Powers for a purpose but whose and what?

Scottish Labour declared the focus and approach for its Devolution Commission to be about “Powers for a Purpose”.  But whose and what purpose?

Much has already been written about the timidity of the proposed extension of powers – not least by Labour commentators – with the findings failing even to live up to the dizzy heights of expectation created by the interim report. There are inherent contradictions too, in terms of what will be devolved and what will be left behind. For me, one of the most glaring is on the devolution of attendance allowance but not the non-contributory elements of employment and support allowance. Apparently, there “is an overriding argument for reserving” this it is an “explicitly redistributive” benefit.  Set aside that support for disabled people and those with long-term health conditions was never designed to be redistributive, the Executive Summary declines to say what that over-riding argument is. I’m sure if I wade through the full report I’ll find it, but I’m struggling to think of a coherent one.

The Executive Summary states, in recommending devolution of attendance allowance, a “connection between attendance allowance and health and social care policies”.  Thus, devolving this benefit would give the Scottish Parliament the means, or at least some of them, to meet the ever-rising costs of free personal care for older people by top-slicing the pot or, if it chooses still to give over the whole amount to pensioners, to means test its application so that only those with limited means to pay local health and social care charges benefit the most or, simply to allow it to continue as a universal benefit, to be recouped by local authorities through home care charges and the like. Yet, the non-contributory element of employment and support allowance, which is largely payable to disabled people and those with long-term health conditions of working age, would provide funds to be more creative about how to meet their care costs too. Or even allow Scottish Labour to extend free personal care to younger age groups.  On a policy level, devolving one and reserving the other makes little sense.  Not for a coherent policy purpose then.

The proposals fail a more fundamental constitutional test: they do not meet the expectations of the Scottish people. It’s not quite “devonano” or my favourite, “devoheehaw” but it is “devolimited”. And if the intention, even on an unwritten or subconscious level, was to provide an offer which stops the inching in the polls of Scots towards a yes vote in September, it’s hard to see that it will be enough.  Because Scots want more: all the public opinion surveys which have asked this, show so.

Scottish Labour could and no doubt, will argue that saying they want full control over welfare and benefits in Scotland is sweeping and without proper consideration of the complexities of decoupling things like child benefit, winter fuel payment and carers’ allowance. Voters’ eyes will glaze over as the party explains just how so – well at least I hope it does in the 300 page tome. But that is missing the point. The Scottish electorate, for a number of years now, has set the bar on its aspirations for further devolution and Scottish Labour has failed the test.

Just as it has on electability. The Scottish electorate has fallen out of love with the party it has voted faithfully for, for decades and in some communities, generations. On a purely political level, there is much to like for those well to the left on the political spectrum, myself included. It’s well past time that the better off were required to pay their fair share. Higher earners should pay more tax; the few on stratospheric salaries and income in Scotland should pay more still. The limited recommendation to upgrade property taxation to make it fairer suggests the creation of new property bands for the council tax, presumably at the top end. [Which is so unambitious that it was proposed by Jack McConnell in the 2007 election]

There are many Labour voters who like the idea of soaking the rich. And if the intention of the proposals is to shepherd back into the fold, Labour heartlands, then they will probably achieve that. But the SNP winning constituencies like Anniesland, Clydebank, Airdrie and Coatbridge in 2011 was always an aberration. Recent by-election results in Dunfermline and Cowdenbeath suggest that these lost sheep will probably return of their own accord.

But regaining heartlands is not enough to win a Scottish election for Labour. It must find the way to appeal to those voters in those constituencies who will be nearly a decade apart from the party in voting terms. Breaking the habit the first time is one thing, reinforcing the break a second time means forming a new voting habit on the third occasion becomes much more likely. And there is little to prevent that happening with these proposals.

It does not matter that most of the voters and constituencies Scottish Labour needs to target have barely a handful of big hooses and high heid yins. It’s the aspiration that counts. And there are many who having bought their council house and seen their weans off to university and into good jobs, fancy cars and hooses with an en suite in nice communities are by definition, families who through striving and application believe in the ability to better themselves. Ignoring the detail that they are unlikely to earn the levels at which it all kicks in, they will see Labour’s tax proposals as punishment for daring to get on.

This matters because Scotland’s middle class is burgeoning. Still. It has paid little in the way of the price of austerity, as has been the case elsewhere in the UK. The no compulsory redundancy policy for the public sector has helped, as has the raft of universal policies – the something for nothing accusation applies just as much to those who could pay as those who can’t.

