The Scotland Bill

Introduction

In December 2007, the Scottish Parliament with the support of the UK Government established the Commission on Scottish Devolution (the Commission) to review the Scotland Act 1998, recommend changes to improve the devolution settlement and give the Scottish Parliament greater financial accountability.

The Commission was chaired by Sir Kenneth Calman, a former Chief Medical Officer of Health of both England and Wales and Scotland and currently Chancellor of Glasgow University. It included representatives of the Labour, Conservative and Liberal Democrat parties, and prominent figures in Scottish public life. Colin Boyd QC, the former Lord Advocate, member of the House of Lords and head of public law at Dundas &Wilson was one of the members.

The Commission was assisted in its work by an Independent Expert Group on Finance headed by Professor Anton Muscatelli, now Principal and Vice Chancellor of Glasgow University.

Two reports were published, one in December 2008 and the other in June 2009, making a range of recommendations. Many of the recommendations were administrative and have already been acted upon. The Scotland Bill is the UK Government’s vehicle for considering and implementing other recommendations requiring legislative provision. Many of the recommendations are likely to impact upon future public sector spending in Scotland.

The recommendations of the Commission and the provisions of the Bill reflect 3 broad themes; increasing the financial accountability of the Scottish Parliament, improving inter-governmental and inter-parliamentary relations and minor amendments to the reserved/devolved divide. It is the first of these themes that is likely to have the most impact upon public sector financing.

Measures

The ability to raise additional borrowing and to vary stamp duty land tax and landfill tax could have significant consequences on public spending on infrastructure in Scotland. How Scotland uses its other tax levying powers will also influence the economic environment in Scotland and it will be interesting to see how companies adapt to differences in taxation regimes north and south of the border.

As these measures will be implemented in phases from 2013, the Scottish Government returned after the 2015 election will be the first to be able to make decisions substantially affecting tax and borrowing levels in Scotland.

The Bill’s provisions will lead to greater fiscal accountability for the Scottish Parliament and more flexibility to fund capital expenditure. This should be good news for investment in public infrastructure in Scotland though the timescales for implementation mean that these new powers will not have an immediate impact on spending levels in Scotland over the next few years.

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