So we’re pretty embarrassed that we’ve only just put these two things together. We’ve been spending a fair bit of time recently pointing out that there’s almost no chance of the Barnett Formula – in essence, a mechanism for returning to Scotland some of the excess money it sends to Westminster in the form of oil revenue and tax receipts – being retained after the next UK general election.
We’ve also spent a good six months highlighting that the possibility of Holyrood being given “more tax powers” after a No vote is actually a trap, not in reality offering more power at all, but more responsibility. (Because it does you no good to have to collect your own tax revenue – the power lies in deciding how your tax revenue is spent.)
And duh, it’s taken us till now to see the connection. Boy, is our face red.
It took a piece in this morning’s Herald to switch the lights on:
“Following a No vote, it is suggested there would be a two-stage process: a snap Scottish constitutional convention to fine-tune the details of a stronger Holyrood followed by a UK constitutional convention in the next Westminster Parliament, which would include the Scottish proposals and also cover the so-called English Question, constituency boundaries and Lords reform.
Scottish Labour has said it is minded to agree to more tax powers for Holyrood while the Scottish Tories are undertaking their own review on how to bolster the Scottish Parliament’s financial responsibilities.”
There’s nothing particularly revelatory in the article itself, but it was thinking about the issue properly in a UK-wide context that did the trick. It’s no secret that the Barnett Formula is hated in England, where they see it as the manifestation of Scotland as a “subsidy junkie”. (Even though, as noted above, the “extra” spending granted to Scotland by Barnett is paid for, and billions more besides, by North Sea oil money.)
But how to fix the problem while seeming to be granting the Scottish electorate’s wish for “more powers”? The answer can be easily deduced from the proposals:
1. End the Formula, by which Scottish spending is higher than the UK average. At a stroke, that strips something like £7bn (or around 28%) out of the Scottish block grant, making English voters happy.
2. At the same time, grant Holyrood “more powers” by allowing it to set Scotland’s income tax rates in their entirety, which can be portrayed as a gesture of major devolution (and indeed, technically is). The Scottish media can then present this as a positive, saying the Unionist parties – and chiefly Labour – have kept their pre-referendum promises and delivered extra powers.
3. Now, to fill the huge £7bn hole that’s just opened up in Holyrood’s coffers (because Barnett’s gone, but all the North Sea cash is still going straight to Westminster), the Scottish Government – not the UK government – is the one that has to make swingeing cuts to services or whopping tax increases.
Labour has already conceded the 2016 Scottish election, so in practice “the Scottish Government” means the SNP, with catastrophic results on the popularity of a party which may already be damaged by losing the referendum.
4. The Tories, meanwhile, can use the devolution of taxation to further reduce the number of Scottish MPs at Westminster – because Scottish MPs will have fewer responsibilities – and also to reduce their influence by finally excluding them from votes on matters that don’t affect Scotland (the “English question” mentioned in the Herald, more usually called the “West Lothian Question”).
5. So the Tories win, because they’ve reduced Labour’s numbers and influence at the Commons. And while Labour will grumble a bit at that, they’ll mostly be delighted because of the body blow dealt to the SNP, and because in reality they know that their Scottish MPs almost never make a difference to whether they win Westminster elections or not anyway.
For the Unionist parties, there’s no downside to this plan. They save billions of pounds that they can redirect to bribe crucial English swing voters, but they get to do so in the guise of giving the Scottish electorate what it wants, while keeping all of Scotland’s oil revenues safely in the Treasury and Trident in the Clyde.
If the Tories win the 2015 general election, they have a ready-made excuse to reduce Labour’s power in the Commons as a bonus. And if Labour wins in 2015, they can do it WITHOUT reducing the number of Scottish MPs, and can also take the chance to devolve more powers away from Holyrood to councils at the same time,.
That leaves the SNP holding the “cuts” baby while Labour gets on with rebuilding its local powerbases via the time-honoured party practices of cronyism and corruption so familiar to people in Glasgow and the surrounding regions.
Labour will then be in a strong position to capitalise in 2020, when a dispirited and exhausted SNP – having lost the referendum, implemented massive cuts and/or tax rises, and been effectively emasculated and left unable to defend Scotland in the face of impossible financial pressures (free universal services would have to fall by the wayside, and Salmond’s promises about rocks melting in the sun would disintegrate, to great media glee) – would surely be unable to secure a fourth consecutive election victory, leaving Labour king of the roost again.
(And since the SNP would already have done all the dirty work of cuts and tax increases, the incoming Labour administration wouldn’t have to make any unpopular decisions. If it was also in power at Westminster, there’d doubtless be scope for some relaxations on the purse strings for a few crowd-pleasing giveaways.)
Labour would have regained what it sees as its birthright, and would have a stronger stranglehold on Scotland than at any time in the past, with both Holyrood and council levels sewn up. The Tories could easily bear that as a worst-case scenario because they’ve long since written Scotland off electorally, and Labour’s “One Nation” agenda would mean there was no great ideological tension anyway.
And all of that happens without Scottish Labour having to become any more competent or restore its hollowed-out grassroots. All it has to do is set Scotland up to fail, then walk in and occupy the ruins.
It’s a bleak picture. But we invite readers to find fault with the logic.