a constitutional crossroads: ways forward for the … a constitutional crossroads ways forward for...

A Constitutional Crossroads:Ways Forward for the United Kingdom

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A Constitutional CrossroadsWays Forward for the United Kingdom

May 2015

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TTHHIISS RREEVVIIEEWW WWAASS UUNNDDEERRTTAAKKEENN BBEETTWWEEEENN DDEECCEEMMBBEERR 22001144 AANNDD MMAAYY 22001155 BBYY AA CCOOMMMMIISSSSIIOONN**CCOONNSSIISSTTIINNGG OOFF::

PPRROOFFEESSSSOORR SSIIRR JJEEFFFFRREEYY JJOOWWEELLLL KKCCMMGG QQCC (Chair), Director of the Bingham Centre for theRule of Law

PPRROOFFEESSSSOORR LLIINNDDAA CCOOLLLLEEYY, Shelby MC Davis 1958 Professor of History at Princeton University

GGEERRAALLDD HHOOLLTTHHAAMM, Managing Partner at Cadwyn Capital LLP. Cardiff Business School

PPRROOFFEESSSSOORR JJOOHHNN KKAAYY, Visiting Fellow, Nuffield College, Oxford

SSIIRR MMAAUURRIICCEE KKAAYY, Former Vice President of the Civil Division of the Court of Appeal

PPRROOFFEESSSSOORR MMOONNIICCAA MMCCWWIILLLLIIAAMMSS, Professor, Transitional Justice Institute, University of Ulster

PPRROOFFEESSSSOORR EEMMEERRIITTAA EELLIIZZAABBEETTHH MMEEEEHHAANN, Professor at the School of Politics and InternationalRelations at University College, Dublin

PPHHIILLIIPP SSTTEEPPHHEENNSS, Chief political commentator, Financial Times

PPRROOFFEESSSSOORR AADDAAMM TTOOMMKKIINNSS, (Rapporteur) Professor of Public Law at the University of Glasgow

PPRROOFFEESSSSOORR TTOONNYY TTRRAAVVEERRSS, Director of British Government at the London School of Economics

AALLAANN TTRREENNCCHH, (Advisor) Devolution expert, author of ‘Devolution Matters’ blog

CCoommmmiitttteeee SSeeccrreettaarryy: SSAANNDDRRAA HHOOMMEEWWOOOODD

AAssssiissttaannccee iiss aacckknnoowwlleeddggeedd ffrroomm ccoonnvveerrssaattiioonnss wwiitthh:: TToobbyy FFeennwwiicckk,, PPrrooffeessssoorr RRoobbeerrtt HHaazzeellll,, LLoorrdd LLeesstteerr QQCC,, LLoorrdd LLeexxddeenn aanndd PPrrooffeessssoorr RRiicchhaarrdd RRaawwlliinnggss.. AAnndd ffoorr aaddmmiinniissttrraattiivvee aassssiissttaannccee ffrroomm CChhaarrlloottttee LLaazzaarruuss..

* For fuller biographies see Chapter 8.

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CONTENTS

FFoorreewwoorrdd iixx

EExxeeccuuttiivvee ssuummmmaarryy ooff mmaaiinn rreeccoommmmeennddaattiioonnss xxiiiiii

11.. IInnttrroodduuccttiioonn:: tthhee ddeevveellooppmmeenntt ooff ddeevvoolluuttiioonn 111.1 Scotland 11.2 Wales 41.3 Northern Ireland 61.4 Implementing the new proposals 7

22.. TThhee aarrcchhiitteeccttuurree ooff tthhee uunniioonn ssttaattee 992.1 Inter-governmental machinery 92.2 Whitehall and the civil service 11

33.. DDeevvoolluuttiioonn aanndd ffeeddeerraalliissmm 11333.1 Permanence 143.2 Secession 153.3 Judicial review 153.4 Shared rule and solidarity 163.5 A reformed Upper House 173.6 England 173.7 The content of devolution and the extent of diversity 18

44.. AA CChhaarrtteerr ooff UUnniioonn 11994.1 Principles of union constitutionalism 204.2 The principle of consent and secession referendums 22

55.. TThhee EEnngglliisshh qquueessttiioonn 22555.1 Representation: English votes for English laws? 265.2 Making English votes for English laws work 295.3 Devolution within England 31

66.. FFuunnddiinngg ddeevvoollvveedd ggoovveerrnnmmeennttss:: ffiissccaall ddeevvoolluuttiioonn,, ppuubblliicc sseerrvviicceess aanndd tthhee ‘‘ssoocciiaall uunniioonn’’ 33556.1 Social solidarity in the Union 356.2 Principles for funding devolution 366.3 The block grant and the working of the Barnett formula 406.4 Tax devolution and its implications 416.5 The block grant and fiscal devolution 436.6 England within the Union: the implications of English choices for the rest of the UK 456.7 How to reform the system 46

77.. CChhrroonnoollooggiiccaall ssuummmmaarryy ooff ccoonncclluussiioonnss aanndd rreeccoommmmeennddaattiioonnss 4499

88.. BBiiooggrraapphhiieess ooff CCoommmmiissssiioonn MMeemmbbeerrss 5555

AAppppeennddiixx:: tthhee ccaassee llaaww oonn ddeevvoolluuttiioonn 5599

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The United Kingdom has reached a constitutionalcrossroads. Scotland’s vote last September toremain part of the Union was made in the light ofan offer by political leaders of an unprecedenteddegree of home rule. Much greater transfer ofpower to the Scottish Parliament will transformrelationships between the four parts or nations1

of the Union. The urgent task of the new UnitedKingdom government is to craft a renewedsettlement that at once meets the pledges made to Scotland; maintains the essential fabric of theUnion; and is fair to all nations of the Union in aspirit of mutual respect. To say this will be not beeasy is an understatement.

The informal, asymmetric nature of the UKconstitution does not lend itself to balanced, neatadjustments. Nor does England’s preponderancewithin the Union. Any new settlement willnecessarily be complex. It will be impossible tobanish all inconsistencies and anomalies. TheUnion has great advantages for reasons ofsecurity, economic efficiency and social solidarityas well as shared history and culture. Yet there are also great virtues in decentralised sources of governance.

This review seeks to assist the mapping of a pathto a new settlement for the UK government.Although the devolution arrangements are oftenreferred to as a ‘settlement’, this is far from thecase and there is now a growing sense of uneasethat the Union is at risk of becoming unstuck.Indeed, in 2014, the United Kingdom was on theverge of breaking up on the authority of an inter-government arrangement without the properunderpinning of parliamentary enactment or theconsent of the other constituent nations. Contrastthe position in most federal countries, where awritten constitution provides with clarity thattransfers of power can be achieved, if at all, onlywith unanimity or a high threshold of popular

support. A settlement is therefore urgent tocreate a sense of security among our owncitizens, who need to comprehend the basic rules of our domestic territorial arrangementsand to know that they are “coherent, stable andworkable”.2 A settlement is urgent too becausethe present lack of clarity conveys an impressionof instability which can harm our dealings withthe outside world.

The late Lord Bingham, commenting on our lack of a codified constitution, said that“constitutionally speaking, we now find ourselvesin a trackless desert without map or compass”.He was therefore attracted to the notion of asparely drawn constitution, dealing with a fewgoverning principles regarded as fundamentaland indispensable. This would enable “any citizen to ascertain the cardinal rules regulatingthe government of the state of which he or she is a member” and also inculcate a constitutionalawareness which is particularly important in theincreasingly polyglot, multi-cultural, religiouslydiverse, plural society that this country hasbecome3.

We believe that in the context of devolution, a written constitution would most securelyprovide the advantage of clear ground-rules toserve as a framework for our territorialarrangements and to secure their permanence.Its realisation however, will, rightly, take time. In the meantime, because the issue is urgent, we suggest that we would benefit now from aCharter of Union which would lay down theunderlying principles of the UK’s territorialconstitution and of devolution within it, fromwhich flow a number of changes to existinginstitutional arrangements and practices,including financial arrangements under theexisting ‘Barnett formula’ (from which, wesuggest too, we should progressively depart).

1 We know that there are reservations in some quartersabout describing each of England, Scotland, Wales andNorthern Ireland as ‘nations’ but, for ease, this is thenomenclature we adopt throughout this review.

2 The words of Lord Hope, Deputy President of the UKSupreme Court, in Imperial Tobacco v Lord Advocate [2012]UKSC 61, 2013 SC (UKSC) 153, at [13].

3 Tom Bingham, Lives in the Law (OUP, 2011), chap.6.

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FOREWORD

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This review (carried out over five months, and inevitably selective) examines devolution, the UK’s union state, and our territorialconstitution in the context of the United Kingdomas a whole. UK devolution has been undertaken ina piecemeal fashion and has only occasionallybeen viewed in the round – both in the light of theUK’s fundamental constitutional values (such asthe rule of law, the protection of individualliberties and human rights, and representativegovernment) and in the light of how eachconstituent nation relates constitutionally to each other and to the centre, and the interactingpoints of influence between them. The House ofLords Constitution Committee stated in a reportpublished in March 2015 that they were“astonished that the UK Government do [sic] notappear to have considered the wider implicationsfor the United Kingdom of the proposals” agreedin November 2014 for further devolution forScotland.4 The Institute for Government said in arecently published report that “the overallimpression is of upheaval at a rapid pace, withouta great deal of consideration about how thevarious proposed changes relate to one another,or how they should be implemented… Insufficientattention is paid to the big picture”.5

Chapter 1 of this review describes how devolutionhas been separately developed in Scotland, Walesand Northern Ireland. The chapter includes anassessment of the recent Smith Report forScotland, and of the constitutional implications ofits recommendations that (for example) theScottish Parliament and Government should bestated in legislation to be ‘permanent institutions’.

In Chapter 2, we consider the architecture of theunion state, the provision made in the UnitedKingdom for inter-governmental machinery andthe implications of devolution for Whitehall, theorganisation of the UK Government, and the civilservice. We note here how the present inter-governmental arrangements strikingly lacktransparency and in some ways offend the rule oflaw.

In Chapter 3, we set devolution in the UnitedKingdom in the context of an understanding offederalism. We explore the similarities betweendevolution and federalism and we note where theymay be contrasted with one another. We note thatany degree of permanence of our devolvedstructure requires a written constitution andpropose other ways to enhance a combination of‘shared rule’ and ‘home rule’.

In Chapter 4, we identify the constitutionalprinciples which, we argue, should shape ourunderstanding of the UK’s territorial state. We examine the idea of union and ask whatanimates it: from a range of sources we identify a series of ‘principles of union constitutionalism’which, we argue, should now be codified in a newCharter of Union to help us understand the stateof the union and its likely future. Although notpossessing the entrenched framework of awritten constitution, the Charter of Union wouldguide future legislation and would shape futurediscussion about the development of devolution,but it would also identify judicially enforceableprinciples of UK constitutional law. Theenforcement of such principles is a task forwhich, in our view, the UK Supreme Court is ably equipped.

