Unlocking the lockstep

I'm sure most readers of Syniadau will know this; but for any who don't, the "lockstep" is a provision that devolved income tax rates can only be varied by exactly the same amount in each tax band rather than varied individually.

This is already part of the Scotland Act 2012 (although it has not yet to come into effect) and is something that Westminster wants to impose on Wales too, even though it is against the specific recommendations of the Silk Commission. Part of the reasoning behind this seems to be that Wales should only have the same as Scotland ... which is completely bogus, because the same reasoning would mean that Wales should have the same model of devolution as Scotland and that the same things should be devolved to us as are devolved to them.

The news today is that the Scottish Labour Party have just published the recommendations of a commission they set up about further devolution to Scotland in the event that Scotland votes No in September. The Executive Summary is available by clicking the image:

Interestingly, one of the proposals is that the base from which the devolved portion of income tax is varied should go up from 10p in the pound to 15p in the pound, and that the lockstep should be removed. Except for one small detail ...

The Scotland Act enables the Scottish Parliament to increase or decrease income tax rates in Scotland. In addition to extending this power, we will also introduce new Scottish Progressive Rates of Income Tax, so that the Scottish Parliament can increase the rates of tax in the higher and additional bands. For the first time, the Scottish Parliament will be able to alter both the level of tax and the progressivity of the tax system, but without the risk that a Scottish Government could force tax competition within the UK by cutting only the top rates, to the detriment of public services. Labour in the Scottish Parliament would be able to use these powers if a UK Government did not set fair taxes at these levels.

Yes, under Labour's version of devolution the Scottish Parliament can only increase, but cannot decrease, the higher rates of income tax relative to the basic rate. In other words, it can only enact Labour's policies, not those of any party that might want to cut the higher rates of tax relative to the basic rate. This shouldn't come as too much of a surprise, for the members of the Commission are all Scottish Labour politicians.

One other amazing recommendation in the report is that Labour in Scotland are committing themselves to retaining the Barnett Formula:

The Barnett formula should remain as the funding mechanism for public services in Scotland.

As this aspect of the report was trailled beforehand, John Osmond has already written about it in this article on Click on Wales. I agree with him.

If Barnett is retained for Scotland, it will also have to be retained for Wales, and therefore any chance of replacing it with a new funding formula based on need goes out of the window. It means that Scotland will continue to receive some £4bn a year more than it would get under a needs-based formula, and that Wales will continue to receive some £300m a year less than we would get under a needs-based formula. And our shortfall will increase due to the Barnett Squeeze as spending on public services rises.

The reasons for this are quite understandable. They want Scotland to remain in the United Kingdom, and therefore they have little choice but to say that they have no intention of cutting Scotland's block grant. If they said anything else, it would encourage more Scots to vote Yes in September.

The message to Wales is quite clear: we are of no importance whatsoever.

But perhaps there is another message. Just as Labour in Westminster are not going to take a blind bit of notice of anything that Carwyn Jones as so-called leader of Welsh Labour might want, are they going to take a blind bit of notice of what the so-called leader of Scottish Labour, Johann Lamont, might want? After all, this report is by the Scottish Labour Devolution Commission, not Labour in Westminster. Why should Ed Miliband or Ed Balls be bound by it?

Nearly everyone in Westminster believes that the Barnett Formula is way past its useful life and needs to be replaced, so it would be foolish to think that even a Labour government in Westminster wouldn't seize the opportunity to save itself £4bn a year ... if the Scots vote No in the referendum.