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i

YOUR SCOTLAND YOUR VOICE

A NATIONAL CONVERSATION

I ASK EVERY SCOT TO PAUSE

AND REFLECT, NOT JUST ON

WHAT KIND OF COUNTRY WE

ARE, BUT ON THE KIND OF

COUNTRY WE COULD BE, THE

KIND OF COUNTRY WE SHOULD

BE. I AM COMMITTED TO A NEW

CHAPTER IN SCOTTISHPOLITICS, ONE IN WHICH THE

STORY AND THE SCRIPT IS

WRITTEN BY THE PEOPLE AND

NOT JUST BY THE POLITICIANS.ALEX SALMOND, FIRST MINISTER OF SCOTLAND, 14 AUGUST 2007

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A National Conversation – YOUR SCOTLAND, YOUR VOICE

iii

No man has a right to fix the boundaryof the march of a nation; no man has a right to say to his country, “Thus farshalt thou go and no further”.Charles Stewart Parnell (1846-1891)

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iv

Deputy First Minister and Cabinet

Secretary for Health & Wellbeing

Scotland has a long and proud record ofinnovation and excellence in health andhealthcare, with internationally recognised

medical schools alongside world-renownedclinical and scientific research. Our NationalHealth Service is one of which we can similarlybe proud. By wisely using already wide rangingdevolved responsibilities for health andwellbeing on behalf of the people of Scotlandwe have changed the landscape of andpotential for improving health and healthinequalities. Huge strides have been made inreducing waiting times and our strategies toimprove coronary heart disease, stroke and

cancer services, among others, have broughtwith them significant improvements forpatients. What has been done is testament towhat can be achieved and I am certain thatwith full powers and responsibilities in anindependent nation we can and will achievemuch more.

“

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The current constitutional settlement places limits onScotland’s ability to fully capitalise on the economicbenefits our education and skills system offers us. In

particular our employment and benefits system mustbe structured to help as many people as possible fromall parts of Scotland into sustainable employment. This

can be best achieved by placing the needs andexpectations of the people of Scotland at the heartof its design and operation.

“

”Cabinet Secretary for Education and

Lifelong Learning

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Scotland’s laws and justice system areunique. They have been established for

centuries and been maintained through 300years of an incorporating union. Under

devolution with justice mainly devolved theycontinue to serve Scotland in a unique way

appropriate to our country and its people.

We have confidence in the people ofScotland and they can be proud of

Scotland’s achievements. We want theScottish Government to be able to gofurther in the interests of the Scottish

people. We want to be able to tackle allaspects of crime and its causes.

“

”

Cabinet Secretary for Justice

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Using our existing but limited powers,the Scottish Government has deliveredmuch progress for our rural communitiesbut there are numerous examples where

the influence of an independent countrywould have brought much greaterbenefits.

When I attend European negotiationsand witness the success of other similarsized nations, I appreciate more thanever how having our own voice in Europewould ensure the distinctive needs of ourfarmers, fishermen and our environmentwould be recognised.

“

”Cabinet Secretary for Rural Affairs and

the Environment

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Minister for Parliamentary Business

We have legislated to remove theconfusion of combined polls anddeveloped proposals to clarify theconduct of Scottish elections.Responsibility is currently split betweenHolyrood and Westminster. GivingHolyrood the responsibility for all

elections in Scotland would bringaccountability closer to the voter andrestore confidence in the democraticprocess. We would lower the voting ageto 16 and introduce STV for all electionsso extending participation anddemocracy in Scotland.


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The National Conversation has demonstrated thatthere is a tremendous appetite for debate about

Scotland’s constitutional future. Across thecountry, people have considered and discussed a

range of constitutional choices, from expandeddevolution to independence. There are a wide

variety of options to reform our constitution, butmost people agree that the status quo is not

delivering for Scotland. As Minister for Culture,

External Affairs and the Constitution, I am

immensely proud of Scotland’s achievements sincedevolution, but I believe that independence

presents the best opportunity for Scotland toflourish. It would enable Scotland to thrive

internationally and culturally; Scotland wouldconduct itself on the world stage as an equal with

other sovereign states. It would also give Scotlandresponsibility for all the policy tools required to

promote sustainable economic growth.

“

”Minister for Culture, External

Affairs and the Constitution

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xviii

CONTENTS

FOREWORD 1

1. THE NATIONAL CONVERSATION ON SCOTLAND’S FUTURE 3Introduction 3Current constitutional arrangements 3Options for the future 4

The National Conversation 5

2. THE OPTIONS FOR SCOTLAND’S FUTURE 15Introduction 15Current position 16Commission on Scottish Devolution 16Full devolution 17Independence 17

3. A WEALTHIER SCOTLAND 21Overview 21Economic and fiscal policy 23Business and enterprise 39Migration 50Broadcasting 53Conclusion 57

4. A FAIRER SCOTLAND 59Overview 59Welfare and benefits 60Housing and regeneration 64Equal opportunities 68Conclusion 69

5. A GREENER SCOTLAND 71

Overview 71Environment, agriculture and fisheries 72Transport 82Energy 85Conclusion 89

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6. A HEALTHIER AND SMARTER SCOTLAND 91Overview 91Health 91Education and children 96Conclusion 97

7. A SAFER SCOTLAND 99Overview 99Criminal and civil justice 100Judiciary and the Courts 102Human rights and responsibilities 104Conclusion 105

8. A STRONGER SCOTLAND 107

Overview 107Scotland in the world today 108Scotland’s future role 108Conclusion 122

9. A MODERN SCOTLAND 125Overview 125Constitution and government 126Elections 131Conclusion 133

10. CHOOSING SCOTLAND’S FUTURE 135Introduction 135Involving the people 135A national referendum 136

The next step 139

ANNEX A NATIONAL CONVERSATION EVENTS 140

ANNEX B ORGANISATIONS CONTRIBUTING TO THE NATIONAL CONVERSATION 144

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1

FOREWORD

The Rt Hon Alex Salmond MSP MP, First Minister of Scotland

Over the last two years more than 15,000 people have taken part in theNational Conversation on the future of Scotland: at public meetings, in printand online. There have been other significant contributions: from experts,academics, journalists and think tanks on a range of subjects such as fiscal

autonomy, energy and the environment, and Scotland in the world.

Two things are clear. First, that there is a demand in Scotland to considerand debate our national future. Second, that the current arrangements donot meet the ambitions of our nation. Ten years on from devolution, almostall agree that it is time to expand the responsibilities of our Parliament.

Ten years ago Donald Dewar said the Scottish Parliament was “a newvoice in the land, a voice to shape Scotland, a voice above all for thefuture”. He was right. But our Parliament is incomplete, unfinished. Its voice

is muted or silent in many areas vital to our nation.

I believe that Scotland cannot fully flourish until it takes responsibility for

itself: for its economy, taxes, and spending; for its rich and its poor; for itsnatural resources and its waste; for its old and its young; for its roads andits seas; for its place in the world, for peace and war, for ties of friendshipand common interest with the other nations of the earth.

These are the matters with which normal, independent countries dealevery day. They know the challenges and opportunities that come withthat independence, as well as the responsibility.

Scotland and its people are more than capable of doing so, too. We wouldbenefit from the opportunities. I believe it is time that Scotland reclaimedits place among the nations of Europe and the world. Other people havedifferent views. It is now time for the voice of the people to be heard – inthe referendum on Scotland’s future we intend to hold in November 2010.

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2

I think the idea of a NationalConversation is hugely effective inbringing people within the democraticexperience.(Glasgow Summer Cabinet, 1 September 2009)

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INTRODUCTION

1.1 In September 1997 the people ofScotland decided in a referendum toestablish a Scottish Parliament,exercising their sovereign right to

determine the form of their owngovernment.1 In the samereferendum the people supportedtax varying powers for theParliament.2 On 1 July 1999 the

Scottish Parliament was formallyvested with its full responsibilities.

1.2 Ten years on from devolution, theNational Conversation has promptedextensive debate across Scotland onthe options for the future of thecountry: continuing with the currentsituation; extending theresponsibilities of the Scottish

Parliament and Government; andindependence for Scotland. A

referendum on the options forScotland’s future would give thepeople an opportunity to have theirsay.

CURRENT CONSTITUTIONAL

ARRANGEMENTS

1.3 The Scotland Act 1998 was the lastmajor change to the government ofScotland within the United Kingdom

(see Box 1). The Act devolved to aScottish Parliament and ScottishGovernment all matters not reservedspecifically to the United Kingdom:in practice domestic matters

administered previously by theScottish Office, such as health,education, justice, local governmentand agriculture and fisheries.3

1.4 The matters reserved to the UnitedKingdom included:

• matters seen as fundamental to thestate: the Head of State, citizenship,

foreign affairs, and defence andsecurity• matters regarded as needing a

common regime across the UnitedKingdom, such as employment andbusiness law, drug classification andfirearms control

• matters that the United KingdomGovernment thought should beorganised across Great Britain or

the United Kingdom, such aseconomic affairs, social security,and tax collection

3

CHAPTER 1

THE NATIONAL CONVERSATION

ON SCOTLAND’S FUTURE

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1.5 Even the existing devolutionsettlement envisages changes inthese devolved responsibilities. Asonly specified areas are reserved,any new issues – such as climatechange – fall within devolvedresponsibility. The existing list ofreserved matters can be adjusted byorder with the agreement of theScottish and United KingdomParliaments, although there is no

statutory mechanism for the ScottishParliament to request action fromthe United Kingdom Parliament toalter the division of responsibilities.4

1.6 The Scottish Government has takensteps within its current responsibilities

to further its purpose of focussingthe Government and public serviceson creating a more successful

country, with opportunities for all ofScotland to flourish, throughincreasing sustainable economicgrowth. The Scottish Governmenthas also addressed the economicand financial crisis through theScottish Economic Recovery Plan,but the main policy responsibilities

remain with the United KingdomGovernment, notably the level of

public debt and spending over theshort term, advancing capitalexpenditure from future years, andthe overall tax regime. The ScottishGovernment has been constrained inthe fiscal stimulus package it canintroduce, and the actions taken bythe United Kingdom Government may

not be best suited to Scotland. Forexample, the resources allocated tothe temporary cut in Value Added Taxby the United Kingdom could have

been used to increase the level ofcapital investment, helping to supporta greater number of jobs in Scotland.

1.7 For devolution to be successful, theScottish Government needs to workclosely with the United KingdomGovernment, the other devolved

administrations and the EuropeanUnion. The governments haveworked well together on someissues: anti-terrorism measures; theswine flu outbreak; and ClimateChange Bills in both the Scottishand United Kingdom Parliaments.Regular meetings of the JointMinisterial Committees have beenre-established. However, relations

between the Scottish and UnitedKingdom Governments have beenless successful on other occasions:

negotiations for a Prisoner TransferAgreement with Libya; delay inamending the law on human rightscases under the Scotland Act;5

exclusion of Scottish Ministers fromthe United Kingdom delegation tothe Copenhagen Summit on ClimateChange; and the United Kingdom

Government’s refusal to be flexible infunding capital projects, notably the

Forth Road Bridge.

OPTIONS FOR THE FUTURE

1.8 The Scottish Government’s whitepaper Choosing Scotland’s Future,published in August 2007, identifiedthree principal options:

• the current devolution scheme, withthe possibility of further devolution on

individual matters as occasions arise

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• a package of specific extensions todevolved responsibilities, includingfiscal autonomy, but short ofindependence. Such a package mightneed, or benefit from, the consent ofthe Scottish people in a referendum

• independence: Scotland wouldassume all the responsibilities andrights of a normal European state,including membership of theEuropean Union and other

international bodies, the ability todetermine economic policy,including the currency, and fullresponsibility for defence andsecurity.6

1.9 The Commission on Scottish

Devolution (see Box 2) was set up in2008 by the Scottish Parliament andthe United Kingdom Government.

Its terms of reference excludedconsideration of independence. Ithas proposed a package of changesto the devolution settlement. Themain elements are:

• devolution of an element of incometax

• devolution of some other minor taxes• limited borrowing ability for the

Scottish Government• devolution of responsibilities for

drink driving limits, airguns andspeed limits

• a formal role for Scottish Ministers inreserved policies on benefits andmarine conservation

• reserving to the United KingdomParliament and Government anumber of matters currentlydevolved (regulation of health

professionals, definition of charities)

The Commission also made anumber of recommendations aboutinter-Governmental and inter-Parliamentary working.

1.10 Your Scotland, Your Voice discussesin detail the advantages anddisadvantages of variousconstitutional options for Scotland’sfuture. As the package proposed by

the Commission on Scottish

Devolution falls short of fulldevolution, the paper discusses theopportunities provided by both theCommission’s proposals and moreextensive devolution, as well asindependence.


1.11 The National Conversation began in

August 2007 with the publication ofChoosing Scotland’s Future. Over5,300 people have attended morethan 50 National Conversationevents throughout Scotland. Some500,000 have viewed the website,

which provides video and audiorecords of meetings, access todocuments, Ministerial blogs and anopportunity to comment.7 TheNational Conversation has been a

unique programme of engagementwith the Scottish public which hasinvolved civic organisations, youngScots, black and minority ethniccommunities, and individuals from

all parts of the country. A full list ofNational Conversation events is atAnnex A, and a list of organisationsthat have participated is at Annex B.8

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Public events

1.12 The National Conversation has beenan open, inclusive process intendedto encourage debate, ideas andopinions. Events have been heldfrom Glasgow and Edinburgh toStornoway and Dumfries. National

Conversation events were part ofthe Scottish Cabinets held acrossScotland in the summers of 2008and 2009, with the First Minister, theCabinet, and other Ministers, on theplatform. There have also been 130National Conversation economy-based sessions with community andbusiness groups, attended by morethan 6,500 people across Scotland.

1.13 The events gave members of the

public the opportunity to presenttheir own views, ask ScottishMinisters about their vision ofScotland, and to ask questions onlocal, national and international

concerns. The events haveillustrated how the constitutionembraces everyday concerns suchas the economy, employment,energy, benefits, housing, education

and health. Quotes and commentsfrom these events appearthroughout this paper.

1.14 Civic Scotland has been a key partof the National Conversation. On26 March 2008, the First Ministerand the Cabinet hosted a meetingof over 120 representatives of civicsociety, acknowledging theimportance of Scotland’s civicinstitutions. National Conversation

events have been hosted by theScottish Council of VoluntaryOrganisations (SCVO), the Councilof Ethnic Minority VoluntaryOrganisations (CEMVO), Young Scotand the Scottish Youth Parliament,and churches and faith groups.

1.15 There have also been NationalConversation events outsideScotland. Ministers have debatedthese issues in London, Toronto andDublin. The First Minister hosted aNational Conversation seminar inBrussels, and the NationalConversation paper on Europeanand Foreign Affairs was laterlaunched there.

The National Conversation website

1.16 The National Conversation has

pioneered the use of new mediawithin the Scottish Government,with regular blogs from Ministersand the opportunity for individualsfrom across the political spectrumto debate directly with the ScottishGovernment and each other. So farthe National Conversation website

has received over 500,000 hits, andalmost 5,000 people havecontributed to the National

Conversation blogs from allperspectives and across the world.9

1.17 The website has also built up arecord of the National Conversationas it has progressed, with video andaudio records of meetings, transcripts

of speeches, records of commentsand questions and photographs.

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Along with an interactive timeline ofScotland’s constitutional story, thewebsite has become a forum fordebate, a resource for research andlasting evidence of the interestgenerated by the NationalConversation as it has developed.

National Conversation policy papers

1.18 As part of the NationalConversation, the ScottishGovernment has published a seriesof papers on different constitutionaloptions for reserved and devolved

policy areas. These papers include:

• Fiscal Autonomy in Scotland: Thecase for change and options for reform

• Europe and Foreign Affairs: Takingforward our National Conversation

• Opportunities for Broadcasting:Taking forward our National Conversation

• An Oil Fund for Scotland: Takingforward our National Conversation

• People and Communities: Takingforward our National Conversation

• Rural Affairs, the Environment and

Climate Change: Taking forward our National Conversation

Wider debate

1.19 The National Conversation is nottaking place in isolation.Constitutional reform is a major

issue across the United Kingdom,prompted in part by public concernabout the expenses system of theUnited Kingdom Parliament. TheUnited Kingdom Government’s

response has been to launch itsBuilding Britain’s Future initiative,the aim of which is to rebuild trust inpolitics, as well as to respond to therecent economic crisis.10 Other

organisations have launchedinitiatives in response to the expensesissue and the constitutional issuesraised, for example, the JosephRowntree Trusts’ POWER 2010

project.11

1.20 The United Kingdom Government hasalso continued its programme of workon the Governance of Britain, and istaking forward a ConstitutionalReform and Governance Bill whichwould place the civil service on astatutory footing, among othermeasures.12

1.21 In Wales, the All Wales Conventionpublished its report on 18 November2009 recommending a referendumon extending the legislativecompetence of the Welsh

Assembly.13 The Welsh AssemblyGovernment’s IndependentCommission on Funding and Financefor Wales (the Holtham Commission)also published its first report on

reforming funding of devolvedgovernment in Wales on 7 July 2009.14

7

Very useful, you areto be congratulated

for attempting to

encourage debate. Folks have been giventheir chance to speak.(Stirling National Conversation event, 13 May 2009)

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BOX 1: SCOTLAND’S CONSTITUTIONAL JOURNEY SINCE

THE TREATY OF UNION

1. The Treaty of Union between the independent kingdoms ofScotland and England came into force on 1 May 1707. TheTreaty created a unified Crown and a single Parliament forthe new kingdom of Great Britain. Its other main provisionscovered representation in the new Parliament and

reciprocal measures of taxation and trade, and it preservedvarious Scottish institutions, notably a separate legalsystem. Separate legislation guaranteed the position of theChurch of Scotland.

2. Some Scots challenged the Union from the outset,particularly as the advantages of free trade to English

colonies and free access to English markets – which tooktime to materialise – were offset by the higher Englishtaxes and duties now payable in Scotland.

3. Following the failure of the 1745 Jacobite rising, the issue

of Scotland’s place within the Union, and the stability ofthe succession to the throne, seemed settled. New

imperatives of industrial revolution and Empire moved tothe fore. Scotland played a full part in these Britishdevelopments, but its nationhood was preserved by theseparate institutions protected by the Treaty of Union.

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4. In 1853, the National Association for the Vindication ofScottish Rights was formed. Although short-lived, thisindicated growing interest in Scotland’s position as aseparate political entity within the United Kingdom,motivated in part by the pressure for Home Rule in Ireland,and by the challenges of governing the expanding BritishEmpire.

5. The emergence of political interest in Home Rule forScotland was accompanied by changes in the arrangementsfor Scotland’s government, starting with the creation of theScottish Office in 1885 and the appointment of the firstSecretary for Scotland to represent Scottish interests in theUnited Kingdom Cabinet. This recognised that Scotland’sdistinctive culture, institutional and political identityrequired specific and full-time representation. However, noseparate national democratic assembly was developed.

6. Scottish Home Rule took on greater currency with theformation of a Scottish Home Rule Association in 1886.

In 1888 Keir Hardie adopted a Home Rule platform at theMid Lanark by-election, and Scotland’s constitutionalposition has remained a central political issue since then.Home Rule for Scotland was debated on many occasionsin the United Kingdom Parliament, and a number of Bills

were introduced. In 1913 a Home Rule Bill passed itsSecond Reading, but the First World War intervenedbefore further legislative steps could be taken.

7. Following the First World War, the political relevance of

Scottish Home Rule was maintained by various politicalparties and movements, and the Scottish National Party(SNP) was formed in 1934 from the National Party of

Scotland (formed in 1928) and the Scottish Party (formedin 1932). The SNP won its first parliamentary seat at theMotherwell by-election in 1945, but held it for only threemonths.

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8. Unionism dominated in Scotland following the SecondWorld War, and in 1950 the Labour Party abandoned itssupport for Scottish Home Rule, although this remained animportant issue in Scotland. The Scottish CovenantAssociation helped sustain popular interest in a Scottishassembly, attracting two million signatures between 1949and 1950. However, the Association was not linked to anypolitical party and failed to secure its objectives directly.

9. Scottish Home Rule returned as a key issue with the SNP’svictory in the Hamilton by-election of 1967. Winnie Ewingwon the seat with 46% of the vote, marking the emergenceof the SNP as an electoral force and mainstream politicalparty.

10. Since the Hamilton by-election, each of the main politicalparties has, at different times, committed itself to newconstitutional arrangements for Scotland. In 1968 thedeclaration of Perth committed the Conservatives toScottish devolution in some form, and in 1970 the

Conservative government published Scotland’sGovernment, which recommended the creation of aScottish assembly. However, Conservative support forScottish devolution declined, and the party opposedlegislative devolution for Scotland through the 1980s and

1990s. Although the party campaigned for a “No” vote inthe referendum of 1997, the Conservatives at both Scottishand United Kingdom level have supported the ScottishParliament since it was established.

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11. In 1969, the Labour Government commissioned a reportinto constitutional options for the United Kingdom. TheKilbrandon Commission did not report until 1973 by whichtime a Conservative government was in power. TheKilbrandon report recommended devolved assemblies forScotland and Wales, which led eventually to devolutionbeing put to the electorate in a referendum in 1979. Thelegislation required 40% of the total electorate to supportdevolution in the Scottish referendum; in the event only32.9% supported the assembly, although this represented51.6% of those who voted, and a majority of more than

77,000.

12. Following the election of the Conservative Government in1979, devolution, and the concept of the sovereignty of theScottish people, was taken forward first by the Campaignfor a Scottish Assembly, and then, from 1989, the ScottishConstitutional Convention. In 1988 the Campaign for a

Scottish Assembly published A Claim of Right for Scotland which asserted Scotland’s cultural and historical legacy in

putting forward its argument for a Scottish assembly. Thiswas followed in 1995 by Scotland’s Parliament, Scotland’sRight, the Scottish Constitutional Convention’s blueprintfor a Scottish assembly, which became the basis for thesettlement that was eventually enacted.

13. The Labour Party fought the 1997 general election on aplatform that included a commitment to a referendum onScottish devolution. The white paper Scotland’s Parliament was published in July 1997, and its proposals were the

basis for the pre-legislative referendum which was held on11 September 1997. Over 74% of those participatingsupported the creation of the Scottish Parliament, andover 63% tax varying powers for the Parliament. TheScottish Parliament that reconvened in 1999 was based on

the constitutional settlement in the subsequent ScotlandAct 1998.

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BOX 2: THE COMMISSION ON SCOTTISH DEVOLUTION

1. On 6 December 2007, the Scottish Parliament passed amotion calling for the creation of an independently chairedcommission to review devolution in Scotland. Chaired bySir Kenneth Calman, the remit of the Commission onScottish Devolution was:

To review the provisions of the Scotland Act 1998 in thelight of experience and to recommend any changes to thepresent constitutional arrangements that would enable theScottish Parliament to serve the people of Scotland better,improve the financial accountability of the ScottishParliament, and continue to secure the position of Scotlandwithin the United Kingdom.

Members of the Commission were drawn from Scottishcivic society and the Labour, Liberal Democrat andConservative parties. The United Kingdom Governmentlargely provided the secretariat for the Commission. As the

Commission’s remit excluded independence, the ScottishGovernment declined to take part.

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2. Over the course of its work, the Commission took evidencemainly in writing, although there were formal evidencesessions with members of representative organisations andtwelve public meetings to allow members of the public toengage with the Commission directly. The United KingdomGovernment provided written submissions to theCommission, while the Scottish Government providedfactual information. The Commission published its firstreport in December 2008 and its final report in June 2009.

3. The final report, Serving Scotland Better: Scotland and the United Kingdom in the 21st Century, made 63recommendations in four categories:

• strengthening financial accountability

• strengthening co-operation between the Scottish andUnited Kingdom Parliaments

• strengthening the devolution settlement• strengthening the Scottish Parliament

Following publication of the final report, a working group,consisting of members of the political parties involved in

the creation of the Commission, was established to takeforward the recommendations.

4. The Scottish Parliament debated the Commission’s finalreport on 25 June, passing a motion supporting itsrecommendations. The Scottish Government published itsformal response to the Commission’s recommendationson 9 November 2009.15 While not in favour of all the

conclusions of the report, the Scottish Government doessupport a number of recommendations and has set out amechanism for those proposals with widespreadagreement to be implemented as soon as possible.

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INTRODUCTION

2.1 Devolution was never intended asa fixed arrangement: it was and isa process which should respond topolitical, economic and social

circumstances over time to ensurethat Scotland is well-positioned toaddress the challenges it faces andtake advantage of opportunities.Nor does devolution need to be

Scotland’s final constitutionaldestination.

2.2 The tenth anniversary of the ScottishParliament offers a suitable momentto consider these issues in depth,and invite the people to have theirsay on the next steps in Scotland’sconstitutional journey.

2.3 The National Conversation hasidentified many areas for furtherdevolution, as well as the argumentsaround independence. The NationalConversation has illustrated that theconstitutional debate raises issuesacross the whole range ofgovernment activity and Scottishlife, from economic policy,

taxation and benefits, foreign affairsand defence to human rights,broadcasting and responsibility forairguns and drink-drive limits. In theseand many other areas, decisions forScotland are not made by theScottish Parliament and the ScottishGovernment, but by their UnitedKingdom counterparts.

2.4 This paper covers many of the most

important policy areas which wouldbe affected by different constitutionalarrangements. However, it is notexhaustive: it focuses on those areaswhere new constitutional

arrangements, whether fulldevolution or independence, wouldprovide the greatest opportunitiesto develop Scotland-specificapproaches to particular issues.16

It also discusses significant areas ofScottish life which are already largelydevolved, such as health, educationand justice. The achievements inthese areas since devolution

illustrate the potential for Scotlandto tackle its problems and promoteits successes with the rightresponsibilities and opportunities.

15

CHAPTER 2

THE OPTIONS FOR

SCOTLAND’S FUTURE

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2.5 The paper describes the opportunitiesthat increased responsibility wouldprovide for Scotland to developpolicies to address its issues. Theuse made of these opportunitieswould depend on the policy choicesof future Scottish Governments and

the make up of future Parliaments.The examples in the paper thereforeillustrate the benefits and challengesof these responsibilities, and are

neither a programme for governmentnor commitments to future action.

2.6 There are four broad options forScotland’s future:

• the status quo: Scotland retains itscurrent responsibilities with gradualevolution in response to particularevents or pressures

• implementing the recommendationsof the Commission on ScottishDevolution

• full devolution of the maximum

range of responsibilities to Scotlandwhile remaining in the UnitedKingdom (sometimes called

“devolution max”)• independence: Scotland has all

the rights and responsibilities ofa normal independent state

CURRENT POSITION

2.7 Under the Scotland Act, amendmentscan be made to the legislativecompetence of the Scottish

Parliament and the executiveresponsibilities of the Scottish

Government. While the devolvedresponsibility of the ScottishMinisters has been adjustedrelatively frequently, extension ofthe legislative competence of theScottish Parliament has been rarer.17

COMMISSION ON SCOTTISHDEVOLUTION

2.8 The Commission carried out areview of devolution, although itdid not consider the possibility ofindependence, and was preventedby its terms of reference from

examining some of the moresignificant options such as full fiscalautonomy.18 The Commissionnevertheless proposed a packageof alterations to the devolutionsettlement that embodied newprinciples, such as giving theScottish Government a limited abilityto borrow. It also recommendedways to improve the relationships

between the Scottish Governmentand Parliament and the UnitedKingdom Government and Parliament.

The advantages and drawbacks oftheir main recommendations arediscussed in detail later in the paper.

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2.9 The Commission did not makerecommendations in a number ofimportant areas including economicissues, employment and companylaw, and foreign affairs. TheCommission’s recommendations onbenefits fell short of further

devolution, but recognised theinterest of the devolved governmentof Scotland in reserved policymaking. Devolved competence

could therefore be extended beyondthe recommendations of theCommission.

FULL DEVOLUTION

2.10 Under full devolution the existingdevolution framework would beretained, and Scotland would remainwithin the United Kingdom. TheUnited Kingdom Government andinstitutions would continue to haveresponsibility for many matters, forexample the currency and monetary

policy, and decisions on peace andwar. Full devolution would giveScotland more responsibility for

domestic matters, and would extendthe range of measures the ScottishGovernment and the ScottishParliament could take to encouragegreater sustainable economicgrowth. Nonetheless, there would becontinued interaction with matters

reserved to the United Kingdom, forexample foreign affairs, defence,macroeconomic policy, some

taxation and, possibly, social

protection and pensions. Existingareas of disagreement wouldcontinue. Improved inter-governmental relations, includingenforceable principles of parity ofesteem, would be required forScotland to get the most out of its

increased responsibility.

