The Scottish government should be offered the revenues from North Sea oil

This long-festering perceived injustice has to be addressed

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The Independent Online

The Scots have affirmed the Union, and the other nations of the Union must now be heard.

There are four grievances in this debate: two Scottish and two of the rest of the UK. All must be addressed and this can be done without compromising the ‘vow’ of the three party leaders, which must be honoured by all the parties in full, without retrospective qualification or conditionality. The credibility and legitimacy of our politics is at stake.

First, there is Scottish tax and spend. The Scots have told us that the current devolution settlement has not been enough to assuage dislike of what they perceive to be rule by Westminster. So we must act: much greater control over tax and spending needs to be handed to the Scottish Parliament. Far-reaching proposals have already been made. For the Scottish Conservatives, the Strathclyde Commission argued for the full devolution of income tax and air passenger duty, along with a partial assignment of VAT revenues. We can and should also consider other ideas, including those of Ming Campbell’s Liberal Democrat commission.

The argument that substantial further devolution cuts into what constitutes a union does not wash at proposed levels of tax and spend.  If anything, the arguments runs the other way: Scotland already controls two thirds of its spending but, even after implementation of the Scotland Act, will still raise only 18 per cent of its revenues, an imbalance which must be rectified. These proposals are devo more, not devo max. In any case, the key features of the Union – foreign affairs, defence, a single currency, a highly integrated single market – will be unchanged.

A second long-standing Scottish grievance is the sense that Westminster has appropriated North Sea oil and gas revenues properly belonging to Scotland. The Scottish government should be offered the oil revenues. The arguments against –  the revenues are volatile; decommissioning costs could be a long-run headache for the Scottish government; different parts of the UK continental shelf could be subject to different tax regimes – can all be addressed. In any case, they pale into insignificance compared to the benefits of tackling this long-festering perceived injustice.

The argument for a good deal of fiscal devolution is made all the more powerful by the fact that it can help assuage the discontent and grievances of other nations, particularly England. The more tax-raising powers that are devolved, the bigger the reduction in the amount of block grant covered by the Barnett formula. This – despite its original intentions – has locked in higher public spending in Scotland than any reasonable assessment of relative needs can justify. Barnett is the first of two growing English grievances. Greater self-financing for Scotland eases it.

All four nations of the union have a legitimate interest in ensuring that the vow’s commitment to an equitable settlement is met. We are a long way from that now. Not only are current financing arrangements a source of English frustration and resentment; they fail to meet the needs of Wales, while Scotland – though funded generously – finds itself in thrall to spending decisions made in and for England. An equitable settlement must be based on need; defining it is not straightforward. A ‘Grand Commission’ of all four nations is needed to examine this question to enable longer-term reform.

The fourth grievance is the West Lothian Question: why should non-English MPs vote on matters affecting England that are devolved in the other nations? To insist on the principle that decisions affecting England (or sometimes England and Wales) should be taken only with the consent of a majority of MPs from that area – what is commonly known as English Votes for English Laws – is not a narrow sectional demand, still less a slogan. It is a statement of the minimum necessary to stabilise the Union in the long term.

Some argue that we can rely on the proposals of the McKay Commission to solve this. We cannot. There is a lot to commend in the McKay approach. But it offers, for the most part, a menu of options, rather than firm proposals for action. And McKay does not solve the West Lothian Question. It falls decisively short of what can reasonably be described as English Votes for English Laws, so maintaining the West Lothian grievance, with all its corrosive properties for the Union. Scottish MPs would still be able to help a government impose its will on the text of a Bill over an English majority’s objections.

The minimum necessary to deliver the principle of consent was set out by the Conservative Party’s Democracy Task Force, on which I served, chaired by Ken Clarke. We concluded that, for the relevant Bills, both the Public Bill Committee and Report stage should be ‘English only’ so that – in contrast to McKay - the government should not be able to amend England-only bills at Report Stage by mobilising non-English MPs’ votes. Non-English MPs would come in again at the Third Reading stage, where the Bill could no longer be amended but only accepted in the form decided by English MPs or voted down altogether. Where a UK government lacked an English majority, both it and its opponents would have a form of veto – and thus an incentive to compromise. Most importantly, the consent of the English, the government and the Commons as a whole would be required to pass legislation affecting England.

The reforms outlined here can be implemented without recourse to the much more radical upheaval of an English Parliament and an English executive, which – quite apart from the risk that it could ultimately destabilise rather than entrench the Union – could scarcely be implemented quickly and might well require a referendum.

No doubt over the next six months there will be a heavy dose of party politics in this debate. That is scarcely surprising. But there is a bigger prize, and one of which we must not lose sight: to bring stability to the Union by assuaging all four grievances, after decades of discontent.

Andrew Tyrie is Conservative MP for Chichester and Chairman of the Treasury Select Committee. He writes in a personal capacity.