In Chapter 5, we turn our attention to England. Welook first at the vexed issue of ‘English votes forEnglish laws’. How can the fact best be brought outthat the Westminster Parliament is England’slegislature as well as the legislature for the whole of the United Kingdom? We look also atgovernance within England, focusing in particularon decentralisation and localism as manifestedthrough City Deals and the empowerment of newcity-regions. Is the ‘northern powerhouse’ merelyabout the economic regeneration of the north-west, or should it be seen more overtly as aconstitutional reform?

Chapter 6 addresses the all-important question ofhow devolution and the union state are financed.We examine the Barnett formula and the idea ofsocial solidarity that should govern the funding ofdevolved government. We consider the implicationsof fiscal devolution and of the ‘no detriment’principle.

We add as an appendix to this review, an analysisof the courts’ devolution case-law to date, from

FOREWORD

4 House of Lords Constitution Committee, Proposals for theDevolution of Further Powers to Scotland (10th report, 2014–15,HL 145), para 22.

5 Institute for Government, Governing in an Ever CloserUnion (London, 2015) p 8.

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which we have drawn a number of our principles of union constitutionalism.

We hope that our review will guide policy-makersand commentators alike as the United Kingdomcontinues to evolve and to reform its territorial

governance. Constitutional reform generally, anddeveloping the UK’s territorial constitution inparticular, are not exercises undertaken merely fortheir own sakes. They are vital components ofnational harmony, regional and local identity, andeffective governance.

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FOREWORD

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1. The UK should enact a Charter of the Unionsetting down the powers and underlying principlesgoverning the relationship between the fournations of the Union. The Charter would codifyshared commitments to democracy, the rule of lawand personal liberty alongside the rights of eachnation to a government best suited to its needs.

Passage by the UK parliament of the Charterwould embed into constitutional law the guidingprinciples of solidarity and subsidiarity. TheCharter would be interpreted and enforced by thecourts. It would set the framework for an urgentrevision of the constitutional architecture andinter-governmental machinery of the Union.

The Charter would be a significant first step on the path to a written constitution which, to quotethe late Lord Bingham, would “enable any citizen to ascertain the cardinal rules regulating thegovernment of the state of which he or she is a member”.

2. The UK should remain a fully integrated singlemarket with a single currency and common macro-economic framework in which citizens are free tolive, to work, to trade and to retire without legalimpediment. Collective responsibility for defenceand security should remain with the UK. The reportwarns about different human rights regimes indifferent parts of the UK.

3. Fiscal devolution has been approached on apiecemeal and ad hoc basis. It should rest on a clearer balance between social solidarity across the Union and the autonomy of devolvedparliaments.

The present Barnett formula governing fundingarrangements for the devolved governments does

not deliver equity between the various parts of theUK. It is not appropriate for the Union’sdecentralised constitution. The way forward is agrant mechanism based on clear criteria such asrelative need with a discount for devolved tax-raising powers and subject to periodic reviews.

The machinery for devolved finance can no longerbe left to the discretion of HM Treasury.

4. The machinery governing the UK’s relationshipwith constituent nations should be overhauled toreflect the constitutional principles of transparency,accountability and effective parliamentary scrutiny(which are presently lacking). There is a powerfulcase for rolling the three territorial departments ofstate – Scotland, Northern Ireland and Wales – intoa single Department for the Union. The operationof the civil service should be reformed to reflectthe new architecture of the Union.

5. Secession referendums should be held no more than once in a generation. For thesepurposes a generation should be considered atleast 15 years.

6. Greater recognition should be given to the factthat Westminster is England’s parliament as wellas the parliament of the UK. Decisions taken atWestminster with a separate and distinct effect forEngland (or England and Wales) should be takenonly with the consent of a majority of MPs fromEngland (or England and Wales).

7. Devolution in the other nations of the Unionshould be accompanied by decentralisation inEngland. This requires significant fiscal devolutionto restore a much larger share of revenue andspending decisions to cities and to other localauthorities.

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EXECUTIVE SUMMARY OF MAIN RECOMMENDATIONS

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The United Kingdom is not an old state. In itspresent form it dates only from 1922.6 But it is astate comprising ancient nations. The legal unionof England and Wales dates from 1536. The unionof the Crowns of Scotland and England dates from1603. And the political union of Scotland withEngland and Wales dates from 1707. There was a further Act of Union, with Ireland, in 1800.

The United Kingdom is not an easy state tounderstand. Each of the three nations is differentin legal and political character. Wales is distinctfrom England in some respects but not in others.Wales and England share a legal system and there is therefore no discrete body of Welsh law,although there are particular laws that have effect only in Wales (not only those passed by theNational Assembly for Wales). The border betweenEngland and Wales is crossed about 130,000 timeseach day, whereas the border between Englandand Scotland is crossed about 30,000 times eachday. Forty-eight per cent of the Welsh populationlives within 25 miles of the border with England;only 3.7% of the Scottish population lives within 25miles of England. Northern Ireland has no landborder with any other part of the United Kingdom,but it has an international border with Ireland.Scotland and Northern Ireland have separate legalsystems, although there is a common UK SupremeCourt whose Justices come from the legalprofessions of England and Wales, Scotland, and Northern Ireland.

These differences mean that what is right for one of the home nations may not be right for theothers, and they, as well a range of other factors,help to explain why the governing arrangements ofeach of the UK’s four home nations have developeddifferently. To give two contemporary examples: theability to set a lower rate of corporation tax may bemore pressing in Belfast (in order to compete with

Dublin) than it is in either Edinburgh or Cardiff.7

The differences between the Anglo-Welsh borderand the Anglo-Scottish border may make taxcompetition a more likely threat (or opportunity)were income tax rates to vary in Wales than werethey to do so in Scotland.

The four nations, of course, are of very differentsizes. England has 84% of the UK’s population(53.5 million out of 63.7 million). Of the 650 MPs in the House of Commons, 533 represent seats inEngland. Scotland has 8.5% of the UK’s population(5.3 million) and 59 seats in the House ofCommons. Yet Scotland comprises nearly one third of the UK’s land mass and has nearly 60% ofthe UK’s coastline. Wales has a population of 3.1million (nearly 5% of the UK total) and 40 seats in the House of Commons. Northern Ireland has a population of 1.8 million (under 3% of the UKtotal) and 18 seats in the House of Commons.

It is important at the outset to stress that thedevolution schemes enacted for Scotland, Walesand Northern Ireland in 1998 did not create thedifferences between the ways the four nations are governed. But those schemes did make thedifferences greater. A Scottish Office was set up inWhitehall in the 1880s and a Secretary of State forScotland has sat in the UK Cabinet since the 1920s.A Welsh Office and Secretary of State were createdin the 1960s. There is a Secretary of State forNorthern Ireland and a separate Northern IrelandOffice with junior ministers attached but there is no‘English Office’ nor a Secretary of State for England.

1.1 Scotland

Devolution in Scotland has developed in threestages: the Scotland Act 1998, the Scotland Act2012, and the Smith Commission Agreement (aScotland Bill to implement the Agreement will be

6 The creation in that year of the Irish Free State led to theUnited Kingdom of Great Britain and Ireland becoming theUnited Kingdom of Great Britain and Northern Ireland. 7 See now the Corporation Tax (Northern Ireland) Act 2015.

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CHAPTER 1 – INTRODUCTION: THE DEVELOPMENT OF DEVOLUTION

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included in the first Queen’s Speech after thegeneral election).8 The Scotland Act 1998 createdthe Scottish Parliament and the ScottishGovernment.9 In general terms, the powers itconferred upon these institutions were thoseformally exercised by the Scottish Office and theSecretary of State for Scotland. The structure of theScotland Act 1998 is to list the powers reserved toWestminster. Everything else is devolved. Thus,there is no list of devolved powers – if a power is notfound in the list of reservations in Schedules 4 and 5to the Scotland Act, it is devolved. The core areas ofdevolved competence are health, education, justice,agriculture, arts and culture and most areas oftransport. Under the powers conferred by the Act,

the Scottish Parliament is responsible for abouttwo-thirds of identifiable public expenditure inScotland; Westminster is responsible for about one-third. Westminster remains responsible for defenceand foreign policy as regards the whole of the UK(including Scotland), currency and the macro-economy, and most aspects of economic regulation.By far the largest slice of domestic expenditure inScotland for which Westminster is responsible issocial security, including the state pension. Thus,devolution as provided for under the Scotland Act1998 is principally service devolution: that is to say,devolution of responsibility for the delivery of publicservices in Scotland.

The Scotland Act 2012 extended devolvedcompetence10 but far more significant was the

INTRODUCTION: THE DEVELOPMENT OF DEVOLUTION

8 In January 2015, the UK Government published draftclauses of the forthcoming Scotland Bill: see Scotland in theUnited Kingdom: An Enduring Settlement (Cm 8890). Weconsider a number of the draft clauses below.

9 Formally named the ‘Scottish Executive’ from 1998–2012.

10 Extensions to devolved functions included theadministration of elections, airguns, speed limits, drink-drivelimits and a handful of other matters.

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Tax Devolution under the Scotland Act 2012

Under the 1998 Act, the Scottish Parliament had the power to vary the basic rate of income tax up ordown by up to three pence in the pound. But this power was never used and it was allowed to lapseafter 2007. The 2012 Act replaced this power with a new regime. From 2016, the basic and higher andadditional rates of income tax will be set at 10 percentage points lower for Scottish taxpayers than for taxpayers in the rest of the United Kingdom. It will then be for the Scottish Parliament to set aScottish rate of income tax (‘SRIT’) in that tax space. This rate could be 10 per cent (in which casebasic and upper rates of income tax will be the same in Scotland as in the rest of the UK). It could behigher than that, or it could be lower. Under the 2012 Act, only one SRIT may be set, meaning thatHolyrood may not set different rates for the basic and upper bands of income tax. A SRIT of 9% wouldsee the rates set at 19% and 39%; a SRIT of 11% would see them set at 21% and 41%. What Holyroodcannot do under this scheme is to set, for example, a 9% rate for the basic rate and an 11% rate forthe upper rate. This is known as the ‘lock-step’.

Additionally, under the Scotland Act 2012, two smaller UK taxes were discontinued for Scotland, andthe Scottish Parliament given the power to replace them with new devolved taxes. Thus, from April2015, stamp duty land tax was replaced with a Land and Buildings Transaction Tax and landfill dutywas replaced with a Scottish Landfill Tax. The Scottish Parliament also has the power to introducenew taxes, with the consent of HM Treasury.

Reductions are to be made from the block grant calculated using the Barnett formula to allow for the revenues that the devolved taxes would create, if they were maintained at the same level as in the rest of the UK.

The UK-wide body, HM Revenue and Customs (HMRC), will be responsible for collecting andadministering the SRIT. However, the Scottish Parliament has established a new body, RevenueScotland, which will be responsible for collecting and administering the Land and BuildingsTransaction Tax and the Scottish Landfill Tax and advising it on tax matters.


fiscal devolution it started. Under the 1998 Act,while the Scottish Parliament was responsible for spending a great deal of public money, it wasnot responsible for raising very much of thatmoney. Almost all of it came to Holyrood via theblock grant from Westminster. The Scotland Act2012 sought to begin to close this ‘fiscal gap’ or ‘vertical fiscal imbalance’ (ie, the contrastbetween what Holyrood spends and whatHolyrood is responsible for raising) in a limitedway.