INDEPENDENCE

2.11 The Scottish Government’s favouredpolicy is independence, which wouldbring all the possibilities of fulldevolution with the additional

responsibilities that could not bedevolved within the United Kingdom,such as foreign affairs and defence.Under independence Scotlandwould be responsible for:

• the economy, including decisions on

the currency and the macroeconomicframework

• investment in education, enterpriseand infrastructure includingtransport and housing

• the environment, energy and

climate change• the taxation and benefits system• the full range of public services,

including benefits and health• foreign affairs, defence and security

matters• equality legislation and human rights• the constitution and government of

Scotland, including Parliament, thecourts, local government

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2.12 Independence would complete theresponsibilities of the ScottishParliament and Government, whileallowing existing structures andservices to continue. Aspects of anindependent Scotland would befamiliar: services and entitlements

continuing to be delivered; pension

and benefits continuing to be paid ata similar level as now. Services suchas the NHS and education arealready largely devolved, and sowould continue in much the sameform as they do now. Over time, theScottish Government and ScottishParliament could develop andimplement Scotland-specific

solutions.

2.13 As an independent nation, Scotlandwould be similar to other sovereignnations across the world. In recentyears, many countries have gainedindependence, recognising that it isright that sovereign nations areresponsible for their own decisions,

while still working in partnership

with other nations. At the moment,Scotland is a nation within a largerstate, unable to speak for itself onall relevant matters. Independencewould give Scotland the responsibilityfor making decisions about its futureas part of an international,globalised environment, making afull contribution to the

interdependent world.

18

I found this event very interesting … it

was refreshing to see that the Scottish Government want the people of Scotland to decide its own future – the CalmanCommission, although it has some great ideas, is based on what three political

parties want.(Aberdeen Summer Cabinet, 18 August 2009)

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19

I can see no way forward for the countryother than full fiscal autonomy. But my

question is, would it be better to do thisand share some common resources as part

of the United Kingdom (e.g. armed forces,embassies around the world, etc). Or cana case be made that this would be betterdone independently?(National Conversation website, 18 November 2008)

How will independence benefit young people in Scotland?

(Inverness Summer Cabinet 5 August 2008)

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OVERVIEW

3.1 Sustainable economic development

improves the quality of life, healthand the environment to the benefitof all in society, while managing theresources of the planet for thefuture. It is one of the central goalsof governments around the world,and is the overarching purpose of

the Scottish Government.

3.2 A nation’s prosperity depends uponeveryone playing a part – as

workers, consumers, volunteers andbusiness people. A government’srole is to enable their success byinvesting in people and places, and

tackling unnecessary obstacles tosustainable economic growth. Thereare a number of mechanismsgovernments can use to promotegrowth including:

• encouraging economic developmentthrough effective fiscal andmonetary policy

• influencing economic, social andenvironmental objectives throughlegislation and regulation of labourand product markets

• investing directly in infrastructureand education

In the modern interdependent world,

these mechanisms are often co-ordinated internationally, mostnotably, in Scotland’s case, throughthe European Union.

3.3 Under the current arrangementsmany of the key mechanisms topromote economic growth arereserved to the United KingdomGovernment and other UnitedKingdom institutions. Some could be

devolved to Scotland within theUnited Kingdom (for example,aspects of the tax system, asrecommended by the Commission

on Scottish Devolution).

21

CHAPTER 3

A WEALTHIER SCOTLAND

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3.4 With independence Scotland wouldhave full responsibility for promotingeconomic growth and improvingScotland’s long-term competitiveness,

including:

• designing a tax system to makeScotland a more attractive place forbusiness growth and investment

• choosing a macroeconomicframework, including the operationof fiscal policy, best suited to thecharacteristics of the Scottisheconomy

• encouraging research and investmentto spur growth in key sectors whereScotland has comparativeadvantages, for example in energy,food and drink, life sciences,financial services, creative industriesand sustainable tourism

• borrowing responsibly for investmentin key long-term projects, such asthe Forth Road Bridge

• representing Scottish interests

internationally: for example fishingpolicy in the European Union; duties

on whisky in the World TradeOrganization

• establishing a distinct populationstrategy, addressing thedemographic and skills challengesthat face the nation

22

What steps are being taken to mitigateScotland, in particular against the effectsof resource depletion? We are so dependent inevery way now, that huge changes are needed to empower and re-skill future generations tocreate a resilient, sustainable community with confident, capable people able to meet the verychallenging times they will face.(Oban National Conversation event, 5 October 2009)

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ECONOMIC AND FISCAL POLICY

Introduction

3.5 The Scottish Government aims to

create higher levels of sustainableeconomic growth and improvementsin productivity, labour marketparticipation and population, whilebuilding solidarity, cohesion andsustainability.19 An economic andfiscal framework that enhancesScotland’s long-term competitivenessand ability to respond swiftly anddecisively to short-term economic

pressures and circumstances is vitalto achieving sustainable economicgrowth.

3.6 For over a generation, the growth

rate of the Scottish economy hasbeen lower than that of the United

Kingdom and other comparableEuropean countries. In the 30 yearsto 2007, Scotland’s average annualGDP growth rate was 2.0% – lowerthan the United Kingdom economyas a whole (2.4%) and well behindIreland (5.3%), Norway (3.1%) andFinland (2.9%). As a result of being

locked into a low-growth cycle forso long, Scotland now trails many

comparable European countriesacross a range of economicindicators.20

Current responsibilities

3.7 The current devolutionarrangements give the ScottishGovernment responsibility for anumber of policy areas that affectScotland’s long-term economicperformance, such as education,

transport, planning and economicdevelopment. The GovernmentEconomic Strategy outlines howthese are used presently to improveScotland’s sustainable economicgrowth rate.21

3.8 However, key elements of economicpolicy, including taxation,macroeconomic policy, science andinnovation, social security,employment law and financial

regulation lie outside currentScottish responsibilities.

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Fiscal policy

3.9 The Scottish Parliament andGovernment are responsible for theallocation of much of public sectorexpenditure for Scotland: around£30 billion out of £50 billion.22

However, several key areas of

Scottish public spending are reserved,for example defence spending.

3.10 In contrast to its spendingautonomy, Scotland has very limitedresponsibility for raising money forpublic spending. Only three taxation

instruments are devolved toScotland: local taxation (currentlythe council tax); business rates; andthe Scottish Variable Rate which canvary the basic rate of income tax by

up to 3p.23 The vast majority of taxrevenue raised in Scotland is set andcollected at the United Kingdomlevel. For devolved matters, theUnited Kingdom Government then

determines how much of this shouldbe reallocated back to Scotlandthrough the Scottish Block Grantand the operation of the BarnettFormula (see Box 4 on the Barnett

Formula).

3.11 Scotland also has very limited abilityto borrow. The Scottish Governmentcan borrow only from the UnitedKingdom Treasury and for immediatecash-flow purposes. Unlike local

authorities, and indeed the NorthernIreland Executive and the vastmajority of other comparabledevolved governments, the ScottishGovernment cannot borrow forwider policy objectives, for exampleto meet pressures in an economicdownturn or to fund capital projectslike the new Forth crossing.24

Macroeconomic policy

3.12 A balanced and supportivemacroeconomic policy frameworkis key to fostering innovation,

investment and job creation and increating the right incentives,conditions and opportunities foreconomic growth.

3.13 There are two main instruments ofmacroeconomic policy:

• monetary policy: the use of interestrates, money supply and exchangerates to influence the level ofmoney, credit and inflation in theeconomy

• fiscal policy: the framework for themanagement of government

spending, revenue and borrowing

24

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3.14 Monetary policy is fully reserved andconducted through the Bank ofEngland. The Bank of England setsinterest rates, conducts operationsin the money markets and managesthe United Kingdom’s foreignexchange reserves. Its monetarypolicy remit is to deliver pricestability, defined by the UnitedKingdom Government’s inflationtarget of 2%.25 The inflation target is

set for the United Kingdom economyas a whole, and does not allowvariations in prices, demand, oreconomic cycles within the UnitedKingdom.

3.15 Overall responsibility for the

operation of fiscal policy and thepublic finances is also reserved to

the United Kingdom Government.The United Kingdom Governmentdetermines the framework for theconduct of fiscal policy and isresponsible for the management ofnet borrowing, financial reservesand debt.

Industrial policy and regulatory

framework

3.16 Other important economic policieslevers are reserved to the United

Kingdom Government, whichremains largely responsible for theframework for economic regulationin Scotland. This includesresponsibility for energy policy,including the oil and gas sector,

competition policy, company law,economic regulation of utilities (forexample telecommunications),regulation of financial markets,consumer protection and productand trading standards; and policiesaffecting the labour market,including employment law andmigration. These significantresponsibilities have a considerablebearing on the performance and the

growth potential of the Scottisheconomy.

Scotland within the current framework

3.17 Scotland’s lack of financialresponsibility has real economicconsequences. Opportunities arelimited to set competitive policies,

particularly taxation, and to use thefull range of fiscal and economicpolicy levers to complement thespecific strengths of the Scottisheconomy and address any

weaknesses. Commitments to investin long-term infrastructure are alsoconstrained by fiscal rules which aredetermined and revised by theUnited Kingdom Government and

not the best interests of the Scottisheconomy.

3.18 In macroeconomic policy, theScottish economy is subject to arange of ‘one size fits all’ fiscalpolicies which are set according toconditions across the UnitedKingdom as a whole, and do not aim

25

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to meet Scotland’s distinct needs.The ability to take short-termmeasures to stabilise the economy,through, for example, tax cuts orsignificant increases in publicinvestment is severely constrained.The Scottish Government also cannotopt out of United Kingdom-widepolicies where an alternative solutionmay provide a better outcome forScotland.26 In times of economic

difficulty, the Scottish economy isaffected by the policies of the UnitedKingdom Government, and theScottish Government is limited in themeaningful actions it can take at theright time to address particularchallenges faced in Scotland.

3.19 As set out in the Scottish Government

Fiscal Autonomy in Scotland: thecase for change and options for reform the current financialsettlement does not provide theScottish Parliament with theresponsibility or the necessarymechanisms to boost Scotland’slong-term competitiveness, or

respond to short-term economicshocks.27 It also fails to provide a

framework which maximisesefficiency, transparency oraccountability. For example, withinthe current fiscal framework, policyinitiatives which successfullyincrease economic growth in Scotlanddo not produce a correspondingincrease in the tax revenue available

to invest in Scottish public services.Any increase in tax yield would flowto the United Kingdom. The limited

tax-varying opportunities providelittle incentive to spend less than theblock grant and few opportunities tospend more. More generally, theScottish Government’s budget isdetermined principally by changes inspending on equivalent programmesin England set by the UnitedKingdom Government and is notdirectly linked to the demand forpublic services of the Scottish

population.

3.20 There is also no direct accountabilitybetween the taxes raised in Scotlandand spending by the ScottishGovernment. In 2007/08,approximately 89% of the Scottish

Government’s budget was financedby a block grant.28 The United

Kingdom Government retainsresponsibility for the size of theScottish budget through theallocation of this grant and theapplication of funding rules andguidelines.

3.21 Finally, fundamental decisions suchas choice of currency and the overallbalance of taxation lie outwith the

remit of the Scottish Parliament. TheScottish Government cannot adoptmacroeconomic policies to addressthe weaknesses of the currentUnited Kingdom framework, such

as the limitations of the financialregulation and fiscal frameworks.29

26

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Economic and fiscal recommendations of

the Commission on Scottish Devolution

Macroeconomic policy

3.22 The Commission recommended thatmacroeconomic policy remainreserved to the United KingdomGovernment, although there shouldbe greater discussion between theScottish and United KingdomGovernments on macroeconomicpolicy.30 The Commission did notpropose any changes to the currentarrangements for monetary policy,

the currency or financial regulation.

Fiscal policy

3.23 The Commission’s terms of

reference charged it with makingrecommendations to improve thefinancial responsibility of theScottish Parliament. The Commissionrecommended that a greater shareof the Scottish Parliament’s budgetshould come from devolved taxationby the Scottish Parliament and theUnited Kingdom Parliament sharingthe yield of income tax in Scotland.

The Commission proposed that theScottish Variable Rate should bereplaced by a single Scottish rate ofincome tax, applying to the basicand higher rates of income tax. Thebasic and higher rates of income taxlevied by the United KingdomGovernment in Scotland would bereduced by 10p. Half the estimatedincome tax yield from savings and

dividends in Scotland would also beassigned to the Scottish Government.

The block grant from the UnitedKingdom Government to theScottish Government should bereduced by an equivalent totalamount. It would then be for theScottish Parliament to supplementthe block grant by setting a Scottishincome tax and deciding theappropriate rate.

3.24 The Commission recommended thata number of minor taxes (airpassenger duty, landfill tax, stampduty land tax and the aggregateslevy) should be devolved to Scotland,and the Scottish Parliament shouldbe able to legislate, with theagreement of the United Kingdom

Parliament, for new taxes whichwould apply in Scotland. The

Commission’s final report arguesthat these recommendations wouldgive the Scottish Parliament realfinancial accountability, and strike abalance between accountability,equity and efficiency.

3.25 The Commission recommended thatthe Scottish Government should begiven limited autonomy to borrow

to fund capital investment. Underthe proposals, Scottish Ministerswould be able to borrow only fromthe United Kingdom Government,which would set the conditions and

amount, therefore deciding theScottish Government’s ability tomanage its finances and capitalinvestment programme.

27

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3.26 The proposals embody importantprinciples:

• the Scottish Parliament should beaccountable for some income tax inScotland

• that this taxation should be linked tothe level of public spending in

Scotland• that the Scottish Parliament should be

able to levy specific taxes, directedat particular policy objectives

• that the Scottish Government shouldbe able to borrow to invest in capitalprogrammes

3.27 However, Scotland’s budget wouldbe a complex mix of a block grant,various devolved taxes, taxassignment, tax sharing and

reserved taxes. The United KingdomGovernment would still collectaround 80% of all Scottish taxrevenues. Key elements of fiscalpolicy, such as corporation tax, VAT,

national insurance contributions,capital gains taxation, North Searevenues and the key types ofenvironmental taxation, wouldremain reserved to the United

Kingdom Government. In addition,responsibility for key elements ofthe income tax system, such aspersonal allowances, tax thresholds,the tax rates on savings and

dividends, the opportunity toestablish tax breaks for particulargroups such as pensioners, the self-employed and young artists, wouldremain reserved. The ScottishGovernment would only be able to

apply relatively broad brush changesto the income tax system, and eventhen, constraints on funding priorservice commitments would limitthe practical opportunities to deliverreal policy autonomy. Targeted andpotentially redistributive measures,open to the United KingdomGovernment, through adjusting thestructure of the income tax regimeand its interaction with the wider

tax and welfare system would notbe possible. The Commission’srecommendations would notimprove financial clarity andtransparency in Scotland, orsignificantly increase the autonomyof the Scottish Parliament.31 Theblock grant – set at the discretion ofthe United Kingdom Government –

would remain the most importantfactor in determining Scotland’sbudget.

3.28 The particular taxation mechanismsproposed by the Commission couldpose a risk to Scotland’s public sectorand to its economic performance:

for example, the ScottishGovernment would be heavily reliant

upon one single source of taxationrather than the range of taxesavailable to most governments. Thiswould leave Scotland’s budget moreexposed than under the currentarrangements. There is also a riskthat the Scottish budget could besqueezed inadvertently following

technical or administrative changesto the income tax system by theUnited Kingdom Government.

28

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Full devolution32

3.29 More extensive reforms of fiscalpolicy and responsibility have beenproposed during the NationalConversation.33 Essentially thesepropose that there should be agreater linkage between the level of

public spending in Scotland and thetaxation decided in the country, andthat the Scottish Parliament shouldmake decisions over a wider rangeof taxes, for example inheritance taxor corporation tax. These modelswould increase the economic andother benefits of reform, andprovide flexibility beyond that ofthe relatively limited Commission

proposals. For example, ReformScotland has proposed that the

Scottish Government and the UnitedKingdom Government are eachresponsible for raising what theyspend, with taxes allocated to orshared between them.34

3.30 Full fiscal autonomy would makethe Scottish Parliament and ScottishGovernment responsible for raising,collecting and administering all (orthe vast majority of) revenues inScotland and the vast majority of

spending for Scotland. A remittanceor subvention from Scotland to theUnited Kingdom would be requiredto cover common United Kingdompublic goods and services, such asdefence and foreign affairs. Therange of services paid for in this waywould be subject to negotiation atthe time of any revised settlement.In essence, this framework would be

the maximum form of tax and policydevolution short of independence.

29

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3.31 In practice, a number of factors arelikely to limit the policy flexibility ofa devolved Scottish Government

even under full devolution:

• intra-national rules and guidelines,

in particular, European Union lawsgoverning taxation policy bothbetween and within Member States

• rules/agreements with United

Kingdom Government to align theScottish Government’s devolvedpolicies to those of the UnitedKingdom

• continued reservations: keyaspects of economic policy – suchas financial regulation, employment

and competition law – may remainreserved

3.32 It would be difficult to devolvemonetary policy effectively whileScotland remained part of theUnited Kingdom as a common

currency is a feature of a unifiedstate. For example, if majorityopinion in Scotland favoured joiningthe Euro, that would not be possiblewithin the United Kingdom.

30

After independence would theScottish Government’s ambition be

for a high-tax, high-spend economy,or a low-tax, market-driven economy?(Dumfries Summer Cabinet, 29 July 2008)

How will Scotland’s taxes beaffected in independence?(Kirkcaldy National Conversation event, 16 May 2009)

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Independence

Monetary policy

3.33 Under independence, Scotland wouldhave the opportunity to choose themonetary framework and currencythat best suited the needs of the

Scottish economy. A larger currencyunion can offer some protectionfrom financial market speculation,although countries forgo the abilityto tailor monetary policy to theirspecific economic circumstances.

Monetary union can also benefiteconomic integration and trade byeliminating exchange rate risk.

3.34 Scotland would continue to operate

within the sterling system until adecision to join the Euro by thepeople of Scotland in a referendumwhen the economic conditions

were right.

3.35 A monetary union necessarily limitsmonetary policy discretion andflexibility. Greater emphasis istherefore placed on fiscal policy to

address the Scottish economy.

Fiscal policy

3.36 With independence, the ScottishParliament would be fully responsiblefor fiscal policy in Scotland,

including the collection of all taxesand government expenditures.35

The Scottish Government would be

able to borrow freely in internationalcapital markets, subject to marketconstraints.36 Ensuring thesustainability of public expenditurewould be Scotland’s ownresponsibility, as would managingthe national budget over the short

and long-term. It would, however, befor an independent Scotland todecide the taxation to be levied, the

level of government borrowing andthe level of public expenditure.

31

Where would an independent Scotland borrow from?(Kirkcaldy National Conversation event, 16 May 2009)

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3.37 Public sector borrowing and net debtare two of the most important andvaluable tools of macroeconomicpolicy. This debt must be managed toensure affordability and sustainability.

A Scottish Government would havethe opportunity to establish crediblefiscal rules to guide policy, drawingon the lessons and experiences ofother countries. Recent events, andin particular, the suspension of theUnited Kingdom fiscal framework,offer some important insights.

3.38 Independence would allow the

Scottish Government to enhanceScotland’s long-term competitivenessand better protect the economyduring downturns.37 This could beachieved, for example, through thecreation of a Fiscal Commissionsuggested by the Council ofEconomic Advisers.38 The fiscal

framework under independencecould make Scotland moreattractive for business by simplifying

the tax system and reducingcorporation tax. Independencewould also increase Scotland’sability to respond to changes in theeconomy through policies targeteddirectly at the Scottish economy, forexample investment in capital, bothphysical and human, and research

and development.

Financial regulation

3.39 Currently regulation of financial

markets is reserved and isconducted through a tripartite

agreement between the Treasury,the Bank of England and theFinancial Services Authorityalthough European regulations areof growing importance.39

3.40Independence would provideopportunities to:

• create a culture to ensure the

success of Scottish financialservices in the future• ensure market and financial stability

for the Scottish economy and fiscalpolicy

• maximise political accountability• influence European Union and

international policy from a Scottishperspective

• build on Scotland’s strengths asa financial centre

• attract new institutions to themarket

32

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3.41 On independence, Scotland wouldneed to choose institutionalmechanisms for financial servicessupervision, to ensure an efficientlyfunctioning market, financial stabilityand consumer protection This couldbe done through partnershiparrangements with the rest of theUnited Kingdom or through its ownfinancial regulator, like Ireland. Thesystem chosen would need to reflect

the lessons of the current financialcrisis, for example greaterinternational co-operation inregulation of the financial servicesindustry. An independent Scotlandcould play a significant role inEuropean and internationaldevelopments and build its reputationas a global financial centre.

3.42 Independence would provideopportunities for new institutionssuch as a stock exchange. TheGlasgow Stock Exchange mergedwith the London Stock Exchange in1973, and subsequent attempts tocreate a Scottish Stock Exchangehave failed. A Scottish StockExchange in an independentScotland could help Scottishcompanies float, and provide an

alternative approach to accessingprivate capital to assist growth.

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BOX 3: SCOTLAND’S PUBLIC FINANCES

1. There has been considerable debateabout Scotland’s fiscal position andthe contribution made by taxrevenues from North Sea oil and gasproduction.

2. Professor Alex Kemp and LindaStephen from the University of

Aberdeen have estimated Scotland’sgeographical share of oil and gasproduction using the principle of themedian line, that is, that all points onthe dividing line are the samedistance from the Scottish and restof the United Kingdom coastline.Analysis based on this research hassuggested that for most of the1980s, Scotland’s estimated fiscal

balance was in substantial surplus,driven in part by the significant

growth in North Sea revenues, at atime when the United Kingdom as awhole was building up substantialdebt.40 Analysis also suggests thatScotland’s estimated fiscal positiondeteriorated through the 1990s.However, since 2001/02, Scotland’spublic finances have recovered and

its fiscal balance, including anillustrative share of North Sea

revenue, is estimated to have been

broadly in line with that of the

United Kingdom and in the last threeyears measured the current budgetbalance has bettered it.

3. The most recent GovernmentExpenditure and Revenue Scotland(GERS) demonstrates that Scottishpublic finances ran current budgetsurpluses in each of the three yearsto 2007/08 worth a cumulative£2.3 billion, when an illustrative

geographical share of North Searevenue is included.41 In comparison,the United Kingdom ran a currentbudget deficit in each of these yearswhich was cumulatively worth£24 billion. Scotland’s overall fiscalbalance in 2007/08, which is theestimated current budget balanceplus net capital investment, was adeficit of £3.8 billion (2.7% of Gross

Domestic Product), similar to thosefor other OECD countries.42

4. GERS takes the currentconstitutional and fiscal frameworkas given. Under alternativeframeworks, Scotland’s fiscalposition would depend on the policy

choices of the government of theday and the economic climate.

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BOX 4: THE BARNETT FORMULA

1. The Barnett Formula is used by theUnited Kingdom Government todetermine variations to the budgetsof the Scottish Government, WelshAssembly Government and NorthernIreland Executive. It was firstintroduced for Scotland in 1978 andhas remained largely unchangedsince, although since devolution it hasbeen routinely subject to marginal

adjustments to reflect populationchanges. These are given effectthrough the Statement of FundingPolicy between HM Treasury and thedevolved administrations, which isre-issued after each spending review.

2. Under the formula, increases ordecreases in the ScottishGovernment’s budget are determined

by increases or decreases in spendingin Whitehall Departments’ spendingon programmes which are devolvedto Scotland, calculated using relativepopulation shares.43 These increasesor decreases in Scottish, Welsh andIrish budgets are known as Barnett

consequentials. This means that thetotal level of public spending inScotland is largely determined byhistoric spending baselines, adjusted

by reference to decisions onspending elsewhere in the UnitedKingdom and not linked to currenteconomic conditions, the preferencesor needs of the Scottish people. Theformula also means that the Scottish

budget depends on unilateraldecisions by the United KingdomGovernment on spending in England.For example, the implementation of

efficiency savings across the UnitedKingdom Government, andreductions in Department of Healthbaselines in England in the 2009

Budget, resulted in the Scottish

budget being cut by £500 million in2010/11.

3. The United Kingdom Governmentcan also unilaterally decide not topass to Scotland consequentialincreases from United Kingdomexpenditure in a devolved policyarea (known as “formula bypass”).For example, Scotland did not receiveconsequentials from the capital

expenditure on urban renewalassociated with the London Olympicsor from the increase in prisonexpenditure in England in 2007,following the recommendations ofLord Carter’s review of prisons.44

4. There have been recent proposals toreform the method of funding thedevolved administrations. TheScottish Government report Fiscal

Autonomy in Scotland set out theshortcomings of the Barnett Formulaas a funding mechanism, and theoptions for full fiscal autonomy forScotland. The Commission onScottish Devolution and the House

of Lords Select Committee on theBarnett Formula both recommendedthat the current formula should bereviewed. The Welsh Assembly

Government’s IndependentCommission on Funding and Financefor Wales (the Holtham Commission)made similar recommendations.However, no consensus has beenreached on how an alternative system

would operate, and the UnitedKingdom Government has indicatedthat it does not accept the need forreform, although the Joint Ministerial

Committee (Domestic) is currentlyexamining whether an adjudicationprocedure could be established toresolve areas of controversy.

35

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BOX 5: LESSONS FROM THE CURRENT

GLOBAL ECONOMIC SITUATION

1. The causes and the impact of theglobal economic slowdown haveraised important, wider questions

about the setting of economic policyin advanced economies. This isforcing a reappraisal of policy andinstitutional frameworks in severalareas, including the role of the state;the scope of financial regulation; the

objectives of monetary and fiscalpolicy; and the arrangements forinternational economic and financialcoordination.

Monetary policy

2. Independent central banks have

been generally charged withmeeting inflation targets, mainly

through interest rates. Some havebroader objectives: the UnitedStates Federal Reserve promotesemployment, stable prices andmoderate long-term interest rates.

3. Recent events in the globaleconomy have led to an element ofreappraisal of the objectives ofmonetary policy. One of the maincauses of the economic downturnwas imbalances in the globaleconomy. Finance from countrieswith high savings rates and currentaccount surpluses, such as Chinaand oil-producing states, flowed into

developed economies including theUnited Kingdom and the UnitedStates, leading to low interest ratesand a boom in credit, house prices,equity prices and trade deficits.

4. A number of commentators have

questioned why such imbalanceswere allowed to develop over such along period of time. This is based onthe argument that central banksshould target a broader measure ofinflation when setting interest rates,by including asset prices or keyelements of the macro economy

such as the balance of payments.45

However, central banks mightrequire additional policy instruments

to achieve dual objective ofpreventing asset price bubbles aswell as controlling inflation. MervynKing, Governor of the Bank ofEngland, has emphasised that usingone policy instrument to meet twoobjectives would involve a trade-off

between achieving both objectives.46

5. In time, the severity of the credit

crunch may lead to a re-casting ofthe objectives of monetary policy toplace greater emphasis on financialmarket and asset price stability.

Fiscal policy

6. The economic crisis has placedsignificant pressure on public sector

finances, and illustrated problems

with previous frameworks formanaging fiscal policy.

7. A common criticism of some previousfiscal rules, such as those of theEuropean Union, is that they lacked

firm theoretical foundations and settargets that were largely arbitrary.Other fiscal rules, such as those forthe United Kingdom, while groundedin economic theory, were open to

interpretation and failed to ensure

36

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fiscal restraint and saving during

periods of stronger economic growth.For example, between 2001 and2008, the United Kingdom economygrew 15% but public sector net debtalmost doubled to £593 billion.47 In2008 the United Kingdom was forcedto abandon its two fiscal rules,replacing them with a temporary

operating rule.

8. In light of these criticisms, a number

of options for fiscal reform havebeen put forward:

• fiscal rules that are legally binding.This approach is taken in manyAmerican states, but its rigidityraises wider social and economicchallenges

• greater flexibility when setting fiscalrules. The European Union’s revised

Stability and Growth Pact nowplaces greater emphasis on theeconomic cycle and the underlyinghealth of the public finances

• greater independent oversight toassess compliance with the rules andprovide projections for the publicfinances. The Council of EconomicAdvisers has recently advocatedsupport for such a Fiscal Commission.

