Response to the Smith Commission

Summary
We welcome the fact that the Smith Commission has encouraged individuals and organisations in
Scotland to contribute towards shaping the future of devolution, post referendum. Whilst, clearly, it
is important for the Commission to be seen to deliver on the pre-referendum promise of significantly
more powers for Scotland, and certainly to set out an agreed framework before the General Election
of 2015, it is a matter of concern that the inherent haste in the Commission's timetable runs the risk
of publishing a result that is so broad-brush and lacking in depth that, in practice, it falls short of the
expectations and desires of the Scottish people.
The Prime Minister's announcement on the steps of Downing Street on the morning of 19
September, infers that Scotland's future governance must be considered within the wider context of
constitutional reform for the entire United Kingdom. This is something to be welcomed if it is an
impetus for genuine, concrete, radical and fundamental reform of the existing unsatisfactory
arrangements. With this in mind, we urge that the Commission should not chart its final course
without the democratic consent of the Scottish people. To that end, it is our contention that no final
decisions should be made, no parameters agreed and no options ruled out without their being full,
open and transparent engagement with the widest range of individuals and interested parties in
Scotland. Indeed, some form of final formal consultation that secures the endorsement of people
domiciled in Scotland would be a worthwhile exercise in demonstrating that the Commission's
proposals enjoyed the support and confidence of the Scottish public.

Looking furth of Scotland, we anticipate that the framework, content and processes that are
eventually agreed will be capable of adaptation to the other devolved jurisdictions in the United
Kingdom and any further devolved or decentralised structures that may emerge for the English cities
and regions. However, this should not be used as a device to impede Scotland's progress in taking
even more responsibility for additional powers in advance of the other areas.
Practicalities
It is evident that the practical implementation of the 1999 devolution settlement has highlighted
discrepancies and omissions that were not immediately apparent at its launch. This was inevitable.
However, there was no process through which such anomalies, inconsistencies and incongruities
could be readily resolved as they emerged. Therefore, it will be important the Commission sets out a
dynamic process for improving devolution: one which incorporates democratic mechanisms for
periodic reviews and to adapt and flex in the light of practical experience. The review process should
not take the form of a pre-programmed, one-off review set at a single point in time; it must be a
process that makes due allowance for evolution and change over time.
Experience, since 1999, has highlighted the fact that as powers are devolved, the governance
arrangements relating to the remaining reserved powers have failed to take due account of and
respond appropriately to the impact of devolution: as a consequence, the operational arrangements
for many of the reserved powers are no longer fit for purpose. Therefore, we encourage the
Commission to identify relevant changes in the operation of reserved powers to ensure that the
arrangements that are put in place for these powers take due cognisance of the legitimate interests
of the devolved administrations and, as a matter of course, provide for timely engagement and
communication with relevant representatives of the devolved administrations.
Principles
Like the majority of people living in Scotland, we subscribe to the principle that where it makes
sense for powers to be devolved to Scotland, they should be. Nonetheless, we acknowledge that the
extension of devolution will take longer for some powers than others. However, we expect the
Commission to list, clearly and in detail, all of the powers that will be devolved and to indicate a
realistic timescale for this.
To our mind, it is valid to conclude that the pronouncements from the Prime Minister, the Deputy
Prime Minister and the leader of the UK Opposition on the eve of the referendum mean that the
Scottish Parliament should expect to:
be assigned full fiscal responsibility for the Scottish Parliament with all tax revenues being
retained in Scotland;
be responsible for all domestic expenditure;
be entitled to all of the assets and income generated by the Crown Estates in Scotland and
have the freedom to manage them in line with Scottish needs;
have the capacity to set the rate of Air Passenger Duty for travel into and out of Scottish
airports;
have control of VAT;
have borrowing powers, within an agreed UK framework;
become responsible for welfare policy and its administration;
have full responsibility for employment policy, including the capacity to set the minimum
wage;
take responsibility and be allocated an equitable share of existing UK resources for equal
opportunities and equality policy, competition, energy and broadcasting, transport and
aspects of immigration policy.
Operational alignment in a UK setting
In recognition of the fact that a majority of the Scottish electorate has voted for the nation to remain
in the United Kingdom, we acknowledge that some of areas of responsibility that we have identified
for devolution will need to fit coherently within a more encompassing UK-wide framework. This will
be no different for the further devolution of powers to Northern Ireland, Wales and in the context
of English Votes for English Laws (EVEL) - the English regions and cities and may be perceived as the
sort of robust regional policy approach that is adopted, in different ways, in countries like Belgium
and Germany.