The Smith Commission Agreement

The Smith Commission Agreement was publishedin November 2014 to outline the next stage ofScottish devolution. It was agreed by all five partiesrepresented in the Scottish Parliament, includingthe SNP, although that party has since distanceditself from the package, arguing that it isinsufficient. The Smith Commission Agreementcomprises four core elements:

• it extends fiscal devolution beyond theScotland Act 2012;

• it introduces a degree of welfare devolution;• it extends various other competences of the

Scottish Parliament;• and it seeks to embed some of the features

of Scottish devolution in UK statute.

Tax

Under Smith, the Scottish Parliament will becomeresponsible for setting all the rates and bands ofincome tax on earned income for Scottishtaxpayers. The UK Government will set thepersonal allowance (ie, the point at whichearnings begin to be taxable), other exemptionsand reliefs, collection and anti-avoidancearrangements and UK legislation will define‘income’ for tax purposes and will define ‘Scottish taxpayer’. The UK will continue to levyincome tax on savings and dividends11. Beyondthese, income tax in Scotland will become theresponsibility of the Scottish Parliament. Therewill be no lock-step: Scottish Ministers will be freeto decide how many bands of income tax there

should be, what the thresholds between themshould be, and at what rate income should betaxed for each band.

Additionally, two further taxes are to be devolved in full: Air Passenger Duty and the AggregatesLevy12.

To add to this, the revenue from the first 10percentage points of VAT raised in Scotland will be assigned to the Scottish Parliament. In federalsystems it is common to find sales taxes fallingunder the responsibility of state/provincial/regionalgovernments. This is however unlawful in the EU,where each Member State must set a single rate of VAT. While VAT cannot be devolved for as long as the UK remains a Member State, its revenuescan be assigned and this will enable the ScottishParliament to benefit from general economicgrowth in Scotland.

National insurance, capital taxes, corporation tax and excise duties will remain reserved toWestminster. Taken together, this package ofdevolved and assigned tax powers means thatabout 60% of the money the Scottish Parliamentspends will flow directly to it.

Welfare

The Smith Commission Agreement proposedsignificantly greater devolution in the area ofwelfare. While there is nominal devolution ofwelfare provision to Northern Ireland, the reality is that Belfast implements British welfare policyand, indeed, is fined by London if it does not do so.The Smith Commission agreed that real welfaredevolution was called for in Scotland: that is to say, that the Scottish Ministers should have theflexibility to develop their own priorities for welfare spending, albeit within limits, and thatthese priorities should not be tied to those set byUK Ministers in London. The matter is difficult,however, for two reasons. First, because there is ashortage of official expertise in DWP about how itmight work, and secondly because there are limitsto how far Scotland can depart from a differentsort of social welfare to that in the rest of the UKwhile still pooling and sharing risks and resources


11 The Calman Commission had recommended assignment ofhalf these revenues to the Scottish Parliament, without anypower to set rates.

12 Devolution of these was recommended by the CalmanCommission but not implemented by the Scotland Act 2012.

3


across the UK as a whole. The principle ofsolidarity or parity tempers the extent to which theprinciple of autonomy can be realised in the field of welfare. These issues are discussed further inChapter 6.

The result provides for the state pension to bereserved to Westminster, as are tax credits, childbenefit and (largely) universal credit (UC).13

Benefits relating to those unable to look afterthemselves – such as attendance allowance andcarers allowance – and to disability (particularlyDisability Living Allowance and PersonalIndependence Payments), are to be devolved toHolyrood. There should also be a power for theScottish Ministers to make additional discretionarypayments or introduce new welfare benefits thatrelate to devolved responsibilities.

Other competences

The Smith Commission agreed that a range of further powers be devolved to the ScottishParliament and/or the Scottish Ministers, includingin the following areas: broadcasting, the regulationof telecommunications, transport, energyregulation, the management and operation oftribunals, energy efficiency and fuel poverty,consumer advocacy and advice, and onshore oiland gas extraction (ie, fracking). In the main, thesebuild on competences already devolved underScotland Acts 1998 and 2012.

Constitutional features

The Smith Commission agreed that UK legislationshould provide that the Scottish Parliament andScottish Government are ‘permanent institutions’and that the Sewel convention should be placedon a statutory footing. Under the doctrine of thesovereignty of parliament, Westminster retainsthe legal power to make laws for Scotland ondevolved matters: this is confirmed by section28(7) of the Scotland Act 1998.14 However, underthe Sewel convention, Westminster will notnormally exercise this power without the consent

of the Scottish Parliament. Such consent is oftengiven: there are many occasions when it is moreconvenient for Westminster legislation to extendto Scotland (even on a devolved matter) than it is for Holyrood to legislate afresh. The ScottishParliament’s consent is indicated by the passingof a legislative consent motion (‘LCM’). To date,148 LCMs have been passed by the ScottishParliament, including 71 since the SNP tookoffice.

As noted above, the Smith Commission Agreementis to be taken forward in a new Scotland Bill to beintroduced in the first session of the 2015parliament. In January 2015, the Governmentpublished clauses of this bill in draft, enablingthem to be the subject of pre-legislative scrutiny.15

Draft clause 1 provides that after section 1 of theScotland Act 1998 will be inserted: “A ScottishParliament is recognised as a permanent part of the United Kingdom’s constitutionalarrangements”. Draft clause 2 provides that aftersection 28(7) of the Scotland Act will be added thewords: “But it is recognised that the Parliament ofthe United Kingdom will not normally legislate withregard to devolved matters without the consent ofthe Scottish Parliament”. We consider these draftclauses in detail below (section 1.4).

In addition, the Scottish Parliament will gain thepower to legislate for Scottish Parliamentelections (subject to certain limitations), andregarding the operation of the Scottish Parliamentand Government, including the electoral system tobe used and the size of the Scottish Parliament.Use of these powers will require a two-thirdsmajority in the Scottish Parliament, not a simple majority.

1.2 Wales

Devolution in Wales has been in constant flux since1998. Approval for the principle of devolution in theSeptember 1997 referendum was by the narrowestof margins.


13 While Universal Credit is largely reserved under the SmithCommission Agreement, its housing element was agreed to bedevolved.

14 This provides that “This section does not affect the powerof the Parliament of the United Kingdom to make laws forScotland”.

15 See above, n 2. Such pre-legislative scrutiny has beenundertaken by the House of Commons Political andConstitutional Reform Committee, the House of LordsConstitution Committee and, in the Scottish Parliament, by theDevolution (Further Powers) Committee.

4


The form of devolution enacted in the Governmentof Wales Act 1998 was limited. As in Scotland, the‘National Assembly’ created then largely inheritedthe functions of the former Secretary of State forWales and Welsh Office, but these had only existedsince 1964 and were more limited than devolvedadministrative functions were in Scotland.Institutionally, the National Assembly was morelike a local authority, constituting a single legalbody corporate with a ‘first secretary’ and‘assembly secretaries’ responsible for generaladministration, but working mainly throughcommittees of which assembly secretaries werealso members. This was found rapidly not to work.Perhaps the most important change made by theGovernment of Wales Act 2006 was to divide theinstitution of the National Assembly into two,creating a deliberative and legislative Assemblyand a separate executive, accountable to theAssembly, called the Welsh Assembly Government,recognising in law a change already made inpractice.

The second key change made by the 2006 Act wasto provide for the Assembly to exercise law-makingpowers. The model for legislative devolutionenacted by the Government of Wales Act 2006involved two distinct approaches. Initially, powerswere conferred on the Assembly incrementally, ona case-by-case basis. Such powers would relate tospecific ‘matters’ within the 20 ‘fields’ of policy setout in Schedule 5 to the Act. Conferral of legislativepowers could take place in two ways. If theAssembly sought powers, it could seek a‘legislative competence order’ (‘LCO’), a form ofsecondary legislation that required the assent ofboth Houses of Parliament (and the Assembly).Alternatively, powers could be conferred by Act ofParliament, with an assumption that devolution oflegislative powers would be considered wheneverlegislation was proposed at Westminster. Theworking of the LCO system gave rise to aprotracted legislative procedure and greatinconsistency. It was controversial and unpopularand survived only until 2011.

In March 2011, a referendum was held in which it was decided to move to the 2006 Act’s secondapproach to legislative devolution. This is theapproach currently in force. It enables theAssembly to exercise primary law-making powers over 20 ‘subjects’, as listed in Schedule 7 to the Act.

The emergence of an Assembly with broad law-making powers has not ended debate about Welshdevolution. One reason for this is finance. Whilethe block grant arrangements using the Barnettformula treat Scotland and Northern Irelandgenerously, that is not the case for Wales. The2007 ‘One Wales’ coalition agreement betweenLabour and Plaid Cymru provided for theestablishment of an expert commission onfinancial matters, to establish whether and how farWales was ‘under-funded’. The commission,chaired by Gerald Holtham, published its finalreport in 2009, and argued that Wales was indeedunder-funded relative to England, given the level ofdemonstrable need in Wales.16 It recommended arelatively simple approach to assessing relativeneed.17 The question of ‘fair funding’ has remaineda recurrent theme in debates about furtherdevolution since the Holtham Commissionreported. On taking office, the Conservative-LibDem Coalition proposed the establishment of afurther commission if there were support forfurther legislative devolution in the referendumheld in March 2011.

The resulting commission, known as the SilkCommission, had a broad remit and resulted in two reports: one on finance, published inNovember 2012 and one on legislative issues,published in March 2014.18 The former led to theWales Act 2014, which parallels the tax provisionsof the Scotland Act 2012 and alters electoralarrangements for the Assembly, and formallyrenamed the Welsh Assembly Government as the‘Welsh Government’. Like the Scotland Act 2012,the Wales Act 2014 was enacted with the consentof the National Assembly. Before these provisionsmay come into force, however, a furtherreferendum will have to be held in Wales. The SilkCommission’s second report led to a yet furtherprocess of cross-party debate, initiated inNovember 2014 and known as the St David’s Dayprocess. It agreed the following:


16 Independent Commission on Funding and Finance forWales, Fairness and Accountability: a new funding settlementfor Wales (Cardiff, 2010).

17 Such an approach had earlier been endorsed in principle bythe House of Lords Select Committee on the Barnett formula inits report The Barnett Formula (2008–9, 1st report, HL 139).

18 Commission on Devolution in Wales, Empowerment andResponsibility: Financial powers to strengthen Wales (Cardiff,2012); idem, Empowerment and Responsibility: LegislativePowers to Strengthen Wales (Cardiff, 2014).

5


• the introduction of a ‘reserved powers’ model for Welsh devolution,19 as is alreadythe case in Scotland and Northern Ireland.