Financial regulation

9. Regulation in the United Kingdomdid not keep pace with innovation inthe financial markets. Hence the

disruption in sectors of the financialservices market that were poorly orunregulated, including hedge fundsand derivatives. Exposure in thesecomplex instruments led to major

losses for banks and damaged

confidence throughout the financialsystem. Regulators did not identifythe systemic risks caused by lossesin one organisation spreading toothers across the globe, andeventually the real economy.

10. The United Kingdom regulatorysystem did not prevent: businessesbecoming overextended throughexcessive leverage and risk taking;

over-reliance on wholesale funding;overdependence on risky products;and poor decisions over acquisitions.The United Kingdom Government

has outlined proposed changes tothe current regulatory framework ina White Paper.48

11. A further lesson from the currentcrisis has been how to regulate and,

if necessary, support multinationalinstitutions, which whileheadquartered in one area, operateacross jurisdictions. In the case ofcertain institutions, support hasbeen international. For example,the Belgian, Dutch and LuxembourgGovernments provided joint supportfor Fortis Bank.49 The G20 Summit inApril 2009 agreed to establish a

Financial Stability Board to extendregulation and oversight to allsystemically important financialinstitutions and to strengtheninternational regulation. In June2009 the European Council agreedto establish a European System ofFinancial Supervisors and a newEuropean Systemic Risk Board toimplement the international model.

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38

SOVEREIGN WEALTH FUND

3.43 An independent Scotland could

create a sovereign wealth fund,based on Scotland’s oil and gasreserves, to provide an effectivemechanism to insulate the economyin times of economic instability andinvest for long-term sustainability.Since 1980/81 approximately 90% ofUnited Kingdom oil and gasrevenues have been generated froman area that could be classified as

comprising Scotland's geographicalshare of the current United KingdomContinental Shelf. Substantial NorthSea oil and gas reserves are yet tobe extracted, and their value is likelyto increase. The management ofNorth Sea reserves would thereforebe an important element ofScotland’s public finances under arevised fiscal framework.50

3.44 Under the current constitutionalsettlement, all revenues from NorthSea oil and gas production go to theUnited Kingdom Government andhave been used to fund governmentexpenditure or to lower taxation. Analternative approach is demonstrated

by the Shetland Islands. Since the1970s, Shetland Islands Council hasbeen able to levy a royalty overevery barrel of oil landed at SullomVoe and invested the revenue in anoil fund. The fund is now estimatedto be worth £180 million.51

3.45 A Scottish sovereign wealth fund

would invest a proportion ofthe revenues from oil and gasproduction over the long term,creating a permanent source ofrevenue. The fund would supportmacroeconomic stabilisation andaddress unexpected short-termspending pressures, safeguardingScotland’s fiscal position. The fundcould invest in low carbon sources

of energy production, providingScotland with new sustainablesources of energy.

3.46 The Commission on ScottishDevolution considered devolution ofsome element of oil and gas revenuesto the Scottish Government, but,

based largely on fluctuations in oiland gas prices, concluded that this

would expose the Scottish budgetto possible revenue fluctuations.52

However, the Commission’sIndependent Expert Groupsuggested that the creation of an oilfund can enhance intergenerationalequity, protect a country’s capitalstock over time and mitigate the

volatility of oil revenues.53

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39

BUSINESS AND ENTERPRISE

Current position

3.47 Current devolved responsibilitiesare used to support enterprise and

business in Scotland,

54

and tosupport the Scottish EconomicRecovery Plan.

3.48 However, many of the key policyareas that contribute to enterprise

and business remain reserved, forexample company law, corporateinsolvency, competition andconsumers,55 health and safety

and employment rights. Underthese arrangements, Scotland'sgrowth has remained behind thatof the United Kingdom in nine outof the past 10 years.56

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Enterprise and business

recommendations of the Commission

on Scottish Devolution

3.49 The Commission concluded that aseparate macroeconomic policy forScotland would affect what theysaw as the benefits of the economic

Union.57 The Commission did nottherefore propose any alterations tothe Scottish Parliament and theScottish Government’s responsibilitiesaffecting business and enterprise.

3.50 The Commission did not recognise

or discuss the historic under-performance of the Scottish economycompared to the United Kingdom asa whole, nor the Europeandimension to economic Union, which

guarantees the free flow of goods,services and people betweenScotland, the rest of the UnitedKingdom and other member states.

3.51 The Commission did makerecommendations on related issues:health and safety and insolvency.

Health and safety

3.52 The Commission recommended acloser relationship between theHealth and Safety Executive (HSE)in Scotland and the ScottishParliament.58 The Commission foundno reason in principle why health

and safety (or elements ofenforcement) could not be devolved,but recommended that the currentreservation should continue.

3.53 This recommendation recognisedthe importance of devolved matters

to health and safety in Scotland andwould give some opportunity forScottish interests and factors toinfluence HSE policy and operations.However, devolution beyond the

Commission’s proposal wouldprovide clearer enforcement andremove boundaries to improveconsistency.

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Insolvency

3.54 The Commission’s solerecommendation was that the UnitedKingdom Insolvency Service, withinput from the Scottish Government,should be responsible for the rulesfor insolvency practitioners on both

sides of the border.59

3.55 As the Commission recognised,devolved Scots law governs muchof the substance and procedurefor insolvency in Scotland. Byincorporating these matters into

United Kingdom legislation, thisrecommendation would increasecomplexity and work against thepurpose of devolution.

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3.56 There are a number of important areas of business andenterprise policy that could be devolved beyond therecommendations of the Commission on Scottish Devolution:employment60 and competition law; regulation of companies;and health and safety. The Scottish Parliament and Governmentcould be given responsibility in these areas to make Scotland anattractive environment for business and to promote sustainableeconomic growth.

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Corporation tax

3.57 A major policy lever that could bedevolved is corporation tax. Thetax burden on small businesses inScotland has been substantiallyreduced within existing devolvedcompetence through the Small

Business Bonus Scheme. A morecompetitive corporation tax couldboost the economy, includingforeign investment, research anddevelopment, and the siting ofcorporate headquarters. Corporationtax could be adjusted for small andmedium sized companies, greatertax allowances could be given fortargeted activities and the

administrative process could besimplified. The United Kingdom

(and hence Scotland) has the eighthhighest corporation rate in theEuropean Union; a number ofEuropean countries of comparablesize to Scotland have alreadyintroduced significantly morecompetitive corporation tax rates.Within a full devolution framework,

the Basque Country has used itsresponsibility for corporation tax to

introduce a lower statutory rate to

the rest of Spain, and to put in placemore competitive allowances forparticular growth enhancingactivities, such as investment inresearch and development.(see Box 7 on the Basque Country).

Independence

3.58 Under independence Scotland

would have responsibility for thefull range of policies to encourageenterprise and business growth,and the opportunity to address thefactors which have contributed tothe economic under-performanceof the last 30 years.

3.59 Scotland would continue to besubject to international rules, suchas European Union directives oncompetition and tax harmonisation.However, Scotland would act as anindependent state in its relationshipwith the international economic,financial and business community,and would have a full voice inEurope.

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Competition and consumers

3.60Recent research indicates a lack ofcompetition in markets in Scotland,with high prices relative to theUnited Kingdom in areas liketransport, utilities, catering andleisure services.61 Independence

would allow future developments incompetition and consumer policy tobe based on Scottish political, socialand economic interests, for examplesecuring or sustaining comparativeadvantage. Responsibility forcompetition in Scottish markets,combined with an enterpriseoriented fiscal policy, would:

• encourage businesses to improvetheir internal efficiency and reduce

costs• incentivise early adoption of new

technology and other forms ofinnovation

• increase the international

competitiveness of Scottishbusinesses and products

3.61 Scotland’s geography raises issuesfor consumers in the islands or in

rural areas, who enjoy far fewerchoices in the products and services

they use.62 Consumer policy in anindependent Scotland could bedeveloped in the context of a setof key principles such as access,choice, safety, information, fairness,representation, redress, andeducation.

International trade

3.62 Scotland has long been an outward-looking trading nation, with strongglobal connections. Scottishbusiness organisations work acrossthe globe to increase internationaltrade revenue through exports. They

also seek to increase investment inScotland and promote Scotlandinternationally as a vibrant place tolive, work and do business with.

3.63 Scotland’s biggest trading partner isthe rest of the United Kingdom, with

trade worth £26.1 billion in 2007.63

On independence Scotland and therest of the United Kingdom wouldretain common interests and tiesthrough shared history, geography

and trade links. As a full member ofthe European Union, Scotland wouldcontinue to have access to itsmarkets. Independence wouldenhance the opportunities for

Scotland’s wider international tradeand investment, underpinned byforeign and fiscal policies dedicatedto Scotland’s political, social andeconomic interests. For example,

Scotland’s overseas representationis likely to focus on business andenterprise, rather than the projectionof power.

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Tax collection

3.64 The overall tax burden is centralto the competitiveness of the tax

system, but the costs ofcompliance are also important.

A study commissioned by HMRevenue and Customs in 2006estimated that administration ofUnited Kingdom corporation taxcost business £608 million, 70% ofwhich was from Small to MediumEnterprises.64

3.65 A simpler tax system in Scotlandwould reduce costs for businesses

and government, reduce incentivesfor tax avoidance and non-

compliance, and potentiallyincrease revenue.65 Reportingof statutory accounts and taxcalculations could be unified forsmaller companies. The smallestcompanies might be assessed fortax on cash flow rather thanaccounting profit. Business leaders

could be directly involved in thedesign of revised tax, regulation

and enterprise systems forScotland, avoiding the uncertaintysurrounding recent UnitedKingdom announcements oncapital gains tax.

45

e event in elrose wa attended by a good crosection of the communityand the open format leto informative discussion.

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BOX 6: SCOTLAND’S ECONOMY

1. Scotland has a diverse and open knowledge-based economythat provides employment for around 2.5 million people andgenerates total annual economic output of over £100 billion.66 Inaddition, Scotland’s offshore natural resources, including oil andgas, generated an estimated annual output of over £30 billion in2008.67

2. Scotland’s economy has adapted well in recent decades to theforces of globalisation, and the structure of Scotland’s economyhas changed significantly. In common with many industrialisedcountries, the manufacturing sector has declined and the servicesector has grown. In 1981, 479,000 people in Scotland wereemployed in the manufacturing sector; this had fallen to 220,000

in 2007. In contrast, between 1981 and 2007, employment in theservice sector rose by 587,000, more than compensating for thefall in manufacturing employment.68 The service sector nowaccounts for around 75% of employment in Scotland.69 Scottishfirms also continue to maintain and develop global competitive

strengths in the manufacturing and engineering sectors throughinnovation and commercialisation of research.

3. The Scottish economy remains diversified with a number ofsectors contributing to output, employment and exports.Scotland’s goods and services are exported across the globe.Beyond the United Kingdom, the European Union and NorthAmerica are the main export markets for Scottish firms.70

4. To expand Scotland’s areas of international comparative

advantage, the Government Economic Strategy recommendsbuilding critical mass in a number of key sectors with high growthpotential and the capacity to boost sustainable economic growth.The Scottish Government continues to support enterprises acrossScotland in other sectors where action can be taken to overcomeweaknesses in markets, and where particular businesses can makea significant contribution to the Scottish economy.

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5. The energy sector makes a substantial contribution to Scotland’seconomy. In 2007, the energy sector employed directly 40,700 people,accounting for 23% of the total people employed in the energy sector inthe United Kingdom.71 Scotland’s oil and gas industry, based in Aberdeen,is one of the world’s largest energy hubs, and is home to major Europeanheadquarters of global companies like BP and Shell. The industry body,Oil and Gas UK, estimates that in total the sector supports around195,000 jobs in Scotland through its impacts on the supply chain, exportactivities and employee expenditure throughout the economy. Since1976/77, production from North Sea oil and gas fields has generatedmore than £269 billion (2008 prices) in direct tax receipts to the United

Kingdom Government.

6. In addition to the oil and gas sector, Scotland has considerable potentialto develop renewable energy and low-carbon energy production,contributing to Scotland’s targets to reduce climate change emissions.The sector is expanding rapidly in terms of new capacity and output,with electricity generation from renewable sources reaching 20% of

gross consumption in 2007. The sector is estimated to employ 4,000 –6,000 people, and there is scope for significant expansion over the next

decade.72 Scotland’s natural advantages, coupled with investment in newtechnologies, means that it is well-placed to be a major European centrefor the production and export of renewable energy.

7. The financial services industry has a long history in Scotland, and it

remains an important part of the economy. Edinburgh is one of Europe’slargest financial services centres, and many of the world’s major financialorganisations have offices there. The industry employed directly 91,500people in 2007.73 Global turmoil in financial markets experienced since2007 has created a challenging environment, but Scotland’s strengths in

financial services remain despite the pressure on the banking sector.Several financial services companies in Scotland continue to makeannouncements of expansion and investment plans.

8. Food and drink (including agriculture and fisheries) is a key sector in theScottish economy. The contribution to economic output from food anddrink manufacturing was £3.2 billion, of which over half was from themanufacture of beverages.74 The spirits sector within drinksmanufacturing, especially whisky, forms an important part of the sector’scontribution to the Scottish economy in terms of value added and exportpotential. Agriculture and fishing provide further economic contributionalong with the wider food and drink supply chain.75

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9. Tourism provides an important source of expenditure in Scotland’seconomy, and helps generate economic activity in some of the morerural and fragile areas of Scotland, sustaining communitieseconomically and socially. Around 14.6 million tourists visited Scotlandin 2008, and total expenditure on tourist trips stood at £4 billion. 76

10. The creative industries make an important contribution to Scotland’seconomy. Scotland’s creativity has a strong international reputation.Scottish art, film, fashion, music and literature is recognisedthroughout the world, as are the design and computer gaming

industries. Creative industries have grown over the past 10 years inScotland, and they are estimated to contribute £2.4 billion toeconomic output and account for 5% of Scotland’s total exports.77

11. The Life Sciences sector in Scotland is diverse, encompassing a rangeof industries including biotechnology and pharmaceutical companies,contract research organisations (CROs), medical device anddiagnostic companies, along with specialist suppliers and supportorganisations. This sector employs over 30,000 people directly and

indirectly in more than 600 organisations, with an annual turnoverexceeding £3 billion and economic output of £1.3 billion.78

12. Scotland’s strong academic base is evidenced by the size, scope andinternational standing of Scottish higher education institutions, withfour (Edinburgh, Glasgow, St Andrews and Aberdeen) among theworld’s top 150 universities.79 Directly employing some 35,159 full-timeequivalent staff and teaching some 224,855 students, Scottishuniversities had a total turnover of £2.48 billion in 2007/08. 80 Scotlandhas the highest ratio of cited research papers to Gross Domestic

Product in the world and the impact of Scottish research is rankedsecond in the world, behind only Switzerland.81 Scottish universities

attracted 33,520 international students in 2006/07, at 14.6% of thestudent body third in the Organisation for Economic Cooperation andDevelopment behind Australia and the United Kingdom.82

13. Scotland has a diverse economy which plays a dynamic role in themodern global economy. Scotland has responded to shifting globalpatterns to ensure that its workforce has the right skills and that its

business infrastructure remains competitive.

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MIGRATION

Current position

3.66 Demographic change presentsScotland with challenges of growingthe population and addressing thestructure of the Scottish population,in particular those of working age.

Population growth is a key driver ofeconomic performance and Scotlandhas a population growth target tomatch average European populationgrowth over the period from 2007to 2017.84 The average age of theScottish population is predicted toincrease, with the working agepopulation decreasing and a greaterratio of pensioners to persons of

working age.

85

3.67 The Scottish population is projected

to decline in the mid-2040s, with theworking age population projected todecline after 2020. The structure ofthe Scottish population is projectedto change more rapidly, with olderpeople accounting for a relativelyhigher share of the Scottishpopulation.86 The dependency ratio

– the ratio of persons aged under 16or over pensionable age to those of

working age – is projected to risefrom around 60 per 100 in 2008 to68 per 100 in 2033.

3.68 Immigration is currently reservedto the United Kingdom Parliament.For migrants from outside theEuropean Economic Area, there isa points-based managed migration

system which takes account ofqualifications, age, salary, andlanguage skills. For skilled migrantsthere is also a shortage occupationlist. Some elements of the system

reflect Scotland-specificcircumstances, such as recognitionof Higher National Diplomas as aqualifying criterion, and a separateScottish shortage occupation list.

However, the points based systemoperates at a United Kingdom level,with no substantial regionalvariations, which makes attractingthe required number of migrants to

Scotland more challenging, asScotland has different populationneeds from most other parts of theUnited Kingdom.

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51

We really applaud and support the United Kingdom Home Office’s points based system forimmigration. But it is very unfortunate that it isnot taking into consideration the regionaldifferences in immigration attractions in England versus Scotland. Why not do a regional variation?(Edinburgh CEMVO event, 22 April 2009)

Migration recommendations of the

Commission on Scottish Devolution

3.69 The Commission recommendedretaining the current reservation ofimmigration, but that activeconsideration should be given to

agreeing sustainable variations toreflect the particular skills and

demographic needs of Scotland. TheCommission concluded that freedomof movement and employabilityargued for one system throughoutthe United Kingdom. However, themajority of submissions theCommission received on this issuecalled for greater flexibility and

more responsibility for Scotlandwithin an overall United Kingdom

framework. Sub-state migrationpolicies have been establishedsuccessfully in a number of countries,including Australia and Canada.

3.70 The Commission’s recommendation is

a variation on existing arrangements,which allow Scotland to contribute to

overall United Kingdom immigrationpolicy, but give it no formal role. TheCommission would not give Scotlandresponsibility for its migrationrequirements for either economic ordemographic reasons, as these wouldbe subject to policy imperatives inother parts of the United Kingdom.Experience elsewhere shows that

greater responsibility for Scotland todetermine its own migration policyneed not have the impact on the restof the United Kingdom suggested bythe Commission.

Independence

3.71 An independent Scotland would haveresponsibility for its own migration

policy and its borders. Scotlandfaces different issues from the otherparts of the United Kingdom, andmigration policy could be tailored toaddress the economic challenges ofdemographic change. Immigration

could also help address skillsshortages in Scotland’s labour market.

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52

3.72 Many nations use migration policiesto address demographic problems,as well as addressing skillsshortages. Both Canada andAustralia give priority to potentialimmigrants with particular skills andexperience. Quebec has its own

immigration policies, establishedunder the Canada-Quebec Accord

on Immigration, which requires,amongst other things, thatimmigrants can speak French orEnglish. A Scottish migrationscheme could both place particularimportance on required skills andgive priority to immigrants whoassist in meeting the demographic

challenges, for example youngpeople or families with children.

3.73 Citizens of European Union memberstates are entitled to freedom ofmovement within the single market.As a full member of the EuropeanUnion, Scottish borders wouldremain open to European Union

nationals, just as Scots are free tomove throughout the EuropeanUnion.

3.74 Scotland’s immigration systemshould also support the country’scommitment to human rights. Likeimmigration, asylum policy iscurrently the responsibility of theUnited Kingdom. On independence,Scotland could take into account

economic and demographic needs,as well as human rights and justice,

when considering asylumapplications. Responsibility for theimmigration and asylum systemwould allow Scotland to providegreater security to asylum seekersawaiting the outcome of theirapplication and ensure a fairerand more humane asylum system.

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53

BROADCASTING

3.75 Broadcasting is a key part ofnational life, expressing Scottishculture to domestic and internationalaudiences. The broadcasting

industry also makes an important

contribution to the economy.

Current position

3.76 Broadcasting is a reserved matter.All decisions about broadcastingwhich affect Scotland are taken bythe United Kingdom, includingrelated matters such as thetelevision licence fee, broadcasting

spectrums, funding and regulation.

3.77 In 2008, only 3.7% of the BBC’snetwork television programmeswere made in Scotland, while STV isnow obliged to produce only 1.5 hoursof non-news programming per week,a reduction from three hours priorto January 2009. The ScottishBroadcasting Commission expressedstrong concerns about the state of

public service broadcasting inScotland, and identified a number ofareas where viewers felt that thereshould be a better choice ofprogramming relevant to Scotland.87

Broadcasting recommendations of the


3.78 The Commission made onerecommendation relating tobroadcasting: that the appointmentof the Scottish member of the BBC

Trust should be the responsibility ofScottish Ministers, subject to thenormal public appointments process.This recommendation could be

implemented immediately withoutthe need for legislation. Although itwould not directly affectbroadcasting in Scotland, theproposal would give the ScottishGovernment influence over parts of

the broadcasting framework with aparticularly Scottish element.

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54

Full devolution

3.79 Further devolution would provideopportunities for Scotland to haveresponsibility for different parts ofits broadcasting framework, whileremaining within the overall UnitedKingdom framework, including the

BBC and Ofcom. Examples of such

an arrangement include Catalonia,which is responsible for Catalanbroadcasting, while the Spanishgovernment is responsible forSpain-wide broadcasting.88

3.80 Additional responsibilities couldinclude: new public servicebroadcasting bodies, such as theScottish digital networkrecommended by the Scottish

Broadcasting Commission; ensuringthat Scottish culture and interestswere better represented throughtelevision and radio programming;responsibility for appointments of

board members of MG Alba (theorganisation responsible for theoutput of BBC Alba). Under furtherdevolution Ofcom could be chargedwith taking the lead in setting

commercial, public service networksnations and regions obligations toScotland and ensuring they were met.

3.81 The majority of funding for public

service broadcasting in the UnitedKingdom comes from the TV licencefee (for the BBC) and advertising.The United Kingdom also providesfunding of £98 million for S4C inWales from general taxationrevenues, in addition to theprogramming subsidy provided by

broadcasters which is worthapproximately £25 million. Further

devolution should be accompaniedby a negotiated arrangement forfunding public service broadcastingin Scotland. Scotland could, forexample, be allocated a share of TVlicence revenues and revenuesgenerated from licensing broadcastersand other telecommunicationsoperators to use spectrum.

Why is broadcasting a reserved issue? I askspecifically because I am interested in Gaelicbroadcasting where the broadcasting side isreserved and the Gaelic side is devolved. This causes some odd situations.

(Dundee Summer Cabinet, 30 June 2009)

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Independence

3.82 Independence would mean fullresponsibility for broadcasting inScotland. Impartiality and politicalindependence of broadcasters,including a national public servicebroadcaster (based initially on the

existing staff and assets of BBCScotland), would remain a keyprinciple. There would be variousoptions available for the funding of aScottish national broadcaster. Thiswould ensure that an independentScotland had a high-quality,impartial national public servicebroadcaster which reflected Scottishlife, culture and interests.

3.83 An independent Scotland should not

lose the range and quality ofbroadcasting options receivedcurrently, and indeed should seek anenhanced broadcasting service. Forexample, Scotland should continue to

access BBC and other broadcastersfrom the United Kingdom and thereshould be no obstacles to Freeview,satellite and cable services beingavailable in Scotland on a similar

basis to now.

3.84 Independence would allow a

regulatory system that prioritisedissues of particular importance forScotland, such as making availableadditional spectrum for newchannels. A Scottish broadcastingregulator would also safeguard thequality and impartiality of Scottishpublic service broadcasters withinEuropean regulations.

3.85 Independence would also providethe opportunity to rationalisechannel 3 licensing arrangements.Following a merger between theBorder and Tyne Tees local newsservice, viewers in the South ofScotland now receive ‘local’ eveningnews programmes which arebroadcast from Gateshead.89

Independence would make it easierto establish licensing arrangements

which would better serve Scottishviewers, including a singlenationwide licence, or the creationof further licences to allow moreregional broadcasting.

Broadcasting industry

3.86 The Scottish broadcasting industry

employs 2,400 people and is wortharound £111 million to Scotland’seconomy. Independence wouldprovide opportunities to developthe industry further. The Scottish

Government could take a range ofsteps to attract inward investment,as have countries like Ireland andCanada. It is likely that this would inturn generate further investment in

the Scottish broadcasting industry,including further spending onprogramming. Additional investmentof this kind would bring improvedchoice for Scottish viewers and

would allow broadcasting, alongwith the other creative industries, tomake a significant contribution toeconomic growth in an independentScotland.

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CONCLUSION

3.87 Addressing Scotland’s historicunderperformance, and encouragingsustainable economic growth is oneof the key challenges that face thenation. A number of different policyareas contribute to this goal, butmany of the major mechanisms opento independent states – economic

and fiscal policy, monetary policy,

international trade – are currentlyreserved to the United KingdomGovernment.

3.88 Some of these matters couldbe devolved within the UnitedKingdom, for example aspects ofthe taxation system or employmentlaw. However, any level ofdevolution would leave Scotlandwithin the overall macro-economicpolicies of the United Kingdom and

its international position on

economic matters, especially in theEuropean Union.

3.89 Independence would give Scotlandfull responsibility for its owneconomic performance, and for all

the policy mechanisms to encouragethe optimum level of development.

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OVERVIEW

4.1 Scotland has a strong traditionof striving for a fairer and moreinclusive society, combining equalityof opportunity to thrive and excel,with support for those in need.

4.2 There are a number of important

areas of government policy thatshould build on those traditionalScottish values. Welfare supportand benefits should be responsive tothe specific needs of individuals andthe country: its economy, housing,

geography and demographics.People should be supported backinto work, and those who cannotwork should not be abandoned toa lifetime of poverty and struggle.Those who suffer from disadvantageor discrimination should beprotected.

4.3 Under the current devolutionsettlement, the major systemsfor providing social justice – thetaxation and benefits systems –are reserved to the United Kingdom,as is the legislation to protect and

promote equalities.

4.4 The Commission on ScottishDevolution recognised the closerelationship between devolvedpolicy, for example on poverty andhousing, and the reserved benefits

system. The Commissionrecommended a formal but very

limited role for the ScottishParliament and Government inthese matters. Devolution of greaterresponsibility for benefits wouldallow more integrated policy totackle poverty in Scotland, butwould also require devolution oftaxation, and full financial

responsibility for Scotland.

4.5 With independence Scotland wouldbe responsible for addressing all ofthese issues, and for designing andimplementing a taxation andbenefits system integrated withother policies on skills, education

and family support to address issuesof poverty and exclusion. Scotlandwould also be responsible forensuring that all its citizens aretreated fairly and equally, and enjoy

the full protection of the law.

59

CHAPTER 4

A FAIRER SCOTLAND

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WELFARE AND BENEFITS

Social inclusion and poverty in Scotland

4.6 Around one in six people in Scotlandare living in relative poverty – that is,their income is so far from the normthat they face difficulties

participating effectively in society.This means that around 840,000Scots live in poverty, including200,000 children and 200,000

pensioners.90 Poverty levels inScotland are better than the UnitedKingdom as a whole, but the UnitedKingdom is above the average forother European Union countries forchild and pensioner poverty.91

Inequalities in health, education andemployment opportunities arepassed from one generation toanother: children who grow up in

poverty are more likely to havechildren who suffer from poverty,repeating the cycle.92

Current position

4.7 Scotland is responsible for anumber of services which influenceemployment prospects and lifechances, including education,training, skills, healthcare andchildcare. However, the majormechanisms for addressing poverty– social security benefits, tax credits,the minimum wage and employment

support – are reserved to the UnitedKingdom Government.

4.8 In important areas Scotland cannotdesign or deliver policies to addressits social needs. For example,Scotland cannot determine eligibilityfor, nor set the levels of, benefits,and cannot supplement existingUnited Kingdom schemes for

particular social objectives – for

example supporting students orproviding child care – without therecipient risking the loss of existingUnited Kingdom benefits or taxcredits. Equally, Scotland cannot optout of changes by the UnitedKingdom Government which are notappropriate for Scotland, forexample broad market areas forHousing Benefit not suitable for

Scottish conditions.93 Scotland isalso constrained in developingdevolved policies where there areconnections with the reservedbenefit system, for example localgovernment taxation. The UnitedKingdom Government withdrewAttendance Allowance from thosereceiving free personal care, adding£30 million a year to the costs borne

by the Scottish Government.

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Welfare recommendations of the


4.9 The Commission concluded that the

welfare system should continue to bereserved, as it ensures common socialcitizenship throughout Great Britain,and the complexity of the social

security system could lead todifficulties in devolving any oneelement.

