27 Nov 2014

At breakneck speed a new UK takes shape

Seismic stuff in Edinburgh and London today.

The Smith Commission has announced that Scotland gets the right to set income tax levels (though not the tax threshold) and some powers of welfare as well.

As David Cameron puts the finishing touches to his speech outlining his renegotiation strategy for EU membership, he’s been stretched on finalising the other union in his political life.

The Smith Commission thought it had agreement on powers for much more flexibility on Universal Credit in Scotland. Then, late in the day, Whitehall started a push-back.

At Tuesday’s cabinet, when Alistair Carmichael read out the plans taking shape at the Smith Commission table, one after another English Tory cabinet ministers challenged the plans and their implications for their brief and their department.

Theresa May was amongst them, George Osborne too. The Culture Secretary Sajid Javid even raised questions about a separate National Lottery for Scotland. But Iain Duncan Smith was said to have been the sharpest critic of what was being cooked up in Scotland, fearing that his entire Universal Credit fabric was being unravelled.

The draft conclusions were diluted in the last 48 hours much to the irritation of the Smith Commission members. “There was panic” in Whitehall according to one Smith Commission source.

Like Northern Ireland, Scotland will now have the power to vary payment regularity etc. The real new power conceded is the power to start up a completely new welfare payment, to invent one from scratch. It’ll be interesting to see what if anything emerges in that space.

The Prime Minister was quick off the blocks (just as he was on the morning after the referendum vote) to reassure English Tory MPs that he will work out (before Christmas) what this all means for his “English votes for English laws” promise.

You get the sense that the constitution is being written at breakneck speed.

As the clock ticked towards the midnight printing deadline for the Smith Commission report last night, cabinet ministers were in last minute contact with their departments about exemptions, extra powers and what could and couldn’t be written in the main body of the report or the tantalising last page – titled “additional issues for consideration”.

The decree on page 23 of the report that “MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including income tax” was described by one co-author as “utterly meaningless … inserted purely for the benefit of Labour” and “nothing to do with the remit” of the Smith Commission.

“Nobody (on the Commission) wanted it there … but Labour needed it,” the source said.

On the basis of yesterday’s comments from Labour MPs (see yesterday’s blog “Scottish Labour in despair”) it doesn’t look like it’ll do the trick.

The deputy first minister, the SNP’s John Swinney, gave what some colleagues on the commission thought was a rather sour welcome for the Smith Commission, emphasising Holyrood had not been given job creation powers.

The Lib Dems and the Tories think this could be the moment the SNP government starts copping the blame for Scotland’s problems rather than just taking the credit for its successes.

Many Labour figures still think it won’t work like that, and is the beginning of the end for the union. Whoever wins the leadership of the Scottish Labour Party has a massive task and little time to galvanise some despairing troops.

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