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26th January 2015
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On Thursday 22nd January the UK Government released draft legislation for a new Scottish devolution settlement. This sets out how they plan to put the recommendations of the Smith Commission into law. These are draft clauses with a new Scotland Bill to be included in the Queen’s Speech following the UK General Election this May.

SCVO has been working with our members on the consultation to the Smith Commission, and provided initial thoughts on the results of that Commission. For us it was a mixed bag.

We have now read the new draft clauses and accompanying document. Using the headings in the latest UK document, we highlight the top points, make some brief comments, and give a thumbs up, thumbs down, or a middling thumb as to whether we think these changes satisfy what the sector wanted to see or not.

Constitutional matters

Taxes

Crown Estate

Transport

Fiscal Framework

Welfare & employment support

Civil protections & advice

Energy

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Constitutional matters

Both the Scottish Parliament and Government will be recognised as permanent intuitions and the Sewel Convention, whereby the UK Parliament does not legislate on devolved matters without the consent of the Scottish Parliament, will be given statutory footing. All powers over Scottish Parliament and Local Government elections are devolved. These include a wide range of issues such as campaign spending, party political broadcasts, and the voting system. The extension of the franchise to 16 and 17 year olds, is already taking place to ensure that 16 and 17 year olds can vote in the 2016 Scottish Parliament elections. Overall the clauses deliver what Smith set out. Given that the making the Scottish Parliament permanent was a big issue for the sector it’s good to see this, and that Sewel is now in legislation and not just a nice idea, in the clauses.

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Fiscal Framework

The Smith Commission was clear on the need for an updated fiscal framework to create sustainable fiscal policy and protect the UK economy from risk. The principle of any updated framework is that Scotland contributes proportionately to the UK fiscal programme. The proposed framework includes a commitment to Barnett and notes that the Scottish Government block grant will be adjusted to reflect the tax and spending decisions of the Scottish Parliament. In short, it makes the Scottish Government more responsible for the money it spends. While there’s no draft legislation to enact this, the document looks at this idea in some detail. Any fiscal settlement will need to be agreed between the UK and Scottish Governments.

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Taxes

Taxes are being devolved as set out in the original Smith agreement. This includes powers to set rates and bands of income tax above the UK-wide personal allowance. Taxes on savings and dividend income, capital gains tax, and VAT rates will remain reserved. There is an acknowledgement that issues around Gift Aid will need to be resolved – this will be done after the main legislation has gone through the UK Parliament.
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Welfare & employment support

Welfare is a mixed bag. Power to stop the ‘under-occupancy charge’ and to change how often people receive Universal Credit payments along with various other bits and pieces have been devolved as expected. Various disability and carers’ benefits have been fully devolved, and these benefits have also been placed outside the UK-wide benefit cap which is welcome – so if a Scottish Government were to make them more generous than in the rest of the UK, this would not cause the cap to come into play. Meanwhile, discretionary payments will be able to be made in any area of welfare, but only to individuals on a case-by-case basis, and the Smith-promised “powers to create new benefits in areas of devolved responsibility” don’t seem to have emerged which is really disappointing. The real shocker though is on employment support programmes and benefits, which just seem unworkable. See Policy Officer Kate Wane’s blog Draft legislation takes few steps back from Smith for more on this.
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The Crown Estate

Smith recommended that responsibility for the management of Scotland’s Crown Estate assets and their revenue. Under the draft clauses this will happen by transferring the functions of the Crown Estate Commissioners to Scottish Ministers. Smith further stated that following the transfer of Crown Estate powers to the Scottish Government, responsibility of management of the assets should be further devolved to local authorities but obviously this is not for the UK Government to do. Once the Scottish Government has power over the Crown Estate it will be up to it to decide whether or not to devolved further to local authorities or – gasp – local communities themselves so there’s work for the sector to do here. However, It will remain possible for the UK Crown Estate to make investments in Scotland and there are also several provisions relating to the defence, oil and gas, telecommunications and energy which muddy the water.
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Civil protections and advice

There’s a couple of things of note for the sector here. Essentially, the Scottish Parliament will get the power to legislate on equalities in respect of the public bodies in Scotland. So for example it would be able to introduce gender quotas on public boards. The big disappointment here is the ambiguity from the Smith Commission which stated that: ‘The Scottish Parliament can legislate in relation to socio-economic rights in devolved areas.’ However, under the legislation this is confined to socio-economic rights as the relate to public bodies and no more. The other aspect here is Consumer Protection and Advice. We were pleased to see Smith recommend this be devolved to the Scottish Parliament and the clauses here do just that. Effectively the Scottish Parliament will gain the ability to design its own Scottish model of consumer advocacy and advice, tailored to the Scottish consumers.

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Transport

Nothing much relevant to the sector to report here.
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Energy

Another mixed bag. The Scottish Parliament will be able to grant or refuse licences for fracking, but will only have a consultative role in designing incentives and priorities for renewable energy which will continue to operate UK-wide. Some powers to improve energy efficiency and prevent fuel poverty are also in the draft legislation.