Brown’s plan a recipe for disaster

Friday, 14 March 2014 17:14

8 Comments

  By George Kerevan
 
GORDON Brown is that rare animal in politics: a card-carrying intellectual who likes ideas. I say this as a compliment. Unlike the Tories, Labour has always attracted the big brains. The list is almost endless: think Harold Wilson, Denis Healey, John Mackintosh, Richard Crossman or Anthony Crosland.

Curiously, most of this bunch hid their intellectual brilliance behind a façade of thuggish pragmatism. This is explained partly because Stalinist Labour distrusts middle- class intellectuals as being unreliable elements in the class war. The Scots, however, are still brought up in the spirit of the Enlightenment. We like to intellectualise and think in universal systems. Which brings us back to Gordon Brown and his (latest) offering in the devolution stakes.

In evaluating any new proposals from Mr Brown or Menzies Campbell, the Liberal Democrat elder statesman, we should remember that the main Westminster parties clubbed together to keep a second question on devo-max from appearing on the 18 September referendum ballot form. They were more interested in isolating the SNP than in meeting the popular demand for more powers for Holyrood.

Also remember that for 13 years Gordon Brown ran Britain, admittedly with some help from the man next door. He could easily have delivered the sort of devo-max he now proposes – but didn’t. True, Brown helped engineer the first round of devolution in 1997. But he was careful to ensure that Westminster (through the Secretary of State for Scotland) can still veto any decisions taken by Holyrood. The lesson of G Brown in government is that he is a control freak.

This time round, Gordon Mk II is proposing a written UK constitution that entrenches the existence and powers of the Scottish Parliament, preventing its future abolition and any countermanding of its decisions. There will also be more devolved powers, including over income tax. Brown’s model sees a quasi-federal UK in which Holyrood is given a measure of sovereignty. Westminster will have a new constitutional role as “referee” – ensuring resources are pooled equitably to provide for the common defence and social security.

This vision is not without its attractions. But it fails at the first hurdle: where does England fit into this quasi-federal vision? Brown was careful not to suggest an elected English chamber. But unless English voters have their own parliament, there is no machinery for the different parts of the UK to decide on individual economic and social priorities – so how do we pool or share anything equitably? And if Westminster continues to operate as a de facto English Parliament, it can never become the UK national “referee” Brown envisages.

Gordon Brown is proposing an unstable, halfway house between the asymmetric devolution of the present and the full-bloodied federalism offered by the Lib Dems. Which means Brown’s project will never happen. Most likely, English MPs – including Labour ones – will oppose it on the grounds it yields Scotland (and presumably Wales and Northern Ireland) more influence, while offering nothing to English voters.

Even if implemented, it would not be long before English MPs at Westminster use their inbuilt majority to “adjust” the financial pooling arrangements in their favour.

A proper federal system, with England split into regional parliaments, would be more stable. It would also allow a proper financial pooling arrangement; eg rich London would inevitably be called on to foot more of the bill to help the flooded English West Country. But I can’t see any appetite in the Labour or Tory parties to federalise England. And I certainly can’t imagine Mayor Boris in London accepting constitutionally entrenched “fiscal pooling”, whether proposed by Gordon Brown or Menzies Campbell.

Gordon Brown’s ideas on devolving income tax to Scotland are also unworkable in practice. Typically, as befits the man who turned the UK Treasury into a fortress for the centralisation of power, he explicitly rejects devolving corporation tax on the spurious grounds that this would encourage companies to migrate between tax jurisdictions and promote a “race to the bottom” in tax rates.

Can I remind readers yet again, that the US and Germany have – as a matter of course – devolved substantial powers to their federal parliaments to tax companies, without the economic roof caving in. Most firms serve local markets and are not footloose – which is precisely why you should set company taxes locally, to match domestic economic conditions. This promotes growth better than “one size fits all” taxation.

If only income tax is devolved – and substantial control over income tax is already coming to Holyrood in 2016 – there will be financial Armageddon. In the next Westminster parliament, whoever is chancellor is going to have to cut at least £25 billon more per annum from public spending. This will result in pressure from non-Scottish MPs to abolish the Barnett Formula, which already provides (de facto) the fiscal pooling arrangements Gordon Brown wants to entrench. At the very least Barnett will be “recalibrated” through a “reassessment” of Scotland’s spending needs.

Either way, Scotland will suffer greater cuts per capita than other parts of the UK. We will be told that if Scots want to maintain higher levels of public spending than the rest of the UK, they have it in their own power to raise income tax. But without the full control over fiscal policy needed to grow the economy, this is a poisoned chalice. Gordon Brown is not offering Scotland fiscal autonomy. He is offering us a limited right for the state to spend more of our money without the sovereignty needed to excite aspiration and expand wealth creation in Scotland. It is a poor choice.

A No vote on 18 September will not bring devo-max and certainly not UK federalism. In that event, Gordon Brown’s latest constitutional mumbo-jumbo will end up in the Commons wastepaper basket because non-Scots MPs have other political priorities. The truth is that every grudging concession granting devolved powers to Scotland has been the result of agitating for full independence. That game ends on 18 September. Make your choice.

Courtesy of George Kerevan and the Scotsman