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Smith Commission sets scope of Scottish devolution

28 November 2014
The Smith Commission (the "Commission") has published its report on the further devolution of powers to the Scottish Parliament.

Following the independence referendum in September 2014, each of the three main UK political parties promised that more powers would be devolved to the Scottish Parliament. The Commission, led by Lord Smith of Kelvin, was tasked with working with the five political parties represented in the Scottish Parliament to agree what the new powers should be. In what Lord Smith termed an "unprecedented achievement", those parties have now agreed which powers should be devolved. This "package of powers" has been termed the "Smith Commission Agreement".

The powers to be devolved are arranged under heads of agreement according to three "pillars":

  • Pillar 1: providing a durable but responsive constitutional settlement for the governance of Scotland.
  • Pillar 2: delivering prosperity, a healthy economy, jobs, and social justice.
  • Pillar 3: strengthening the financial responsibility of the Scottish Parliament.

Pillar 1

  • UK Legislation will state that the Scottish Parliament and Scottish Governement will be permanent institutions

It is unclear whether this means that the Scottish Parliament will become entrenched within the UK constitution or, indeed, whether this is even possible. The UK Parliament is sovereign and therefore cannot pass legislation that limits its capacity to legislate as this would amount to Parliament abandoning its sovereignty. Therefore, depending on how the UK legislation is framed, it may be that simply "stating" that the Scottish Parliament and Scottish Government will be permanent institutions will not have any impact on the constitutional status quo.

  • The Scottish Parliament must consent to the UK Parliament making law in devolved areas and the Sewel Convention will be put on a statutory footing

Currently, there is nothing in the Scotland Act preventing the UK Parliament from legislating on matters which are devolved. However, there has been an understanding (the "Sewel Convention") between the UK and Scottish Parliaments that the UK Parliament will not legislate on to devolved matters without the consent of the Scottish Parliament. This convention will now be enshrined in statute. However, this would also have the effect of limiting the sovereignty of Parliament; therefore, it is also unclear whether such a statute would have legal effect.

  • The Scottish Parliament will have all powers in relation to elections to the Scottish Parliament and local government elections in Scotland 
  • UK legislation will give the Scottish Parliament powers to make decisions about all matters relating to the arrangements and operations of the Scottish Parliament and Scottish Government
  • The must be a super-majority for any Scottish Parliament legislation on Scottish Parliament franchise, electoral system and membership
  • Scottish Ministers must be fully involved in agreeing the UK position in EU negotiations relating to devolved policy matters
  • Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the Scottish Parliament

Pillar 2

This pillar is primarily focused on devolving power to introduce measures that boost the Scottish economy as well as transferring responsibility for the administration of a significant number of benefits. The key provisions are:

  • The Scottish Government will be given the administrative power to change the frequency of Universal Credit, to vary the existing plans for single household payments, and pay landlords direct for housing costs in Scotland
  • The Scottish Parliament will have powers over a number of benefits and will now be able to create new benefits in areas of devolved responsibility
  • The Scottish Parliament will have all powers over support for unemployed people through certain employment programmes, although the Jobcentre Plus service will remain reserved
  • The licensing of onshore oil and gas extraction underlying Scotland will be devolved to the Scottish Parliament

Pillar 3

Under this pillar, Scotland is to be given more fiscal responsibility and the shift towards giving Scotland some control over income tax is particularly politically significant. The key provision is:

  • The Scottish Parliament will have the power to set the rates of Income Tax

In particular, they will have the power to control the thresholds at which incomes are paid for the non-savings and non-dividend income of Scottish taxpayers. There will be no restrictions on the thresholds or rates the Scottish Parliament can set. However, all other aspects of Income Tax will remain reserved and Income tax will continue to be collected and administered by HMRC.

The English Question

With the prospect of further powers being devolved to Scotland, a spotlight has once again been shone on the issue of the "English Question", namely whether MPs with seats in Scotland, Northern Ireland or Wales should continue to be allowed to vote on legislation and other matters at Westminster that will only affect people in England. The Conservatives have now intensified moves towards introducing "English Votes for English Laws" and have announced that a Commons vote will be held by December 2014 if the main UK parties fail to reach an agreement.

What next?

It remains to be seen how these proposed changes to the constitution will play out in practice. For Scotland, the next step is for the UK Government to publish draft clauses implementing the heads of agreement set out in the Smith Commission Agreement, which is due to take place by 25 January 2015.

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