Appealing to aspirational Scots to win elections is something the SNP grasped two Scottish elections ago. By this report, it seems Scottish Labour still hasn’t got the hang of it. Building an electoral manifesto around proposals which hike up income and council tax for the better off won’t change their electoral fortunes much. It’s almost as if Labour never wants to be elected again.

At least in Scotland. Because the timidity of the power transfer and the focus of the tax proposals point to only one real purpose. Winning the UK election in 2015.  The whole premise smells of a compromise being brokered which buys off grumbling MPs, limits the ambitions of those more in thrall to devolution and crucially, provides the basis of UK Labour’s platform for 2015.  The UK party wouldn’t want recommendations coming from Scotland which undermine their bid for power at Westminster nor create the opportunity for awkward questions to be asked if divergence on key policy streams like tax, welfare and immigration could be discerned. The Powers for a Purpose boil down to being what the party at UK level was prepared to thole and willing to deliver if in government after 2015.

These powers are not for Scotland’s benefit, but Labour’s. They are not powers for a purpose, except that the purpose is power for itself. And in this, Labour’s proposals for more devolution will fail to stem the flow, towards a yes vote in September and towards its core vote becoming SNP voters, not just for the odd election but for keeps. Because they’re no daft and they know when they’re being sold a pup.

 

Time to talk tax

It is remarkable that tax hasn’t featured more in the referendum debate.

Last week saw its first real incursion into the headlines, initially through the First Minister’s response to a question at his New Statesman speech and then by Johann Lamont asking about it at First Minister’s Questions.

But it was hardly a full exploration of all the tax issues, focusing as it did on whether or not the top tax rate in independent Scotland would be raised to 50p.

The First Minister advised that he has no wish to set independent Scotland at a tax disadvantage to the rest of the UK. Less reported was his reference to the White Paper commitment to not make any tax changes immediately after independence. The reason for this is that tax is a policy issue upon which parties should set out their plans in election manifestoes. Which is as it should be.

UK Labour has already pledged to reinstate the top tax rate, so Scottish Labour saw an apparent opening and seized it. Conveniently forgetting in the process that its conversion to taxing rich people more has been more of an oppositionalist exercise than one it practised while in government. Yes, it did raise the rate but only at the fag end of thirteen years in power. It was in force for precisely 36 days before they lost the 2010 UK election.

And while this was clearly comfortable territory for Lamont, her inability to switch from the script of calling out the SNP as Tartan Tories was telling. The fact that the First Minister joined her in condemning the Tory-Lib Dem cut and aligned himself with comments made by Ed Balls on its inappropriateness in the current climate rather diluted her point.

But we are dancing on a pinhead here. Only a relatively small number of people, particularly in Scotland, pay the higher rate of tax. Surely of much wider concern and interest to most voters is what will happen to the tax they all pay.

Given its all-pervasive influence on our lives and how the types and levels of tax permeate nearly everything we do, it is curious that so little attention has been paid to this vital issue in the debate to date.

Perhaps that’s because the proposals in Scotland’s Future are plausible, workable and sensible. And even likely to encourage more to vote yes.

Labour is wont to seize upon the commitment to lower corporation tax as proof of the SNP being a neo-liberal, big business loving entity which wants to reinforce unfairness in the tax system. That lazy analysis ignores all that is said on pages 117 to 123 of the White Paper.

The section on tax makes plain a commitment to provide independent Scotland with a more efficient tax system predicated on key principles of simplicity, neutrality, stability and flexibility.

These point to a quite different future on tax. One which sweeps away the complexities and inefficiencies that successive UK Governments have enabled through decades and indeed, centuries of layering and applying without removing and reforming.

Even with Gordon Brown’s attempts to simplify income tax when he was Chancellor, legislation on UK tax runs to over 10,000 pages with over 1,000 exemptions. These, in particular, allow for tax avoidance and a whole industry employed in finding them and maximising them for a select few rich enough to employ their services.

So which would have the bigger impact on our country’s collective tax take and the perception of paying dues – removing myriad opportunities to avoid tax or paying slightly more on declared and visible income?

As Alex Massie kindly pointed out to me on twitter, both Alex Salmond and John Swinney have made speeches and given interviews in which they emphasise the no tax rises in independent Scotland position. But that safety first approach is only part of the story. The White Paper makes clear that in the longer term, independent Scotland will do different on tax than the UK: independence provides the opportunity to “design a Scottish tax system based on specific Scottish circumstances and preferences”.

That’s the bit of the narrative Scottish Labour chooses to ignore, the bit that Better Together would rather Scottish voters didn’t know and the bit that the Scottish and indeed, UK media, both left and right leaning, keeps hidden from view.

