An Interim Report on the Smith Commission
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Published 14th May 2015 SP Paper 720 3rd Report, Session 4 (2015) Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government’s Proposals Members who would like a printed copy of this Numbered Report to be forwarded to them should give notice at the Document Supply Centre. Produced and published in Scotland on behalf of the Scottish Parliamentary Corporate Body by APS Group Scotland. All documents are available on the Scottish For information on the Scottish Parliament Parliament website at: contact Public Information on: www.scottish.parliament.uk Telephone: 0131 348 5000 For details of documents available to order Textphone: 0800 092 7100 in hard copy format, please contact: Email: [email protected] APS Scottish Parliament Publications on 0131 629 9941. ISBN xxx-x-xxxxx-xxx-x © Parliamentary copyright. Scottish Parliamentary Corporate Body Information on the Scottish Parliament’ copyright policy can be found on the website – www.scottish.parliament.uk Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4 (2014) Contents Executive Summary 1 Next steps 2 Introduction 3 A brief timeline 3 This report 3 Our advisers 4 Our approach to date and engagement with the people of Scotland 5 Constitutional matters 8 Background 8 Permanency of the Scottish Parliament and Scottish Government 11 The Sewel Convention/Legislative Consent Memoranda 15 Equal Opportunities 18 Socio-economic inequalities 19 Gender quotas 20 Taxation 21 Background 21 The recommendations of the Smith Commission and the previous UK Government‘s proposals 21 Evidence received 28 Views in general on the content and coherence of the tax proposals 28 Powers over income tax 30 Assignment of a share of VAT revenues 34 Air Passenger Duty 37 Aggregates levy 38 Fiscal framework, institutional arrangements and the operation of ‗no detriment‘ 39 The role of the Scottish Parliament and parliamentary oversight 42 Conclusions and recommendations on taxation provisions 43 Borrowing 47 Background – current situation 47 Comparative information 47 Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4, (2014) The recommendations of the Smith Commission and the previous UK Government‘s proposals 48 Evidence received 49 Critique of the current borrowing powers within the Scotland Act 1998 and Scotland Act 2012 49 Principles of any new borrowing regime 50 Bailouts 53 Commentary on the current proposals of the previous UK Government 53 Conclusions and recommendation on borrowing 55 Welfare and benefits 57 Background 57 The recommendations of the Smith Commission and the previous UK Government‘s proposals 58 Evidence received 61 Commentary in general on the welfare provisions in the Smith Report and the previous UK Government‘s draft legislative clauses 61 Power to create new benefits and top-up reserved benefits 62 Definition of a carer 65 Definition of disability 67 Universal Credit 69 Winter Fuel Payments 77 Scottish Welfare Fund 78 Employment Programmes 78 Inter-governmental relations in welfare provision 83 Conclusions and recommendations on welfare and benefits 84 General 84 New and top-up benefits 85 Carers 86 Definitions of disability 86 Universal Credit – a shared power 87 Universal credit – policy flexibility 87 Universal Credit – ‗veto‘ power? 87 Under Occupancy Charge/‘Bedroom Tax‘ and Discretionary Housing Payments Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4 (2014) 88 Winter Fuel Payments 88 Scottish Welfare Fund 88 Employment Programmes 88 Intergovernmental Relations in Welfare 89 The Crown Estate 90 Background 90 The recommendations of the Smith Commission and the previous UK Government‘s proposals 92 Evidence received 93 The legislative route adopted for devolution 93 The role of successor to The Crown Estate in the rest of the UK to continue to invest in Scotland – two Crown Estates? 