MPs debated the first two decades of devolution in a Commons debate led by the Scottish and Welsh Affairs committees last week.
Although this was a wide-ranging debate covering the recent report and recommendations of the Scottish Affairs Committee’s Inquiry into the relationship between the UK and Scottish Government, there was time to talk tax.
Leading the debate, SNP MP Pete Wishart noted that the devolution of tax setting powers had been an important milestone in the coming of age of the Scottish Parliament.
Scottish Conservative MP David Duguid expressed frustration at the approach taken by the Scottish Government to taxation, repeating his party’s message about Scotland being “the highest taxed part of the UK”.
Ayrshire MP Patricia Gibson (SNP), lamented the Scottish Parliament’s lack of control over tax but said that the “day will come” when Holyrood has control over all aspects of taxation and spending. Tommy Sheppard MP, in a later contribution, suggested that control over levers of corporate taxation could strengthen Holyrood’s fiscal levers.
David Linden (SNP) lamented the criticism focused on the Scottish Government when it sought to use its tax powers to improve society, referencing the moniker “Nat tax” used by opposition politicians in Scotland to attack the government.
In contrast, the Labour MP Hugh Gaffney suggested that the Scottish Parliament could make better use of its powers to deliver “real change” for the people of Scotland.
Mr Gaffney repeated Scottish Labour’s support for the introduction of a new 50 pence top tax rate as a means of supporting investment in public services.
Plaid Cymru MP Hywel Williams said that tax devolution for Wales had shifted perceptions of the Welsh Assembly from being a “glorified county council” to “law making body”.
Welsh Labour MP Susan Elan Jones, suggested that the evolution of Welsh devolution needed to be accompanied by consideration of the needs of the nations and regions of the UK, many of whom are seeking greater control over their own fiscal affairs.
The debate took place a week before the publication by the Institute for Government of a new report evaluating twenty years of devolution.
The report suggests that the devolution have enabled the “separate identities” of Scotland, Wales and Northern Ireland to contribute to varying degrees of constitutional change.
In Scotland, this has led to a “legitimacy deficit” towards Westminster and its centralised authority, suggesting that voters in Scotland tend to trust their devolved bodies more than the UK Government.
The report also highlights the way devolution provides a fresh space for policy to be developed.
In the area of tax, early suggestions that Scotland would adopt “Scandinavian levels of taxation” have not come to fruition, replaced instead with a tax policy described in the paper as being neoliberal with a heart.
Nevertheless, the move to a new system of rates and bands of income tax and a reformed system of property taxation, while modest, has represented “a more decisive move than any of (Nicola Sturgeon’s) predecessors had been prepared to make” and had prompted more “holistic” debate over the role of taxation in society.
Devolution in Wales had been more restricted than Scotland but has since grown to accommodate the partial transfer of tax powers to Cardiff.
But concerns remain that the benefits of devolution – dubbed the “devolution dividend” have yet to be felt in Wales and may be stymied by what the report suggests is the “one party (Labour) nature of Welsh politics”.