4.10 The Commission recommended:

• Scottish Ministers, with the agreementof the Scottish Parliament, should be

able to propose amendments to theHousing Benefit and Council TaxBenefit systems in Scotland connectedto devolved policy

• a formal consultation role should bebuilt into the commissioning processfor welfare to work programmes totake into account the views of theScottish Government

• the Deprived Areas Fund should be

devolved to the Scottish Parliament• the United Kingdom Government

should explore devolving thediscretionary elements of the Social

Fund

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4.11 These recommendations recognisethe close link between devolvedpolicies and the reserved benefitssystem, and embody an importantprinciple: that the ScottishGovernment has a legitimate interestin the development and delivery ofthese policies in Scotland. However,the recommendations do not giveScotland a substantive role indecision making. There is no

obligation on the part of the UnitedKingdom Government to acceptScottish proposals, even when thesehave been agreed by the ScottishParliament.

4.12 Devolution of the Deprived Areas

Fund would enable Scotland to planand spend in a more integrated and

strategic fashion, but there is nocommitment to a Deprived AreasFund beyond 2011. Similarly,devolving elements of the SocialFund would present opportunitiesto align the funding better withScottish priorities.

Full devolution

4.13 Full devolution would allow Scotlandto develop a benefits system guidedby a number of key principles to

eradicate poverty and reduce incomeinequalities:94

• a fair and transparent benefitssystem, sympathetic to thechallenges faced by people living inpoverty and providing confidence in

the security of their income

• benefits, tax credits and employmentsupport systems working inharmony to support those who canmove from poverty through work,with financial benefits for workingthat are significant and sustained

• transitional support into employmentshould be transparent, responsive,quick and effective, so successfulemployment is not undermined by

financial uncertainty• for those that cannot work, benefits

must provide a standard of livingwhich supports dignity, freedom andsocial unity

4.14 It would be possible for Scotland todevelop a devolved benefits system

within the United Kingdom. InNorthern Ireland social security,

child support and pensions aredevolved and there is a separateNational Insurance Fund.

4.15 However, for full devolution of the

benefits system, there would needto be appropriate levels of fiscalautonomy in Scotland. It would bedifficult for Scotland to takeresponsibility for the levels of and

eligibility for benefits without beingresponsible for any resulting costs,or being able to take advantage ofany savings. In turn, this wouldrequire Scotland to have substantial

responsibility for raising its owntaxes and designing a system to meetboth welfare and wider economicneeds.95 This seems unlikely whilethe United Kingdom has a one-size-fits-all welfare system.96

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Independence

How do you propose to fund pensions, nationalinsurance, benefits etcon independence?(Haddington National Conversation event, 28 September

2009)

4.16 Independence would give Scotlandresponsibility for the taxation andbenefits system. On independencebenefits, tax credits and the statepension would continue to be paidas now in an independent Scotland.It would be for future Scottishadministrations to deliver

improvements to the system,designed for Scottish needs.

4.17 In both 2006/07 and 2007/08, asmaller percentage of governmentrevenue was spent on welfare inScotland than in the United Kingdom

as a whole: spending on socialprotection accounted for 34% oftotal government revenue in the

United Kingdom, but 33% inScotland, including a geographicshare of North Sea revenues.97

4.18 A range of factors would affect thedesign and delivery of a taxationand benefits system for anindependent Scotland, including theoverall effect on the economy; thebalance between reasonable

taxation and minimum standards

of care and guarantees of income;incentives to earn and work; and thecost to public finances. These all needto be balanced with the economiccircumstances and the priorities andneeds of the nation at any givenpoint. For example, the support thatmight be offered to home ownersduring a recession might differ fromthat offered at other times.

4.19 The welfare system of an independentScotland could also be guided by thekey principles to eradicate poverty.For example, a new system ofbenefits would avoid poverty traps,where little or no financial benefit isgained from employment because

means-tested benefits arewithdrawn. Those attending training

courses or doing voluntary work toimprove their employment prospectswould not be penalised by losingbenefits. Reductions in benefits toreflect people’s improvedcircumstances would be set to matchpolicy objectives, and integrated withthe overall taxation system.

4.20The welfare system could be

integrated and different forms ofsupport be made complementary.For example, free child care orpersonal care would not result in theloss of a corresponding cash benefit.

Similar decisions could be made onpayments for a particular purpose –for example to support childrenbeing cared for by relatives – whichcurrently result in the loss of otherpayments to support income.98

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4.21 An independent Scotland coulddevelop its own flexible approachesto social issues, such as preparingpeople to return to work, or bringingtogether local and national servicesto meet the different needs ofdifferent individuals. A one-size-fits-all rule-based system cannot takeaccount of the diversity ofindividuals’ wishes and needs. Forexample for some lone parents a

voluntary approach to removingbarriers to employment may wellbe more appropriate than currentUnited Kingdom proposals forobligatory skills training whenchildren reach a certain age.

4.22 A key element of the welfare systemis that people are able to understand

easily what benefits they are entitledto, and how to access the supportavailable. Greater integration in anindependent system would improvepeople’s confidence and theirunderstanding of their entitlement.This would address the current levelof take up, estimated at 78-88% for

income support; 61-70% for pensioncredit; 80-87% for housing benefit;

62-68% for council tax benefit; and52-60% for job-seekers allowance.99

HOUSING AND REGENERATION


4.23 Many responsibilities for housing and

regeneration policy are devolved,including funding, land-use planning,tenancy rights, housing quality,property law and regulation oflandlords. Significant progress hasbeen made since devolution,including homelessness legislation,measures to improve the conditionof housing stock in the social andprivate sectors, and introducing the

first national mortgage supportscheme for homeowners at risk fromrepossession. Scotland’s housingdiffers from the rest of the UnitedKingdom: there is still less private

housing and a higher proportion ofsocially rented stock; housing hasbeen more affordable than theUnited Kingdom average and thehousing market less volatile;

Scotland’s climate affects approachesto energy efficiency and fuelpoverty; and there is a differentlegal system.

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What would the Scottish Government doto address carers’ problems financially,were we to have independence?(Melrose Summer Cabinet, 28 July 2009)

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65

4.24However, important policymechanisms such as inheritance tax,Stamp Duty and social securitysystem are reserved to the UnitedKingdom. The distinctive features ofthe Scottish housing landscapemean that an approach which maybe appropriate in other parts of the

United Kingdom will not necessarilydeliver for Scotland.

Housing recommendations of the


4.25 The Commission recommended:

• that Stamp Duty Land Tax should bedevolved to the Scottish Parliament,with a corresponding reduction inthe block grant

• Scottish Ministers, with the

agreement of the ScottishParliament, should have scope topropose new arrangements for

Housing Benefit and Council TaxBenefit when these are connectedto devolved policy changes

Stamp Duty

4.26 Responsibility for Stamp Duty wouldbe a useful addition to Scottishhousing and economic policy.Applying Stamp Duty rates toindividual properties within bulk

purchases could encourageinstitutional investment in the private

rented sector. Stamp Duty could beused to achieve wider objectives suchas incentivising energy efficiency.Stamp Duty holidays could relievestressed markets. However, if onlylimited taxes are devolved, it wouldnot be possible to adjust other taxesor borrow to compensate should the

base of those taxes fluctuate, asStamp Duty has recently.

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Housing benefit

4.27 The wide array of social securitybenefits and tax credits availablein the United Kingdom areinterdependent. Housing benefit is apassport to other benefits such asincome support. Changes to any

element of housing benefit are likelyto impact the coherence and thecost of the overall benefits system.The role recommended for Scotlandmay be more apparent than real.

Independence

4.28 As in other areas, housing andregeneration policy would benefitmost from the increased fiscal andeconomic responsibilities that

independence - or full devolution -would bring to Scotland. Housing,

particularly the social rented sector,also relies heavily on HousingBenefit to fund initiatives andresponsibility for this would assistintegrated and focused decisionmaking in Scotland.

Taxation

4.29 Scotland has experienced a lack ofhousing, particularly affordablehousing. One fiscal mechanism thatmight address this issue in ruralareas is Inheritance Tax. Thebeneficiaries of a will often need to

sell quickly to pay the InheritanceTax, moving stock from the rentalmarket and reducing options forthose who cannot or do not want tobuy. This problem affects Scotlanddisproportionately because of thehigh proportion of rural areascompared to the rest of the UnitedKingdom. Responsibility forInheritance Tax and other taxes

would allow Scotland to addressthis issue.

Funding housing policy

4.30There are two distinct streams ofhousing policy being implementedin Scotland, one set at a UnitedKingdom level through the benefitssystem and one set at a Scottishlevel. For example, the ScottishGovernment subsidises the social

housing sector by providingdevelopment grants to build newlow-cost homes for rent. Housing

benefit currently meets about two-thirds of the total rents in the sector,or £1 billion a year. Any significantchanges to housing benefit affectboth tenants and the devolvedpolicy on investment in socialhousing in Scotland. As housingbenefit decisions are taken forthe United Kingdom as a whole,Scotland has little influence on

the overall balance betweenthese sources of funding.

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67

With some of the worst housing stock in Europe,and targets that we have committed to in terms

of achieving zero-carbon homes by 2016, what is the Scottish Government’s role in achieving zero-carbon development?(Dumfries Summer Cabinet, 29 July 2008)

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EQUAL OPPORTUNITIES

Current position

4.31 Equal opportunities is largelyreserved to Westminster. There are

two exceptions which enableScottish Ministers to:

• encourage equal opportunities• place duties on Scottish public

bodies, and cross-border bodieswith responsibility for devolved

matters, requiring them to makearrangements to ensure they are

operating within the law

4.32 Since devolution, Scottish Ministershave used these responsibilities toadvance equality in Scotland. It hasalso been possible to pursue

different policies within the contextof the legal framework. For example,equality provisions have beenincorporated into Scottish legislation

on housing, education and localgovernment. The Scottish Parliamenthas introduced legislation on hatecrime. The Scottish Government’spolicy on improving communityrelations with asylum seekers differs

from that of the United KingdomGovernment. Scottish Ministers haveplaced a duty on Scottish publicauthorities to report on equal pay.

4.33 The Equality and Human RightsCommission is a United Kingdom

body operating in Scotland with aScotland Committee and ScottishCommissioner. It is a statutory bodywith responsibility for equality andhuman rights, but only reservedhuman rights matters in Scotland.The Scottish Human RightsCommission has responsibility fordevolved human rights matters.

Equality recommendations of the


4.34The Commission did not recommendnew arrangements. However, theCommission’s recommendation thatthe Scottish and United KingdomParliaments discuss and agreecommon social rights couldpotentially include reference toequality.

Full devolution

4.35 Evidence to the Commissionadvocated devolution of equalopportunities, as responsibility forequality legislation should not beseparate from key devolved policies

such as health, education, housing,family law, mental health, localgovernment and justice. There areparticular differences in Scotland’sdemographics and geography andits experience of discrimination andinequality, such as sectarianism.

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How can the government truly facilitatean equal, equitable Scotland in which racialequality is maintained?(Edinburgh CEMVO National Conversation event, 22 April 2009)

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Devolution of equal opportunitieswould allow legislation on equality

as it applied to devolved matters.Equality legislation passed inScotland would not apply toreserved matters such asemployment, and consideration

would need to be given to areaswhere there are reserved anddevolved responsibilities, suchas transport.

Independence

4.36 Scotland is an increasingly diversenation and its people have differing

needs and experiences. Takingresponsibility for equal opportunitieswithin an independent Scotlandwould allow equality legislation tobe promoted and enforced. Equalitylegislation would be developed in theScottish policy context and to ensure

coherence with legislation in otherareas such as health, education andhousing. In an independent Scotland,

it would be possible to establishclear lines of accountability, and todetermine distinct mechanisms forsecuring, promotion and enforcementof equal opportunities.

4.37 To follow international best practice

in equal opportunities Scotlandwould continue current UnitedKingdom commitments to Europeanlegislation and a range of Internationalconventions such as the UN

Convention on the Elimination ofDiscrimination against Women(CEDAW) and the UN Conventionon the Rights of Disabled People.With independence, Scotland couldimplement the requirements of these

conventions taking account of theScottish context.

CONCLUSION

4.38 Under the current devolutionsettlement the major tools topromote a socially just society remainreserved to the United Kingdom.While it would be possible todevolve to Scotland responsibility

for aspects of the benefits system,or a role in United Kingdom policies,full devolution would requireScotland to take responsibility for itsfinances and its taxation system toensure an integrated approach tothose requiring support. Therecommendations of the Commissionon Scottish Devolution fall far short ofthis level of competence for Scotland.

4.39 With independence Scotland could

address the needs of all in society,combining reliable and transparentsupport from benefits with

opportunities for training, supportfor housing and child care, andtaxation incentives integrated withinan overall system that did not imposefinancial barriers to those returningto work. Scotland could also ensurethat it took account of the diverse

needs of its population, promotedequality and addressed the barrierswhich prevent people from playing a

full role in society, that its mostvulnerable groups, and thosesuffering discrimination, receivedprotection and that internationalstandards for equality were upheld.

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OVERVIEW

5.1 Scotland’s natural heritage enhancesthe lives of the people of Scotlandand supports tourism, agriculture,

fishing and aquaculture. The firstdecade of devolution has seenlegislation on climate change,improving the environment and

tackling flooding. Scotland hasdeveloped an approach to nationalparks, land reform and natureconservation designed for Scottishcircumstances, and distinct fromapproaches in the rest of the United

Kingdom.

5.2 Scotland could play a leading role inaddressing the challenge of climate

change and meeting Europeantargets for renewable energythrough its potential in wind, tide

and wave power. Scotland’sremaining reserves of oil and gassupport an infrastructure andtechnical expertise that could play aleading role in the development offuture low-carbon technologies, aswell as providing capital to invest in

developing renewables technology.

5.3 Major policy areas of energy,transport regulation and wasteremain reserved. Many

environmental, agriculture andfishing matters are the subject ofinternational, particularly EuropeanUnion agreement, where Scotland

has no voice outwith the policies ofthe United Kingdom Government.

5.4 Further devolution could provideScotland with mechanisms todevelop its potential, for exampleresponsibility for regulation of themarine environment could allowScotland to encourage offshorerenewables and carbon capture and

storage technology. However, theneed to work internationally, and thecentral role of the European Union in

environmental matters, means thatonly independence would allowScotland to make a full contributionand make the best use of itsexperience and potential.

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CHAPTER 5

A GREENER SCOTLAND

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ENVIRONMENT, AGRICULTURE

AND FISHERIES

Current position

5.5 Scotland has extensive devolvedresponsibilities for its naturalenvironment, natural resources,fisheries, and rural communities.100

Important areas in which theScottish Parliament and the ScottishGovernment have exercised theseresponsibilities include:

• climate change• marine issues• fisheries and aquaculture• agriculture• waste

5.6 Many environmental issues –including fisheries, agriculture,pollution and climate change –are subject to decisions made ininternational bodies, including theEuropean Union and the UnitedNations. The European Union alsoprovides access to a commonmarket for Scottish farmers,fishermen and businesses, as well

as funding opportunities to ruralcommunities, and regulations sothat food is safe to eat.

5.7 The Scottish Parliament andGovernment are responsible forimplementing European Union

decisions within devolved areas,but Scotland is represented at theEuropean Union as part of theUnited Kingdom. This can lead to

anomalous situations. For example,Scotland is among the largest seafishing nations in Europe and theScottish fleet is responsible forlanding 66% of the total UnitedKingdom volume of fish. Scotland isalso the European Union’s largestproducer of farmed Atlantic salmonand is a globally significant salmonproducing country in its own right.

The Scottish Parliament andGovernment are already responsiblefor both sea fishing and aquaculture.However, the United KingdomGovernment still takes the lead inEuropean Union negotiations onthese matters.

Climate change

5.8 The Climate Change (Scotland) Act2009 is the most ambitious climatechange legislation anywhere in theworld. The Climate Change DeliveryPlan sets out what needs to be done

now and in the medium and long-term to achieve the necessaryemissions reductions. Scotlandcannot deliver its emissions targetsby acting alone. For example,

targets for the European UnionEmissions Trading Scheme, thelargest carbon trading scheme inthe world, are set at European Unionlevel. The main responsibilities for

energy policy and regulation arereserved to the United KingdomGovernment, as are fiscal levers totackle climate change, includingVehicle Excise Duty, Fuel Duty,and Landfill Tax.

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Marine issues

5.9 Responsibilities for Scotland’scoasts and seas are divided betweenScottish Ministers and the UnitedKingdom Government, with differentrules within and beyond 12 nauticalmiles. Fishing is fully devolved out

to 200 nautical miles. Regulating oiland gas and shipping is reservedeven within inshore waters. TheCrown Estate, a reserved body,determines the use of the seabed,and coastguard services are run bythe Maritime and CoastguardAgency, an executive agency of theUnited Kingdom Government.Scotland has executive (but not

legislative) responsibility for marinerenewables. Legislative and

executive competence for marinenature conservation and installationsat sea are devolved, but only out to12 nautical miles. Despite recentagreements the underlyingfragmented nature of responsibilitiesdoes pose a risk to the successfulmanagement of marine issues, for

example supporting the emergingwind and tidal energy industry in

Scottish waters.101

Fisheries

5.10 The Scottish Government managesfish stock quotas and the activities ofthe Scottish fleet, including numberof days spent at sea, wherever theyfish within European Union limits. Itcan also regulate inshore fisheries by

all United Kingdom vessels withinthe 12 nautical mile territorial waterlimit around Scotland. Theregistration of fishing vessels is areserved function. Scotland hasbeen at the forefront of measures tosupport fish stock sustainabilitythrough, for example, theconservation credits scheme.102

However, quota management and

licensing cannot readily be adaptedto Scottish needs as long as they are

tied into a one-size-fits-all approachto United Kingdom fisheriesmanagement.

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Waste

5.11 Scottish recycling rates areincreasing, and Scotland has met itsshare of the 2010 European Union

Landfill Directive target 18 monthsahead of schedule. However,regulation of the design and contentof packaging is reserved, whichprevents Scotland taking its ownsteps to prevent and reduce wasteby designing in reusability andrecyclability.

Environmental recommendations of the


5.12 The Commission made a number of

recommendations relating to theenvironment.

Environmental taxation

5.13 The Commission recommended that

Landfill Tax and the AggregatesLevy are devolved. Landfill Tax is atax on the disposal of waste and theAggregates Levy is a tax on the

commercial extraction of rock, sandand gravel. Devolution of thesetaxes would allow Scotland greateropportunities to design integratedwaste and other environmentalpolicies, for example by employing

both higher Landfill Tax and landfillbans which are being examined in aScotland-led project. However, keyenvironmental taxes, such as VehicleExcise Duty and Fuel Duty, would

remain reserved.

Marine and nature conservation

5.14 The Commission recommendedreview of the effectiveness oflegislative agreements between the

United Kingdom and ScottishGovernments on the marineenvironment, and that marine natureconservation should be devolved tothe Scottish Parliament at theearliest opportunity. This wouldallow fisheries and marineconservation to be managed in anintegrated way. However, regulatoryresponsibilities would remain

divided for marine planning, mineraldeposits and marine renewables.

Crown Estate

5.15 The Commission recommended thatthe United Kingdom Governmentshould consult Scottish Ministersand more actively exercise powersof direction under the Crown EstateAct 1961. The Commission alsoproposed that the appointment of aScottish Crown Estate Commissioner

should be made following formalconsultation with Scottish Ministers.

These recommendations would offerScotland a role in the managementof the seabed by the Crown Estate.However, the more significant issue– that revenues collected fromScottish coastal businesses by theCrown Estate bring very little visiblebenefit to Scotland – would remain.

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Animal health and welfare

5.16 The Commission recommended thatfunding for policy relating toendemic diseases in animals should

be devolved, while responsibility forfunding exotic disease outbreaksshould be retained at a UnitedKingdom level. At present, policy onanimal health, including response toexotic disease outbreaks isdevolved, but the budgets are heldby the United Kingdom Government.One of the lessons learnt fromScotland’s response to the foot and

mouth disease outbreak in 2007 wasthat the separation of policyresponsibility from financial

responsibility, as recommended bythe Commission, is unsustainable.103

Full devolution of the animal healthbudget would bring responsibilityfor that budget and animal welfarepolicy in line, and allow devolvedbudgets to support improvements

in animal health and welfare inScotland, to reduce animal diseaseand support increased sustainable

economic growth of the livestockfarming sector.

Food labelling

5.17 The Commission recommended thatregulations of food content andlabelling should be reserved, where

separate devolved arrangementswould place a burden on themanufacturing, distribution andsupply of foodstuffs to consumers.However, this recommendationwould separate responsibility forfood labelling from devolvedresponsibilities for health, nutritionand food policies. Food labelling inScotland is also governed by

European Union legislation andalready reflects the single Europeanmarket.

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Full devolution

Would there be scope for an independent Scotland to have a distinct policy on fuelduty that reflects theneeds of a ruraleconomy? I’m thinking

particularly inrelation to the farming, haulage and

fishing sectors that we have in the Borders.

(Jedburgh National Conversation Event, 29 April 2009)

5.18 Full devolution could bring benefitsto Scotland beyond those envisaged

by the Commission.

Fisheries

5.19 By agreement, quota managementand vessel licensing arrangementshave been overseen by the fourUnited Kingdom FisheriesAdministrations acting jointly. As

policy objectives and fleet structuresacross the United Kingdom havediverged, the current joint

management arrangements haveconstrained the ScottishGovernment’s ability to put in placearrangements tailored to Scottishcircumstances. Greater managementflexibility under full devolutionwould allow Scottish Ministers to

adapt fisheries managementmeasures to meet the specific needsof the Scottish industry. Such an

arrangement would avoiddisagreements between the ScottishGovernment and the UnitedKingdom Government on, forexample, quota management.

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77

Rural and environmental taxation

5.20 The viability of rural areas andthe Scottish Government’s ability

to assist their economic recoverycould benefit from fiscalautonomy. For example,Scotland could tailor fuel andvehicle excise duties to takebetter account of Scottishcircumstances, balancing theneed to reduce emissions againstthe desire to support rural andremote communities. Specific tax

incentives could be given tolandowners who let whole farmsto new entrants to farming, or

relief from Stamp Duty Land Taxfor new entrants taking upleases. Such measures couldencourage new farmers andincrease enterprise in agriculture,food production and landmanagement in Scotland.

Independence

5.21 Independence would allowScotland to be a full member

of various internationalorganisations, including theEuropean Union. This wouldplace Scotland in a strongernegotiating position on ruraland environmental issues.

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78

Relationship with the European Union

5.22 Currently the representation ofScottish interests in the European

Union relies entirely on thepolitical goodwill of the UnitedKingdom Government, withoutany external check or remedy.Where there are differences ofview on policy, for example onreform of the CommonAgricultural Policy (see Box 8) orgenetically modified crops orproducts, the United Kingdom

Government will vote contraryto Scottish preferences.Independence would giveScotland a full voice in Europe.

5.23 Similarly, independence wouldoffer Scotland, as a leadingfishing nation, the opportunity toargue directly for replacement ofthe current Common FisheriesPolicy, through, for example,promoting repatriation of seafisheries management to thecoastal Member States.

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79

In my view the most cogent argument forindependence for Scotland is the need forseparate representation at the European Union.(Dundee Summer Cabinet, 30 June 2009)

Climate change

5.24 Scotland is a key player in energypolicy at both United Kingdom

and European Union levels. TheUnited Nations FrameworkConvention on Climate Change(UNFCCC) is the basis on whichinternational agreement onclimate change is negotiated. Themeeting in Copenhagen inDecember 2009 aims to deliver asuccessor to the UNFCCC KyotoProtocol. A new international

agreement would help Scotland

and Europe as a whole deliver

greater emissions reductions.An independent Scotland wouldmake its own contribution tosuch international agreements

(see Box 9).

5.25 The Scottish Government worksin constructive collaboration withthe United Kingdom Government,the Welsh Assembly Governmentand the Northern IrelandExecutive on climate change. Suchcollaborations could continue andexpand on independence, both

within this group, and within the

European Union.

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BOX 9: INTERNATIONAL CLIMATE CHANGE NEGOTIATIONS

1. Scotland’s share of global emissions is small, and Scotland’smost important contribution at a global level is todemonstrate strong leadership and demonstrate that thepathway to a successful low carbon economy is achievable.

2. The Scottish Parliament has passed world-leading climatechange legislation, a key illustration of the positiveleadership and contribution Scotland can make to meetingglobal challenges. Scotland could be at the centre ofinternational discussions, such as the Copenhagen climatechange summit, supported by Scotland’s environmentalorganisations. However, Scotland’s official attendance atsuch events depends on the agreement of the United

Kingdom Government.

3. With independence, Scotland would be able to play a fullrole in a subject in which it has much to offer. The experienceof a nation with both oil and gas reserves, significant carboncapture and storage potential and the ability to developsubstantial renewable energy capacity would add to the

voices on this issue of global concern, to the benefit of thedebate on tackling climate change within Europe andacross the world.

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TRANSPORT

Current position

5.26 The majority of transport functionsare devolved, and distinctiveScottish policies aim to create awell-connected, safe and reliabletransport system which underpins

business and economic growth.

5.27 A number of transport functionsremain reserved to the UnitedKingdom:

• roads: regulation of roads, vehiclesand drivers; national speed limits, andrenewable Transport Fuels Obligation

• rail: Great Britain-wide rail network

issues, standards and regulationframeworks, representation ofpassenger interests and complaints,and cross-border franchises

• marine: marine policy, regulationand security

• air: economic, security and safetyregulation, internationalrepresentation

5.28 The experience of enhanced raildevolution (see Box 10) demonstratesthe opportunities of devolvingresponsibility for transport policy,and focussing on Scottish needs.

Transport recommendations of the


5.29 The Commission makes only onerecommendation affecting transportin Scotland. Among itsrecommendations on taxation(discussed in more detail at

paragraphs 3.22 – 3.28), theCommission proposed that AirPassenger Duty (APD) should bedevolved to the Scottish Parliament.Devolved APD could be reduced,

providing an incentive for airlines toexpand direct connections toScotland, benefitting the Scottisheconomy and reducing air travelconnections within the United

Kingdom. This is an example of thescope to use fiscal policy toencourage economic activity, andthe principle of the Commission’srecommendation could bring

benefits in other areas of taxation.

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The result is a hotch potch which…is inhibiting transport integration in Scotland and the integration of transport in energyand climate change policies.(Scottish Association for Public Transport response to the National Conversation, September 2008)

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Independence

5.30 Independence - or full devolution -would offer allow Scotland tointegrate fully all transport policiesand initiatives.105 Scotland would alsohave responsibility for the overallpublic financial framework, which

could benefit transport throughborrowing and taxation policies.

Borrowing

5.31 Greater borrowing autonomy for theScottish Government would allowmore flexibility in the pace and

priorities of Scotland’s capitalexpenditure programme, andprovide an alternative source offinancing for major infrastructureprojects when required. Forexample, phasing the funding of thenew Forth crossing would allowexisting capital budgets to takeforward more projects at the sametime as bridge construction.

Transport taxes

5.32 Other taxes directly linked totransport could be devolved,

beyond the APD recommended bythe Commission on ScottishDevolution. Fuel duty, APD andvehicle excise duty accounted for

just 5% of Scottish tax revenue in2007/08, but they are importantpolicy instruments to influencebehaviour and achieve economic

objectives.

5.33 With responsibility for fuel duty,Scotland could press the EuropeanUnion for a derogation to apply alower rate of fuel duty in rural areas,

recognising accessibility and pricedisadvantages faced by Scotland’sremote and island communities. TheFrench government has introduced

a lower rate of duty in Corsica undera similar system. The UnitedKingdom Government has notpursued such a policy for Scotlandalthough the Commission onScottish Devolution acknowledged

the case for the Scottish and UnitedKingdom Governments ‘to pursue aderogation limited to the outlyingparts of the Highlands and Islands’.106

5.34 Responsibility for fuel duty wouldalso enable the Scottish Government

to respond to the pressures faced byScottish businesses due to Scotland’sgeographic position.


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BOX 10: DEVOLUTION OF RAIL SERVICES

1. Until the Railways Act 2005 rail investment was decided at UnitedKingdom level, and Scottish projects competed for funding in aUnited Kingdom Government hierarchy. Since 2006 devolvedresponsibility for investment decisions has allowed the ScottishGovernment to target investment in the Scottish rail network to meetScottish objectives, from improving connectivity to meeting climate

change targets.

2. For example, in July 2007 the Scottish Government specified onbehalf of Scottish rail passengers and freight users industrydeliverables to secure the most positive outcomes for Scotland.Different priorities from the United Kingdom included a focus onfaster journey times to benefit business, resulting in substantialplanned investment in the Glasgow to Edinburgh line and from

Inverness and Aberdeen to the central belt.

