devolution speech

I also welcome the decision made in Scotland by the Scottish people, by an overhelming majority of over 400,000 people. If ‘Yes’ had succeeded, Scotland would have needed to create a new currency, perhaps called the Scottish pound. New Scottish passports would have needed to be created. Scotland would have had to reapply to the European Union for membership with the near certainty of rejection. A ‘Yes’ vote in Scotland could have led to the Balkanisation of the whole of western Europe. Market reaction would have been the opposite of a rise in the pound and share prices. Last year, I led a backbench debate on the reserved powers model. I do not want to repeat the long list I gave of the countries in Europe that have embraced the reserved powers model, so, suffice it to say, it is the preferred model across Europe. Britain, when it set up devolution, embraced the asymmetric devolution model, based on what had been done in Spain. Catalonia had far greater powers than almost anywhere else in Spain, the Basque country had greater powers and some of the other regions had substantially fewer. Spain is now moving towards symmetry. In recent times, the difference between the powers devolved has become reduced as further responsibility has been devolved to all regions.

 

If we look at the United States of America, as we often do on many things, we see that state size varies from California with 38 million people and Texas with more than 26 million people to Vermont with just over 600,000 people and Wyoming with less than 600,000 people. The last two, as I always point out, are smaller than the Swansea city region. What do not vary are state powers. The number of senators they have also does not vary. I recently outlined my support for the Northern Ireland model, under which section 4 of the Northern Ireland Act 1998 allows the Secretary of State to devolve areas listed as reserved matters in the Act provided that a resolution has been passed by the Northern Ireland Assembly. This has stopped the big bang method of everything being devolved in one go. When two thirds of the Members of the Northern Ireland Assembly wish to have items devolved to them, a vote by that body moves those powers to being devolved. Has it worked? Yes. Additional legislative power relating to policing and justice matters were devolved to the Northern Ireland Assembly last year following a resolution of that body.

The English question will not go away and cannot be answered by creating first and second-class members of the Westminster Parliament. It will have to be addressed, which is one of the reasons why we need a constitutional convention to end asymmetric devolution and deal with the problems in England. It needs to be made up not just of the usual suspects. It needs to involve interested individuals as well as politicians and academics. We also need to decide what should be provided in each sphere of government. May I take you back to a word that, in 1990s and the early 2000s, was very popular: ‘subsidiarity’? The subsidiarity principle is based on the idea that decisions must be taken as closely as possible to citizens. The European Union brought it in. The principle says that the European Union should not undertake action, except on matters for which it alone is responsible, unless EU action is more effective than action taken at national, regional or local level. We need to decide what should be provided where. Devolution cannot stop at Cardiff bay. It cannot just be a case of moving powers from Westminster to Cardiff bay and then stopping. I am going to suggest a novel approach: we decide in which sphere of government a decision is best made and then allow that sphere of government to deal with it. It may be Westminster, it may be here and, dare I say it, it may actually be local government. We need a showing of mutual respect, not just by Westminster to the Assembly but also by the Assembly to principal councils and by principal councils to community councils. In 10 years’ time, we need to look back and be able to say that we have most, if not all, decisions made at the appropriate level. Would anyone say that we are there today?

they meant it

From the BBC website

Meanwhile RBS confirmed it would not be moving its registered head office now that independence had been rejected

"The announcement we made about moving our registered head office to England was part of a contingency plan to ensure certainty and stability for our customers, staff and shareholders should there be a 'Yes' vote," the bank said.

"That contingency plan is no longer required. Following the result it is business as usual for all our customers across the UK and RBS."

In a statement, Lloyds Banking Group said: "The group is proud of its strong Scottish heritage and remains committed to having a significant presence in Scotland. We remain fully focused on supporting households and businesses in Scotland as well as right across the rest of the UK."

if Scotland votes yes, what happens next

Well the first thing we can be certain of is that the Scottish Nationalist will have a big party over the whole weekend to celebrate the historic decision but when Monday morning comes what happens .

Firstly the time table for Scottish independence is far too long and will have a serious economic impact possibly pushing the whole country including Scotland back into recession. Surely the most sensible situation would be for Scottish independence to coincide with the start of the 2015 financial year.

Scotland would need to create a central bank and a currency which I assume will be called the Scottish pound and arrange for sufficient to be printed so that they can arrange to exchange British currency for Scottish currency at the banks. I would also expect the currency to start at equal value and then the currency markets to decide their relative values.

The Scottish passport office would need to start creating Scottish passports to replace the British passport that people travelling currently use. A decision on whether to share embassies with Scottish and British sections or to have separate buildings will have to be made.

The armed forces would need to ensure that all Scottish servicemen were in areas that were going to Scotland and that non Scottish servicemen moved the other way. In terms of the infantry equipment, air force and navy Scotland’s share will need to be calculated and sent to Scotland.

In terms of national assets and debts they will need to be shared out and the simplest way would be on a population basis but if such an agreement cannot be reached then arbitration will need to be used.

The easiest way to set the first year taxation and benefit levels would be to use the levels set at Westminster but in subsequent years as a sovereign country it would obviously set and collect its own revenue and have its own benefits system.

Those companies that wished to relocate either into Scotland or out of Scotland could then issue their 90 day redundancy notices and have time to either relocate or employ new staff at their new centres.

Scotland could apply immediately to become a member of the European Union and seek any opt outs that Britain has got that it wishes to continue with.

Divorce is never easy but a quick clean break would be the best way.

a Welsh treasury

As taxation and borrowing powers are devolved to the Welsh Government then we will obviously need a Welsh Treasury to deal with these changes, but what will it actually do.

There are two distinct types of public sector treasury that we have in Britain, the treasury at Westminster and the treasuries at Local authorities.

The treasury at Westminster carries out 5 main functions, central co-ordinating and accounting department, a ministry of finance, economics department, foreign economic policy agent and a policy driver.

Local authority treasuries act as tax collectors, control borrowing including debt management, manage expenditure and invest reserves. Effectively they fulfil the first two functions listed above of the Westminster Treasury.

Currently the Finance Department in the National Assembly acts as a central co-ordinating and accounting department where it distributes the money received from the Treasury at the beginning of the financial year and via a series of supplementary budgets allocates additional funding during the year. What it effectively does is receive income from the treasury and distribute it between the different assembly directorates for them to spend.

What a Welsh Treasury will not become is a foreign economic policy agent because that will be still be carried out by the Westminster Treasury or an economics department because the main macro economic policy will also still be set at Westminster. What we do not want it to be is a policy driver, with Treasury policies over riding departmental policies as appears to happen at Westminster.

It will have more similarities with the treasury function of a Council than it will with the Treasury functions at Westminster. It will continue to manage expenditure but will have added to that raising part of the income and managing debt. Also it is inevitable that investing and managing any reserves will become part of the duties of a Welsh Treasury.

Whilst initially the amount of money raised via taxation by the Welsh Government, outside of the block grant, will be relatively small if income tax is either wholly or partly devolved that will lead to a far larger proportion of the Welsh Government income being raised in Wales.

I believe there is a definite requirement for a Welsh Treasury to control debt including debt management, manage investments and income as well as distribute money. What we need to avoid is a Treasury that also wants to be a policy driver setting its own policies and driving Government policy.