And that’s because many in Scotland, including undecided voters, are appalled that the gap between haves and have-nots continues to grow. Indeed, austerity has shifted a considerable number of haves into having far less, making them acutely aware of the inherent inconsistencies and unfairnesses in our tax system and elsewhere in our economy. The failure of any UK party to offer anything which punishes the financial institutions for the mess we are in nor attempts to reign in the worst behaviour of buccaneers adds grist to their mill.

If they knew of the existence of a fairer future on tax with independence, it might encourage more to move to yes. It’s exactly the kind of issue the Scottish Government and Yes Scotland should be encouraging all their grassroots supporters to be having conversations with their friends, family and neighbours about.

No level playing field on tax

A doddle through the detail of the budget reveals much.  Tucked away in the full document, beyond all the nice graphs, bar charts and blethers, sits the blow by blow account of each and every measure.

Chapter 2 on budget policy decisions is illuminating.  Take points 2.58 and 2.59.  These little nuggets make plain that any football players and officials earning money when the Champions League Final comes to be played at Wembley next year will be able to do so tax-free.  They won’t have to pay any UK tax on such earnings.

Likewise, following discussions between the UK and Scottish Governments, any athlete earning money as a result of a performance at the Commonwealth Games in Glasgow in 2014, won’t be taxed on it.  As was pointed out to me, these games are supposedly amateur so where does the earning potential come from?

Nonetheless, I don’t suppose many of us will bemoan an athlete from the developing world being gifted a car or a house by their government/sheikh/dictator to congratulate them on winning gold or breaking a world record.  We might feel a bit uncomfortable with it but every country needs its heroes and heroines and grand gestures.  We will all delight in such worldclass performances, not least because they took place in oor ain dear green place.  We’ll all be proud.

However, the exemption appears only to apply to non-resident athletes, so presumably Sir Chris Hoy and others, if they make any dosh from doing well at the Commonwealth Games – which I’m not at all sure would be the case – will have to pay tax.  It’s unequal treatment which seems a mite unfair.

Still, we aren’t talking huge sums here and no doubt like many others, our top-earning athletes from these shores will have all manner of tax minimisation measures in place.

But the idea of letting some of the highest paid athletes, professional footballers, off the tax hook does stick in my craw.  Admittedly, they are here for one night only.  Such exemptions are bound to be part of the deal when UEFA chooses its finals venues and will be commonplace around Europe.  But you only have to look at the state of our, and other countries’, finances to realise that even a small bonus from a big football game would help.  Even just to send the correct message.

We already know from the Rangers’ debacle that some highly-paid footballers who ply their trade in Scotland are avoiding their fair share of tax.  One supposes that Rangers learned and copied the scheme from other clubs around Europe:  I’d be very surprised if they worked this one out all by themselves.  So, it means that in most countries, the highest earners in football are paying very little tax in the country they currently call home.  It doesn’t take a mathematical genius to guesstimate the level of earnings and potential level of tax being avoided.  Answer – it’s a lot.

Why should footballers get away with paying very little tax when the rest of us have to?  And indeed, when most other visiting sports stars have to?

Presumably, the exemption for the Olympics is already in place.  Hopefully, Six Nations rugby players, international swimmers, cyclists, track athletes, F1 drivers, tennis players – and all the others who come every year to play in tournaments and championships, events and meetings – all pay tax on earnings from their endeavours.  So why the differential treatment for some of the richest of all in football?

Interestingly, there was no such exemption granted for the Ryder Cup in 2014 in Scotland.  Is that because the exemption has already been granted, will be sought next year or won’t be afforded?  Someone on twitter suggested that overseas golfers are not given a bye on tax and that this is an ongoing issue.  It makes it hard, for example, to attract the big name players to the Scottish Open and other tournaments.  That, one presumes, is only one reason but it will be an important one.

I appreciate that this piece might seem like a bit of a treatise on the need for all sport stars to be made exempt from tax on all earnings on these shores.  It’s not.  But currently, the system does appear to be unfair, with exemption given to some and not to others.  Though maybe I’m just being naive;  maybe it is all immaterial, and they all have offshore trusts and companies and the like and get away with paying very little tax anywhere.

But it does seem like one rule for the very richest, and another for the rest of us.  And it seems to be an area ripe for investigation to answer mine and no doubt many other questions.

Ultimately though, if we want to level the playing field on tax and sports earnings, they should all just have to pay the going rate on everything they earn while in the UK.  The same as us mere mortals do: that to me would seem like the fairest of fair play notions.