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ENERGY

Objectives of energy policy

5.35 Energy policy encompasses bothsupply of energy, and developingthe energy sector in Scotland’seconomy, including renewableenergy and climate change targets.

5.36 The Climate Change (Scotland) Act2009 introduced a statutory targetto reduce emissions in Scotland by

42% by 2020. 50% of Scottishelectricity consumption should comefrom renewable sources by 2020,with 31% by 2011, and, in line withEuropean Union-wide targets, 20%of all energy use should come fromrenewable sources by 2020.

5.37 Scotland has a competitiveadvantage in energy: natural and

geographic opportunities in windand wave and tidal generation; and

established expertise in the oil andgas and power generation industries.Scotland is estimated to have 25% ofEurope’s offshore wind resource,10% of Europe’s wave resource and25% of its tidal resource, whichwould make a significant

contribution to a low carbon futurefor Scotland and Europe. Energy willbe a key sector in Scotland’ssustainable economic growth overthe next 30 years and beyond.

Current position

5.38 The major policy responsibilities forenergy are reserved, including theregulation of energy markets,regulation and taxation of the oiland gas sector and the promotion ofScottish interests at European Union

level. Grid access is also reserved,and the current grid charging systemworks against the development ofclean, renewable energy in Scotland.

85

Nuclear, tidal, wind, clean-coal are, in varying proportions, ingredients for energy. The Scottish Government is against nuclear energy, so is thereany confident assurance that other remaining sources are adequate tomeet present and future demands, and within reasonable timescales?(Melrose Summer Cabinet, 28 July 2009)

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5.39 Scottish responsibilities in relation toenergy are limited to the promotionof renewable energy and energyefficiency.107 Through the planningsystem, the Scottish Governmentcan also influence decisions relatingto investment and the energy mix.

Energy recommendations of the


5.40The Commission did not recommendany improvements to the currentresponsibilities for energy, either toencourage development of Scotland’s

renewables or to maximise thebenefits of oil and gas to Scotland.

Oil and Gas

5.41 The Commission established anIndependent Expert Group toexamine the issue of North Seataxation and revenue. This reportedthat there would be economicopportunities from devolvingresponsibility for North Sea taxation,although there could also bechallenges.108 The Expert Group also

identified the benefits of a Scottish

oil fund. However, the Commissionitself concluded that oil and gasrevenues should remain reservedand did not recommend a Scottishoil fund.

Other Energy Matters

5.42 The Commission consideredelectricity generation and supplyissues and made no recommendationsin this area. On transmissioncharging, the Commission noted

that this was an issue for many ofthose who gave evidence, but didnot consider the subject was withinits remit.

Full devolution

5.43 There are a number of areas of energypolicy which could be devolved,despite the conclusions of theCommission on Scottish Devolution.

Renewables

5.44The Scottish renewables targetrequires the right infrastructure,including harbours, test facilities, heatnetworks and upgrades to the grid.These require co-operative workingacross the public and private

sectors, and major investment. TheFossil Fuel Levy fund is collected inScotland to promote renewable

energy, and currently stands at£174 million. A decision by theUnited Kingdom Government meansthat this fund cannot be invested inrenewables without a correspondingreduction on the Scottish blockgrant. A devolved Fossil Fuel Levy

fund could be invested to encouragethe renewable energy sector inScotland, helping to meet renewablestargets in Scotland and across theUnited Kingdom.

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Carbon Capture and Storage

5.45 Carbon Capture and Storage (CSS)is a technology in which Scotlandhas a number of significantadvantages including academicexpertise, considerable offshorestorage capacity and the potential

to utilise the skills and infrastructureof our existing oil and gas andpower engineering sectors. Thereare a number of outstandingpotential CCS projects which couldbe developed in Scotland. Givinggreater powers to Scotland, such asensuring that funding raised fromthe proposed United KingdomGovernment levy on generation to

fund CCS projects is allocateddirectly to Scotland, would provide

an opportunity to assist thedevelopment of such projects andensure that Scotland can be seen asa leader in the development of thisemerging sector. In addition, CCS iscurrently regulated by a number ofbodies including Scottish Ministers,the United Kingdom Government,

and the Crown Estate. Devolving alloffshore licensing, including oil and

gas licensing, to Scotland wouldcreate a seamless regulatoryframework for low carbon-basedenergy activity in the Scottishoffshore area.

Oil and gas taxation

5.46 Oil and gas remain an importantsector in the Scottish economy.With further devolution the Scottishgovernment could encouragedevelopment in a number of keyareas:

• improving depletion rates and

promoting enhanced oil recovery• worldwide marketing of Scottishoil services expertise

• sustainable use and decommissioning

of the oil and gas infrastructure(including for CCS)

• encouraging diversification of skillsfrom the sector into low carbonopportunities such as CCS andmarine renewables

• better use of fiscal revenues,

including a sovereign wealth fund

5.47 The taxation regime is an importantfactor in maximising investment andproduction in the sector. The currenttaxation regime is made up of threeparts: petroleum revenue tax:charged at 50% on profits fromfields approved before March 1993(when the tax was abolished for new

fields); corporation tax: nowcharged at an effective rate of 50%;and license fees paid by operatorsto the United Kingdom Governmentto explore and extract oil and gasfrom specified areas.

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As energy security issues climb to the topof the geopolitical security agenda, howwill this impact on Scotland’s energysecurity in the coming decade?(Dumfries Summer Cabinet, 29 July 2008)

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5.48 It is in Scotland’s interests to developan oil and gas taxation regime that

balances revenues, environmentalobjectives on decommissioning andre-use of the infrastructure, andincentives for continued developmentand exploration in the North Sea.

Remaining reserves may have awholesale value of between£650 billion and £1.1 trillion. Fulldevolution of the North Sea taxregime would allow the Scottish

Government to work with industryto develop a fiscal regime that metthese objectives and ensured anappropriate level of taxation on avaluable and non-renewable resource.

Independence

5.49 Independence would give Scotlandthe advantages of full devolution andbring responsibility for importantareas such as energy regulation andengagement with the EuropeanUnion.

Energy regulation

5.50 Under independence, energy marketregulation would address Scotland’s

specific needs in transmission ofenergy, encouraging renewables andenergy efficiency, promoting tradewith the rest of the United Kingdomand further afield within EuropeanUnion rules. The Commission onScottish Devolution considered the

issue of electricity supply andconcluded the current model of a

United Kingdom-wide market was thebest way ahead to ensure security of

supply and allow consumers accessto a competitive and modern energymarket, as well as ensuring thatobligations and targets are met.However, there are a number of

examples where independentcountries can operate a commonelectricity transmission anddistribution system, such as thepooling arrangements that exist

between a number of Nordiccountries.109 A single electricitymarket now exists between theRepublic of Ireland and NorthernIreland, demonstrating thatagreements and co-operationbetween individual countries onenergy market regulation is possible.

5.51 Under the current United Kingdomsystem, there are higher chargesfor connection and use of the UnitedKingdom electricity grid forgenerators furthest from the mainUnited Kingdom centres of demand,favouring generation in the south

of England. Scottish generatorsproduce 12% of United Kingdomgeneration, but account for 40%of the transmission costs, or about£100 million per year more thantheir proportionate share. This is areserved matter, and Scotlandcannot reform this regime eventhough it discriminates againstScottish generators and acts against

the delivery of renewable energytargets. With independence Scotland

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OVERVIEW

6.1 Scotland has a long history ofdistinctive education, children’sservices and health systems withinthe United Kingdom. Devolution has

shown the potential that greaterautonomy gives Scotland to bringimprovements to these systems,while preserving their traditionalfeatures. Free personal care for the

elderly and the ban on smoking inpublic places have been landmarkachievements of the ScottishParliament. Scotland’s health servicehas maintained its integrated

structure while reducing waitingtimes, and public health legislationhas been modernised. In education,the Curriculum for Excellence hasmodernised the schools system,

while legislation has given greaterrights to those requiring particularsupport for learning.

6.2 Independence would allow healthand education to build on theachievements of devolution,integrating the support offeredwith important reserved matters,particularly the benefit and taxation

system, and contributing to tacklingwider issues of poverty, ill healthand economic inactivity in Scottishsociety.

HEALTH


6.3 From its inception, and in particularsince devolution, the NHS inScotland has been largelyindependent from the rest of theUnited Kingdom, and shaped bydifferent patterns of need andgeography. Such differences have

defined the provision of free healthcare in Scotland, and the NHS inScotland today is markedly different

from that in England and Wales.Scotland has a long-standingintegrated healthcare system.General Practitioners refer patientsto a treatment centre within theirown Board area or elsewhere if therequired service is not provided

locally. There is no competition, orinternal market, operating across theNHS in Scotland.

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SMARTER SCOTLAND

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6.4 Responsibility for the provision ofhealth care is almost entirelydevolved and there have beensignificant achievements over thelast ten years: a reduction in waitingtimes through more efficient ways ofworking; better workforce planning;more investment in new diagnosticequipment; the development of thesingle patient record. Prescriptioncharges are being phased out to

ensure that all patients have accessto the prescriptions they require.Public health legislation has beenmodernised through the PublicHealth etc. (Scotland) Act 2008.Scotland led in the United Kingdomwith legislation to ban smoking inpublic places.

6.5 The NHS in Scotland contributesdirectly to other policy objectives:growth in the Scottish economythrough investment in medical andlife sciences technology, andcontinuous improvement in itshealthcare services; developing ahighly skilled workforce with

increasing productivity levels; andimproving the health and wellbeing

of the working age population.

6.6 Relatively few areas related tohealth are reserved. Those whichare include: regulation of the main

health professions; misuse of drugs;medicines, medical supplies andpoisons; embryology, surrogacyand genetics; and abortion.111

Health recommendations of the


6.7 The Commission made onerecommendation directly affectinghealth matters: that regulation of allhealth professions should bereserved. The Scotland Act reserves

to the United Kingdom regulation ofhealth professions which existedwhen the Act was passed.Regulation of any new healthprofession has been devolved. If theregulation of all professions wasreserved there would be noguarantee that the differences inScotland’s health structures andsystems would be taken into

account, as there would be nostatutory imperative for the United

Kingdom Government to seekagreement to its regulatory regimes.

What further stepsare planned to developour Health Service as

a public service inwhich healthcareworkers United Kingdom-wide would be proud to work?(Paisley National Conversation event, 14 September 2009)

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Full devolution

6.8 Scotland already has responsibilityto provide health care responsiveand relevant to the needs of peoplein Scotland, and free at the point ofdelivery. However, Scotland doesnot have responsibility in areas that

could be used to help reduce thenegative health effects of smokingand alcohol misuse. For example,alcohol misuse is one of the mostserious health problems facingScotland, and it also has significantsocial and economic consequences.Responsibility for some keymechanisms to address this issue –such as taxation levels on alcohol

and the advertising of alcohol –remains reserved to the United

Kingdom.

Independence

6.9 With devolution Scotland hasdemonstrated its innovativeapproach to public health and to thedelivery of healthcare. Scotland hasmaintained a high quality servicebased on a traditional national model,

and avoiding market led innovationsthat have been introducedelsewhere in the NHS. Independence

would ensure that Scotland had fullresponsibility for the entirety of itshealth system, including the fewhealth policy areas reserved to theUnited Kingdom, and, wider policyareas which could support healthpolicies in the economic and socialfields.

6.10 Under independence, cross-border co-operation in health could be enhanced.In some areas, co-operation has arisenout of necessity, requiring a sharing ofscarce resources or consistency ofapproach to complex issues; in others,it has arisen because of the benefitsco-operation has brought for both thepeople of Scotland, and the rest of theUnited Kingdom.

6.11 The allocation of organs for donationand transplantation is carried out on aUnited Kingdom-basis, which ensuresthe best match between donor andrecipient can be achieved. Thisarrangement could be maintained inan independent Scotland to ensure

equal access for every citizen in theUnited Kingdom who requires a

transplant. Likewise, there are UnitedKingdom-wide arrangements for thecommissioning of specialist healthservices for conditions or treatmentsthat are so rare or specialised that nosingle United Kingdom country couldsustain them alone. Similaragreements exist on a European

Union basis. These arrangements aremanaged on

behalf of Scotlandby the NationalServices Divisionof NHS NationalServices Scotland,to ensure that thepeople of Scotlandhave access to

such rare andspecialisedservices when theyneed them.

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BOX 11: FREE PERSONAL CARE112

1. Free Personal and Nursing Care hasbeen one of the most high-profileScottish policies since devolution.

Over 50,000 vulnerable olderpeople in Scotland are currentlyreceiving assistance through the

scheme. Around 42,000 people arenow receiving personal care servicesat home at no charge allowing themto remain in their own homes andlive independently for longer. 9,600self-funders in care homes arereceiving a weekly payment of £153towards their personal care andaround 6,100 of these self-fundersare also receiving £69 per week

towards their nursing care costs. Thebalance has shifted from residentialcare to supporting people in theirown homes for long as possible.

2. The implementation of free personalcare illustrated a difficulty ofimplementing devolved policy which

interacts with the reserved benefitssystem. The United KingdomGovernment withdrew Attendance

Allowance from those people in carehomes receiving free personal care.The Scottish Government had toensure that these individuals are notdisadvantaged financially as a resultat a cost of £30 million a year.

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95

BOX 12: SMOKING BAN

1. On 26 March 2006, Scotlandbecame the first part of the UnitedKingdom to introduce comprehensive

legislation to ban smoking inenclosed public places. The

legislation has been hailed not onlyas the most important piece ofpublic health legislation since theintroduction of the NHS but as adefining moment in devolution. Itis widely acknowledged that theleadership shown by the ScottishParliament encouraged smoking banselsewhere in the United Kingdom.

2. The legislation was preceded by aninnovative work programme to raiseawareness of the health risks of

passive smoking, research currentsmoking policies, gather international

evidence about the health andeconomic impact of smoking bans,and to test public opinion by a majorpublic consultation through anumber of routes. This provided awealth of evidence, including ofpublic support, on which to basethe ban.

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EDUCATION AND CHILDREN


6.12 Scotland has long had its own

education system, with a distinctivecurriculum framework, qualificationsand examination system, andcompulsory periods of education.The quality of Scotland’s Universitiesis recognised internationally (seeBox 6). Scotland has its ownsystems of pre-school education,childcare, children’s services, achildren’s hearings system, social

work and youth work. Withdevolution in 1999, the ScottishParliament gained legislativeresponsibility for this educationsystem.

6.13 Successive Scottish Governments

have used devolved responsibilitiesto improve the Scottish educationsystem, including the Curriculum forExcellence, the biggest reform ofthe Scottish education system for ageneration. Legislative action has

been taken to strengthen the rightsof parents and young people withadditional support needs, andplanned provisions will update andstrengthen the consultationpractices and procedures forproposals that affect educationservices, such as the closure ofschools.

6.14 However, the current constitutionalsettlement places limits on theaction that can be taken in Scotlandto improve the lives of children andyoung people. In particular, thebenefits and tax credits system isnot responsive to Scotland’s specificneeds and is organised on a United

Kingdom-wide basis.

Children recommendations of theCommission on Scottish Devolution

6.15 The Commission made only onerecommendation concerningchildren services: that in dealingwith the children of asylum seekers,the relevant United Kingdom

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I s i n d e p e n d e n c e g o i n g t o b r i n g m o r e

o p p o r t u n i t i es f r o m t h e m?

( Ed in b urg h C E M

VO Na t iona l Co

n versa t ion e ven t, 2 2 Ap

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authorities must recognise thestatutory responsibilities of Scottishauthorities for the well-being ofchildren in Scotland.

6.16 This recommendation reflects recentpractice. Scottish and UnitedKingdom Governments have regular

discussions about statutory duties topromote the well-being of childrenseeking asylum in Scotland. SinceJanuary 2009 all United KingdomBorders Agency staff andcontractors have been operatingunder a statutory Code of Practiceto keep children safe from harm, andwill be subject to a new statutoryduty from the autumn to safeguard

and promote the welfare of children.When children are detained at

Dungavel, an agreement existsbetween the Borders Agency andthe local authority to ensure thatchildren are given the help andsupport they need, though theScottish Government remainsopposed to any such detention ofchildren.

Independence

6.17 Independence - or full devolution -would allow children’s services to be

integrated with support through thetax credit and benefits system. Forexample, support with the costs ofchildcare (demand-side funding) isreserved to the United KingdomGovernment and is funded throughthe tax credit system, whilechildcare provision (support-side

spending) is devolved to theScottish Government. Parents findthis split of responsibilities confusingand there is widespread criticism ofthe way the tax credit system works.If the Scottish Government hadresponsibility for supply anddemand side funding for childcare itcould construct progressive supportfor the costs of childcare, which issimple and accessible for parents.

CONCLUSION

6.18 The achievements in health and

education since devolutiondemonstrate the potential forScotland to flourish when it has fullresponsibility and can develop andimplement policies to meet

particular Scottish priorities andneeds. Independence would allowScotland to bring a similar approachto all areas of government activity,as well as integrating existing health

and education services in widermechanisms to support and developthe people of Scotland.

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OVERVIEW

7.1 Scotland requires a legal system thatsupports a safe and just society, andtackles societal issues like drug andalcohol misuse and violence,including domestic and sexual

violence. Human rights, liberties andequalities should underpin Scottish

society, ensuring justice andtolerance for everyone, andprotecting the rights of citizensagainst the state, and reflecting andprotecting the diversity of society,tackling issues of sectarianism anddiscrimination.

7.2 Scotland has a proud legal tradition,securing the basic rights of the

citizen within an effective justicesystem. Much of this system hasbeen devolved, but important areasremain reserved: laws to tackledrugs, firearms and terrorism; the

legal machinery for safeguardingthe human rights of Scottishcitizens; and important parts ofthe judicial system: aspects of theUnited Kingdom Supreme Court

and many tribunals.

7.3 The Commission on ScottishDevolution recognised that theprinciple of devolution would placeresponsibility for these matters inScotland, but only followed this

argument to its conclusion in theirrecommendations on airguns, drink

driving limits and speed limits. Thereis a separate criminal jurisdiction inScotland, and responsibility for thewhole body of criminal law couldnow be devolved to the ScottishParliament as the legislature forthat jurisdiction.

7.4 Independence would give Scotlandfull responsibility for its court

system, its approach to internationalobligations of law and rights, andallow Scotland to protect the humanrights of its citizens, guaranteeingtheir position within and against

the state.

CHAPTER 7

A SAFER SCOTLAND


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CRIMINAL AND CIVIL JUSTICE

Current position

7.5 The Scottish legal system has long

been distinct from that in the rest ofthe United Kingdom. Its integrity andindependence were secured in theActs of Union, and administrativeresponsibility for running the justicesystem remained in Scotland.Devolution also gave Scotlandlegislative responsibility. TheScottish justice system has its owncourt system; different professional

legal bodies (the Law Society ofScotland and the Faculty ofAdvocates); its own legislation; itsown police forces; its ownindependent prosecution, headed by

the Lord Advocate; its own prisonand criminal justice social workservices.

7.6 Scotland has used its devolvedresponsibilities to tackle a range oflong-term societal problems, and toreform the system itself. Theseinitiatives demonstrate the principleof devolution: problems which are

endemic to Scotland are tackled inScotland, by a coherent legislative,policy and judicial framework to

tackle offenders, and reduceoffences.

7.7 Although the justice system inScotland is largely devolved, thereare several important areas whichare reserved to the United Kingdom:terrorism, legal safeguards forhuman rights, drugs, firearms,alcohol taxation, drink-driving limits,and some jurisdictions of the UnitedKingdom Supreme Court. If theScottish Parliament were responsiblefor these areas there would be a

more fully integrated justice system,with no gaps in the administration of

justice in Scotland.

Justice recommendations of the


7.8 The Commission recommended thatScotland should be responsible for:

• the regulation of airguns

• licensing and control of controlledsubstances for the treatment ofaddiction

• drink-driving limits• the national speed limit in Scotland113

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s a f e f or us t o li v e i n?(Kilmarnock National Con vers

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Firearms legislation

7.13 Responsibility for all firearmslegislation would allow the firearmsregime to be made consistent, easier

to understand and easier to enforce.The Scottish Parliament would bebetter able to protect communities

from illegal or irresponsible use offirearms, as it has with knives andother offensive weapons. A coherentfirearms policy for Scotland wouldmake it easier for legitimate firearmsusers to go about their activities,supporting the economic contribution

of shooting sports and relatedindustries. The risk of cross-bordertraffic in illegal firearms can be

addressed in the same way as it hasbeen for differences in the law onknife licensing and alcohol sales.

JUDICIARY AND THE COURTS

Current position

7.14 The Acts of Union guaranteedcontinued autonomy for Scotland’slegal system. Scots Law, and theprincipal institutions administering it,

have remained separate and distinctfor the last 300 years. The principaleffect of devolution was to give thenew Scottish Parliament

responsibility for maintaining a largeproportion of the statute law (Actsof Parliament) which the Courtsimplement. The major reservedmatters are some jurisdictions of thenew United Kingdom Supreme Court

and many reserved tribunals underthe auspices of the new UnitedKingdom Tribunals service.

7.15 The Supreme Court was establishedin October 2009 and its judges areappointed on the recommendationof the Prime Minister. It sits as aScottish Court to hear appeals fromcivil cases arising in Scotland, and

also hears criminal cases wherehuman rights are at issue, although

most final appeals relating tocriminal cases continue to be heardby Scottish courts. This split in thefinal jurisdiction on criminal mattersrisks inconsistency and confusion.The Supreme Court is required toinclude judges from each UnitedKingdom jurisdiction, but a clearmajority of its judges are from

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England and Wales. It is not clear ifthe new arrangements will safeguardthe continued distinctiveness ofScotland's legal system or thecoherence of Scots law as a bodyof law.

7.16 The United Kingdom Tribunal

Service was created in 2008. Certaintribunals it administers sit inScotland as British institutions,handling cases that would otherwisebe heard by the Scottish Courts. Thecreation of the UK Tribunal Servicewas intended to rationalise the

system in England and Wales buthas in some cases added a furtherlayer to the framework for

administrative justice in Scotland.

7.17 Other reserved judicial mattersinclude the remuneration

arrangements for senior judges andthe appointment of Scotland’s mostsenior judges are still made on therecommendation of the PrimeMinister, on the nomination of theFirst Minister.

Courts recommendations of the


7.18 The Commission considered thecomplexity of the tribunal system inScotland, and the development of asplit in the criminal law. On bothmatters, it found evidence of

concern, but the Commissionconcluded both to be beyond its

remit and madeno recommendations.115

Full devolution

7.19 Full devolution would allow theconcerns found by the Commissionon Scottish Devolution to be

addressed. In particular, the SupremeCourt could have a ScottishChamber, with a majority of judges

expert in Scots law and practice,which was the responsibility of theScottish Parliament. Such a Chambercould be properly integrated into theScottish legal system, addressing theconcerns about splits in the criminallaw. Devolution of all tribunals would

allow a Scottish tribunal service tobe established, integrated into theScottish court system and ensuring

greater efficiency. Full devolutionwould also allow Scotland tointroduce rational criteria, consistentlyapplied, to the allocation of

jurisdiction between the courts andtribunals.

Independence

7.20 The judicial branch is one of three

pillars of government in most states.An independent Scotland would

continue its tradition of a robust judiciary holding the executive andParliament to the law, as well asadministering and dispensingcriminal and civil justice in the normalway. Scotland would need to considerthe architecture of the court system,in particular whether there was aneed for a Scottish Supreme Court

on the United Kingdom model, or

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whether existing Scottish courtstructures would suffice. Howeverthe functions of a supreme court ininterpreting the legal aspects of theconstitution would remain thefunction of the Scottish judiciary.

7.21 The Scottish legal system would

continue its traditional openness tothe positive influence of other

jurisdictions, particularly the Courtsof European institutions. Theprincipal difference would be thatScotland’s legal system woulddecide how to use these external

influences, including the rich jurisprudence of the rest of theUnited Kingdom and the

Commonwealth, rather than havingsome crucial decisions made by

judges from other jurisdictions.

HUMAN RIGHTS AND

RESPONSIBILITIES

Current position

7.22 The Human Rights Act 1998incorporated the EuropeanConvention on Human Rights intoUnited Kingdom domestic law byrequiring public authorities to act inaccordance with the Conventionrights. The Scotland Act providesthat Scottish Ministers cannot actincompatibly with any of thoserights and that the Scottish

Parliament cannot legislateincompatibly with those rights.

7.23 These statutes are reserved. TheUnited Kingdom Parliament stillclaims competence to legislate inways which are incompatible withthe European Convention on HumanRights and the human rights ofScottish citizens can therefore beencroached upon by Westminster

without reference to the ScottishParliament and Government. Greaterprotection has been given to thehuman rights of Scottish citizens insome devolved areas than has beenthe case in England and Wales, forexample on the retention offingerprints and DNA samples.However, the Scottish Parliamentand Government cannot protect

against threats to those rights if thematter is reserved, for example theintroduction of identity cards.

Human rights recommendations of the


7.24 The Commission did not considerthe wider issue of human rights,their place in the governance of

Scotland, and the responsibility ofthe Scottish Parliament to protectthe human rights of its citizens fromlegislation in the United Kingdom

Parliament.

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Independence

7.25 With independence, Scotlandcould properly entrench the humanrights of Scottish citizens in the

constitutional framework of thenation. This approach would reflectinternational best practice, and the

international commitments Scotlandhas undertaken as part of the UnitedKingdom. Instead of regardinghuman rights as a burden on thegovernment, an independentScotland could take a positiveapproach to the place of rights in

its political and legal system,guaranteeing the position of theindividual against the state.

7.26 As an independent state, Scotlandwould generally inherit currentinternational obligations, and it

would be for the Government andParliament to consider how thesewere taken forward in the future,including, for example, the domesticprotection of the rights under the

jurisdiction of the European Court of

Human Rights. Independence wouldalso give Scotland the ability tochoose how to implementinternational obligations in areas

which are currently reserved in away sympathetic to local legaltraditions, and national concerns.

CONCLUSION

7.27 Scotland’s legal system has longbeen a distinctive feature of thenation. Devolution has provided the

opportunity to update andmodernise some of its features, anddirect the system to addressing

societal problems that has facedScotland. However, some of themost important of these – drugs,firearms, aspects of alcohol policy –remain reserved.

7.28 The recommendations of theCommission on Scottish Devolutionwould provide some furtherresponsibilities to Scotland, but not

in these central areas. The principleof devolution should apply to the

justice system as a whole, and givefull responsibility to the Scottish

Parliament as the law making bodyfor this jurisdiction.

7.29 Independence would also giveScotland responsibility for its whole

judicial system; and for the framework

of fundamental rights for its citizens.

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107

OVERVIEW

8.1 A defining feature of anindependent state is its voiceon the world stage: in a wider

international organisation, such as

the European Union or the UnitedNations; or in bilateral discussionswith other nations, neighboursand trading partners. Influencingothers, representing the views andinterests of its people, is a key aimof governments across the worldin this global and interdependentage.

8.2 Scotland’s international relationshave three principal dimensions:

• relations with the European Union• relations with the wider

international community and

other international organisations• relations with the rest of the

United Kingdom

Given the European Union’s rolein many areas of government,

Scotland needs adequaterepresentation within theEuropean Union to negotiatedirectly for its own interests.

Scotland already has a distinct, iflimited, voice on the internationalstage, both as a nation in its ownright and as part of the UnitedKingdom. Scotland has close tieswith the rest of the United

Kingdom, from geography, fromsocial and historical bonds, andthrough institutions, such as themonarchy, and would maintainthese on independence.

CHAPTER 8

A STRONGER SCOTLAND

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SCOTLAND IN THE WORLD TODAY

Current position

8.3 As a nation within the UnitedKingdom, Scotland has maintainedan international profile. People fromacross the globe have connectionsto Scotland; Scottish culture,

manufacturing and produce arewell-known throughout the world;and events such as Scotland Week

and Homecoming 2009 placeScotland, its heritage and itscontribution to the modern world onthe global stage. Since devolution,Scotland has developed a moreformal international role, for examplecontributing to international

development, particularly in Africa.