• the devolution to the National Assembly ofthe power to determine its own size,electoral arrangements and otheroperational matters, including its name,along with putting the Sewel convention intostatute and recognising the Assembly’spermanence (as in Scotland), along withremoval of the current rights of the Secretaryof State to take part in Assemblyproceedings.

• the establishment of a ‘Welsh Inter-governmental Committee’ to improve co-ordination between the two governments.

• devolution of a number of additionalfunctions, including planning approval forcertain energy schemes, speed limits, busand taxi regulation, rail franchising andfunctions in relation to water and sewerage.

• an agreement on a ‘Barnett floor’ tounderpin the Assembly’s block grant, withoutsaying what this might be or how it wouldwork.

Implementation of the St David’s Day process willrequire further legislation after the 2015 generalelection.20 Once implemented it will – quiteastonishingly – be the fifth iteration of devolution in Wales since 1998.

1.3 Northern Ireland

Devolved government in Northern Ireland isdifferent from that in Great Britain in a number ofrespects. The legacy of the political conflict is keyto this. Unlike Scotland or Wales, the underpinningof devolution in Northern Ireland is through amulti-party peace agreement, the 1998 BelfastAgreement (also known as the Good FridayAgreement). The Belfast Agreement is not justbetween the political parties in Northern Ireland,

but also the UK and government of Ireland.Devolution forms one of its three ‘strands’, theothers being a set of North-South relations withinIreland – the North South Ministerial Council and a range of cross-border bodies – and a set of east-west arrangements including the UK and Irish Governments, of which the best known is theBritish-Irish Council.21

The Northern Ireland Act 1998, which implementsthe Belfast Agreement, contains a number ofdistinctive provisions. One is the scheme oflegislative devolution. This resembles the Scottishmodel in permitting the Northern Ireland Assemblyto legislate for all matters save those expresslyexcluded from its powers. A second is the waythose exclusions are framed: some powers are‘excepted’, others are ‘reserved’. Excepted mattersare wholly beyond the Assembly’s powers.Reserved powers may, however, be devolved bysecondary legislation (an order made by theSecretary of State). With the Secretary of State’sconsent, the Assembly may also legislate forreserved matters.22 Reserved matters maytherefore be regarded as a category of ‘devolvable’matters; policing and the justice system (whichwere on that list) have been devolved. A thirddistinction is the way the devolved institutionsembody power-sharing. This means that a numberof key decisions taken by the Assembly, includingthe budget and the programme for government,require cross-community approval, so that theyhave a majority of members identifying with bothunionist and nationalist communities and not asimple majority in the Assembly as a whole. It alsomeans that ministers are not chosen because ofagreement between their parties or majoritysupport, but because of the strength of theirparty’s performance in elections to the Assembly.The Northern Ireland Executive is therefore basedon power-sharing through a coalition. A fourthdistinction follows: the office of First Minister is in


19 At present the legislative competences of the WelshAssembly are listed in Schedule 7 to the 2006 Act. In Scotland,by contrast, the powers reserved to Westminster are listed inthe Scotland Act, with all other powers devolved. The Scottishreserved powers model is deemed preferable to the Welshconferred powers model for a variety of reasons, not least thatthe latter seems to result in more litigation.

20 See HM Government, Power for a Purpose: Towards aLasting Devolution Settlement for Wales (Cm 9020).

21 The British-Irish Council’s members include the UK andIrish governments (sovereign states), the three devolvedadministrations of Scotland, Wales and Northern Ireland, andthree of the UK’s Crown Dependencies (Jersey, Guernsey andthe Isle of Man).

22 Excepted matters are set out in Schedule 2 to the 1998 Actand include the Crown and Parliament, international relations,defence and national security, nuclear matter, NationalInsurance, taxation and coinage. Reserved matters are set out in Schedule 3 and include such matters as aviation andnavigation, the Post Office, social security, competition law, and formerly policing, the courts and the criminal law.

6


effect shared between the First and Deputy FirstMinisters, who are chosen as representatives ofthe largest parties of each community and whoseformal role is shared. The Deputy First Minister isnot a subordinate of the First Minister, let alone hisappointee, but holds office in his own right andexercises functions jointly with the First Minister.

The course of devolution has not been smooth.Unionist demands to the IRA to decommission its weapons led to several short suspensions ofdevolution in 2001 and 2002, and a lengthysuspension between 2002 and 2007. During theseperiods, the Assembly continued to exist (andelections were held in November 2003), butgovernment functions were exercised by UKGovernment ministers as they had during theperiod of direct rule between 1969 and 1999.Devolution was restored in 2007, following the 2006St Andrews Agreement. Since then, the processhas encountered some difficulties, with relationsbetween the various parties represented in theExecutive being tested.

Nonetheless, in December 2014, a further StormontHouse Agreement was reached. This agreementcovers certain conflict-related legacy issues andreforms to the finances of the Northern IrelandExecutive (including the implementation of welfarereform). It paved the way for legislation to devolvethe power to set the rate of corporation tax inNorthern Ireland which was enacted in the form ofthe Corporation Tax (Northern Ireland) Act 2015.

1.4 Implementing the new proposals

The various constitutional processes that have beenunderway in Scotland, Wales and Northern Irelandare different from each other, both in the nature ofdevolution as applied there and the processes thatestablished and continue to develop it.

Some aspects of the proposed changes give rise to constitutional concerns. Some of these centreon the ‘draft legislative clauses’ to implement theSmith Commission’s recommendations, which arealso agreed to be applied to Wales as a result ofthe St David’s Day process.23 Draft clause 1, which provides that the Scottish Parliament and

Government are permanent parts of the UK’sconstitutional arrangements, is intended torecognise in law that which is already the case infact. Were Westminster to pass a law abolishingthe Scottish Parliament, the union would be at aneffective end. For as long as the Scottish peoplewish to have a parliament in Edinburgh,Westminster lacks the political authority to close it down, even if the UK Parliament retains thatright in legal theory. The Scottish Parliament wasestablished by statute only after a referendum inwhich the Scottish voted by 74% to 26% that thereshould be one. The reality is that Westminstercould not disestablish the Scottish Parliamentwithout the consent of the Scottish people beingsimilarly expressed. At least, Westminster couldnot act in this way without risking some sort ofScottish unilateral declaration of independence: asDavid Mundell MP (Minister of State for Scotland inthe 2010–15 coalition government) has said, thecontinued existence of the Scottish Parliament is “a prerequisite of our United Kingdom”.24 TheScotland Office informed the House of CommonsPolitical and Constitutional Reform Committee in2015 that “there has never been any question inthe past 16 years that the Scottish Parliament and Scottish Government are anything other thanpermanent”.25 As the House of Lords ConstitutionCommittee has observed, the clause as drafted is“designed to be a political and symbolic affirmationof the permanence of the Scottish Parliament”,which is exactly what the Smith Commissionintended.26 Similar considerations apply in Wales.

Draft clause 2, regarding the Sewel convention, issimilar. It does not turn the Sewel convention into a judicially enforceable rule of law, but rather, itrecognises in statute that the Sewel convention is apolitically binding rule governing the way in whichthe UK Parliament will exercise its legal powers.There is, however, a potential problem with draftclause 2. As originally articulated by Lord Sewel27


23 Scotland in the United Kingdom: An enduring settlement,Cm 8990, Annex A; Powers For A Purpose Cm 9020, section 2.2.

24 See House of Commons Political and ConstitutionalReform Committee, Constitutional Implications of theGovernment’s Draft Scotland Clauses (9th report, 2014–15, HC1022), para 33.

25 Ibid, para 19.26 House of Lords Constitution Committee, Proposals for the

Devolution of Further Powers to Scotland (10th report, 2014–15,HL 145), para 64.

27 Minister of State in the Scottish Office when the ScotlandBill was being taken through Parliament in 1997–98: see HLDeb, 21 July 1998, col 791.

7


and as set out in the Memorandum ofUnderstanding28 the convention applies toWestminster legislation “with regard to devolvedmatters”. Its scope is generally understood to havebeen extended, however, also to cover Westminsterlegislation that alters the legislative competence of the Scottish Parliament or the executivecompetence of the Scottish Ministers.29 Thus, theSewel convention was triggered by the passage of the bill that became the Scotland Act 2012,which was not enacted until after a legislativeconsent motion had been passed by the ScottishParliament. As drafted therefore, draft clause 2would not cover all legislation currentlyunderstood to be within the scope of the Sewelconvention. Again, the same issues in principleapply to Wales, where the working of the Sewelconvention has been less smooth than in Scotland,and Northern Ireland.

It is possible that this may have significantconstitutional consequences. The Conservativeparty, for example, is pledged to repeal the HumanRights Act 1998 and to replace it with a British Billof Rights, based on the European Convention onHuman Rights but giving the courts fewer powers,it seems, than those which they currently possessunder the 1998 Act. The Scotland Act 1998 providesthat Convention rights, as defined in the HumanRights Act, limit both the legislative competence of the Scottish Parliament and the executivecompetence of the Scottish ministers. Similar

provisions appear in the Government of Wales Act2006 and Northern Ireland Act 1998. A bill torepeal and replace the Human Rights Act mighttherefore be one which could be said to alter thecompetences of the devolved institutions inScotland, Wales and Northern Ireland. Were this tobe the case, it would trigger the Sewel convention.If the Scottish Parliament declined to pass alegislative consent motion, this would raise theargument that the United Kingdom would be actingunconstitutionally were it to press ahead withlegislation repealing the Human Rights Act – orthat it would leave in place two sets of regimesregarding human rights applying in Scotland, withthe Human Rights Act ceasing to apply to reservedmatters, but the Convention rights continuing toapply to devolved (non-reserved) ones.

It is not clear why draft clause 2 understands theSewel convention only in its narrower formulation.The Command Paper Scotland’s Future in theUnited Kingdom accompanying the draft clausesstates that “it is expected that the practice [oflegislating to alter the competences of thedevolved institutions only with their consent] willcontinue” but that the practice “has no legaleffect”.30 However, given the importance of theprinciple of consent to the effective working ofdevolution, this approach perpetuates the notionthat devolved institutions are subordinates ofWestminster, not partners with it in thegovernance of the United Kingdom.


28 Memorandum of Understanding Between the UKGovernment and the Devolved Administrations (2013), para 14.

29 See, eg, the UK Government’s Devolution Guidance Note10 (2011), para 4.

30 HM Government, Scotland in the United Kingdom: AnEnduring Settlement (Cm 8890), para 1.2.2. The Governmenthas stated that the draft clauses 1 and 2 should apply equallywith regard to the devolved institutions in Wales (on which seebelow): see HM Government, Powers for a Purpose: Towards aLasting Devolution Settlement for Wales (Cm 9020), paras 2.2.4and 2.3.10. It is not clear that they should apply also toNorthern Ireland. As we note below, devolution was suspendedin Northern Ireland from 2002–07. Were legislation to providethat “it is recognised that the Northern Ireland Assembly is apermanent institution”, it may be that there would be doubt asto whether this could happen again, even if it were deemednecessary for pressing reasons of national security.