As specific illustrations of how we would envisage this approach working, we would cite corporation
tax and welfare as two examples. With the former, our view is that the (national) UK policy would
take due account that the current one size fits all approach is not appropriate for the variations in
the composition and performance of regional economies of the four jurisdictions. Consequently, the
UK government would be responsible for implementing a framework that would spread wealth and
opportunity across the four territories whilst identifying and addressing anomalies. The consequence
of this would be that corporation tax would, in all probability, be higher in London and the Home
Counties whilst the poorer, more deprived and less attractive regions would be afforded an
opportunity via the capacity for the devolved administrations to set lower rates - to stimulate
higher economic activity and growth.
Adopting a similar approach for spending on welfare would allow the devolved administrations to
better target and monitor in-work and out of work benefits and support to respond to local needs
and to cohere with regional employment and training strategies and priorities for health and social
care.
Credible and sustainable further devolution of powers across the UK requires significant cultural and
operational changes within Westminster and the civil service. This may take some time but it is of
such importance that it must be actively addressed or else there is an enormous risk that
weaknesses in this regard that emerged after 1999 will become entrenched and eventually
undermine any benefits that further devolution may offer. In specific terms this means that civil
service should be required to implement programmes of professional development and
departmental rotation that will ensure that civil servants working in the devolved administrations
understand that their principal duty should be to serve Ministers in the devolved administrations
and that this does not represent any conflict of allegiance with being part of a UK-wide corps. At the
same time, civil servants in Westminster departments would understand that the devolution of
power and responsibility means that their duties would require them to respect and take due
cognisance of the legitimate interests of the devolved administrations and, as a matter of course,
undertake timely engagement and communication with their counterparts and Ministers in the
devolved administrations. Failure to confront this issue runs the risk of planting the seeds of future
conflict and confrontation between Westminster and the devolved administrations and the
accompanying wasteful expenditure and unnecessary commitment of valuable public resources.
With this in mind, we cite the Baltic Assembly as a relevant model. This is a collaborative
international organisation which aims to promote cooperation amongst the parliaments of the
Republics of Estonia, Latvia and Lithuania by finding common positions on economic, political and
cultural issues. Other lessons may also be learned from the Nordic Council through which eight
countries and territories cooperate on an inter-parliamentary basis on issues including defence,
education, research, the environment, justice, energy, the economy, working life, arts and the
media. Even if the situation in the UK may not be the same as in either of these regions, both offer
worthwhile examples of how sustained and genuine democratic inter-parliamentary collaboration
may be facilitated.
Our view of adopting a similar approach in the UK would see each of the four devolved
administrations being fully responsible for the effective and efficient control of devolved matters but
also having access to a mechanism to influence and monitor the operation of reserved powers. A UK
Assembly would then be responsible for those matters which remain reserved - monetary policy,
defence, intelligence & security and also for co-ordinating the devolved functions to ensure that
they sit within an overall and agreed UK-wide approach. Membership of the UK Assembly would be
accorded to representatives from each of the devolved administrations, with voting power weighted
according to populations. In this way, each jurisdiction within the UK would be represented by a
single tier of MPs/MSPs/AMs/MLAs without any need for additional tier of or duplicated
representation. Such a measure would significantly reduce the costs of government across the UK
and would offer a solution to the reform of the House of Lords.
Under such an arrangement, we contend that there would be neither a need nor a role for the
House of Lords in governing Scotland and it would be a matter for the other jurisdictions to reach
their own conclusions on its relevance or that of any other chamber. This being the case, it would be
expected that the value of any contributions that Scotland makes towards the running costs of the
House of Lords would be deployed to more relevant Scottish priorities. Experience from the
aforementioned Baltic and Nordic examples suggests that the timescale for this implementing this
approach in the UK could be as short as five years.
Budget
The appeal of English votes for English Matters is entirely understandable to those who seek fairer
and better government. However, the logic with which it is currently presented is specious: it,
blatantly, ignores the fact that many decisions made in Westminster impact on areas that are
devolved in Scotland and remain inextricably linked to the budget allocated to the Scottish
Government. It is self-evident that the achievement of EVEL will require the construction of a
mechanism that completely uncouples the Scottish budget from decisions made in Westminster.
