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Nicola McEwen: The Problem of Interdependence in the New Devolution Agreement

When Gordon Brown made his key intervention in the final days of the referendum campaign, he promised a new devolution settlement which would be "as close to federalism as you can have in a nation where one part forms 85% of the population". Evaluating that claim requires a brief discussion of what federalism entails.

Federalism provides for the constitutional division of sovereignty between a central, or federal, level and the federated units of a state. It provides for territorial self-rule, reflected in the formal constitutional division of legislative, executive and fiscal powers, such that each level has genuine autonomy in some policy spheres. In all federal systems, self-rule is balanced by a degree of shared rule, which enables the constituent units to participate in the decision-making processes at the federal level. In their Regional Authority Index, Hooghe et al identified four measures of shared rule: (i) the extent to which regional representatives co-determine national legislation; (ii) the extent to which regional governments can co-determine national policy in intergovernmental meetings (iii) how far regional representatives can co-determine the distribution of national tax revenues; and (iv) whether regional representatives co-determine constitutional change. Federal systems come in many shapes and sizes. They vary in the level of self-rule the constituent nations and regions enjoy. They may be symmetrical or asymmetrical, both with respect to the size and population of the constituent units or the distribution of powers between these units. They differ, too, in both the level of shared rule and the institutional mechanisms through which it is expressed.

The UK is sometimes described as a quasi-federal state, and certainly has some federal features. The Scottish Parliament, in particular, has a relatively high degree of self-rule, at least on a par with regions in many federal states. The recommendations in the Smith report will increase Scottish self-rule further. But the UK is not a federal state, nor is it likely to become one. Although the referendum has intensified debates over English votes for English laws, city regionalism in England, and revisions to devolution in Wales and Northern Ireland, these remain separate, piecemeal processes – politically-linked but not constitutionally-linked – with little coherence between them or a coordinated effort to redesign the constitutional nature of the state as a whole.

Even with respect to Scotland alone, the original devolution settlement did not diminish the sovereignty of the Westminster parliament. Passing Westminster legislation underlining the permanence of parliament and giving statutory weight to the Sewel convention is likely to be of more symbolic than legal significance (though see Tierney for a constitutional-legal view). Moreover, the high degree of self-rule stands in stark contrast to very low levels of measurable shared rule. Shared rule is virtually absent in law-making, with no region-specific input into UK legislation. With respect to executive and fiscal control, a machinery of intergovernmental relations has evolved in the UK, but it is weakly institutionalised and dependent upon good communication, goodwill and mutual trust. UK intergovernmental relations are also hierarchical, with no scope for co-decision of national policy-making, or co-decision over the distribution of national taxes. Only on constitutional reform has a significant measure of shared rule developed. Although the constitution remains a reserved matter, the convention that the Scottish Parliament’s consent is required for any changes to the Scottish devolution settlement was reinforced by the precedent set by the Scotland Act 2012.

The weakness of shared rule on the other measures, however, is especially problematic in view of the new constitutional settlement embodied in the Scotland Act 2012, and that expected to emerge in the wake of the Smith report. Both made income tax an area of overlapping competence. Smith recommends the devolution of tax rates and thresholds on earned income, but the broad policy framework of income tax remains reserved, and in both this framework and the rates, the degree of policy interdependence will be substantial. New bilateral intergovernmental forums have emerged, most notably the inter-ministerial Joint Exchequer Committee, and the complex set of interactions among the officials whose work underpins and informs the JEC. However, the focus of these networks, to date, have been in implementing the new powers. It is not at all certain that they will have a permanent role in managing policy interdependence or provide an avenue for Scottish influence over those areas of reserved policy which will directly impact upon Scottish competences.

The recommendations of the Smith Commission on social security also create new policy interdependencies. Decisions taken by UK social security ministers will affect in fundamental ways new areas of devolved competence. The Smith Report called for joint intergovernmental arrangements for the oversight of the development and delivery of Universal Credit, given its recommendations that the Scottish Parliament be given an opportunity to vary the housing element and delivery of UC in Scotland. But joint intergovernmental working is arguably necessary for those areas and benefits. For example, UC affects other benefits, including Disability Living Allowance which is to be devolved. The conditions attached to Job-Seekers Allowance will intervene directly with the back-to-work employability schemes to be devolved to the Scottish government. These interdependencies will create spill-over effects, ensuring that the decisions taken by one level of government will have repercussions for the other. Similar interdependencies will emerge in light of many of the other devolution recommendations of the Smith Commission.

These new interdependencies were recognised within the Smith report. In his introduction, Lord Smith’s noted:

Throughout the course of the Commission, the issue of weak inter-governmental working was repeatedly raised as a problem. That current situation coupled with what will be a stronger Scottish Parliament and a more complex devolution settlement means the problem needs to be fixed

The report itself called for the “reform” and “scaling up” of intergovernmental machinery “as a matter of urgency”, including “new bilateral governance arrangements which will be required to oversee the implementation and operation of the tax and welfare powers”, as well as a new memorandum of understanding. Clearly, changes to multilateral arrangements would be a matter for the UK government and all devolved administrations. But existing multi-lateral forums, like the Joint Ministerial Committee, will be inappropriate for managing the new intergovernmental challenges facing principally the Scottish and UK governments as a result of a new and more complex devolution settlement.

Yet, there are inevitable obstacles here. Even if the UK government consented to new formal and informal bilateral arrangements to manage overlapping Scottish/UK competences, it is unlikely that the Scottish government would be given more than a consultative role on UK policies on tax, welfare and other areas of concurrent jurisdiction. To allow the Scottish government to shape or co-decide policies affecting the whole of the UK would be politically problematic south of the border, likely to be portrayed as giving Scots undue influence. And yet, it is here where the dynamics of the Scottish self-government debate may be determined. Consultation is a pale imitation of co-decision. Failure to fix lack of shared rule – or to recognise and act upon the interdependencies in the new settlement – will have consequences for territorial politics. If the capacity to develop policies for Scotland is undermined by UK decisions over which the Scottish government has little or no influence, it may fuel the demand for a stronger, less dependent, form of Scottish self-government.

Nicola McEwen is Professor of Territorial Politics at the University of Edinburgh

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31 December 2014 08:31

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