Post-Smith draft clauses fall short, Holyrood committee claims

The draft legislative clauses produced by the coalition Government following the report of the Smith Commission on further devolution for Scotland, do not meet the “spirit or substance” of the Commission’s recommendations in key areas, according to a committee of MSPs.

In a unanimous interim report on the draft clauses, Holyrood's Devolution (Further Powers) Committee grades the clauses under the different subject headings as red, amber or green, depending whether, in its view, amendment is required for the clauses to fulfil Lord Smith's proposals, or clarification or possible amendment with further information as to how the clauses will operate, or whether no significant issues have been raised in evidence before the committee.

In only two areas, air passenger duty and aggregates levy, is there a green rating. Four are marked red: permanency of the Scottish Parliament; Sewel convention and legislative consent; welfare and benefits; and the Crown Estate. The remaining seven areas are given an amber rating.

Among the committee's specific conclusions:

• On welfare, it recommends that the UK Government reconsiders the draft clauses designed to devolve the creation of new benefits and enable the top-up of reserved benefits in order to ensure that the Scottish Government has a "genuine policy discretion" in this area. Clarity is needed on how to ensure that any new benefits or discretionary payments introduced by Holyrood will provide additional income for recipients and not be offset by reductions in entitlements to UK benefits or tax credits.
• On income tax, it concludes that there are "significant issues still to be resolved regarding the implementation of the new powers, such as an appropriate definition of residency for a Scottish taxpayer, the details of the administration of the new regime (who collects the tax and how it will function), the costs on business and individuals, the need to avoid double taxation and the timing and phasing of the new powers on income tax relative to those already devolved under the Scotland Act 2012”.
• As regards the fiscal framework, the MSPs state that final detail of the intergovernmental agreement setting out the principles and operation of devolved taxes and the impact on the Barnett formula, among other matters, must be provided to the Scottish Parliament before the question of legislative consent to any new bill is considered in early 2016.
• Ensuring that the Scottish and UK Parliaments, and other devolved assemblies, can effectively scrutinise inter-governmental relations will also represent "a significant challenge posed by the Smith Commission for these legislatures”.
• In areas such as taxation, fiscal framework and welfare, both Governments should reach "an urgent agreement" on how intergovernmental relations and agreements will be achieved, with the Scottish Government reporting to the committee on what arrangements it proposes to put in place for parliamentary oversight.
• As for the Crown Estate, the committee has "serious concerns regarding the situation in Scotland post-devolution and the competition and confusion that may arise from the creation of ‘two Crown Estates’".
• And regarding the permanency of the Scottish Parliament, while recognising the difficulties caused by the UK doctrine of parliamentary sovereignty, the committee recommends that if the issue of permanency is in question, the Scottish electorate should be asked to vote in a referendum, with majorities also being required in the Scottish Parliament and the UK Parliament. 

The committee urges the new UK Government to consider the report and the concerns highlighted during its extensive evidence gathering process, and work with the Scottish Parliament "to help ensure that we have legislation that achieves the objectives that all five parties on the committee signed up for”.

Convener Bruce Crawford MSP said: “All political parties involved in the Smith Commission agreed to take forward its recommendations as quickly as possible while ensuring that the draft legislation met the spirit and substance of those recommendations.

“In the short period of time the committee had to consider the legislation prior to the dissolution of the UK Parliament, we decided to focus our attention on key issues such as taxation and borrowing, welfare and benefits and the Crown Estate.

“The committee believes that the current proposals do not yet meet the challenge of fully translating the political agreement reached in the Smith Commission into legislation. For example, as we heard in our evidence taking, there is no power for the Scottish Parliament to top up reserved benefits despite that being one of the powers highlighted at the time of publication. The committee also seeks reassurance that any new benefits or top-up benefits introduced in Scotland would result in additional income for a recipient.

“The committee is disappointed that the currently proposed legislation sells Smith short.”

Following the UK general election, the committee will undertake detailed scrutiny of all of the provisions in any Scotland Bill that may be introduced in the new Government's first Queen’s Speech. 

Click here to view the committee's report.