This will, as a matter of course, necessitate the replacement of The Barnett Formula with a more
appropriate but no less equitable funding arrangement.
Addressing this issue head-on would allow the UK government to refrain from investing consultants
and civil servants time and public resources in the creation of models of expenditure that are
exempt from Barnett - and consequently deprive the devolved jurisdictions of their legitimate share
of public investment and focus its energies on developing a new model that takes due account of
receipts generated in the devolved areas. Surely, it is more responsible for governments to allocate
public servants and national resources to finding legitimate solutions to complex budgetary issues
than seeking to develop ever more creative ways to bend existing rules?
When the current UK Coalition government came to power, it proposed that every year, each
individuals P60 would provide a transparent breakdown of where her/his tax and NI payments were
being spent: for example, how much contributed to education, defence, Europe, welfare, and so on.
Therefore, we consider it a straightforward exercise for the UK government to produce an annual
statement of Scotlands receipts and expenditure. Whilst Scotland remains part of the UK, it is, of
course, appropriate for any surplus generated in Scotland to be assigned to subsidising other less
well-performing areas of the UK. However, the legitimacy of this would be better demonstrated by
the public presentation of such figures on an annual basis with a full, clear and transparent
explanation of how they were calculated. Providing the electorate with an annual balance sheet of
this nature would show, unequivocally, how much Scotland contributes to reserved matters, how
much to subsidising other areas and how much for specifics such as Trident, the Foreign Office and
the House of Lords.
The balance sheet for Scotland and, for that matter, any of the other jurisdictions - should take
account of all receipts from all taxes including oil revenues, and should subsequently inform the
foundation of an agreed expenditure budget for the Scottish Government. The Barnett Formula
should shadow this approach for a transition period, to counter any significant variances, until a new
funding mechanism for government across the UK is finalised and implemented.
We believe that there should also be a budget assigned on a UK basis that would support the
existing cross-party consensus on the need to spread wealth and opportunity more fairly across the
UK. To our mind, such a budget could be assigned to pump prime activities to progress this
objective. A pertinent and timely example of how such spending may be targeted emerged during
the Referendum campaign. During the campaign, the UK government revealed that the lifetime of
the oil industry in Scotland would not extend beyond 20 years. This highlights a clear and urgent
prerogative for the allocation of additional capital and revenue funding from the UK to Scotland to
supplement the Scottish Governments existing resources so that it may formulate and implement
an immediate response to the imminent decline of this key industrial sector and develop relevant
job-rich alternatives, like renewables. We think the national strategic impact of this disclosure by the
UK government is of such magnitude for the Scottish and UK economies that it is legitimate to
assume that the priority for allocating expenditure on this would supersede that of HS2 and other
transport infrastructure in England.
Reserved Matters
Earlier in this paper we have remarked on the failings of the current devolution arrangements to
accord due respect and influence to the devolved administrations in the discharge of their own
responsibilities and in contributing to the implementation and evolution of powers related to
reserved issues. Whilst we contend that much of this may be traced back to the prevailing culture
and attitudes of the Westminster establishment and civil servants and we have suggested some
structural and practical solutions to addressing these, we should like to return to this issue for a final
time in order to offer a potential solution. Our view is that since 1999, when the devolution process
began, the structures and mechanisms of governance and administration for reserved matters have
signally failed to take due account of the impact of the transfer of powers.
Since 1999, those responsible for reserved matters have, by default, excluded or discouraged
interest and influence from the devolved administrations and, as a consequence developed an
anglo-centric turn. Our experience of being confronted with this issue, regularly, is that a
contributing factor is a tendency for the Civil Service either not to embrace or to resist the new
reality and its consequent failure to adapt and evolve appropriately. Our solution is that the
professional development of civil servants working on devolved matters - for example, education or
health should involve periods of rotation to departments responsible for reserved matters such
as the Treasury, defence or foreign affairs. The current fairly static arrangements, which confine
professional mobility to either reserved or devolved departments means that civil servants working
on reserved matters have little inclination or need to develop an awareness of devolved issues and
arrangements and this has been exacerbated over time. In addition, because of the logistical and
financial barriers that confront civil servants working in devolved departments it is rare for them to
relocate to departments handling reserved matters as most of these are located in London.