8


Devolution in the United Kingdom has beendelivered with minimal disruption to theestablished conduct of business in Whitehall andWestminster. On one level, this was a laudableattempt to absorb devolution as smoothly andseamlessly as possible into the patterns andprocesses of British government decision-making,understanding that reforms cutting with theconstitutional grain are more likely to stick in thelonger term than those that cut too aggressivelyagainst it. On the other hand, however, tthhaattWWhhiitteehhaallll hhaass cchhaannggeedd ssoo lliittttllee aass aa rreessuulltt ooffddeevvoolluuttiioonn ggiivveess tthhee uunnffoorrttuunnaattee iimmpprreessssiioonn tthhaatt tthhee cceennttrree hhaass nnoott ffuullllyy ccaauugghhtt uupp wwiitthh tthhee mmaaggnniittuuddee ooff tthhee cchhaannggeess ttoo tthhee ssttaattee tthhaatt ddeevvoolluuttiioonn hhaass ttrriiggggeerreedd.

2.1 Inter-governmental machinery

EEvveerryy rreevviieeww ooff ddeevvoolluuttiioonn hhaass ccoonncclluuddeedd tthhaatt tthheecceennttrree nneeeeddss ttoo bbee rreeffoorrmmeedd ttoo ttaakkee aaccccoouunntt ooff tthheeiimmpplliiccaattiioonnss ooff ddeevvoolluuttiioonn aanndd,, iinn ppaarrttiiccuullaarr,, tthhaatttthhee UUKK’’ss iinntteerr--ggoovveerrnnmmeennttaall mmaacchhiinneerryy iiss nnoott ffiittffoorr ppuurrppoossee. This has been the view of the Houseof Commons Justice Committee,31 the House ofCommons Welsh Affairs Committee,32 the House of Commons Scottish Affairs Committee,33 theCalman Commission,34 the Silk Commission35 andthe Smith Commission.36 It is also the view of theInstitute for Government37 and of the House ofLords Constitution Committee.38

The Calman Commission was particularlyconcerned that, while the UK’s inter-governmentalmachinery is poor, the UK’s inter-parliamentarymachinery is non-existent.39 There are noestablished links, for example, between theScottish and Welsh Affairs Committees of theHouse of Commons and the committees of theScottish Parliament and Welsh Assembly. Thelegislatures of the United Kingdom do not workjointly in seeking to hold the governments of theUnited Kingdom to account. Nor is there any jointscrutiny of legislation that affects both reservedand devolved matters.

IInntteerr--ggoovveerrnnmmeennttaall rreellaattiioonnss iinn tthhee UUnniitteeddKKiinnggddoomm aarree cchhaarraacctteerriisseedd bbyy iinnffoorrmmaalliittyy aanndd,, ttoo tthhee eexxtteenntt ttoo wwhhiicchh tthheeyy aarree rreegguullaatteedd aatt aallll,,aarree rreegguullaatteedd bbyy ccoonnvveennttiioonn,, ccoonnccoorrddaatt,,mmeemmoorraanndduummss ooff uunnddeerrssttaannddiinngg,, aanndd gguuiiddaanncceennootteess.. TThhee mmoosstt iimmppoorrttaanntt ddooccuummeenntt iiss tthheeMMeemmoorraanndduumm ooff UUnnddeerrssttaannddiinngg aannddSSuupppplleemmeennttaarryy AAggrreeeemmeennttss,, which was firstdrawn up in 1999 and the most recent version ofwhich dates from 2013. TThhee MMeemmoorraanndduumm ooffUUnnddeerrssttaannddiinngg ((MMooUU)) hhaass nnoo ssttaattuuttoorryy bbaassee.. TThheerree iiss nnoo rreeqquuiirreemmeenntt tthhaatt iitt bbee llaaiidd bbeeffoorree tthheelleeggiissllaattuurreess ooff tthhee UUnniitteedd KKiinnggddoomm.. TToo tthhee eexxtteenntttthhaatt iitt iiss ssuubbjjeecctt ttoo ppaarrlliiaammeennttaarryy ssccrruuttiinnyy aatt aallll,,tthhiiss iiss ppoosstt hhoocc,, ssppoorraaddiicc aanndd ooff oonnllyy ppeerriipphheerraalleeffffeecctt. The MoU establishes a Joint MinisterialCommittee (JMC), which now meets annually inplenary session40 and more frequently on afunctional (sector-specific) basis and at officiallevel. The most frequent JMC meetings are of theEuropean ‘format’ or sub-committee, whichmeets about five times each year ahead ofEuropean Council meetings so that, to quote fromthe MoU, the devolved administrations may be“involved in the discussions within the UK

31 House of Commons Justice Committee, Devolution: ADecade On (5th report, 2008–09, HC 529).

32 House of Commons Welsh Affairs Committee, Wales andWhitehall (11th report, 2009–10, HC 246).

33 House of Commons Scottish Affairs Committee, Scotlandand the UK: Co-operation and Communication BetweenGovernments (4th report, 2009–10, HC 256).

34 Commission on Scottish Devolution, Serving ScotlandBetter (2009).

35 Commission on Devolution in Wales, Empowerment andResponsibility: Legislative Powers to Strengthen Wales (2014).

36 Smith Commission Agreement (2014).37 Institute for Government, Governing in an Ever Looser

Union (2015).38 House of Lords Constitution Committee, Inter-

governmental Relations in the United Kingdom (11th report,

2014–15, HL 146). The same committee had made similarcriticisms more than a decade previously: see House of LordsConstitution Committee, Devolution: Inter-InstitutionalRelations in the United Kingdom, 2nd report, 2002–03, HL 28).

39 Calman Commission, op cit, pp 143–7.40 Plenary meetings of the JMC were not held between 2003

and 2007. Since 2007 they have been held in London.

9

CHAPTER 2 – THE ARCHITECTURE OF THE UNION STATE


Government about the formulation of the UK’spolicy position on all issues which touch onmatters which fall within the responsibility of the devolved administrations”.41 The ‘domestic’format of the JMC, established in 2008 to dealwith policy issues, now meets only once a yearand has proved to have limited value.

There are also a number of bilateral forums. There are ‘Joint Exchequer Committees’ of the UK Government with the Scottish and now WelshGovernments, to discuss issues of fiscaldevolution. (A similar ‘working group’ hasaddressed corporation tax issues for NorthernIreland.) Following the work of the SilkCommission and the St David’s Day process, a Welsh Inter-governmental Committee is to be established.42

Much of the MoU is concerned with disputeresolution. Few disputes between thegovernments of the United Kingdom have beentaken to court (see the appendix for an account of the relevant case law), and some may not besusceptible to legal resolution in any event. Mostare resolved at official level, and on a bilateralbasis. Where this cannot be achieved, the MoUprovides that the matter may be formally referredto the JMC secretariat. Again there will be anattempt to resolve the matter at official level. If this cannot be done, a meeting of the JMC’sdisputes panel (chaired by a UK minister) will beconvened to decide the matter. On the onlyoccasion such a meeting has been called, theoutcome was a stand-off. The UK Governmentdepartment involved (HM Treasury) refused tomake any concessions to the devolvedgovernments, and so the status quo wasmaintained. The devolved governments are likelyto be in the position of supplicants, asking the UK Government to change its mind with theassistance of a UK Minister, through such a process.

Dispute resolution is only one function of effectiveinter-governmental relations. The Institute for

Government has identified 10 such functions.43

In our view, these boil down to five core issues, as follows:

• Political summitry, where few decisions aretaken but having a high profile and ofsymbolic value; useful also for sharing bestpractice and lesson learning; can be usedalso to agree constitutional change.44

• Dispute resolution.• Fiscal and financial governance

(see Chapter 5).• Negotiating and managing UK policy

positions with regard to the EU.• Managing policy and public service issues,

either where there are overlaps betweendevolved functions and those reserved to the UK, or where decisions made regarding‘devolved’ matters in one part of the UK havean effect on what happens in another.

Given the significance of these issues, it is plainlyimportant that inter-governmental arrangementsare effective and robust. TThhee MMooUU iiss bbaasseedd oonn tthheerriigghhtt sseennttiimmeennttss bbuutt tthhee mmaacchhiinneerryy iitt eessttaabblliisshheessiiss ttoooo wweeaakk ttoo eennssuurree tthhaatt tthhee sseennttiimmeennttss ffiinndd tthheeiirrwwaayy iinnttoo pprraaccttiiccee. For example, the MoU statesthat “all four administrations are committed to theprinciple of good communication with eachother”45 and that they “want to work together… onmatters of mutual interest”.46 But, as the House ofLords Constitution Committee noted in its recentreport on inter-governmental relations, tthhee MMooUUmmaakkeess ““nnoo pprroovviissiioonn ffoorr jjooiinntt ppoolliiccyy--mmaakkiinngg bbyyppaarrttiicciippaannttss””..47

NNoorr ddooeess tthhee MMooUU mmaakkee aannyy pprroovviissiioonn ffoorr tthheeeeffffeeccttiivvee aaccccoouunnttaabbiilliittyy oorr ppaarrlliiaammeennttaarryy ssccrruuttiinnyyooff tthhee JJMMCC’’ss aaccttiivviittiieess,, mmeeeettiinnggss oorr ddeecciissiioonnss. Thecommuniqués issued following a plenary meetingof the JMC are terse, bordering on the opaque. Themodel adopted is of international relations, wherenegotiations between governments of sovereignstates take place behind closed doors and are

THE ARCHITECTURE OF THE UNION STATE

41 MoU (2013), para B4.3. The MoU provides that “the UKGovernment will… provide the devolved administrations with full and comprehensive information, as early as possible, on allbusiness within the framework of the European Union whichappears likely to be of interest to the devolved administrations”(para B4.1).

42 Powers For A Purpose Cm 9020 op cit, section 2.3.

43 Institute for Government, Governing in an Ever LooserUnion, op cit, p 15.

44 As in, for example, the decision taken at the JMC plenarymeeting in December 2014 to accelerate the extension of thefranchise to 16- and 17-year-olds in time for the 2016 Scottishparliamentary elections.

45 MoU, op cit, para 4.46 Ibid, para 8.47 Op cit, para 64.

10


subject to minimal parliamentary oversight.Similarly, inter-governmental matters are exemptfrom disclosure under section 28 of the Freedom of Information Act 2000. TThhiiss iiss iinnaapppprroopprriiaattee.. TThhee ccoonnssttiittuuttiioonnaall pprriinncciipplleess ooff ttrraannssppaarreennccyy,,ooppeennnneessss,, aaccccoouunnttaabbiilliittyy aanndd eeffffeeccttiivveeppaarrlliiaammeennttaarryy ssccrruuttiinnyy sshhoouulldd ggoovveerrnn tthhee UUKK’’ssiinntteerr--ggoovveerrnnmmeennttaall aarrrraannggeemmeennttss. That they donot do so at the moment is a constitutional failingwhich should be remedied.

While these defects could be remedied withoutrecourse to primary legislation, it may be that the Charter of Union we recommend in thisreport should incorporate provisions on inter-governmental machinery, which could reshapethe UK’s arrangements in the light of theconstitutional principles we have just listed. Such legislation could, at the same time, amend the JMC machinery so that the UKgovernment is less dominant within it – makingthe arrangements more of a partnership, andless of a hierarchy.

