Joining the McChattering classes
You have to feel just a tad sorry for David Cairns.
There he is just a week ago confidently lampooning the concept of further tax powers for Holyrood.
It was, he opined, an issue of interest only to the “McChattering classes.”
Leave aside, for a moment, the slightly (if not literally) patronising tone of that patronymic “Mc”.
Consider instead what has changed.
Mr Cairns finds today that his boss, Gordon Brown, has signed up to the Clan McChattering.
The PM says it is right to review the devolution settlement - and logical to consider whether and how Holyrood might take more responsbility for raising its own revenue.
Oops! For Mr Cairns, a 1984-style moment. Time to change tack. We are no longer at war with Eastasia. They are our chums. To the contrary, we are in dispute with Eurasia. May they be cast down and banished.
To be fair, the gutsy Mr Cairns must have thought he was on pretty secure ground.
Until today, Mr Brown had given no indication that he was disquieted with Holyrood’s financial settlement. Quite the contrary.
Further, the PM is intuitively cautious - and especially about finance. Something to do with a decade as Chancellor, I guess.
So this is a big change. Perhaps up there with the late Donald Dewar’s original decision to take Labour into the cross-party Constitutional Convention. Mr Dewar called that “living dangerously”.
For the avoidance of doubt, he was, like Gordon Brown, customarily inclined towards caution.
So what is being contemplated? Firstly, a review of Holyrood’s powers. Gordon Brown suggests that some extra powers, such as over transport, might accrue to the Scottish Parliament.
But some others, such as residual security issues, might revert entirely to Westminster in the light of a decade’s experience.
The PM calls this a “two way street” – while stressing that he has no definitive package in mind, preferring to allow the review to proceed.
In passing, I might note that this “review” sounds decidedly more Downing Street driven than the “commission” originally envisaged by Wendy Alexander - and endorsed by the Tories and the Liberal Democrats.
The PM says no. He says it will be collaborative, involving a range of opinion, involving both Westminster and Holyrood.
Well, fine - but who do you think will take the final decisions? The Tories and LibDems? Independent experts?
Labour’s new (opposition) leader at Holyrood? The Prime Minister of the United Kingdom? Yes, I thought that might be your view.
Secondly, money. Gordon Brown envisages deploying some form of assigned revenues. Older, sagacious readers will recognise the lengthy pedigree here.
Assigned revenues featured in the 1990 report from the Convention, Towards Scotland’s Parliament. They were dropped in the 1995 version in favour of “an assigned budget” (the block grant to you and me.)
What are assigned revenues? At the moment, all taxation accrues to the Treasury who disburse cash to Holyrood and elsewhere.
Instead of that, the product of certain taxes in Scotland would be diverted directly to Holyrood. That might, for example, involve Scottish income tax and VAT going straight to Holyrood.
Such a system was envisaged by Sir David Steel’s 2006 commission for the Liberal Democrats - although he declined to specify which taxes would form the devolved basket.
The upside? MSPs would have a direct incentive to grow the economy in that extra revenue would thereby accrue to Holyrood. At the moment, extra tax raised if the economy is buoyant goes to the Treasury.
The snags? You might choose to assign VAT or corporation tax. But European Union rules almost certainly preclude a devolved Scotland from varying the rate of those taxes. Which rather defeats the purpose of allowing fiscal discretion.
What about income tax then? Well, remember that Holyrood already has the power to vary the standard rate. It has never used this power because it would cause too much political pain for too little fiscal gain. Could that power, then, be extended to upper rates of income tax?
What about North Sea oil revenues? Wendy Alexander made no reference to this in her 30 November speech when she first set out these plans.
Expect SNP Ministers, entirely understandably, to lay great stress on this aspect.
Further, such a scheme of assigned revenues would involve a needs assessment across the UK.
That’s because it would be necessary to calculate how much top-up cash was needed from London to Edinburgh (or the other way round.)
It is very far from guaranteed that a needs assessment would work in Scotland’s interests. Especially if such an assessment were driven by the Treasury whose ministers (and hence officials) might be lending an ear to those in the English regions who assert that Scotland is over-subsidised.
It would, at the very least, be an intriguing argument – if not a political fight.