In the interests of effective and responsive government and financial efficiency, the UK government
must make more effort to move government departments out of London. Full devolution of tax
powers offers an excellent opportunity in this regard. However, it must not be confined to a simple
outsourcing or dispersal of clerical and administrative functions; it should include a radical rethink of
the organisation and deployment of the civil service to support reserved matters.
The present demographic of the UK senior civil service fails to even approximate to the profile of the
UK population at large. This is an issue that has attracted critical comment for years and has been
highlighted by political reporters like Andrew Neil. In essence, the current approach to recruitment,
selection and development within the UK civil service means that a young girl attending a
comprehensive school in the east end of Glasgow has a better chance of landing on the moon than
she has of becoming an Ambassador for the UK government. This embedded iniquity must be
addressed to ensure that the government of the UK and the devolved jurisdictions is relevant to all
of the populace that it seeks to serve. However, it cannot be tackled without regular open and
transparent monitoring of social demographics of the UK civil service corps and its recruitment and
selection processes. With this in mind, we would like to see reports containing anonymised data,
benchmarks and reviews of progress made similar to that used to monitor equal opportunities
presented to the devolved administrations on an annual basis: this data should be used to develop
and support mechanisms for generating genuine diversity in the civil service in terms of gender,
ethnicity, public/private education, geographic and social deprivation. It would also be appropriate
for such mechanisms to take due cognisance of any policy aspirations that the devolved
administrations have for widening access and fostering equality of opportunity.
It is in these reserved areas that effort must be made to invoke cultural change. Our experience in
matters relating to the reserved areas of taxation, foreign affairs and, in particular, Europe
demonstrates that these (UK government) departments regard the views of the devolved
administrations as subordinate, inferior or irrelevant. The position they ascribe to themselves is that
they occupy roles that place them in a position that is hierarchically superior to the devolved
administrations and that they owe no duty of accountability to them. Further devolution must take
account of this aspect of the inter-governmental civil service culture and address it through a
requirement for relevant professional development, staff rotation and formal accountability
structures.
There must be regular scrutiny of UK reserved matters by each of the devolved administrations. In
practice, this should include UK ministers and civil servants responsible for reserved matters
reporting to the relevant Committees in the four jurisdictions. The devolved administrations should,
as a matter of routine, be fully engaged with any and all consultations on reserved matters and the
they should be charged with ensuring that devolution means that such consultations are brought to
the attention of relevant organisations in the devolved areas.
Europe
Our area of professional expertise is in matters associated with the European Union and with a
combined experience of more than 40 years working in this field, we are convinced that effective
devolution requires the Scottish Government to be offered the scope and capacity to engage more
directly with Europe. Not only would this be of benefit to Scotland but it could also contribute to
better relations between London and Brussels.
We are of the firm belief that the Scottish Government should be accorded the power to engage
directly with the EU on all devolved matters and that a formal mechanism must be created to allow
the Scottish Government and other devolved administrations to influence UK decisions on EU
matters. This should also extend to the Scottish Government having the competence to sign
international agreements which pertain to devolved areas.
The current arrangements, whereby the UKs position on all EU issues is determined by a
combination of inputs from Westminster government ministers and committees of elected and
unelected representatives in the Houses of Parliament serves to restrict legitimate and relevant
influence by the devolved administrations. This is exacerbated by the absence of transparent and
accessible information on (i) the workings of UK government departments like the EU and
International Affairs Division of the Department of Work and Pensions and their arrangements for
consulting with and feeding back to relevant stakeholders in the devolved jurisdictions; and (ii) on
the processes employed by the UK to identify and nominate representatives to EU Expert Groups
and Committees. The net effect of this is that, by default, the UK position on issues or in EU reports
and studies frequently (re)presents an anglo-centric perspective and there is a lack of timely and
considered engagement with civil servants and others working in relevant fields in the devolved
jurisdictions. This has the potential to reduce the scope for the priorities of the devolved
administrations to influence the shape and priorities of EU funding programmes and on the capacity
of organisations in the devolved nations to impact on these programmes and to secure funding from
them.