A reconstituted second chamber (see 3.5 below)might also provide a more effective bindingtogether of the constituent nations at the politicalcentre of the Union.

2.2 Whitehall and the civil service

In addition to inter-governmental machinery, twoother aspects of the architecture of the union statemerit consideration: the territorial departments ofstate and the civil service. BBeeffoorree ddeevvoolluuttiioonn tthheerreewwaass aa SSccoottttiisshh OOffffiiccee,, aa WWeellsshh OOffffiiccee aanndd tthheeNNoorrtthheerrnn IIrriisshh OOffffiiccee,, eeaacchh hheeaaddeedd bbyy aa SSeeccrreettaarryyooff SSttaattee iinn tthhee CCaabbiinneett.. AAfftteerr ddeevvoolluuttiioonn,, tthhiissrreemmaaiinnss tthhee ccaassee.. BBuutt iitt iiss nnoott cclleeaarr tthhaatt iitt sshhoouulldd.The argument in favour of retaining this model isthat each of Scotland, Wales and Northern Irelandhas a distinct voice around the Cabinet table.However, when so much of the former workload ofthese government departments is now undertakenby ministers in Edinburgh, Cardiff and Belfast, it is not self-evident that there continues to be ajustification for three separate departments ofstate. In 2009, the House of Commons JusticeCommittee found that “what is lacking is any onedepartment which is clearly charged with taking aholistic view of the infrastructure of governmentacross the United Kingdom and the constitutional

and policy issues involved”.48 In 2015, the House ofLords Constitution Committee recorded its “deepconcern” at the “lack of central co-ordination andoversight of the devolution settlements and of the minimal consideration given to the effect ofdevolution in one area of the UK on other areas, and on the Union as a whole”.49

CCoonnssiiddeerraattiioonn sshhoouulldd tthheerreeffoorree bbee ggiivveenn ttooiimmpprroovviinngg tthhee cceennttrraall ccoo--oorrddiinnaattiioonn ooff tthheeddeevvoolluuttiioonn sseettttlleemmeennttss –– ppeerrhhaappss bbyy rroolllliinngg tthheetthhrreeee ddeeppaarrttmmeennttss iinnttoo aa ssiinnggllee DDeeppaarrttmmeenntt ffoorrtthhee UUnniioonn –– iinn wwhhiicchh tthheerree wwoouulldd bbee aa ssiinngglleesseeccrreettaarryy ooff ssttaattee ((iinn tthhee CCaabbiinneett)) aanndd tthhrreeeemmiinniisstteerrss ooff ssttaattee,, oonnee ffoorr eeaacchh ooff SSccoottllaanndd,, WWaalleess aanndd NNoorrtthheerrnn IIrreellaanndd.50

Devolution to Scotland and Wales has not alteredthe fact that in Great Britain there is a singlehome civil service (Northern Ireland has its owncivil service, an arrangement dating back to theGovernment of Ireland Act 1920). While theScottish and Welsh Ministers have autonomy over staffing, promotions and grading, and paysettlements, their officials are members of the‘civil service of the State’.51 The civil service is a reserved matter under the Scotland Act199852 and it is not a devolved matter under the Government of Wales Act 2006. Thesearrangements have placed the civil service underconsiderable strain, not least during the Scottishindependence referendum campaign. Thatcampaign saw two of the governments within the United Kingdom on opposing sides of anexistential argument: the United KingdomGovernment wanted a ‘No’ vote and the ScottishGovernment wanted a ‘Yes’ vote.

In its recent report the House of Commons PublicAdministration Select Committee (‘PASC’) found


48 House of Commons Justice Committee, Devolution: A Decade On (5th report, 2008–09, HC 529), para 63.

49 House of Lords Constitution Committee, Inter-governmental Relations in the United Kingdom (11th report,2014–15, HL 146), para 133).

50 This case has been made by Jim Gallagher in his paperThe Day after Judgement, available here: http://policyscotland.gla.ac.uk/wp-content/uploads/2014/09/THE-DAY-AFTER-JUDGEMENT-final.pdf.

51 Scotland Act 1998, section 51; Government of Wales Act2006, section 52 (as amended by the Constitutional Reform and Governance Act 2010, which placed the civil service on astatutory footing).

52 Scotland Act 1998, Schedule 5, Part I, para 8.

11


that these strains had caused mistakes to be made on both sides, resulting in constitutionallyinappropriate politicisation of the senior civilservice (in both London and in Edinburgh).53 This is a serious and worrying indictment. PASC wastold in evidence that the rationale for maintaining a unified home civil service at the outset ofdevolution was the perception that it facilitated a more informal form of inter-governmentalrelations54 but that it has become “more and moreof a constitutional fiction that there is a singleunified civil service”.55 However, evidence to PASCthat Scotland should have its own public service

separate from the UK civil service was rejected by the committee. PASC concluded that “theadvantages that flow from having a single HomeCivil Service justify the retention of a single UKCivil Service”.

While the committee’s report is a usefuldescription of the problems, it is less valuable as ablueprint for what should be done to resolve them.WWee iiddeennttiiffyy rreeffoorrmm ooff tthhee cciivviill sseerrvviiccee aass aa ffuurrtthheerraassppeecctt ooff tthhee iissssuueess ppeerrttaaiinniinngg ttoo tthhee aarrcchhiitteeccttuurreeooff tthhee uunniioonn ssttaattee wwhhiicchh wwiillll rreeqquuiirree ttoo bbeeaaddddrreesssseedd iinn tthhee lliigghhtt ooff ddeevvoolluuttiioonn.


53 House of Commons Public Administration SelectCommittee, Lessons for Civil Service Impartiality from theScottish Independence Referendum (5th report, 2014–15, HC 111).

54 Ibid, para 18.55 Ibid, para 20 (evidence of Akash Paun, Fellow at the

Institute for Government).

12


A unitary constitution is generally considered to be one where political power is exercised by onecentral authority. Power can be devolved within thatunitary constitution. But it is granted by the centralauthority and can also be withdrawn, at least as amatter of law. The powers of the devolvedauthorities are therefore not entrenched. Thecentral parliament is sovereign subject only to any conventions, and of course to the vicissitudes of political reality. Under a federal constitution, by contrast, the powers granted to the devolvedauthorities (normally states, provinces or regions)are guaranteed by the constitution. Suchconstitutional status does not permit those powersto be altered or removed by simple legislation. Thenotion of federalism does not, however, mean thatthe two tiers of government – central and devolved –act entirely independently of each other.

Federalism has been variously defined. For KCWheare, writing in the 1940s, federal governmententailed having co-ordinate and independentspheres of government, co-equally supreme, as inthe United States of America.56 Others have seenfederalism more in terms of a ‘marble cake’ thanmutually distinct spheres.57 More recently, DanielElazar defined federalism simply as “self-rule plusshared-rule”.58 And for William Riker, federalismis marked by three features: that there are twolevels of government over the same territory, thateach level is at least partly autonomous, and thatthere is a constitutional guarantee of suchautonomy.59 Ronald Watts,60 a Canadian scholar,defines a federal system as having five features:

• Two tiers of government, each acting directlywith the people;

• A written, supreme constitution, with adivision of powers which, because it isdeemed to be a covenant or contract with the people, cannot be changed unilaterally;

• Representation of the devolved authority atthe centre (normally in the upper house of parliament);

• An ‘umpire’ to resolve disputes (normally aconstitutional court), and

• Mechanisms to facilitate inter-governmentalco-operation (because federalism requiresshared power).

The United Kingdom constitution has some ofthese characteristics, but not all of them. Clearly,in at least Scotland, Wales and Northern Ireland,there is “self-rule plus shared-rule”. Moreover,there is a degree to which the different levels ofgovernment are autonomous, at least in practice.But, notwithstanding the Smith Commission’sagreement that the Scottish Parliament andGovernment be recognised as permanentinstitutions, there is no legal guarantee.Westminster cannot legally be constrained fromabolishing the devolved institutions because, as a matter of law, parliament may make or un-make any law.

However, as is well known, this is only part of thepicture. The UK’s constitution is not, and neverhas been, purely a matter of law. While it may belegally possible for Westminster to abolish theScottish Parliament at Holyrood, the practicalreality is that the United Kingdom Parliamentcould not legislate for the abolition of theScottish Parliament or Government and expectthe United Kingdom to survive intact. This isbecause our uncodified constitution combines asubtle, albeit unclear, mix of law and practicalpolitical reality.

The features of federalism outlined by Watts raisethe question of whether there is a point where theextent or degree of devolution (eg, extensive taxingpowers, or a ‘permanent’ devolution, as proposedby Smith) necessitates those features of a federal

56 KC Wheare, Federal Government (Oxford University Press,1946).

57 Morton Grodzins, The American System: A New View of theGovernment of the United States (New York, 1966).

58 Daniel Elazar, Exploring Federalism (University ofAlabama Press, 1987).

59 William Riker, Federalism: Origin, Operation, Significance(Little, Brown, 1964).

60 Ronald Watts, Comparing Federal Systems (McGill-QueensUniversity Press, 2008).

13

CHAPTER 3 – DEVOLUTION AND FEDERALISM


system which are presently lacking in ourdevolution settlements (in particular, a writtenconstitution and representatives of the devolvedbodies at the centre).

Several lucid accounts exist of why the UnitedKingdom should embrace federalism and becomea fully federal state61. Arguments in favour ofviewing the United Kingdom in federal termsinclude the following:

• that the content and degree of the enhanceddevolution proposed by the SmithCommission Agreement tips the balancefrom devolution into federalism;

• that the principle of the sovereignty ofparliament cannot make the presentdevolution arrangements secure from thewill of a future parliament, and that a federalconstitution would secure devolution byentrenching it;

• that a federal constitution would provide anopportunity to reform the House of Lords sothat it could provide formal politicalrepresentation at the centre for the nationsand regions of the United Kingdom;

• That a federal constitution would provide a map, direction of travel and coherentframework for our territorial arrangements.

Arguments against moving to full federalism in theUnited Kingdom include the following:

• that there is no appetite for such a radicalchange to our constitutional arrangements;

• that the UK has always been capable ofacting without a codified constitution;

• that in the area of devolution a mix oflegislation and convention provides aworkable substitute for a fully federalconstitution;

• that representation at the centre is nowsufficiently provided by individual membersfrom the devolved nations in both Houses of Parliament.

