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Super ‘ devo -max’ and moves towards a federal Britain

Super ‘ devo -max’ and moves towards a federal Britain. Iain Mclean, Oxford University Iain.mclean@nuffield.ox.ac.uk For LSE Workshop 01.07.14. Outline of remarks. What is devo -max? All the political parties, including SNP, say they want it So do the Scottish people

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Super ‘ devo -max’ and moves towards a federal Britain

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  1. Super ‘devo-max’ and moves towards a federal Britain Iain Mclean, Oxford University Iain.mclean@nuffield.ox.ac.uk For LSE Workshop 01.07.14

  2. Outline of remarks • What is devo-max? • All the political parties, including SNP, say they want it • So do the Scottish people • But nobody has defined it • Building on Calman • Focus on taxing not spending • Or indy-minus • Why the White Paper scheme would actually be devo-max

  3. What is devo-max? • Working definition: ‘more than Calman and less than independence’ • On that definition, all parties including SNP are for devo-max • Can take Cons plan as an e.g. (the most radical and realistic of the unionist parties) • But devo-max is not on offer on 18.09.14

  4. The Strathclyde Commission – main points • SP to fix all rates and bands of income tax • Mini-OBR (‘Scottish Fiscal Commission’) • Comment: Scotland already watched by OBR and Stats Auth • State pension to stay with UK • Consider devolving other taxes • Comment – why not assign VAT, excises?

  5. Why the SG offer is really devo-max not indy • ‘Nothing will change’ again and again • E.g., BBC, monarchy • Accepts will have to use UK tax and welfare regimes until new ones ready • If rUK were to make shared currency offer it would come with v tight conditions (cf Carney, Macpherson) • They wd include control on tax-and-spend

  6. Building on Calman • It’s fashionable to say that Calman (≈ Scotland Act 2012) is dead on arrival. • All unionist parties want to go further • But almost nobody understands what Calman actually proposes • Matching marginal spend with marginal tax • 10p in £ of income tax is enough to achieve this • Devolving the whole of income tax doesn’t add a lot

  7. How to max out devolution • Go tax by tax, not spending area by spending area • Focus on the big ones: • VAT • Corporation Tax • National Insurance. • By elimination, only NI offers much scope….

  8. Do we want social union or postcode lottery? • Most survey evidence says the people want social union • Therefore want benefit rates and terms to be constant UK-wide • But devolving NICs puts this in question • Would the people really want devo-max if they faced a consistency contraint?

  9. Devo-max and fiscal federalism • Would it be just for Scotland? • Wales would prefer needs assessment (Holtham) • NI doesn’t know what it wants, except control of Corp Tax (dreadful idea – ask Amazon or Google) • North of England with Wales • London has the only REAL interest in f.f.

  10. Conclusion • Devo-max is not fiscal federalism • But Δtransparency on inter-regional tax-and-spend increases pressure for federalism

  11. For further reading • I McLean et al, Scotland’s Choices 2nd edn • I. McLean et al ed., Enlightening the Constitutional Debate • Report of the Strathclyde Commission

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