8.4 Under the current constitutionalsettlement, foreign affairs arereserved to the United Kingdom forformal international purposes, forexample membership of theEuropean Union. Scottish Ministerscan make representations on issuesof particular interest to Scotland

only through the United Kingdom

delegation. They can attendmeetings only with the agreementof the United Kingdom Government,and must adhere to the agreedUnited Kingdom position. Similararrangements apply to otherinternational negotiations whichaffect devolved matters, such the

Copenhagen conference on climatechange and the NuclearNon-Proliferation Treaty ReviewConference.

SCOTLAND’S FUTURE ROLE

External relations recommendations of

the Commission on Scottish Devolution

8.5 The Commission recognised the

importance of the European Unionto Scotland, and made severalrecommendations to strengthen therole of Scottish Ministers informulating the United Kingdom’sposition, both generally and whereparticular Scottish interests areinvolved. The Commission alsorecommended that there should be apresumption that Scottish Ministers

should be part of the United Kingdom

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delegation when devolved issues arebeing discussed, and, similarly, thatthere should be a presumption,when practicable, that ScottishMinisters should be able to speak insupport of the United Kingdomposition.

8.6 These recommendations potentiallystrengthen the opportunity to reflectScottish concerns in Europe.However, Scottish Ministers wouldstill require the agreement of theUnited Kingdom Government to beable to speak, and would not be able

to deviate from the United Kingdomposition.

8.7 The Commission also made a

number of recommendationsdesigned to improve relationsbetween the Scottish Government

and the United KingdomGovernment within devolution.These included strengthening theJoint Ministerial Committee invarious ways, such as increasing thefrequency of its meetings andincreasing parliamentary scrutiny of

its proceedings. The Commission

also made several recommendationsto improve the relationship betweenthe Scottish Parliament and theUnited Kingdom Parliament. Theseincluded more formal channels ofcommunication, particularly wherelegislation involves both devolvedand reserved matters, and the

appearance of the First Minister andthe Secretary of State for Scotlandbefore relevant committees in theUnited Kingdom Parliament and theScottish Parliament respectively.116

8.8 Some of these recommendations

could improve the relationshipbetween the Scottish Governmentand the United KingdomGovernment, particularly those that

would genuinely improve theeffectiveness of the Joint MinisterialCommittee. It should be noted,however, that any improvements tothe relationship between theScottish Government and the United

Kingdom Government should ensurethat Ministers are held properlyaccountable to their own Parliamentfor the exercise of their respective

responsibilities.

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Full devolution

8.9 Scotland could not play a full role ininternational affairs withoutindependence. However, experiencefrom other countries shows that, evenwithin the current arrangements,Scotland’s international role could be

enhanced.

8.10 Devolved governments from bothBelgium and Spain have a right toattend meetings of the EuropeanUnion Council of Ministers whenmatters within their responsibilitiesare being considered. Similarly,representatives of the Germanregions – sitting in the upperchamber of the German parliament –have a key role in determining the

German position for European Uniondiscussions of matters within theirsole competence.

8.11 Full devolution could give similarrights of attendance at Council ofMinisters meetings to Scottish,Welsh and Northern Irish Ministers,instead of having to rely on thegoodwill of the United Kingdom

Government. Where devolvedinterests predominate, a Scottish

Minister could speak for the UnitedKingdom as a whole. This principleapplies to other internationalconferences and meetings, forinstance Scotland could also have aright of attendance at theInternational Climate ChangeNegotiations in Copenhagen.

Independence

Scotland in Europe

8.12 An independent Scotland would

continue membership of theEuropean Union, fulfilling theresponsibilities which membershipbrings, and maintaining its political,

economic and social links to Europe.As a nation within the UnitedKingdom, Scotland is alreadyactively involved in, and influencing,the European Union, is governed byEuropean Union law, and is

responsible for transposingEuropean Union law into Scots lawfor devolved subjects. However, aspart of the United Kingdom,Scotland is less fully involved inEuropean Union policy-making.Scotland derives a range of benefitsfrom being part of the EuropeanUnion, including access to the largestsingle market in the world. Full

membership of the European Unionwould allow Scotland to participatefully in European affairs, and ensurethat Scottish interests wererepresented. Settling the details of

European Union membership wouldtake place in parallel toindependence negotiations with theUnited Kingdom Government, andwould cover areas such as number ofMEPs and weight in the Council of

Ministers.

8.13 Scotland would represent its ownnational interests within the European

Union, in the same way as othermember states,117 influencing directlythe overall direction of European

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Union policy, as well as raisingScotland’s profile as a responsibleand active European nation.

8.14 As a full member of the EuropeanUnion, Scotland would have greaterrepresentation across the EuropeanUnion’s various institutions andbodies. Within the United Kingdom,

Scotland has six MEPs, butindependent countries of acomparable size to Scotland, suchas Denmark, have thirteen MEPs asrepresentation is calculated so that

there are proportionally fewer MEPsfor larger member states than forsmaller ones. An increase in thenumber of Scottish MEPs wouldwiden the range of committees on

which they could serve, furtherincreasing Scotland’s influence.Scottish Government Ministerswould sit on the Council of theEuropean Union, the organisation’s

principal decision-making body.

8.15 An independent Scotland would alsohave greater representation onother European Union bodies,including the Economic and Social

Committee and the Committee ofthe Regions. As a full member,Scotland would be eligible to serve

as President of the Council of theEuropean Union, which rotates ona six-monthly basis between allmembers. Scotland would havea strong and consistent voice inEurope to argue for its own nationalinterests, as well as representing

Scottish views on wider EuropeanUnion matters.

8.16 In an increasingly globalised world,membership of organisations such asthe United Nations, theCommonwealth, the World HealthOrganisation, the Organisationfor Economic Co-operation and

Development and the WorldTrade Organisation would cementScotland’s place in the international

community. Through theseorganisations, Scotland couldpromote its national interestsglobally, representing the viewsand interests of its people, andengaging with other states as anequal partner. Scotland would also

play a full role in considering andaddressing issues like peace and war,reconciliation and climate change.

As part of the United Kingdom,Scotland already has links to suchorganisations, but is not a full memberof most. Independence would enableScotland to play a full role in each ofthese organisations, with the samerights and responsibilities as all

other full members.

8.17 As part of the global community,an independent Scotland would

establish a diplomatic service, aswell as a government departmentto deal with international affairs.118

Scotland has already establishedits own offices in certain strategicoverseas locations (Brussels,

Washington DC and Beijing) torepresent key interests. ThroughScottish Development International,which promotes Scottish international

trade and inward investment, Scotlandalso has a presence in 21 otherlocations. Scotland would be well-

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placed to build a strong diplomaticservice, promoting Scottish politicaland economic interests, as well asScottish culture, and offeringprotection to Scottish citizens. Thiswould be an important element ofScotland’s full role in theinternational community.

Scotland and the United Kingdom

8.18 On independence, relations betweenScotland and the rest of the UnitedKingdom would be conducted on anequal footing between two

sovereign governments. This shouldlead to an improved relationshipbetween the Scottish Governmentand the United KingdomGovernment, which is sometimes

strained by the devolutionsettlement, particularly around areasof contention. While areas ofdifference would exist – as iscommon between neighbouring

nations – independence wouldremove ambiguities and

disagreements over areas ofresponsibility, allowing thedevelopment of a strongerpartnership between the ScottishGovernment and the UnitedKingdom Government.

8.19 Independence would require

intergovernmental machinery tomanage a new relationship and togain maximum benefit from theScotland-United Kingdompartnership. Existing structures,such as the Joint MinisterialCommittee, should serve as a usefulmodel. Other existing bodies, suchas the British-Irish Council, wouldremain relevant after independence

(see Box 13).

8.20 A new partnership between theScottish Government and theUnited Kingdom Government wouldsupport cross-border institutionsand bodies which continue to exist

after independence. There wouldalso be benefits to Scotland and theUnited Kingdom retaining a strongpolitical relationship when dealingwith the European Union.

8.21 As equal sovereign states, Scotlandand the United Kingdom would be

able to work together in a strongpartnership on areas of mutualinterest and advantage. Anintergovernmental mechanismshould be created to help managethis relationship. This would helpensure that areas of commoninterests were reflected andadvanced in European Uniondecision-making.

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113

BOX 13: BRITISH-IRISH COUNCIL

The British-Irish Council currently consists of: two sovereign states –the UK and Ireland; the three devolved administrations of Scotland,

Wales and Northern Ireland; and the three Crown Dependencies ofJersey, Guernsey and the Isle of Man. Arising out of the Agreementsunderpinning the peace process in Northern Ireland, the Council is aforum for finding and progressing areas of collaboration between allthe member administrations to develop policy solutions to commonchallenges. Each Member Administration has an equal voice at theCouncil, and decisions are taken by consensus. It would therefore makeno difference to the Council’s composition or operation if Scotland wereto become a sovereign state. It would continue as a valuable means ofexchanging experience and opinions, and agreeing future work to

benefit all the administrations represented. The Council provides a goodmodel for positive inter-governmental relationships in which mutualrespect is paramount, and Scotland will continue to support itsconsolidation. The next stage of this is to secure a standing Secretariat,which can then provide the Council with a secure base for its further

development.

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Who will qualify forcitizenship of Scotland should/when it becomes independent?(Written response to the National Conversation, August 2007)

8.22 Citizenship in an independentScotland will be based upon aninclusive model. Many people inScotland have ties to the rest of theUnited Kingdom, including familial,social and economic connections. Anindependent Scotland couldrecognise the complex sharedhistory of Scotland and the UnitedKingdom by offering shared or dual

citizenship. As a member of theEuropean Union, Scottish citizenswould have free access acrossEurope.

Scotland’s defence, security and

resilience

8.23 Scotland is currently unusual as anation in that it does not haveresponsibility for matters of nationaldefence. The Scottish Government,

unlike those in other nations, isunable to determine the levels ofspending on defence, or indeed howmuch of that spending occurs inScotland; it is unable to decide onwhether our young men and womenare sent to participate in conflictssuch as the Iraq war; and Scotland isunable to decide whether or notnuclear weapons are based on ourterritory. That is the defence status

quo for Scotland, with these issuesand others decided outwith Scotland.

8.24 A central function of government isto ensure the security of its citizensand to protect them, their propertyand way of life against threats.

Governments also plan and act toensure that society can withstandand react to major emergencies,whether natural or man-made.

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115

8.25 Working to ensure the security of itscitizens and protect their prosperityand way of life against internal andexternal threats is a normal andnatural function of government andone carried out effectively by every

other nation state in the EuropeanUnion. Other partner nations havethe full range of responsibilities

including defence, security andresilience, each of which plays aninterlocking part in ensuring thesecurity of citizens.

8.26 The security of any state can bethreatened by hostile states,terrorism and serious organisedcrime. Security is also affected bytechnological change, climate

change, migration, competition forresources and international poverty.Societies also need to be resilient toother risks, such as extreme

weather, pandemic disease, utilitiesfailure, and industrial action.

8.27 These challenges require a range ofresponses: traditional policing ofserious crime; the use of intelligenceand technology to assess threats;planning for recovery from seriousincidents; and appropriate military

capabilities and partnerships. Suchpractical measures should becomplemented by core values, such

as respect for human rights and therule of law.

Current position

8.28 National security and defence arecurrently reserved, as areemergency powers.119 Other aspectsof security and resilience planning,such as policing and local authority

contingency planning, are devolved.In practice, there is considerable

overlap in these functions. Forexample, although national securityis reserved, Scottish Police forces,funded by and answerable to theScottish Parliament, implementmany aspects of counter-terrorismstrategy in Scotland. In the event of acatastrophic emergency in Scotland,the United Kingdom Governmentwould be able to impose emergency

regulations and a regional emergencyco-ordinator under reservedemergency powers but the planningwould rely on devolved agenciessuch as local authorities and NHShealth boards.

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8.29 Almost all decisions about defenceand security are taken by the UnitedKingdom Government, with noformal role or consultation with theScottish Government or Parliament.Most prominently, decisions aboutthe deployment of United KingdomArmed Forces, for example toAfghanistan or Iraq, are solely forthe United Kingdom Government.Decisions about defence

procurement and defence facilitieswithin the United Kingdom can havea significant impact on Scotland’seconomy. Neither the ScottishParliament nor Government has anyformal role in these considerationsand there is no requirement for themto be consulted or even informed.The decision remains entirely within

the United Kingdom Government, asdo decisions on testing depleteduranium weapon systems in Scotland,and basing the United Kingdom’snuclear deterrent on the Clyde.


8.30 The Commission concluded thatnational defence and security areirreducible functions of the State.120

The Commission was of the viewthat all parts of the United Kingdommust remain joined together for

defence and national security andthere should be “no risk of a lack ofclarity” over responsibility.

8.31 The Commission did not discuss theexisting relationship betweendefence, security and resilience, nor

the current overlap of reserved anddevolved policy responsibility,funding and agencies. It noted, inthe context of Inter-Governmentalrelations, that existing arrangements

for coordination in emergencieswere well developed and had beentested most recently in the outbreakof the Influenza A virus (sub-typeH1N1). However, the Commission

noted that these were pragmaticarrangements and that Ministersfrom devolved administrationsparticipated by invitation of theUnited Kingdom Government.121

The Commission made norecommendations to put thesearrangements on a more formalfooting for future clarity.

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Full devolution

8.32 National security and defence areseen as central to the functions of anation-state, and therefore difficultto devolve to Scotland within theUnited Kingdom.122 The experienceof other countries suggests that

defence policy would almostcertainly remain reserved to theUnited Kingdom Government.However, there are improvements tothe overall arrangements for defence,security and resilience that could bemade to enhance the effectivenessof current arrangements.

8.33 The reservation of emergencypowers could be removed, toemphasise the need for the United

Kingdom and devolvedadministrations to work together inemergencies. In practice, theScottish Parliament and Governmentwould have a role in the exercise of

the emergency powers, particularlyin devolved areas. To recognise this,the ability to make regulations couldbe exercisable by either Scottish orUnited Kingdom Ministers as

appropriate, on the model of sharedand community law powers underthe Scotland Act.123

8.34 Scottish Ministers could be given amore formal role on significantdecisions affecting Scotland, forexample the closure of a militarybase, particularly where thesedecisions have significant economicimpact, or the units support civilauthorities in Scotland (such assearch and rescue detachments andbomb disposal units). ScottishMinisters could be consulted on such

proposals, and disagreements couldbe taken to an inter-Governmentalmachinery, perhaps the JointMinisterial Committee.

8.35 Taking the country to war is themost serious decision the United

Kingdom Government can take.Under current proposals the United

Kingdom Parliament would gain aformal role in decisions to deployUnited Kingdom Armed Forcesoverseas.124 Extending this principleand consulting the other nationalParliaments and assemblies wouldrecognise the supreme importanceof such a decision to the United

Kingdom, and its constituent nations.

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Independence

8.36 Independence would give Scotlandfull responsibility for matters ofdefence, security and resilience, likeother nations. Independence wouldallow Scotland to decide anapproach to these issues that best

fits the national interest, based on

internationally accepted objectivesfor defence and security policy:

• to uphold national sovereignty andsecure the territorial integrity of thecountry

• to secure internal security in the

face of threats and risks• in partnership with other nations, to

help to prevent and resolve conflictsand war anywhere in the world

• in partnership with other nations, tofurther peaceful development in theworld with due respect for humanrights

8.37 There are a number of key tasks thatsimilar nations undertake to supportthese key objectives:

• securing territorial integrity• working with other nations to ensure

regional security

• developing partnerships with othernations to support peace, buildconfidence and stability in otherparts of Europe and the world

• supporting agencies responsible forcivil emergencies and security

• responding to domestic and

overseas threats to security• ensuring the nation is prepared to

deal with any domestic emergency• ensuring appropriate and

responsible care for veterans

There would be a range of choicesto be made for Scotland’sindependent defence and securitypolicy, including the size and cost of

Scotland’s defence capability,international defence alliances andits general approach to defence andinternational affairs.

118

What defence strategy would anindependent Scotland adopt?(Jedburgh National Conversation event, 29 April 2009)

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8.38 For example, Scotland could focus primarily onsecuring its territory, compared to the UnitedKingdom approach of also having the capacity to

conduct overseas wars. It could support UnitedNations peace keeping operations andinternational disaster relief with specialist units,such as medical or engineering corps as well asproviding expert civilian and military trainingsupport. It could continue to contribute to peace

enforcement operations, like those in the Balkans,and actively participate in the European Securityand Defence Policy of the European Union.

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8.39 Each of these defence options has

opportunities and costs (although

current United Kingdom

Government defence spending in

Scotland is proportionately lower

than in the rest on the United

Kingdom – see Box 14), and there

are different models from similar

countries in Europe, and beyond.

Given the importance and

complexity of the issues involved, an

independent Scotland would require

a strategic defence review to

formulate and propose national

priorities for defence, and the longer

term objectives and structure of

Scotland’s armed forces. Similar

defence reviews have taken place at

a United Kingdom level.

8.40On accession to the Nuclear Non-Proliferation Treaty, an independent

Scotland would become a Non-

Nuclear Weapons State, taking on

the commitments of the treaty to

work for nuclear non-proliferation

and promote a nuclear weapon-free

world. The United Kingdom’s nuclear

deterrent would not continue to be

based in an independent Scotland

and a Scottish Government wouldneed to work in partnership with the

rest of the United Kingdom to

ensure an appropriate transition

and relocation.

8.41 An integrated approach to defence,

security and resilience would allow

an independent Scotland to protect

its own citizens, while further

developing the expertise and

capability to play a full part in

international efforts to address

terrorism, and other threats, and

respond to natural and man made

disasters, continuing the prominent

global role that Scots have played

over many years.

Alliances

8.42An independent Scotland would

have choices regarding its

membership of international

alliances. For example, countries

such as Norway and Denmark are

members of NATO whereas

countries such as Finland and

Ireland are not. Scotland, and this is

the stance favoured by the SNP,

could co-operate with internationalalliances such as NATO through its

Partnership for Peace programme

while not being a member.

8.43Whatever the outcome of a strategic

defence review, an independent

Scotland's closest allies would

remain its current partners in the

United Kingdom. Continued defence

co-operation on training, basing andprocurement arrangements would

benefit both Scotland and the other

nations of the United Kingdom.

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121

BOX 14: DEFENCE SPENDING

1. The United Kingdom currently spends a higher proportion of GDP on defencethan almost any other European country (2.4%)125 although the level of UnitedKingdom Government defence spending which takes place Scotland is lower.This expenditure is used to achieve global reach, and conduct overseasdeployment (such as Iraq and Afghanistan) as well as maintaining the nucleardeterrent.

2. An independent Scotland, following defence models similar to other Europeancountries, could choose to focus on non-nuclear domestic defence and securityand specific overseas peace-keeping operations. Scottish-based defenceindustries could benefit from any joint procurement arrangement with the restof the United Kingdom, as well as wider export opportunities.

3. Defence spending is intended to benefit the whole of the United Kingdom,through providing security and stability, but defence spending also has apositive economic impact on the regions and countries where it takes place. Forexample, military procurement and defence facilities directly supportemployment, and the wider economy, in the regions they are based. However,

Scotland receives a proportionally lower direct economic benefit from UnitedKingdom Government defence spending than it might expect. Actual direct

Ministry of Defence expenditure in Scotland over the five years to 2006/07 wassome £4.3 billion less than the population based apportionment of defencespending to Scotland over the same period.126

4. Ministry of Defence employment in Scotland has fallen from 24,200 in 1997 to17,900 in 2009, a proportionately larger fall than across the Ministry’s activitiesoutside Scotland. Consequently, Scotland’s share of Ministry of Defence

personnel has fallen from 7.0% to 6.5% over this period. The number of jobs

supported by Ministry of Defence expenditure in Scotland has also fallen inrecent years. In 2007/08 Ministry of Defence expenditure supported 6,000 jobsin the Scottish economy, down from 10,000 in 2003/04. 127

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CONCLUSION

8.44 Only independence would giveScotland a full voice in internationalorganisations, especially the EuropeanUnion, and responsibility for its ownsecurity and defence policy. This voicewould represent Scottish interests,

and ensure that Scotland fulfilled itspotential to contribute to debates oneconomic matters, energy, fisheries,the environment and on matters ofpeace and war.

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123

H o w w i l l a n i n d e p e n d e nt S c ot t i s h G o v er nm e nt r e l a t e t o ot h er g o v er nm e nt s

( a n d or g a n i s a t i o ns) a cr oss t h e c urr e nt

U n i t e d K i n g d om?(Dundee Summer Cabine t, 30

June 2009)

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OVERVIEW

9.1 Devolution has given Scotland amodern democratic Parliament,open and accessible to the people,and elected on a proportional basis.Coalition and minority governmentshave held office successfully,demonstrating the adaptability ofthe Scottish political parties to new

ways of working together andgoverning.

9.2 The Scottish Parliament andGovernment have taken a range ofdecisions that have affected eachand every citizen of Scotland, and

have demonstrated that Scotlandcan govern itself effectively. TheScottish Parliament and the ScottishGovernment have both becomecentral parts of Scottish life. Peoplein Scotland routinely trust these

institutions more than theirWestminster counterparts, and lookto them to make the decisions whichaffect Scotland.128

9.3 Democracy in Scotland isunderpinned by key principles suchas power sharing and participation,which make Scottish governancedistinct from the rest of the United

Kingdom. The Scottish Parliamentprovides genuine access for the

people, through the legislative

process and the Petitions Committee,which make the Parliament

responsive, and helps maintainaccountability. The ScottishGovernment has pioneered innovativeconsultation on significant policymaking. Both have demonstrated acommitment to engaging with thewhole of Scotland by takingparliamentary committees and theScottish Cabinet out of Edinburghand around the country.

9.4 These features of today’s Scotlandindicate the direction for anindependent Scotland: a moderncountry where the democraticprocess provides transparency andaccountability. Independence forScotland would bring these

advantages to the whole range ofgovernment activity, including all thekey issues currently dealt with by

the United Kingdom Parliament andGovernment in their traditional way.

9.5 Responsibility for decision making

within Scotland is shared betweencentral and local government basedon mutual esteem and respect.Scotland should encourage a cultureof responsibility and independenceat all levels, with decisions being

taken at the right level to reflectspecific local needs, as well as thoseof the nation as a whole.

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CONSTITUTION AND GOVERNMENT

The founding principles of the Scottish

Parliament

9.6 Those establishing the ScottishParliament deliberately set out tobuild a modern system of governance,particularly compared to the United

Kingdom. A Consultative SteeringGroup was set up to consider howthe Scottish Parliament wouldoperate,129 and indentified foundingprinciples to govern the relationshipbetween people, parliament and thestate in Scotland:

• power sharing• accountability• access and participation• equal opportunity

9.7 The Scottish Parliament has

successfully put into practice theprinciples on which it was founded:

• the petitions system makes theParliament accessible and improvesaccountability

• the legislative process gives civilsociety and individuals significant

opportunities to participate beforeand during the formal Parliamentaryprocesses

• both parliamentary committeesand the Scottish Cabinet take theprocess of government to all partsof the country

• participation and engagementis built into work of government,parliament, local government andwider public sector

9.8 The electoral system has alsoplayed an important role in openingup government in Scotland and insharing responsibility between theexecutive branch and the Parliamentitself. The proportional votingsystem has ensured that the Scottish

Parliament more closely reflects theviews of the people of Scotland, andthat parties have had to formParliamentary majorities in new

ways, either through coalition orthrough issue-by-issue negotiationsby a minority government. Theseadvantages have now beenintroduced to local governmentin Scotland.

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Current position

9.9 Aspects of the constitution,including the United KingdomParliament and the Union of theKingdoms of Scotland and England,

are reserved to the United Kingdominstitutions by the Scotland Act. Thesystem of government that has beensuccessfully built up over the lastten years is, therefore, subject toamendment – or even abolition –by the United Kingdom Parliament.

9.10 Also reserved are fundamental laws

which underlie the existence and

actions of the Scottish Parliamentand the Government, most obviouslymost of the Scotland Act and thelegal mechanisms for safeguardinghuman rights in Scotland. These canalso be altered by the UnitedKingdom to affect the competenceof the Scottish Parliament. Forexample, the Scottish Parliament

cannot legislate in a way

incompatible with human rights.However, while the United KingdomGovernment can be expected tocomply with its internationalobligations, legally the UnitedKingdom Parliament could amendthe mechanisms for protectinghuman rights, altering thefundamental relationship between

the legislature and the citizen. Thereare some safeguards, in that the

Scottish Parliament itself should beconsulted and agree to any variationin its responsibilities. However, thisis a constitutional convention, not arule of law, and relies on the UnitedKingdom Parliament exercisingself-restraint in its use of itsresponsibilities.

9.11 Legislation regarding localgovernment is already largelydevolved to Scotland. ScottishMinisters are elected to set thedirection of policy and the over-arching outcomes that the publicsector in Scotland is expected to

achieve. Local government hasresponsibility to develop serviceswhich deliver outcomes in ways thatreflect local priorities. The Scottishapproach to local government isbased on mutual respect andpartnership, based on key principles:

• central and local government are

equal partners at the centre of

governance in Scotland• local authorities are democraticallyconstituted bodies with autonomyto deliver in the best way that theysee fit for their local communities

• central and local government shouldwork together to develop policy andagree the financial settlementassociated with delivery of policy

priorities

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Constitutional recommendations of the


9.12 One recommendation of theCommission is that the ScottishParliament could be permitted by

the United Kingdom Parliament tolegislate on a one-off basis inrelation to reserved matters. Thismechanism might improve theefficiency of the legislative processwhen Scottish legislation involvesreserved matters. At present,reserved issues have to be dealt withseparately by means of an order inthe United Kingdom Parliament.

There are potential advantages inbeing able to include such provisionsdirectly in Acts of the ScottishParliament.

9.13 However, the Commission does notdevelop this concept fully. A moreuseful proposal would be that theScottish Parliament decides when itshould acquire competence over anissue, recognising its position as theelected national assembly ofScotland. This would follow themodel of the 1931 Statute ofWestminster for the Dominions,

such as Canada and Australia.

Full devolution

9.14 Full devolution of constitutional

affairs would mean that the Scottish

Parliament was responsible for all ofits procedures and its owncompetence. The Parliament couldtherefore adjust its electoral system,or its membership, or its statutoryCommittee structure. Perhaps moreimportantly, it could decide toacquire competence over issuescurrently reserved to Westminster.

This could be either a unilateral

process, or the United KingdomParliament could agree to proposals,similar to the system under theGovernment of Wales Act 2006.With full devolution Scotland couldhave its own civil service, similar toNorthern Ireland.

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9.15 Full devolution on this modelwould recognise the position of the

Scottish Parliament as the elected,democratic voice of a sovereignScottish people, enabled to

determine the best form ofgovernment for the nation. It mightbe that certain amendments to theresponsibilities of the Parliament, forexample on foreign affairs, requirenegotiation and agreement with theUnited Kingdom. A significant

package might need or benefit fromthe direct agreement of the peoplein a referendum.

9.16 Recognising the sovereignty of theScottish people with a devolvedParliament which can alter the

settlement itself would be compatiblewith Scotland remaining within theUnited Kingdom. Sovereignty wouldonly lead to independence if thepeople of Scotland wish.

Independence

9.17 An independent Scotland would

be responsible for its entireconstitution, from the Head of Stateto the rights of individual citizens,subject to international obligationssuch as European Unionmembership.

9.18 The current constitutionalarrangements, with the Queen as

Head of State of an independentScotland, a Scottish Parliament andGovernment modelled on the

existing institutions, and continuedmembership of the European Union,would provide a robust and testedconstitutional framework forScotland in the event of the transitionto independence. Some adjustmentswould be needed to the relationship

with existing United Kingdom bodieswhere new partnership arrangementswere agreed.

9.19 An independent Scotland couldconsider further progress, forexample removing the religiousdiscriminatory aspects of thesuccession to the throne, orformulating and agreeing a fullycodified and written constitution.These issues would be decided

within Scotland, either by the ScottishParliament, or, as at the moment formajor constitutional change, througha referendum.


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ELECTIONS

Current position

9.20Responsibility for elections tothe House of Commons, the

European Parliament and theScottish Parliament is reserved;

responsibility for localgovernment elections isdevolved, although the franchisefor these elections is reserved.

9.21 There are now four differentvoting systems in use in Scotland.

First past the post for UnitedKingdom Parliamentary elections;

the additional member system(AMS) for elections to theScottish Parliament; singletransferrable vote (STV) forlocal government elections; anda closed party list system forelections to the EuropeanParliament.

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Election recommendations of the


9.22 The Commission recommended thatthe responsibilities of the Secretaryof State for Scotland relating tothe administration of elections tothe Scottish Parliament should be

devolved, which would transferadministrative responsibility.