3.1 Permanence

WWee aaggrreeee wwiitthh tthhee SSmmiitthh CCoommmmiissssiioonn tthhaatt tthheeddeevvoolluuttiioonn ooff ppoowweerr ttoo tthhee nnaattiioonnss sshhoouulldd nnooww bbeeppeerrmmaanneenntt.. However, under English constitutionaltheory at least, it is still the case that parliamentmay make or un-make any law whatever and thatno-one may override or set aside parliament’slegislation62. Various judges have suggested thatthe common law may impose limits on thefreedom of parliament to legislate.63 And somestatutes, including the devolution settlements,have been described as “constitutional statutes”.64

But such a status protects them only from impliedrepeal. It does not protect them from expressrepeal. In other words, a later ‘ordinary’ statutewhich contradicts a devolution statute will be heldto have that effect only if the words in the laterstatute clearly so intend; ambiguity will notsuffice.65

There has yet to be a case in which an Act ofParliament has been held to have transgressedany common law rule although the EU and humanrights contexts condition the ways in whichparliament may exercise its legislative supremacy.This will remain true for as long as the UKcontinues to be a Member State of the EuropeanUnion and for as long as the Human Rights Act1998 (or similar enactment) remains in force.

It may be possible to impose some degree ofpermanence upon a statute by requiring it to beendorsed by a referendum, or where it has beenendorsed by a post-enactment referendum, as in

DEVOLUTION AND FEDERALISM

61 See for example, David Torrance, Britain Rebooted:Scotland in a Federal Union, Edinburgh, Luath Press, 2014. Seealso, David Melding AM’s e-book published by the Instiute ofWelsh Affairs, The Reformed Union: The UK as a Federation.

62 Although in MacCormick v Lord Advocate 1953 SC 396Lord President Cooper doubted whether the sovereignty ofparliament was part of Scots law. Earlier authorities in Scotslaw did not appear to share these doubts: see, eg, Edinburghand Dalkeith Railways v Wauchope (1842) 8 Cl & F 710 andMortensen v Peters (1906) 8 F (J) 93. In Jackson v AttorneyGeneral [2005] UKHL 56, [2006] 1 AC 262 the Scottish law lord,Lord Hope of Craighead, referred to “the English principle of the absolute sovereignty of parliament” (para 104, emphasisadded).

63 See, eg, Jackson v Attorney General [2005] UKHL 56,[2006] 1 AC 262, AXA General Insurance v Lord Advocate [2011]UKSC 46, [2012] 1 AC 868, and Moohan v Lord Advocate [2014]UKSC 67, [2015] 2 WLR 141.

64 A notion put forward by Laws LJ in Thoburn v SunderlandCity Council [2003] QB 151, at [62]–[63]. For discussion seeDavid Feldman, ‘The Nature and Significance of “Constitutional”Legislation’ (2013) 129 LQR 343.

65 See BH v Lord Advocate [2012] UKSC 24, 2012 SC (UKSC)308, at [30].

14


the example of the European Communities Act1972. As noted in Chapter 1, the devolutionlegislation passed in 1998 was, in each instance,preceded by a referendum. In some countries,certain laws are regarded as having ‘organicstatus’, as in France where they must be passed bya special majority, or in Spain, where organic laws,including Statutes of Autonomy, must be passed byan absolute majority of members of the Congressof Deputies. In Israel, the Knesset may pass a‘basic law’ which has constitutional significancesimply because it is said to be such, regardless of its content. However, the only permanentarrangement is one that is provided by a written constitution66.

3.2 Secession

The second issue relates to the procedures forseceding from the Union. It is worth noting thatUnited Kingdom law does recognise the politicalsovereignty of at least one of the componentnations of the UK. Section 1 of the NorthernIreland Act 1998 provides that “It is herebydeclared that Northern Ireland in its entiretyremains part of the United Kingdom and shall notcease to be so without the consent of a majority ofthe people of Northern Ireland voting in a poll heldfor the purposes of this section…”. There is noequivalent provision of law for Scotland, Wales or England, although the Scottish Claim of Right in 1988 did speak of “the sovereign right of theScottish people to determine the form ofGovernment best suited to their needs”. In the2014 independence referendum, the UnitedKingdom government recognised that a ‘Yes’ votewould determine – ie, would decide withoutquestion – that Scotland would secede from the UK and become a new state in international law.The franchise for the referendum was the electoratein Scotland: not the electorate of the United Kingdomgenerally. The referendum was therefore anexercise in self-determination, and the Scottishpeople determined to remain part of the UnitedKingdom.

In contrast, the states of the USA do not possess aconstitutional right of self-determination and

secession. The US Supreme Court ruled in Texas vWhite in 1868 that when a State becomes one ofthe United States it enters into an “indissolublerelation” and that there is “no place forreconsideration or revocation, except throughrevolution or through the consent of the States”.67

In the Quebec Secession Reference in 1998, theSupreme Court of Canada ruled that Quebec doesnot enjoy a unilateral right to secede from Canada.An act of secession, the Court noted, “wouldpurport to alter the governance of Canadianterritory in a manner which undoubtedly isinconsistent with our current constitutionalarrangements”.68 A “clear expression of the desireto pursue secession,” the Court said, would giverise to a “reciprocal obligation” on all parties to“negotiate constitutional changes to respond tothat desire” but the mere fact of a ‘Yes’ vote in areferendum in a single province could not, of itself,trigger secession. It could trigger only negotiationswhich may (or may not) lead to secession.69 TheCourt explicitly rejected the proposition that therewould be a legal obligation on the other provincesand federal government to accede to the secessionof a province – even if that province had clearlymanifested its desire to secede.70 The Courtdescribed this as an “absolutist proposition”.71

MMoovviinngg ttoowwaarrddss aa mmoorree ffeeddeerraall,, ccooddiiffiieeddccoonnssttiittuuttiioonnaall aarrrraannggeemmeenntt ffoorr tthhee UUKK wwoouullddtthheerreeffoorree eessttaabblliisshh ‘‘ppeerrmmaanneenntt’’ ddeevvoolluuttiioonn oonn tthheebbaassiiss ooff mmoorree cclleeaarrllyy ddeeffiinneedd pprriinncciipplleess aanndd rruulleess..AAss wwiitthh aallll wwrriitttteenn ccoonnssttiittuuttiioonnss,, iitt wwoouulldd bbee ooppeennttoo aammeennddmmeenntt,, ssuucchh aass ttoo aallllooww sseecceessssiioonn,, oonn tthheebbaassiiss ooff aann eessttaabblliisshheedd mmeeaassuurree ooff ccoonnsseennssuuss..

3.3 Judicial review

In respect of the provision in federal systems foran impartial umpire on matters of competence,that is provided in the United Kingdom by theSupreme Court. In the appendix to this report, wepresent a detailed analysis of the case law ondevolution. We show that, despite someinconsistencies in the approaches taken in thecases, a number of valuable constitutional


66 Although most written constitutions provide for anamendment of their constitutions for all or many of itsprovisions by special majority and/or referendum.

67 Texas v White (1868) 74 US 700.68 Quebec Secession Reference [1998] 2 SCR 217, para 84.69 Ibid, para 88.70 Ibid, para 90.71 Ibid.

15


principles of devolution law can be distilled. Weargue that these should be made more transparentand accessible so that they may shape both ourunderstanding of devolution to date and theargument about future reforms of devolution andthe union state. Without repeating here the legalanalysis that readers can find set out in full in theappendix, the key principles to be taken from thecase law are as follows:

• that devolution exists in order to strengthenand improve the governance arrangementsof the United Kingdom as a whole;

• that devolution is intended to be a system of government for the UK that is coherent,stable and workable;

• that, while there are differences of detailbetween the three devolution regimes, theyare nonetheless best seen as a single body of legislative reform for the UnitedKingdom, accompanied by a single body of case law;

• that the devolved legislatures enjoy plenarylaw-making powers. They are not akin tolocal authorities but are parliaments orassemblies that enact primary legislation.Within the limits of their competence as setby Westminster, they possess a generousgrant of legislative authority.

We saw in the previous chapter that the UK’s inter-governmental machinery is founded on non-legalsources such as Memorandums of Understanding,concordats and convention, and we noted the ruleof law concerns to which this gives rise, owing to their lack of formality, transparency andaccountability. Thus far, the UK’s informal systemof inter-governmental relations has scarcelyfeatured at all in the Supreme Court’s devolutioncase law. However, this is a feature of our publiclaw that would develop were judicial review toextend not only to the question of what powerseach government and parliament has, but also to the question of how those governments andparliaments ought constitutionally to relate to one another.

In anticipation of the Supreme Court playing alarger part in the adjudication of our territorialsystem, wwee rreeccoommmmeenndd tthhaatt lleeggiissllaattiioonn((pprreeffeerraabbllyy uunnddeerr tthhee CChhaarrtteerr ooff UUnniioonn wwhhiicchh wwee pprrooppoossee iinn CChhaapptteerr 44 bbeellooww)),, sseett oouuttpprriinncciipplleess ttoo gguuiiddee jjuuddiicciiaall iinntteerrpprreettaattiioonn ooff

tthhee eexxtteenntt ooff tthhee ddeevvoollvveedd aauutthhoorriittiieess’’ ppoowweerrss aasspplleennaarryy llaaww--mmaakkeerrss..

WWee aallssoo rreeccoommmmeenndd tthhaatt tthhee SSuupprreemmee CCoouurrtt ggiivvee ccaarreeffuull ccoonnssiiddeerraattiioonn ttoo wwhheetthheerr ddeevvoolluuttiioonnaappppeeaallss sshhoouulldd oorrddiinnaarriillyy bbee hheeaarrdd bbyy eennllaarrggeeddppaanneellss ooff sseevveenn oorr nniinnee JJuussttiicceess,, ttoo iinncclluuddee jjuuddggeessffrroomm SSccoottllaanndd,, ffrroomm NNoorrtthheerrnn IIrreellaanndd,, ffrroommEEnnggllaanndd aanndd WWaalleess aanndd,, aass WWeellsshh llaaww mmaayyiinnccrreeaassiinnggllyy ddiivveerrggee ffrroomm EEnngglliisshh llaaww,, ffrroomm WWaalleess.

3.4 Shared rule and solidarity

Another matter that needs consideration is theextent to which, under a federal system, there is anexpectation that the component parts contribute tothe interests of the whole: the notion of ‘sharedrule’, or ‘solidarity’.

A clear articulation of this idea is found in section41 of the South African Constitution. In South Africathere are three ‘spheres’ of government: national,provincial and local. Section 41 provides that “allspheres of government must preserve… nationalunity and the indivisibility of the Republic… [and] beloyal to the Constitution, the Republic and itspeople”. All spheres of government must “respectthe constitutional status, institutions, powers andfunctions of government in the other spheres” andmust “co-operate with one another in mutual trustand good faith…”. WWee rreeccoommmmeenndd tthhaatt aa ssiimmiillaarrccoonnssttiittuuttiioonnaall pprroovviissiioonn ooff ssoolliiddaarriittyy bbee eennaacctteedd iinntthhee UUnniitteedd KKiinnggddoomm..72

In the European Union, Article 10 EC (formerly,article 5 EEC) provided as follows: “Member Statesshall take all appropriate measures, whethergeneral or particular, to ensure fulfilment of theobligations arising out of this Treaty or resultingfrom action taken by the institutions of theCommunity. They shall facilitate the achievementof the Community’s tasks. They shall abstain from


72 See further Chapter 4, below. A similar principle, known as“bundestreue” is central to the operation of German federalismand requires both the Lander and the federal government toconsider and respect the constitutional interests of the other.See DP Kommers and RM Miller, The ConstitutionalJurisprudence of the Federal Republic of Germany (Durham,NC: Duke Univ Press, 2012), chapter 3; J-F Gaudreault-DesBiens, ‘Co-operative federalism in search of a normativejustification: considering the principle of federal loyalty’ (2014)23(4) Constitutional Forum 1.

