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 ednScotland’s Choices 2nd edn I. McLean et al ed., Enlightening the Constitutional DebateEnlightening the Constitutional Debate Report of the Strathclyde Commission