Significant new powers over tax and benefits are to be devolved to Scotland following the report of the Smith commission. In a desperate attempt to avoid defeat in the independence referendum in September, the main pro-union parties offered a “vow” of new and substantial devolution and a rapid timetable for its implementation if Scotland voted No.
Former Labour leader Gordon Brown claimed it would represent a “modern version of home rule”. While falling well short of genuine home rule or “devo max”, the proposals coming from the commission go further than Labour, in particular, originally wanted. If fully implemented it will mean the Scottish parliament will have powers to set all rates and bands of income tax and all of the money raised through income tax will stay in Scotland.
In addition a range of welfare benefits including for older people, carers and those with disabilities will be devolved. New benefits can also be created by the Scottish parliament and full control over elections, including the powers to lower the voting age to 16 are included.
In all it will mean around 30% of total tax revenue will be set by the Scottish parliament. Around 15% of social security benefits will also be controlled by the Scottish parliament.
The SNP have welcomed any new powers for the parliament while rightly stating that the vow has not been kept. SNP leader Nicola Sturgeon commented; “It’s not so much the home rule that was promised – in so many respects it’s continued Westminster rule”. They will contest the 2015 elections demanding more powers for Scotland.
Tory prime minister David Cameron claimed: “We are keeping our promise to the Scottish people.”
Concessions to avoid break-up
The British capitalist establishment has no option but to concede significant more powers to try and head off a possible second referendum on independence. As the Financial Times put it, “further devolution is the price that must be paid now to hold the union together.”
With SNP support and membership rocketing, and polling for the pro-union parties plummeting in Scotland, they were under huge pressure to be seen to deliver. But it’s clear that the radicalised mood in Scotland following the referendum will mean that for many these concessions will not be enough, particularly against the backdrop of continuing austerity. Appetite, as the saying goes, increases with the eating.
Powers over pensions, tax credits and the minimum wage remains at Westminster. As do key economic levers such as corporation tax, powers over public ownership and control over North Sea oil and gas revenues. This is not an accident. The capitalist establishment, Tory and Labour, fear that transferring the powers of devo max would blow apart the UK, which is already under increased strain. They also fear the role of future left government in Scotland that would take measures against the interests of big business.
Yet further concessions are possible. The outcome of the general election could see the SNP hold the balance of power and demand further devolution as a price for supporting a Labour government.
These new powers will not automatically mean more money for public spending in Scotland. The block grant that funds the Scottish parliament budget will be cut to take account of the new tax powers. Indeed, with a depressed economy and falling wages income tax receipts are much lower than the government anticipated from their so-called and much heralded “recovery”. Which is, in reality, is only a recovery for the rich and big business.
The SNP will continue to implement Tory-led austerity, as we have seen by their £500 million cuts budget put to the Scottish parliament in October.
There is overwhelming support for devo max in Scotland, which Socialist Party Scotland called the Smith commission to deliver. Over 70% think that control of all tax and benefits should be devolved. So while the concessions made by the main pro-union parties are significant, they will not satisfy the appetite for decisive change.
Moreover, this is unlikely to alter the electoral prospects for the Labour party in Scotland who face losing a majority of their Westminster seats in May 2015.
Mass working class opposition to austerity, reflected through the referendum campaign, brought British capitalism to the edge of defeat. The concessions on more powers for Scotland wrestled from the capitalist elite show what is possible if working class people organise and fight for their rights.
Unravelling of the UK
Despite “winning” the referendum vote, whoever forms the government next year, Labour or Tory, faces an unstable situation. Not only are further concessions for Scotland possible but increased demands for more devolved powers for England, Wales and Northern Ireland are also certain.
Following the unveiling of the Smith commission the mayor of London, Boris Johnson, and the Labour leaders of nine English city councils called for a “comparable package of measures” for local government in England. David Cameron has proposed “English votes for English laws” that would exclude Scottish MPs from voting on legislation that only affects England. The in-roads made by Ukip into Tory and Labour support will also add to this volatile mix.
Socialist Party Scotland is participating with the RMT trade union and others in the Trade Unionist and Socialist Coalition in preparing an electoral challenge to the parties of cuts next year. We are demanding the Scottish government and local councils implement no cuts budgets. Allied to a mass campaign to demand the return of the £3.3 billion stolen from public services in Scotland since 2010. As part of this campaign we will fight for the full extension of powers over the economy, tax, the minimum wage and all social security.
All the main parties, including the SNP, are implementing cuts. The need for a new mass workers party to help lead the fight for a socialist majority in the Scottish parliament that would fight to end austerity, for public ownership and a living wage is now vital.