96 ‗Jointly held‘ economic assets that are excluded from transfer – Fort Kinnaird 98 Definition of zones 100 Devolution / decentralisation beyond the Scottish Parliament 101 Conclusions and recommendations on The Crown Estate 104 Other provisions and issues 107 Background 107 Recommendations of the Smith Commission 107 Payday Loan Shops 107 Fixed-Odds Betting Terminals 108 Tribunals 109 Broadcasting 111 Food labelling and seafood/red meat levies 111 Elections, the workings of the Scottish Parliament etc. 111 Telecommunications, postal services, energy, transport, health and social affairs, and consumer protection 112 Additional issues raised by the Smith Commission 112 Post-Study Work Visas 112 Victims of Trafficking 113 Additional issues for consideration 113 Inter-governmental relations and parliamentary oversight 115 Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4, (2014) Background and recommendations of the Smith Commission 115 The Smith Commission‘s views 116 Evidence received 117 Views of the two governments 117 Effectiveness of the current system for IGR and on the recommendations for reform 118 New institutional structures, bilateral versus multilateral and formal versus informal 119 IGR and discussions on development of policy on EU matters 120 Role of Parliament in scrutinising inter-governmental relations 121 Conclusions and recommendations 123 Coherence and cohesiveness of the proposals for further devolution 125 Background 125 Evidence received 125 Economic coherence 125 Coherence - Welfare 128 An Enduring Settlement? 129 Conclusion 130 Key conclusions and recommendations 131 General 131 The need for greater public engagement 131 Constitutional matters 131 Permanency of the Scottish Parliament and Scottish Government 131 Sewel Convention and Legislative Consent Memoranda 132 Equal opportunities: socio-economic inequalities and gender quotas 132 Taxation 133 Income tax 133 Assignment of VAT 133 Aggregates Levy and Air Passenger Duty 134 Fiscal framework, institutional arrangements and ‗no detriment‘ 134 Borrowing 135 Welfare 135 Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4 (2014) General 135 New and top-up benefits 136 Carers 137 Definitions of disability 137 Universal Credit – a shared power 137 Universal credit – policy flexibility 138 Universal Credit – ‗veto‘ power? 138 Under Occupancy Charge/‘Bedroom Tax‘ and Discretionary Housing Payments 138 Winter Fuel Payments 138 Scottish Welfare Fund 139 Employment Programmes 139 Intergovernmental Relations in Welfare 139 The Crown Estate 140 Other provisions in the draft legislative clauses or additional issues cited in the Smith Commission‘s report 142 Payday loan shops 142 Fixed-Odds Betting Terminals 142 Tribunals 142 The BBC and the agreement to a Memorandum of Understanding 142 Food labelling and seafood/red meat levies 143 Elections, the workings of the Scottish Parliament etc. 143 Telecommunications, postal services, energy, transport, health and social affairs and consumer protection 143 Post-Study Work Visas & Victims of trafficking 143 Asylum seekers; fines, forfeitures and fixed penalties imposed by courts and tribunals; and the functions of the Health and Safety Executive 143 Inter-governmental Relations 143 Annexe A – a summary guide to the Committee‘s views on the draft legislative clauses compared to the Smith Agreement 153 Annexe B 154 Extract from the minutes of the meetings of the Committee and links to the Official Reports 154 Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government's Proposals, 3rd Report, Session 4, (2014) Annexe C 171 List of other written evidence 171 Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government’s Proposals, 3rd Report, Session 4 (2015) Devolution (Further Powers) Committee To consider matters relating to The Scotland Act 1998 (Modification of Schedule 5) Order 2013, the Scottish Independence Referendum Act 2013, its implementation and any associated legislation. Furthermore, (i) until the end of November 2014 or when the final report of the Scotland Devolution Commission has been published, to facilitate engagement of stakeholders with the Scotland Devolution Commission and to engage in an agreed programme of work with the commission as it develops its proposals; and (ii) thereafter, to consider the work of the Scotland Devolution Commission, the proposals it makes for further devolution to the Scottish Parliament, other such proposals for further devolution and any legislation to implement such proposals that may be introduced in the UK Parliament or Scottish Parliament after the commission has published its final report. www.scottish.parliament.uk/devolution-of-further-powers [email protected] 0131 348 5206 Follow the Devolution (Further Powers) Committee on Twitter Devolution (Further Powers) Committee New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government’s Proposals, 3rd Report, Session 4 (2015) Committee Membership Convener Deputy Convener