To address these problems, we recommend that further devolution of powers should take due
account of the legitimate role of Scottish Government and its counterparts in the other devolved
jurisdictions in engaging more directly with the European Union. In addition to the specific proposals
that we outline above, we also argue that the UKs representation on the (European) Conference of
Parliamentary Committees for Union Affairs (COSAC) must be amended and extended beyond the
European Committee of the House of Commons and the European Committees of the House of
Lords, and needs to ensure that members of relevant committees in the devolved administrations
participate in COSACs meetings and activities.
Furthermore, as a matter of priority, the European Committee of the House of Commons and the
European Committees of the House of Lords should be required to institute formal arrangements to
ascertain the views and decisions on EU issues reached by each of the devolved administrations. This
arrangement could form the basis of procedures for this area of work for the UK Assembly that we
propose above.
Finally, all of the positions currently held by UK government departments and other bodies on EU
committees and working groups should be published and immediately reviewed with a view to
reflecting a better balance of the four jurisdictions and of the devolved issues. Where input relates
to devolved responsibilities, structures should be put in place to ensure that the position being
presented takes adequate account of the views of each of the devolved areas. Such structures
should also be designed to ensure that communication from the EU bodies is shared amongst all
four jurisdictions. This transparency of approach needs to be backed up by relevant instructions to
and training for the civil servants currently representing the UK on such committees and groups
since, for a number of years, legitimate enquiries made to them evoke defensive responses or
disdain and enquirers are treated as fools or knaves.
Before closing, there is a final issue that the Smith Commission should consider the proposed
in/out referendum on the UK's membership of the European Union. If the polling data is accurate,
Scotland, Wales and Northern Ireland are significantly more positive about EU membership than
England. Consequently, Westminster's obsessive fear of and pandering to the UK Independence
Party is creating the conditions whereby the three smaller UK jurisdictions' relationships with Europe
could be undermined by the Eurosceptic perspective of the largest jurisdiction. Therefore, we
recommend that the further devolution of powers must ensure that the structure of an in/out
referendum on EU membership respects the views of all four jurisdictions so that, should England
choose to leave the EU and any or all of the devolved jurisdictions vote to remain within the EU,
clear and unambiguous contingency plans will be put in place to ensure that those jurisdictions that
have democratically chosen to be part of the EU are allowed to do so. These plans should be put in
place prior to any referendum on EU membership and should be made public so that existing
businesses and potential inward investors may be reassured that an English departure from the EU
will not lead to a Scottish exit. This would also communicate a clear message that investing in
Scotland's ongoing participation in the EU will not be jeopardised by political expediency in London.
Concluding remarks
In our response to the Commission we have raised a number of concerns:
1. A rush to respect the timetable set for its deliberations should not lead to the Commission
producing shallow proposals that fail to satisfy the expectations of the Scottish people.
2. The disconnect between Ministers and civil servants responsible for reserved and devolved
matters with the ensuing lack of respect of the latter by the former.
3. The embedded and enduring iniquity in the higher echelons of the UK civil service and its
detrimental impact on devolution.
4. The recurrent failure of UK consultative arrangements, particularly on issues pertinent to
devolved matters, to take due account of the views of MSPs, AMs and MLAs.
5. The UK government's current approach to engaging with the European Union which
effectively blocks legitimate and pertinent comment and scrutiny by the devolved
administrations.
6. The impact of England voting no and one or more of the devolved jurisdictions voting yes in
a referendum on EU membership.
We have offered solutions to all of these and have also listed the extended powers and
responsibilities that the Scottish Government should anticipate. These are to:
be assigned full fiscal responsibility for the Scottish Parliament with all tax revenues being
retained in Scotland;
be responsible for all domestic expenditure;
be entitled to all of the assets and income generated by the Crown Estates in Scotland and
have the freedom to manage them in line with Scottish needs;
have the capacity to set the rate of Air Passenger Duty for travel into and out of Scottish
airports;
have control of VAT;
have borrowing powers, within an agreed UK framework;
become responsible for welfare policy and its administration;
have full responsibility for employment policy, including the capacity to set the minimum
wage;
take responsibility and be allocated an equitable share of existing UK resources for equal
opportunities and equality policy, competition, energy and broadcasting, transport and
aspects of immigration policy.



Morag Keith Dugald Craig
14 Parkhill Drive 6 Friars Lane
Rutherglen Lanark
G73 2PW ML11 9EL
moragkeith@gmail.com dugaldcraig@gmail.com