Legislation for Scottish electionswould continue to be theresponsibility of the United KingdomParliament and Government.

9.23 The Gould Report into the combinedlocal government and ScottishParliamentary elections of 2007

was clear that fragmentation ofresponsibility was a major factor inthe problems encountered.130 TheGould report concluded that theScottish Parliament should have full

responsibility for the ScottishParliamentary elections. TheCommission’s recommendationwould actually lead to furtherfragmentation of decision-makingrisking greater problems.

Full devolution

9.24 Full devolution of ScottishParliamentary elections would bringaccountability closer to the people

of Scotland. With full devolution ofresponsibility for elections, theScottish Parliament could considerthe most appropriate voting system– perhaps STV in line with Scottishlocal government elections – and thevoting age. The Scottish Parliamentcould also examine moreimaginative ways to increase voter

participation following its decisionto decouple local government andScottish Parliamentary elections.

Independence

9.25 The main electoral effect ofindependence would be that Scotlandno longer returned Members of

Parliament to Westminster. Scotlandwould no longer use the first pastthe post system for any of itselections, and would use onlyproportional voting systems.

9.26 Scotland would also be free to choose

its system of electing Members ofthe European Parliament, which iscurrently decide by the United

Kingdom. The method chosen woulddepend on the number of MEPsScotland secures in negotiation,which is likely to be more than thecurrent six (Denmark, of comparablesize to Scotland, has 13 MEPs).

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CONCLUSION

9.27 It has long been a part of Scottishconstitutional tradition that thepeople of Scotland should be able todecide their own constitutionalarrangements. However, the ScottishParliament does not currently have

the responsibility for determiningthe best way of governing thenation, as aspects of the constitutionare reserved to the United Kingdom.

9.28 The sovereignty of the people ofScotland could be recognised legallyand constitutionally within theUnited Kingdom if the ScottishParliament had full responsibilityfor determining its own functions

and role, as well as its structure andelections, consulting either or boththe Scottish people (by way ofreferendum) and the UnitedKingdom Parliament. There areprecedents for such a model.However, independence wouldprovide the Scottish people andtheir Parliament with the fullestresponsibility for their own

government.

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INTRODUCTION

10.1 As a nation, Scotland can be proudof its achievements over the last10 years. The Scottish Parliamenthas introduced innovative and

successful reforms, making a realdifference to the lives of the peopleof Scotland. Two-thirds of thoseliving in Scotland now want theScottish Parliament to have more

responsibilities and 70% want it tohave the most influence over theway Scotland is run.131

10.2 This paper provides a vision of thefurther opportunities for Scotland ifthe Scottish Parliament’sresponsibilities were extended in

order to allow for independence. Thecurrent economic situation reinforces

the arguments for ensuring thatScotland can determine its owneconomic policies. The internationalsituation raises important andrelevant issues of peace and war. Thecrisis in British democracy shows thepotential for a better system ofgovernment for Scotland, which

might be an example for the rest ofthe United Kingdom.

10.3 The debate about the way forwardfor Scotland encompasses a wide

range of views and that range ofviews should be heard: and not justthe views of the political and civicestablishment – everyone inScotland should be given the

opportunity to have their say.

INVOLVING THE PEOPLE

10.4 Ensuring the public can participatein the democratic process is acentral tenet of modern Scottishsociety. The Claim of Right of 1989reaffirmed an ancient Scottishtradition which asserts that it is thepeople of Scotland that aresovereign.

10.5 During and after the restoration ofthe Scottish Parliament, the nationhas sought to be defined by a

more inclusive form of democracythan that which prevails in theUnited Kingdom Parliament.Indeed the founding principles ofthe Scottish Parliament includeaccess and participation, principles

that the Parliament has workedassiduously to embed into its dayto day work. The ScottishParliament is now one of the most

open and accessible Parliaments inthe world.

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CHOOSING SCOTLAND’S FUTURE

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10.6 The Scottish Government issimilarly committed to encouragingthe participation of the people inshaping policy. This is evident thanin the way in which the ScottishGovernment has approached theissue of Scotland’s constitutionalfuture.

10.7 The National Conversation hasbeen an exercise in participativedemocracy. The whole process hasallowed the people of Scotland toexpress their views on the futuredirection of the nation, from publicevents held in all parts of Scotland,to publication of policy papers andan online portal where anyone

could leave comments and join inthe debate.

10.8 The next step is to ensure that thewhole of Scotland can give its viewon the extension of theresponsibilities of the Scottish

Parliament. The ScottishGovernment proposes that aReferendum should be held inScotland in 2010 to allow that viewto be heard.

A NATIONAL REFERENDUM

As the speakers said,it is the decision of the Scottish people asto what road theywant to take. It should not be

politicians who makethis decision!(Haddington National Conversation event, 28 September 2009)

10.9 The Scottish Government believes

that the future prosperity anddevelopment of Scotland is bestserved by becoming an independentcountry, a view shared in theScottish Parliament by the ScottishGreen Party. The ScottishGovernment favours a referendumwhich presents a clear choicebetween achieving that aspiration

and the current devolutionsettlement.

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The Scottish Government’s

preferred option

10.10 Under independence Scotlandwould assume the rights andresponsibilities of a normalsovereign state. This would includeall decisions on economic and fiscal

affairs, currency, the constitution,foreign affairs, security and defence.Scotland would be recognised as astate by the international communityand be part of the European Unionas a full member state.

10.11 The opportunities and challengesof independence for specific policyareas have been described in thispaper and have been the subject ofdebate and discussion in Scotland

for many years. Those who favourthis vision of Scotland will be ableto indicate their support forScottish Ministers seeking toextend the responsibilities of the

Parliament to allow forindependence to be achieved.

Current devolution settlement

10.12 It is accepted that some votersdo not wish Scottish Ministers totake any steps to seek to extendthe responsibilities of the ScottishParliament.

10.13 Therefore there will be an

opportunity for those who do notsupport any extension of currentresponsibilities to express thatview in the referendum.

A multi-option referendum

10.14 However, despite the ScottishGovernment’s preference for asingle choice, it acknowledges thatthere is support within Scotland fora range of positions seeking avariety of increased responsibilities

for the Scottish Parliament. Duringthe National Conversation suchsupport has been heard at townhall meetings, and the NationalConversation policy papers haveincluded information on at leasttwo such options.

10.15 The Scottish Government alsoaccepts that a multi-optionreferendum might be more likelyto command the support of other

parties in the Scottish Parliament, ifthey are consistent with theirprevious positions on the matter,and it would enjoy a measure ofsupport within the country. The

Scottish Government can also seesome democratic advantage inposing more than one question.

10.16 However there is a problem in

deciding what the other optionshould be. It has been suggestedsince the Commission on Scottish

Devolution reported in June 2009that its recommendations shouldbe placed before the Scottishpeople. Those who sponsored theCommission have refused to allowthat to happen. In addition, theproposals not only fall short of beinga coherent package, but they alsofall short of the increase inresponsibilities that would normally

be seen as requiring referendum

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consultation. Furthermore there issome doubt as to whether theparties who previously supportedthe Commission process are stillunanimously in favour of thefiscal proposals.

10.17 There is a further problem in

suggesting that the Commissionrecommendations form anoption in a referendum. As boththe Scottish and United KingdomGovernments support many of therecommendations, and as theScottish Government has publishedan approach which wouldimplement legislative changeswithin a matter of months,

providing the United KingdomGovernment agrees, many of the

proposals could be implementedwell before a referendum could beheld. The Scottish Government isalso working to attempt tofacilitate, with the United KingdomGovernment and the ScottishParliament, early progress on non-legislative Commission proposals

regarding Scottish ParliamentaryProcedures and inter-governmental

relations.

10.18 However, there is an alternativeset of proposals which wouldseek to extend the responsibilities

of the Scottish Parliament, short ofindependence. Contributions to theNational Conversation haveindicated support for a range ofproposals which reduce thereservations of policy areas underthe Scotland Act, but do not

eliminate them all. For example, thedevolution of broadcasting,taxation and benefits could formelements what has been called“Devolution Max”.

10.19 Unfortunately the variousproponents of this approach have

yet to bring it forward in a form inwhich it could provide the basis fora question in a multi-optionreferendum, although the inclusionof the concept in the NationalConversation policy papers, and inthis paper, will have helped thatprocess.

10.20The Referendum Bill will beintroduced into the ScottishParliament in early 2010. There

will therefore be an opportunityduring the Bill process for one ormore of the opposition parties inthe Scottish Parliament to bringforward such a proposal. If it were

brought forward, the ScottishGovernment would be preparedto consider it as a serious optionfor inclusion in a multi-optionreferendum. Accordingly the

Referendum Bill will be constructedso that the Scottish Parliament can,if it so chooses, offer the Scottishpeople the opportunity to vote fora proposal about further devolution

of other responsibilities to theScottish Parliament as part of amulti-option referendum, eventhough the Scottish Governmentdoes not favour this option andwill not campaign for it.

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10.21 A referendum is essential becausethe Scottish Government believes

that this debate cannot be

restricted to the Scottish

Parliament. The National

Conversation has allowed the

people to articulate their views, and

it is now time for them to be invited

to express those views in a formal

way.

10.22 The Bill as introduced will provide

the detailed framework for holding

the referendum and will contain the

precise form of the ballot paper for

the choice described in paragraphs

10.10 – 10.13 above. The referendum

will be held on a similar model to

1997, but with additional provisions

to govern the scrutiny of the

process through an independent

commission, the levels of financethat can be spent during the

campaign, and the mechanism forthe count. The arrangements will

conform to or exceed the best

international practice.

THE NEXT STEP

10.23 The Scottish Government intends

to bring forward the Referendum

Bill early in 2010. The Scottish

Parliament will be invited to pass

the legislation.

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ANNEX A

NATIONAL CONVERSATION EVENTS

DATE EVENT

14 August 2007 Launch of National Conversation and publication of ChoosingScotland’s Future by First Minister Alex Salmond

22 October 2007 Scottish Government summit: Scotland’s future without nuclearweapons

30 November 2007 First Minister delivered St Andrew’s Day lecture on nationaldays and the National Conversation

11 December 2007 Deputy First Minister Nicola Sturgeon gave evidence to theEurope and External Relations Committee of the ScottishParliament on the National Conversation

11 December 2007 First Minister delivered the Playfair lecture on Scotland, Europeand the National Conversation

4 February 2008 First Minister Alex Salmond opened Scotland in the World atthe University of Aberdeen

13 February 2008 First Minister Alex Salmond at Trinity College Dublin

26 March 2008 Phase 2 of the National Conversation launched with over 100representatives of Scotland’s civic institutions at the Universityof Edinburgh

1 April 2008 First Minister Alex Salmond at the University of Virginia in USA

23 April 2008 First Minister Alex Salmond continued the National

Conversation in Brussels

3 May 2008 Minister for Parliamentary Business Bruce Crawford addressedChurches without Walls conference

19 June 2008 Action of Churches in Scotland Together

20 June 2008 Minister for Parliamentary Business Bruce Crawford at Scottish

Council of Voluntary Organisations

29 July 2008 Scottish Cabinet in Dumfries

5 August 2008 Scottish Cabinet in Inverness

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DATE EVENT

29 April 2009 Cabinet Secretary for Rural Affairs and the EnvironmentRichard Lochhead and Minister for Culture, External Affairs andthe Constitution Michael Russell in Jedburgh

13 May 2009 Cabinet Secretary for Education and Lifelong Learning FionaHyslop and Minister for Parliamentary Business Bruce Crawfordin Stirling

18 May 2009 Council of Ethnic Minority Voluntary Organisations in Dundee,

hosted by Cabinet Secretary for Finance and SustainableGrowth John Swinney and Minister for Parliamentary Business

Bruce Crawford

1 June 2009 Cabinet Secretary for Justice Kenny MacAskill and Minister forChildren and Early Years Adam Ingram in Kilmarnock

16 June 2009 Minister for Culture, External Affairs and the ConstitutionMichael Russell and Minister for Schools and Skills Keith Brownin Kirkcaldy

16 June 2009 First Minister Alex Salmond and Minister for Culture, External

Affairs and the Constitution Michael Russell in Livingston22 June 2009 Council of Ethnic Minority Voluntary Organisations in

Aberdeen, hosted by Minister for Housing and CommunitiesAlex Neill and Minister for Environment Roseanna Cunningham

23 June 2009 Council of Ethnic Minority Voluntary Organisations in Inverness,hosted by Minister for Housing and Communities Alex Neill andMinister for Environment Roseanna Cunningham

29-30 June 2009 Scottish Cabinet meeting in Dundee, followed by NationalConversation event

27-28 July 2009 Scottish Cabinet meeting in Melrose, followed by NationalConversation event

3-4 August 2009 Scottish Cabinet meeting in Stornoway, followed by NationalConversation event

17-18 August 2009 Scottish Cabinet meeting in Aberdeen, followed by NationalConversation event

31 August – Scottish Cabinet meeting in Glasgow, followed by National1 September 2009 Conversation Event

8 September 2009 Minister for Culture, External Affairs and the Constitution MichaelRussell launched Europe and Foreign Affairs paper in Brussels

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DATE EVENT

14 September 2009 Cabinet Secretary for Education and Lifelong Learning FionaHyslop and Minister for Community Safety Fergus Ewing in Paisley

28 September 2009 Minister for Culture, External Affairs and the ConstitutionMichael Russell and Minister for Transport, Infrastructure andClimate Change Stewart Stevenson in Haddington

28 September 2009 Minister for Culture, External Affairs and the ConstitutionMichael Russell hosted Expressing and Exercising Scottish

Sovereignty seminar at the University of Edinburgh

30 September 2009 Council of Ethnic Minority Voluntary Organisations in Edinburgh,hosted by First Minister Alex Salmond

5 October 2009 Minister for Community Safety Fergus Ewing and Minister forTransport, Infrastructure and Climate Change StewartStevenson in Oban

19 October 2009 Cabinet Secretary for Health and Wellbeing Nicola Sturgeonand Minister for Schools and Skills Keith Brown in Hamilton

26 October 2009 Cabinet Secretary for Justice Kenneth MacAskill and Ministerfor Housing and Communities Alex Neill in Dalkeith

2 November 2009 Video conference with Minister for Culture, External Affairs andthe Constitution Michael Russell and Minister for Schools and

Skills via University of the Highlands and Islands network,linking Orkney, Shetland, Fort William, Thurso and Dingwall

9 November 2009 Cabinet Secretary for Finance and Sustainable Growth John Swinneyand Minister for Children and Early Years Adam Ingram in Ayr

9 November 2009 Minister for Culture, External Affairs and the ConstitutionMichael Russell delivered lecture on the debate aboutScotland’s constitutional future at Constitution Unit, UniversityCollege London

16 November 2009 Cabinet Secretary for Justice Kenneth MacAskill and Ministerfor Environment Roseanna Cunningham in Port Glasgow

19 November 2009 Minister for Children and Early Years Adam Ingram and Ministerfor Housing and Communities Alex Neill in Bishopbriggs

24 November 2009 Scottish Council on Deafness, Glasgow, with Deputy First

Minister Nicola Sturgeon

In addition, the Minister for Enterprise, Energy and Tourism held 130 NationalConversation economy-based events with a wide variety of groups throughoutScotland. 143

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ANNEX B

ORGANISATIONS CONTRIBUTING TO


Many individuals and organisations have attended or been represented atNational Conversation events, including the following:

Aberdeen Airport

Aberdeen and Grampian Chamber of

CommerceAberdeen City Council

Aberdeen College

Aberdeen Council of Voluntary

Organisations

Aberdeen Greenspace

Aberdeen International Centre

Aberdeen Performing Arts

Aberdeen Tenants Association

Aberdeenshire CouncilAddaction

Adult Protection Committee

Afasic Scotland

All Saints Church Glasgow

Anderston Sanctuary Tenants &

Residents Association

Angus Council

Angus Housing Association

Apex ScotlandAppin Community Council

Arac

Ardler Village Trust

Ardlochrig Tenants and ResidentsAssociation

Ardrossan Community Council

Argyll & Bute Council

Argyll Technologies

Armadale Community Council

Armadale Community Education

AssociationArmour and Partners

Armstrong Landforce

Arran Adventure Company

Arran Ferry Committee

Arran Haulage

Arran High School

Arran Windpower Ltd

Ashley and Broomhill CC

Aspire 2getherAssociation of Scottish Community

Councils

Athelstaneford Parish Church

Auchtermuchty and StrathmigloCommunity Council

Autism Argyll

Autism Rights

Avich & Kilchrenan Community Council

Ayr Careers CentreAyrshire & Arran Alcohol and DrugAction Team

Ayrshire Housing

Baker Tilly Tax and Accounting Limited

Ballantrae Community Council

Banff and Buchan College

Banner Residents Association

BDA Council

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BEAR Scotland

BEEM & East Lothian Resident & TenantsPanel

Befrienders

Belhelvie Community Council

Berwickshire Housing Association

Better Government for Older People

Black and Ethnic Minorities Infrastructurein Scotland (BEMIS)

Blackridge Community Council

Blairgowrie & East Perthshire TouristAssociation

Bon Accord Free Church of Scotland

Border Curling Development Group

Borders Common Riding Association

Borders Family History Society

Borders Independent Advocacy Service

Borders Sport and Leisure

Bower, Halkirk-Westerdale and WattenParishes

Boys Brigade

Braidhouse

British Deaf Association

Broomhill Community Council

Broxburn Academy Parents Council

Broxburn Family Centre

Brunton Court Tenants Group

Buccleuch Group

Burns Festival Trust

Cairn Valley & District CommunityCouncil

Calderwood Community Council

CalMac Ferries Ltd

Cameron Riddell Associates

Capability Scotland

Cardonald College

Cassillis Estate

Castle Tenants & Residents Association

Cathedral of St Mary's of Assumption

Catherine's Country Kitchen

Central Buchan

Centre for Stewardship

Certex Accounting

Chair Caderwood Community Council

Changing PlacesCherry Road Centre

Christ Church

Church of Scotland

Citizens Advice and Rights Fife

Citizens Advice Bureau

CL Research

Clackmannanshire Council

Clyde Gateway URC

Clyde Valley Community CouncilClydebank College

Coal Industry Social WelfareOrganisation

COAST

Comhairle nan Eilean Siar

Community Integrated Care

Community Learning and Development

Community Links

Convenor Orkney Islands Council

Cornbank Primary School

Cornerstone

Cowal Community Hospital

Craigengillan

Cranshaws, Ellemford & Longformacus

Cranston Nurseries Ltd

Crescent Moon Music Ltd

Crofters Commission

Currie & Brown United Kingdom Limited

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Glasgow Metropolitan College

Glasgow Works

Glenburn Surgery

Gordon & Westruther CommunityCouncil

Govan C Residents Association

Grampian Police

Grandparents Apart Self Help GroupKilmarnock

Guthrie Group Ltd

Hairmyres Hospital

Halliday Fraser

Hamilton Old Parish Church

Hamilton Park Racecourse

Hamilton Trinity Parish Church

Harlow Hadden Consulting Engineers

Harris Tweed Authority

Headtown

Hebrides Alpha Project

Highland Alternative Energy

Highland Council

Highland Theological College

Highlands and Islands Enterprise

Hillhouse

Hitrans

HMP Peterhead

HMP Kilmarnock

Homestart Glasgow

Horizon Housing Association

Housing Initiative for Arran Residents

Houston Community Council

Howood Community Council

Hunterhill Community Council

Iain More Associates

Inclusion Scotland

Institute of Directors

Institute of Local Television

Inverurie and District

Islands Book Trust

J Rutherford (Earlston) Ltd

Jedburgh Alliance

Jedburgh Community Trust

Jewel & Esk College

John Wheatley College

Justice and Peace ScotlandKeep Scotland Beautiful

Kelso Library

Kennoway Community Council

Kibble Education Centre

Kilmarnock College

Kinetic Group

King's Park Community Council

Kinross-shire Residents Association

Kirkcaldy High SchoolKirkcaldy West Community Council

Labour Party

Lanarkshire Chamber of Commerce

Langside College

Largo Area Community Council

Lauderdale Development Trust

Lead Scotland North

Lewis Sports Centre

Lilliesleaf Ashkirk & Midlem CommunityCouncil

Lilliesleaf Poultry

Living Streets Scotland

Loch Lomond and the Trossachs NationalPark

Lochaber GoPark

Longside & District Community Council

Lothian and Borders Fire & Rescue

Lothian and Borders Police

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Lothian NHS Board

Maclay Murray & Spens LLP

Mains of Tarryblake

Mann Judd Gordon

Manor, Stobo & Lyne Community Council

Maritime and Coastguard Agency

Maxwellton Court Tenant Association

Medical Research Council

Meldrum, Bourtie Daviot CommunityCouncil

Mellerstain Trust

Melville Housing Association

Methihill Primary School Parent Council

Methodist Church in Scotland

MG Alba

Midlothian & East Lothian Chamber ofCommerce

Midlothian Council

Midlothian Tenants Org

Midlothian Youth Platform

Molendinar Community Council

Momentum Scotland

Moray Council

Moray Firth Coastal partnership

Mossblown & St Quivox CommunityCouncil

Mountain Rescue Association

Museum nan Eilean

Napier University

National Trust for Scotland

Network of Community Councils

Newcastleton, Development, Tourism &Leisure Group

NHS Borders

NHS Fife

NHS Forth valley

NHS Grampian

NHS Greater Glasgow

NHS Highland Board

NHS Lanarkshire

NHS Orkney

NHS Shetland

NHS Tayside

NHS West Lothian

North Ayrshire CouncilNorth End First Responder

North Glasgow College

North Lanarkshire Council

Northern Lights Regional Network

Nungate Tenants Residents Association

Oban Community Council

Oban High School

Oil and Gas Academy

Old Aberdeen Community CouncilOLMC Parish Banff

Orkney College

Orkney Council

Outer Hebrides Fisheries Trust

Paisley South Housing Association

Paisley West Community Council

Parent Council West Calder High School

Partick United Residents Group

Partners in AdvocacyPearce Institute

Peebles Community Council

Peeblesshire Federation

Penicuik Town Hall

Penumbra Youth Project

Perth & Argyll Conservancy

Perth and Kinross Council

Perthshire Chamber of Commerce

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Peterhead North and Rattray

Peterhead South and Cruden

Planning Together

Portlethen & District Community Council

Positive Solutions

Positive Steps

Pöyry Energy (Aberdeen) Ltd

Prestwick and District Branch

Procurator Fiscal ServiceProspective Parliamentary Candidate

Queen Margaret University

Racial Equality Council

Rathbone United Kingdom

RBS

Re-Gen North

Renfrewshire Council

Renfrewshire CVS

Richmond Fellowship ScotlandRiddrie Tenant and Resident Association

Rosemount Flexi Centre

Roses Charitable Trust

Rothera Group

Royal Burgh of Selkirk and DistrictCommunity Council

Royal National Mod

Royal Scottish Geographical Society

Salvation Army

SAMH

Sandback Community Council

Sandwick Community Council

School Leaders Scotland

Scotland Transerv

Scottish Agricultural College

Scottish Agricultural College FarmBusiness Services

Scottish Association of Local SportsCouncils

Scottish Auto Cycle Union

Scottish Beef Cattle Association

Scottish Borders Chamber of Commerce

Scottish Borders Council

Scottish Borders Elder Voice

Scottish Borders EnvironmentPartnership

Scottish Borders Social EnterpriseChamber

Scottish Borders Tenants Organisation

Scottish Business in the Community

Scottish Council for Development andIndustry

Scottish Council of Jewish Communities

Scottish Council on Deafness

Scottish Crofting Foundation

Scottish Enterprise

Scottish Episcopal Church

Scottish Flood Forum

Scottish Genealogy Research

Scottish Health Council Borders

Scottish National Heritage

Scottish Natural Heritage

Scottish Pre-School Playgroup

Development Worker

Scottish Prison ServiceScottish Qualifications Authority

Scottish Tenant Farmers Association

Scottish Traditional Boat Festival

Scottish Water

Scottish Youth Parliament

Scottish Youth Theatre

Seabird Centre

Selkirk Regeneration Group

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SEPA

SEStran

Shell

Shetland Islands Council

Shieldhall Tenants and ResidentsAssociation

Skills Development Scotland

Smithy Croft High School

Smithy House Associates

Soroba Young Family Group

South Ayrshire Council

South Lanarkshire Council

Springfield Community Council

SPT

SRPBA

SSPCA

St Benedicts Church

St John's Church

St John's Episcopal Church

St Mary's Church

St Patricks Church

St Philamena's Primary

Stirling Council

Stirling Smith Art Gallery and Museum

Stirling University

Stornoway Amenity Trust

Strathclyde Fire & Rescue

Strathclyde Forensics

Strathclyde Hospital

Strathclyde Police

Strichen and Tyre Church

Stirling Council

STUC

TACTRAN

Tarbert & Skipness Community Council

Tay Screen

Tenants & Residents Association ofKemnay

Tenants and Residents Association

The Bridge

The Cyrenians

Theatre Hebrides

Third Sector Hebrides

Thornfield House

Thurso Community Council

Tilhill Forestry Ltd

Todd Associates

Trade Union Council

Transition Arran

Traquair House

Trinity Church

Troon St Meddan's Parish Church

Trustee Reform Scotland

Tullibody, Cambus & GlenochilCommunity Council

Turriff and District Heritage Society

Turriff Community Council

Tweeddale Sports Council

Tyron Parish Hall Committee

University of the Highlands and IslandsLews Castle College

Unison

UNISON Lanarkshire Health Branch

Unite

University of Abertay

University of Dundee

University of Dundee

University of Strathclyde

University of the West of Scotland

University of Abertay

Uphall Community council

Video Goodwill

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Visit Scotland

Voluntary Sector Strategy Group

Volunteer Centre West Lothian

Walking Support

Wallyford Community Council

West Church

West End Community Council

West Lochfyne Community Council

West Lothian CollegeWest Lothian Council

West Lothian Drug & Alcohol Service

West Lothian Drug Actions Team

West Lothian FSB

West Lothian LEADER Coordinator

West of Scotland Housing Association

Westburn Village Neighbourhood Council

Western Isles Health Board

Western Isles Library ServiceWesthill & Elrick Community Council

Westhill and District

Westhill Community Council

Whitehall Theatre

Willow Wood Community

Wireless Infrastructure Group

Word Fringe

Young Scot

The following organisations also madeformal written submissions to theNational Conversation:

British Energy

Ecas

Educational Institute of Scotland

Glasgow Caledonian University

Institute of Chartered Accountants of

ScotlandInstitute of Local Television

National Trust for Scotland

Reform Scotland

Scottish Association for Public Transport

Scottish Competition Law Forum

Scottish Consumer Council

Scottish Federation of HousingAssociations

Scottish Refugee CouncilStatistics Commission

University of Edinburgh

West Lothian Council

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152

1 “We, gathered as the Scottish Constitutional

Convention, do hereby acknowledge the sovereign

right of the Scottish people to determine the form

of Government best suited to their needs, and do

hereby declare and pledge that in all our actions

and deliberations their interests shall be

paramount.” Owen Dudley Edwards, Claim of Right

for Scotland (Polygon, 1989).

2 The 1997 referendum offered three options to the

Scottish people: the status quo, a Parliament

without tax varying powers, and a Parliament with

tax varying powers. Scottish Parliament, “The Path

to Devolution”, http://www.scottish.parliament.uk/

vli/history/pathtodevolution/index.htm.

3 See Scottish Government, Choosing Scotland’s

Future: A National Conversation – Independence

and Responsibility in the Modern World (August

2007), paragraphs 1.5 – 1.13, chapter 2 and Annex A

http://www.scotland.gov.uk/Publications/2007/

08/13103747/0.

4 Department for Constitutional Affairs, Devolution

Guidance Note 10: Post-Devolution Primary

Legislation affecting Scotland (last updated

November 2005), http://www.dca.gov.uk/

constitution/devolution/guidance/dgn10.pdf.

5 See Scottish Government, “Move to close damages

loophole” 1 April 2009, http://www.scotland.

gov.uk/News/Releases/2009/04/01140512.

6 Scottish Government, Choosing Scotland’s Future

(August 2007), http://www.scotland.gov.uk/

Publications/2007/08/13103747/0.

7 http://www.anationalconversation.com.

8 Full details of the National Conversation are onthe National Conversation website:

www.anationalconversation.com.

