Two interesting comments from last night’s Scotland Tonight.
So that’s good to know.
Let’s be generous for a moment and assume Sarah Boyack just suffered from a slip of the tongue (although it was interesting that none of the three other people onscreen corrected or questioned her). That leaves us with Jim Murphy’s ever-evolving position on the devolution of income tax.
Let’s see if we can nail it down as concisely as possible.
1. Barnett currently sees Scotland given more money per head from the Treasury than most other parts of the UK, to the tune of about £1200 per head, or 16% more than the UK average spending per capita. (Scotland actually more than pays for this “subsidy” in extra contributions, notably from oil revenue, but we’ll leave that to one side for the moment as it’s not the point under discussion.)
2. Each £1 in revenue that Scotland collects for itself should therefore strictly result in the reduction of the block grant by approximately £1.16, as that’s the premium Scotland currently receives.
3. This would clearly leave Scotland significantly worse off. The only way to reduce that shortfall (other than large tax increases in Scotland) would be to INCREASE the size of the Barnett premium on the remainder of the block grant paid by Westminster to Holyrood each year.
(This will be extremely unpopular in England, and likely to increase the pressure from Tory and Welsh MPs for a future revision to Scotland’s detriment.)
4. In that scenario, in reality NO new tax powers are being devolved. Scotland will be exactly where it is now – it’ll have the ability to subsequently increase or decrease taxes, but it’s getting that ability anyway from the already-passed Scotland Act 2012, due to come into effect next year.
(Which, contrary to popular belief, does NOT stipulate any maximum increase. The “devo nano” proposals which are still Labour’s official position, regardless of what Jim Murphy says, would in fact REDUCE the flexibility of Holyrood’s tax powers compared to the 2012 Act.)
5. The same scenario also destroys the idea that Holyrood will be any more “accountable”. Westminster will be paying to maintain the status quo, because if Holyrood keeps taxes exactly where they are now, nothing will change (except that there’ll be some expensive and complicated new bureaucracy running an extra tax office). Holyrood can just sit on its hands.
In short, if what Jim Murphy told us last night is true (which is of course a very large assumption), the whole premise of devolving tax will have been a charade. There will be NO “new powers” at all, just the old 2012 ones with a different label attached. The people of Scotland are being taken for mugs.