9 http://www.scotland.gov.United Kingdom/

Topics/a-national-conversation/Tell-us/Blog.

10 HM Government, Building Britain’s Future,

http://www.hmg.gov.United Kingdom/

buildingbritainsfuture.aspx.

11 See POWER2010, http://www.power2010.org.uk/ .

12 Constitutional Reform and Government Bill House

of Commons,

http://www.publications.parliament.uk/pa/

cm200809/cmls://s/142/09142.i-iv.html.

13 http://allwalesconvention.org/?skip=1&lang=en.

14 Independent Commission for Funding and Finance

for Wales, Funding devolved government in Wales:

Barnett & beyond (July 2009), http://wales.gov.uk/

icffw/home/report/firstreport/?lang=en.

15 Scottish Government, The Scottish Government’s

Response to the Recommendations of the

Commission on Scottish Devolution (November

2009), http://www.scotland.gov.uk/

Publications/2009/11/09152544/0.

16 Further details on many subjects can be found in

the National Conversation policy papers listed at

paragraph 1.18, and on the National Conversation

website at http://www.scotland.gov.uk/Topics/

a-national-conversation.


(August 2007), 4-5, http://www.scotland.gov.uk/

Publications/2007/08/13103747/0.

18 See Commission on Scottish Devolution, The Future

of Scottish Devolution within the Union: A First

Report (December 2008), 60-64,

http://www.commissiononscottishdevolution.org.

uk/uploads/2008-12-01-vol-1-final--bm.pdf.

19 See Scottish Government, The Government

Economic Strategy (November 2007),

http://www.scotland.gov.uk/Publications/

2007/11/12115041/0.



http://www.scotland.gov.uk/Publications/ 2007/11/12115041/0.




2007/11/12115041/0.

22 Approximately 70% of total identifiable public

sector expenditure for Scotland in 2007/08 can be

loosely classified as ‘devolved expenditure’. See

Scottish Government, Government Expenditure

and Revenue Scotland 2007/08 (GERS 2007/08)(June 2009), Table 6.8, http://www.scotland.

gov.uk/Publications/2009/06/18101733/0.

ENDNOTES

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153

23 It is estimated that a one pence change in the SVR

would be worth approximately plus or minus

£350 million in 2009/10 and £360 million in 2010/11.

HM Treasury Budget 2009, http:www.hm-treasury.

gov.uk/bud_bud_09_index.htm.

24 Scottish Government, Borrowing Powers:

Information to be shared with the Calman

Commission (March 2009), http://www.scotland.

gov.uk/Topics/a_national_conversation.

25 Bank of England, Monetary Policy Framework ,

http://www.bankofengland.co.uk/

monetarypolicy/framework.htm.

26 For example, the Scottish Government believes

that the £12 billion cost of reducing VAT to 15%announced by the Chancellor at the 2008 pre-

budget report, would have been better spent on

increasing net investment. Scottish Government

analysis has shown that the net effect in terms of

jobs would have been greater.

27 Scottish Government, Fiscal Autonomy in

Scotland: The case for change and options for

reform (February 2009),


2009/02/23092643/0.

28 GERS 2007/08.

29 For example, the Norwegian Government

announced in January 2009 that it would use a

proportion of its oil wealth to fund a £2 billion

fiscal stimulus package. In contrast to other

countries, Norway has been able to implement

these measures without relying on large increases

in government borrowing. The Norwegian

Government projects that it will run a budget

surplus of 7.4 % of mainland GDP in 2009, higher

than any other country in Europe. See Scottish

Government, An Oil Fund for Scotland: Takingforward our National Conversation (July 2009), 26,


07/28112701/0.

30 Commission on Scottish Devolution, Serving

Scotland Better: Scotland and the United Kingdom in

the 21st Century, Final Report (June 2009), 86-110,

http://www.commisionscottishdevolution.org.uk/ .

31 See Jim Cuthbert and Margaret Cuthbert, Open

Letter to the Calman Commission: Technical

Failings in the Calman Proposals on Income Tax,

16 July 2009, http://www.cuthbert1.pwp.

blueyonder.co.uk/ ; The Scotsman, “Long-term

planning is threatened by report”, 17 June 2009,

http://thescotsman.scotsman.com/opinion/

Longterm-planning-is-threatened-by.5371689.jp;

The Scotsman, “Calman panel member warns of

'disastrous' tax changes”, 21 June 2009,

http://news.scotsman.com/latestnews/Calman-

panel-member-warns-of.5386447.jp.

32 For a discussion of full devolution see Scottish

Government, Fiscal Autonomy in Scotland: The

case for change and options for reform (February

2009), http://www.scotland.gov.uk/ Publications/2009/02/23092643/0.

33 See, for example, Andrew Hughes-Hallett et al ,

Options for Scotland’s Future – the Economic

Dimension (David Hume Institute occasional paper

no. 80, November 2008), http://www.davidhume

institute.com/DHI%20Website/publications/hop/

HOP%2080.pdf, and Reform Scotland, Powers for

Growth (March 2008), http://www.reformscotland.

com/index.php/publication/view_details/17/ .

34 Reform Scotland,Fiscal Powers

(2nd edition)

(October 2009), http://www.reformscotland.com/

include/publications/fiscal_powers_2nd_edition.pdf.

35 See Scottish Government, Fiscal Autonomy: The

case for change and options for reform (February

2009), 25-31, http://www.scotland.gov.uk/

Publications/2009/02/23092643/0.

36 Scottish Government, Borrowing Powers:

Information to be shared with the Calman

Commission (March 2009), http://www.scotland.

gov.uk/Topics/a_national_conversation.

37 Paul Krugman, “Growth on the periphery: Second

winds for industrial regions?”, The Allander Series,

University of Strathclyde Business School (2003),

http://www.strath.ac.uk/media/departments/

economics/fairse/media_140850_en.pdf, and

C. Paul Hallwood and Ronald MacDonald,

The Political Economy of Financing Scottish

Government: Considering a New Constitutional

Settlement for Scotland (Studies in Fiscal

Federalism and State-Local Finance) (Edward

Elgar Publishing, 2009).

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38 Council of Economic Advisers, minutes of Scottish

meeting, 2009, http://www.scotland.gov.uk/

Topics/Economy/Council-Economic-Advisers/

Meetings/2009-meetings/2009-meeting.

39 HM Treasury, Financial stability,

http://www.hm-treasury.gov.uk/

fin_finstability_index.htm.

40 Scottish Government, The Hypothetical Scottish

Shares of Revenues and Expenditures from the

United Kingdom Continental Shelf 2000-2013

(June 2008), http://www.scotland.gov.uk/

Publications/2008/06/UKContinentalShelfRevenue ,

and Alexander G. Kemp and Linda Stephen,

Expenditures and Revenues from the UKCS –

Estimating the hypothetical Scottish Shares 1970- 2005 (North Sea Study Occasional Paper no. 70,

Department of Economics, University of Aberdeen,

1999); The Economist , “History repeats itself”

20 June 2008.

41 When a geographical share of North Sea revenues

is included. See GERS 2007/08,

42 OECD Economic Outlook, Number 84, November

2008.

43 Scottish Government,Fiscal Autonomy in Scotland,(February 2009) http://www.scotland.gov.uk/

Publications/2009/02/23092643/0, 18; House of

Commons Library, The Barnett Formula, research

paper 07/91 (December 2007); Independent

Commission on Funding & Finance for Wales,

Funding devolved government in Wales: Barnett &

beyond (July 2009), http://wales.gov.uk/icffw/

home/report/firstreport/?lang=en; Hansard HC

vol. 497 col. 292283 (Secretary of State for

Scotland on Barnett formula, 14 October 2009),

http://www.publications.parliament.uk/pa/

cm200809/cmhansrd/cm091014/debtext/

91014-0002.htm#09101435000038; House ofLords, Select Committee on the Barnett Formula,

The Barnett Formula: Report with Evidence (July

2009), HL Paper 139, http://www.publications.

parliament.uk/pa/ld/ldbarnett.htm.

44 Ministry of Justice, Securing the Future: Proposals

for the efficient and sustainable use of custody in

England and Wales (December 2007),

http://www.justice.gov.uk/publications/securing-

the-future.htm.

45 The Economist, “Where economics went wrong”

16 July 2009.

46 Mervyn King, speech to the CBI Dinner, Nottingham,

20 January 2009, http://www.bankofengland.co.

uk/publications/speeches/2009/speech372.pdf.

47 Scottish Government, Quarterly Gross Domestic

Product for Scotland and the UK (updated

October 2009), http://www.scotland.gov.uk/

Topics/Statistics/Browse/Economy/GDP, and HM

Treasury, Public Finance Databank (updated

October 2009), http://www.hm-treasury.gov.uk/

psf_statistics.htm.

48 HM Treasury, Reforming financial markets (July

2009), http://www.hm-treasury.gov.UnitedKingdom/reforming_financial_markets.htm.

49 Bloomberg, “Fortis gets ¤11.2 billion rescue from

governments” 28 September 2009,

http://www.bloomberg.com/apps/news?pid=206

01087&sid=ahlKDjeO0Lik&refer=home.

50 See Scottish Government, An Oil Fund for

Scotland: Taking forward our National

Conversation (July 2009),


2009/07/28112701/0.

51 Scottish Government, An Oil Fund for Scotland ,

(July 2009) 27,


07/28112701/0.


Scotland Better: Scotland and the United Kingdom

in the 21st Century , Final Report (June 2009),

94 – 96. http://www.commissionscottishdevolution.

org.uk/ .

53 Commission on Scottish Devolution, Evidence fromthe Independent Expert Group to the Commission

on Scottish Devolution: Natural Resource Taxation

and Scottish Devolution (June 2009), 12 – 13.

http://www.commissionscottishdevolution.

org.uk/ .




2007/11/12115041/0.

154

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55 See Scottish Consumer Council written response

to the National Conversation (February 2008),

http://www.scotland.gov.uk/Topics/a-national-

conversation/NC-contributions-inds-org.

56 Scottish Government, The Government Economic

Strategy (November 2007), section B.1 Growth


11/12115041/0.



in the 21st Century , Final Report (June 2009), 6.

http://www.commissionscottishdevolution.org.uk/ .


Scotland Better: Scotland and the United Kingdomin the 21st Century , Final Report (June 2009),

173-174. http://www.commissionscottish

devolution.org.uk/ .





60 See the Educational Institute of Scotland response

to the National Conversation (May 2008),

http://www.scotland.gov.uk/Topics/a-national-

conversation/NC-contributions-inds-org.

61 Brian Ashcroft and David Bell, The Key to

Economic Success in Scotland (Policy Institute,

2007), http://policyinstitute.info/research-

publications/economy/the-key-to-economic-

success-in-scotland.

62 See Scottish Consumer Council written response to

the National Conversation (February 2008) and

Scottish Competition Law Forum written response

to the National Conversation (September 2008),

http://www.scotland.gov.uk/Topics/a-national-conversation/NC-contributions-.hds-org.

63 Scottish Government, Scotland’s Global Connections

2007 (March 2009), http://www.scotland.gov.uk/

Topics/Statistics/Browse/Economy/Exports/

GCSData.

64 KPMG Government Services, Administrative

Burdens: HMRC Measurement Project (March 2006),

http://www.hmrc.gov.uk/better-regulation/

kpmg1.pdf.

65 CBI, United Kingdom Business Tax: A Compelling

Case for Change (2008), http://www.cbi.org.uk/

pdf/taxsection01.pdf.

66 Office for National Statistics, Labour Force Survey ,

http://www.statistics.gov.uk/Cci/nscl.asp?

ID=6621; GERS 2007/08.

67 GERS 2007/08.

68 Office for National Statistics, Workforce Jobs,

http://www.statistics.gov.uk/StatBase/

Analysis.asp?vlnk=132&More=Y.

69 Scottish Government, Annual Population Survey in

Scotland 2007: A Compendium of Labour Market

Statistics (June 2008),http://www.scotland.gov.uk/Publications/2008/

06/25095306/0.

70 Scottish Government, Scotland’s Global Connections

2007 (March 2009) ,

http://www.scotland.gov.uk/Topics/

Statistics/Browse/Economy/Exports/GCSData.

71 Scottish Government, Scottish Annual Business

Statistics 2007 (updated August 2009),

http://www.scotland.gov.uk/Topics/Statistics/

16170/4363.

72 Scottish Enterprise, Energy Baseline Study (2009).

73 Scottish Government, The Strategy for the

Financial Services Industry in Scotland, Annual

Report 2009 (May 2009), http://www.scotland.



Statistics 2007 (updated August 2009) ,

http://www.scotland.gov.uk/

Topics/Statistics/16170/4363.

75 Scottish Government, Food and Drink Key Sector

Report (October 2009), http://www.scotland.


76 Visit Scotland, Tourism in Scotland 2008 (2009),

http://www.visitscotland.org/research_and_

statistics/national_facts_and_figures.htm.

155

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Statistics 2007 , http://www.scotland.gov.uk/

Topics/Statistics/16170/4363; Scottish

Government, Scottish Global Connections 2007

(March 2009),

http://www.scotland.gov.uk/Topics/Statistics/

Browse/Economy/Exports/GCSData. (Creative

industries cannot be precisely defined using

standard industrial codes. For details of approach

used to track the sector see Annex A1, Mapping

the Creative Industries to official data

classifications, http://www.culture.gov.uk/

images/research/Creative_Industries_Economic

_Estimates_Jan_09.pdf.)

78 Derived from Scottish Enterprise database of life

science companies, http://www.scottish-enterprise.com/life_sciences_sector.htm.

79 QS, The QS World University Rankings 2007,

http://www.topuniversities.com/university-

rankings/world-university-rankings/2009/results.

80 Higher Education Statistics Agency (HESA),

http://www.hesa.ac.uk/index.php.

81 Scottish Government, Metrics for the Scottish

Research Base (modified March 2009),

http://www.scotland.gov.uk/Topics/Business-

Industry/science/16607/research-1.

82 OECD Directorate for Education, Education at a

Glance 2009: OECD Indicators,

http://www.oecd.org/document/9/0,3343,en_

2649_39263238_41266761_1_1_1_1,00.html.

83 Standard and Poor's, “Spain's Basque Country

Affirmed At 'AAA' And Off CreditWatch On

Unique Fiscal Autonomy/Robust Finances;

Outlook Stable” (January 2009),

http://www.euskadi.net/r33-2734/eu/

contenidos/nota_prensa/standard_aaa/eu_st_aaa /adjuntos/03.Standard.pdf; Isabelle Joumard and

Aristomène Varoudakis, “Options for Reforming

the Spanish Tax System” OECD Economics

Department Working Papers 249, OECD Economics

Department (2000), http://ideas.repec.org/p/

oec/ecoaaa/249-en.html.




2007/11/12115041/0.

85 For example, in 2007 there were 310 persons of

pensionable age to 1,000 persons of working. This

ratio is projected to increase to 399 by 2031.

General Register Office Scotland, Population

Projections Scotland: Population projections by

sex, age and administrative area (revised October

2008), http://www.gro-scotland.gov.uk/statistics/

publications-and-data/popproj/06pop-proj-

scottishareas/index.html.

86 General Register Office Scotland, Population

Projections Scotland (2008-based) (revised

October 2009), http://www.gro-scotland.gov.uk/

statistics/publications-and-data/popproj/

projected-population-of-scotland-2008-based/

index.html.

87 Scottish Broadcasting Commission, Platform for

Success: Final report of the Scottish Broadcasting

Commission (September 2008), 40-45,

http://www.scottishbroadcastingcommission.gov.

uk/about/Final-Report.

88 Scottish Government, Opportunities for

Broadcasting: Taking forward our National

Conversation (September 2009), 17.


09/23125613/0.

89 This subject was discussed at the National

Conversation event in Melrose on 28 July 2009.

See http://www.anationalconversation.com.

90 Scottish Government, Poverty and income

inequality in Scotland: 2007/08 (May 2009),


2009/05/povertyfigures0708.

91 Department of Work and Pensions, Households

Below Average Income: An analysis of the income

distribution, 1994/95 – 2007/08 (May 2009),

http://research.dwp.gov.uk/asd/hbai/hbai2008/ pdf_files/full_hbai09.pdf; European Commission,

Employment and social policy indicators: Indicators

of the social inclusion strand (last updated April

2009), http://epp.eurostat.ec.europa.eu/portal/

page/portal/employment_and_social_policy_

indicators/omc_social_inclusion_and_social_prot

ection/social_inclusion_strand.

92 See, for example, Jonathan Bradshaw, ‘Child

Poverty and Child Outcomes’, Children and

Society, vol. 16, issue 2 (April 2002), 131-140;

Scottish Government, Estimating the Cost of Child Poverty in Scotland – Approaches and Evidence

156

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(April 2008), http://www.scotland.gov.uk/

Publications/2008/01/28111819/0; and Prince’s

Trust, The Cost of Exclusion: Counting the cost of

youth disadvantage in the UK (April 2007),

http://www.princes-trust.org.uk/about_the_trust/ what_we_do/research/cost_of_exclusion.aspx.

93 See Scottish Federation of Housing Associations

written response to the National Conversation

(December 2008), http://www.scotland.gov.uk/

Topics/a-national-conversation/NC-contributions-

inds-org.

94 See Scottish Government, Achieving Our Potential:

a framework for tackling poverty and income

inequality in Scotland (November 2008),

http://www.scotland.gov.uk/Publications/2008/11 /20103815/0.


(August 2007), 13, http://www.scotland.gov.uk/

Resource/Doc/194791/0052321.pdf.

96 See, for example, Commission on Scottish

Devolution, Serving Scotland Better: Scotland and

the United Kingdom in the 21st Century , Final

Report (June 2009), 200-208.

http://www.commissionscottishdevolution.

org.uk/ .

97 GERS 2007/08. Estimate includes an illustrative

geographical share of North Sea revenues.

98 Scottish Government, Communities and People:

Taking Forward our National Conversation

(November 2009), http://www.scotland.gov.uk/

Topics/a-national-conversation.

99 Department for Work and Pensions, First Release:

Income Related Benefits Estimates of Take-Up in

2007-08 (June 2009) , http://www.dwp.gov.uk/

docs/ifd250609benefits.pdf.

100 See Scottish Government, Rural Affairs,

Environment and Climate Change: Taking Forward

our National Conversation (October 2009),

http://www.scotland.gov.uk/Resource/Doc/

288135/0088042.pdf.

101 See, for example, the National Trust for Scotland

written response to the national Conversation

(August 2008), http://www.scotland.gov.uk/


inds-org.

102 See, for example, Scottish Government, “Scheme

to help preserve cod stocks” 4 February 2008,

http://www.scotland.gov.uk/News/Releases/2008

/02/01144700; and Scottish Government, “Fish

conservation” 4 April 2008, http://www.scotland.

gov.uk/News/Releases/2008/04/04113754.

103 Scottish Government, FMD Review (Scotland)

2007 (June 2008), http://www.scotland.gov.

UnitedKingdom/Publications/2008/

06/23130049/21.

104 HM Treasury and DEFRA, A Vision for the Common

Agricultural Policy (December 2005),

http://www.defra.gov.uk/foodfarm/policy/

capreform/documents/vision-for-cap.pdf.

105 See Scottish Association for Public Transport


(October 2008), http://www.scotland.gov.uk/


inds-org.





107 See Scottish Federation of Housing Associations


(December 2008), http://www.commission

scottishdevolution.org.uk/ .

108 Commission on Scottish Devolution, Evidence from

the Independent Expert Group to the Commission

on Scottish Devolution: Natural Resource Taxation

and Scottish Devolution (March 2006),

http://www.commissiononscottishdevolution.org.

uk/uploads/2009-06-06-ieg-natural-resource-

taxation-1.pdf.

109 For information on the Nordic energy market, seeNordic Energy, Ten Perspectives on Nordic Energy:

Final Report of the Nordic Energy Perspectives

Project (September 2006), http://www.nordic

energy.net/publications.cfm?id=3-0&path=10.

110 Scottish Government, Action Plan on European

Engagement , Appendix I – European Union Review

and Forward Look: Update on Key Areas for

Engagement, http://www.scotland.gov.United

Kingdom/Publications/2009/09/07093832/1.

157

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158

111 Scotland Act 1998, schedule 5, section G2; section

J1-J5, http://www.opsi.gov.uk/Acts/acts1998/

ukpga_19980046_en_1; see also Scottish

Government, Choosing Scotland’s Future Annex A:

Reservations in the Scotland Act 1998,


2007/08/13103747/0.

112 Scottish Government, Communities and People:

Taking Forward our National Conversation

(November 2009), http://www.scotland.

gov.uk/Topics/a-national-conversation/

NC-contributions-inds-org.



in the 21st Century , Final Report (June 2009),recommendation 5.13, 187 – 188; recommendation

5.14, 188 – 190; recommendation 5.15, 190 – 191; and

recommendation 5.16, 191 – 192,


114 Scottish Parliament official report, 18 December

2008, http://www.scottish.parliament.uk/

business/officialReports/meetingsParliament/

or-08/sor1218-01.htm; Scottish Government,

Scotland’s Road Safety Framework to 2020

(June 2009), http://www.scotland.gov.uk/

Publications/2009/06/08103221/0.



in the 21st Century , Final Report (June 2009), 193,


116 See Commission on Scottish Devolution, Serving


in the 21st Century , Final Report (June 2009), Part 4:

Strengthening Co-operation,


117 Scottish Government, Europe and Foreign Affairs:Taking forward our National Conversation

(September 2009), http://www.scotland.gov.

uk/Publications/2009/09/08143726/0.

118 See Scottish Government, Europe and Foreign

Affairs: Taking forward our National Conversation

(September 2009), Annex A – Membership of

International Organisations and Ministries of

Foreign Affairs,


09/08143726/0.

119 Scotland Act 1998, schedule 5, part I, s.9(1);

Scotland Act 1998, schedule 5, part II, section B8;

Scotland Act 1998, schedule 5, part II, section B10,

http://www.opsi.gov.uk/acts/acts1998/ukpga_

19980046_en_1.









122 See, for example, Scottish Government, ChoosingScotland’s Future (August 2007), 3, 8-9,


08/13103747/0.

123 Scotland Act 1998, ss. 56-57.

124 Ministry of Justice, Governance of Britain – War

Powers and Treaties: Limiting Executive Power

(October 2007 – March 2008),

http://www.justice.gov.uk/consultations/

cp2607.htm.

125 HM Treasury, Public Expenditure Statistical

Analyses 2009 (July 2009), Table 4.2, ‘Public

sector expenditure on services by function, 1987-

88 to 2009-09’, 66, http://www.hm-treasury.

gov.uk/pespub_pesa09.htm.

126 See Hansard HC Deb, 9 September 2009, c

2000W and HC Deb, 22 October 2009, c 1634W;

GERS 2006/07, Table 6.4: http://www.scotland.

gov.uk/Resource/Doc/228544/0061858.pdf.

127 Ministry of Defence, UK Defence Statistics 2009

(September 2009), Table 2.2, ‘Location of serviceand personnel in the United Kingdom’, 51,

http://www.dasa.mod.uk/modintranet/UKDS/

UKDS2009/pdf/UKDS2009.pdf.

128 Scottish Government, Scottish Social Attitudes

Survey 2007 Core Module Report 1: Attitudes to

Government in Scotland (May 2008),


2008/05/16095134/13.

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159

129 Scottish Office, Shaping Scotland’s Parliament:

Report of the Consultative Steering Group on the

Scottish Parliament (December 1998),

http://www.scotland.gov.United Kingdom/library/

documents-w5/rcsg-00.htm .

130 Electoral Commission, Scottish Elections 2007: The

independent review of the Scottish Parliament and

local government elections 3 July 2007 (October

2007), http://www.electoralcommission.org.uk/

document-summary?assetid=13223.

131 Scottish Government, Scottish Social Attitudes

Survey 2007 Core Module Report 1: Attitudes to

Government in Scotland (May 2008),


05/16095134/13.

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160

Scotland is steadily and surely shrugging off itsunenviable reputation as the sick man of Europe.To do that has involved taking courageousdecisions and backing these up with necessarylegislation – such as leading the way in banningsmoking in enclosed public spaces; delivering free

personal care; and our current legislative proposalswhich include measures to further reduce smoking,such as banning cigarette vending machines, and totackle alcohol misuse through the introduction ofminimum pricing. I am absolutely certain that wecan and should continue to lead the way in takingappropriate measures to improve the health of thepeople of Scotland, now and in the future. Onlywith full independent powers and responsibilitieswill we able to do so. This includes control over

taxation and benefits which are vital if we are toreduce poverty and low income, and eliminate thehealth inequalities which plague Scotland. Suchpowers will enable us to more fully determine and

shape the continuing improvements we need ifScotland’s people are to live longer, healthier lives.

“

”Minister for Public Health and Sport

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161

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162

Minister for Housing and Communities

Scotland’s achievements for housing sincedevolution in 1999 are significant. I amproud to serve in a Government, which,alongside our partners in local governmentand beyond, is part of this dynamic shift.But current constitutional arrangements

mean that crucial barriers to our progressstill remain, with key issues like taxation,social security benefits and financial andbusiness regulation remaining reserved toWestminster. We need responsibility for allpolicy areas impacting on housing todeliver the homes and communities that

Scotland needs and deserves. Independencecan bring about this vital change.

“

”

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163

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164

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165

The Scottish Government continues toencourage, nurture and build a supportive

business environment. We recognise thateffective businesses are the key to delivering

accelerated and sustainable economic

growth. With greater autonomy and in anindependent Scotland, we would have theopportunity to put in place new initiatives

such as lower corporation tax to givecompanies in Scotland a new competitive

edge and to attract new businesses toScotland. Constitutional reform would alsogive Scotland responsibility for developingour vast energy resources, including our oiland gas reserves and our huge potential in

renewables and carbon capture.

“

”Minister for Enterprise,

Energy and Tourism

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166

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167

Scotland’s ambitious and comprehensiveclimate change legislation establishes thiscountry as a global leader in developing a

low carbon economy. We recognise thecontribution that Scotland must make to

reverse the carbon polluting impacts of the

first industrial revolution and the economicopportunities for those who move quickly

into the next. We are doing all we can

within the powers available to us totransform our domestic performance and

to influence the conduct of internationalnegotiations. With the powers properly

available to an independent nation state,we would enhance our internationalcontribution and move more rapidly

towards the more successful and just lowcarbon economy we want to see.

“

”Minister for Transport,

Infrastructure, and Climate Change

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168

Minister for Schools and Skills

To create the sort of country of which we can allbe proud to be a part, we need an educationsystem within which our children and youngpeople will be equipped to succeed personally,socially and economically in the modern world.This goes beyond education. For example, aspectsof the UK tax credit and benefits system impact

directly on the lives of some of Scotland’s mostvulnerable children and young people, such asthose with disabilities. Constitutional reform willallow us to fully align all of Scotland’s publicservice systems to work with the third sector,communities and parents to help enable currentand future generations to thrive.

“

”

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169

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170

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171

Minister for Children

and Early Years

This Government has recently published the Early YearsFramework, making clear our commitment to supporting

children and their families.

While we are making progress in many areas, includingsetting out how we intend to improve accessibility and

flexibility of childcare, the Scottish Government haslimited leverage for change on the issue of affordability.

Under the current constitutional settlement, tax creditswhich support parents with the costs of childcare can be

complex and bureaucratic. Instead, we want to see asingle, accessible and progressive means of supporting

parents with the cost of childcare, appropriate to theneeds of the people of Scotland.

We do not want Scottish solutions undermined andobstructed by monolithic UK-wide systems, which are not

responsive to Scotland’s specific needs. We wantaccessible and affordable childcare, helping parents back

in to work and boosting our economy.

“

”

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172

Minister for Community Safety

Scottish Governments have made largescale and radical reforms to the criminal

justice system to successfully address theserious challenges facing our communities.But there are important gaps in our powers

and responsibilities. These gaps hinder ourefforts to produce joined up policies whichfully address Scottish needs andcircumstances. Further constitutionalreform, especially in the areas such asfirearms and drink driving, would allow usto tackle these issues directly and at our

own hand.

“

”

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173

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174

Minister for En vironment

Our natural environment is part of S

cotland’s

unique and distinct character. It sust

ains

businesses and jobs, supports famil

ies and

communities, putsfood on our plates

and

offers huge potential for sustainable

economic

growth. We couldensure it contribu

tes this

and so much more if we didn’t have unhelpful

limits on our ambitions and actions.

“”

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175

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176

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