16


any measure which could jeopardise theattainment of the objectives of this Treaty”. There is no direct equivalent of article 10 EC in theLisbon Treaty (either in the TEU or in the TFEU),but its principles continue to inform EU law andthe case law of the Court of Justice.73

The UK devolution settlement has, perhapsinevitably, concentrated on what powers should be divested from the centre and conferred on thenations, but it should also be recognised that there is great mutual benefit in principles andmechanisms that permit sharing, interaction and concern with the mutual interests of a union constitution, which a federal systems seek to attain.

3.5 A reformed Upper House

A feature of many federal systems which isdesigned to bind the centre with the componentparts is that of a body – normally the UpperHouse of parliament, which consists wholly orpartially of representatives of the regions withinthe state. We have not in this review had the timeto analyse the extent to which the present Houseof Lords fulfils that role or to consider thequestion of Lords reform in any detail. However,in 2.1 above we discussed the present inadequacyof political co-ordination of policy affecting thenations. WWee rreeggaarrdd iitt aass iimmppoorrttaanntt ttoo hhaavveeppoolliittiiccaall aass wweellll aass ooffffiicciiaall ppaarrttiicciippaattiioonn aatt tthheecceennttrree,, ssoo aass ttoo eemmpphhaassiissee tthhee nnaattuurree ooff ‘‘sshhaarreeddrruullee’’ aass wweellll aass ‘‘sseellff rruullee’’ iinn tthhee ddeevvoolluuttiioonnsseettttlleemmeennttss.. TToo tthhiiss eenndd,, wwee rreeccoommmmeenndd sseerriioouussccoonnssiiddeerraattiioonn ooff aa rreeffoorrmmeedd HHoouussee ooff LLoorrddssffoorrmmaallllyy rreepprreesseennttiinngg iinn WWeessttmmiinnsstteerr tthhee nnaattiioonnssaanndd rreeggiioonnss ooff tthhee UUnniitteedd KKiinnggddoomm.. Given thepresent function of the House of Lords as a bodychiefly devoted to the scrutiny of legislation, thishas to be thought about carefully. Anotherchallenge would be presented if England were tobe treated on a regional basis, for reasons now tobe discussed.

3.6 England

Whatever the merits of a move in the direction of federalism, as we believe, the rock on whichfederal-type proposals for the UK usually founderis England. England shows no desire to be brokeninto regions. Yet, taken as a whole, she accountsfor 85% of the United Kingdom. The mostimbalanced federation in the world is Canada, inwhich Ontario has 35% of the Canadian population(and is responsible for about the same share ofCanadian GDP). Of course, there are greatdisparities between the sizes and wealth of theAmerican states (compare California or New Yorkwith Wyoming or Rhode Island, for example) butthere are 50 such states (whereas in the UK thereare only four home nations) and, in any case, theUS situation is different. The problem with Englandis not its size vis-a-vis the other nations of the UK:the problem with England is its size vis-a-vis theUK as a whole. California may dwarf Vermont, butit has only 12% of the US population and accountsfor only 13% of US GDP.

An English parliament with similar powers to those enjoyed by Holyrood would rival the UKparliament. And an English First Minister withpowers similar to those enjoyed by the ScottishFirst Minister would rival the authority of the UK’sPrime Minister. We note that none of the main UK parties proposes to establish an Englishparliament. Neither do any of them propose to revisit the creation of new elected regionalassemblies in England.

TThhee ccoonncclluussiioonnss rreeaacchheedd mmoorree tthhaann 4400 yyeeaarrss aaggoobbyy tthhee RRooyyaall CCoommmmiissssiioonn oonn tthhee CCoonnssttiittuuttiioonn ((tthheeKKiillbbrraannddoonn CCoommmmiissssiioonn)) ssttiillll hhoolldd:: ““nnoo aaddvvooccaattee ooffffeeddeerraalliissmm iinn tthhee UUnniitteedd KKiinnggddoomm hhaass ssuucccceeeeddeeddiinn pprroodduucciinngg aa ffeeddeerraall sscchheemmee ssaattiissffaaccttoorriillyyttaaiilloorreedd ttoo ffiitt tthhee cciirrccuummssttaanncceess ooff EEnnggllaanndd””;;74 aanndd““tthheerree iiss nnoo ssaattiissffaaccttoorryy wwaayy ooff ffiittttiinngg EEnnggllaanndd iinnttooaa ffuullllyy ffeeddeerraall ssyysstteemm””..75

It is possible that this may change in the future if more devolutionary structures are created inEngland – such as city-regions – discussed in more detail in 5.2 below.


73 Before Lisbon, article 10 EC and its equivalent inpredecessor treaties was central to the Court’s case law onremedies. The ‘duty of fidelity’ also helped to influence thesubstantive law of the internal market, especially regarding thefree movement of goods.

74 Royal Commission on the Constitution, Report (Cmnd5460, 1973), para 531.

75 Ibid, para 534.

17


3.7 The content of devolution and the extent of diversity

Finally, there is the question of the content ofdevolution. Not everything can be devolved: on thisthere is no dispute. But what are the limits ofdevolution? The most extensive proposal fordevolution is that put forward by the ScottishNational Party in the wake of their defeat in the2014 independence referendum: “devo-max”.76

This would see the devolution to Edinburgh ofeverything save for: “aspects of the constitution of the UK as a whole, such as the monarchy andthe Westminster Parliament; monetary policy,including the currency and the Bank of England;aspects of citizenship, including nationality andpassports; defence; intelligence and security,including borders; and many aspects of foreignpolicy”. There is no country anywhere in the worldrun along lines such as these. Under the SNP’sproposal, all revenue raised in Scotland would go to the Scottish Government, who would writethe United Kingdom a cheque for the services itrendered in, and for, Scotland as regards monetarypolicy, defence, security and foreign affairs. This was the proposal which the SNP put to theSmith Commission.

Such an extreme form of devolution would seemdesigned not to preserve the Union with the rest of the United Kingdom, but to break it. Such arelationship would certainly be incompatible withany sort of continuing social union. For that reason,it was rejected by the other parties to the SmithCommission process and, as we have seen, themodel of enhanced devolution agreed by the SmithCommission is very different from the SNP’s visionof devo-max.

As noted in Chapter 1, the Northern Ireland Actdivides powers into three categories: those whichare transferred to the Assembly, those which areexcepted (and may not be transferred), and thosewhich are reserved (ie, not yet transferred). Couldit be that the list of excepted powers (in Schedule 2to the Northern Ireland Act 1998) offers a guide asto the matters which could not be devolved, on theassumption that all others could be, even if theyare not devolved yet? The excepted powers are as

follows: the Crown; the Westminster Parliament,including the franchise for elections to thatparliament; international relations, including asregards the European Union; defence; weapons ofmass destruction; titles and honours; treason;nationality, immigration and asylum; taxes andduties applying to the UK as a whole; nationalinsurance contributions; judicial appointments; thecurrency; national security; nuclear energy andnuclear installations; certain aspects of fishing;and regulation of activities in outer space.

To consider lists such as these is one way ofapproaching the question. However, anotherapproach is to ask how much diversity the countrycan accommodate from the practical point of view.For example, the recent extension of devolvedpowers to Wales may result in a different set oflandlord and tenant laws in Wales from England.Yet the systems of law in England and Wales areintegrated. Will judges in England have to becomeexperts in Welsh law? If so, how might this bedone? To give another example, the Defamation Act2013 passed by the UK Parliament has not beenextended to Northern Ireland. Yet the world isbecoming more connected, no more so than asregards online media. Is it practical, and right, thatan alleged defamation be judged under the 2013Act in England and Wales, but under the commonlaw in Northern Ireland?

Further, as was discussed in the previous chapter,it is questionable whether Westminster couldrepeal the Human Rights Act without first obtainingthe consent of the devolved legislatures. Orwhether Scotland could effectively veto any UKdecision to withdraw from the European Union.

The issue of the extent of diversity raises mattersboth of efficiency (who can best deliver the relevantservices?) and of convenience (can we reallypermit different defamation laws in different parts of the UK?). Above all, however, it raises the question of constitutional principle. Are thereprinciples that should guide, in a union state,relations between the centre and the devolvednations; between shared rule and self rule? In the next Chapter we propose such principles for consideration.


76 Scottish Government, More Powers for the ScottishParliament: Scottish Government Proposals (Edinburgh, 2014).

18


As we have said, we believe that more clarity isrequired about the principles and aims of ourdevolution settlement. We can no longer allowthe basic structure of the country to evolve in a haphazard fashion, through deals behind closed doors and unenforceable promises blownby the prevailing political wind in one part of thecountry or another. The rule of law requirescertainty and predictability in our governmentdecision-making structures. To attain thatcertainty and permanence, we believe there is no alternative to a written constitution which,since it deals with a number of different issues,of which only some have to do with devolvedinstitutions, would take time to devise and agree. However, since the matter is urgent, wweerreeccoommmmeenndd tthhaatt aa nneeww CChhaarrtteerr ooff UUnniioonn bbeeeennaacctteedd aass ssoooonn aass ppoossssiibbllee.

As with all such documents, it must start with aset of guiding principles. We have examined arange of sources to identify a series of principlesof union constitutionalism, which we set out inthis chapter. Among the sources we have foundmost useful are: the arguments used during theScottish independence referendum campaign; the work of the Royal Commission on theConstitution (the Kilbrandon Commission), whichsat from 1969–73; the decision of the SupremeCourt of Canada in the Quebec SecessionReference; and the devolution case law of ourown courts. We referred to this last source in the previous chapter, in which we listed the keyprinciples that emerge from the cases. A fulleranalysis of the case law may be found in theappendix to this report.

Principles advocated during the Scottishindependence referendum campaign

During the course of the long independencereferendum campaign in Scotland, unionists were forced for the first time in decades toarticulate reasons why they supported the Unionof Scotland with the rest of the United Kingdom.As Colin Kidd has pointed out in the leading

intellectual history of Scottish unionism77 for muchof the period since the Scottish Enlightenment,unionism in Scotland was “banal”: a defaultposition that was so dominant it never needed tobe demonstrative.78 By the turn of the millennium,unionism in Scotland was characterised byextreme complacency. Devolution, in the words ofthe Labour politician George Robertson, “will killnationalism stone dead”.79 Yet, while unionistswere sleeping, the ingredients that had combinedto form the glue of Union gradually dissolved. AsMichael Keating has argued80, Empire, monarchy,class politics, the NHS and the BBC each played akey role in maintaining Union in post-war Britain,and each has since diminished considerably insignificance. Only the barest remnants of Empireremain. The monarchy can be seen as distinctScottish and English institutions as much as asingle British one. The politics of class has beenovertaken by the politics of nation (at least inScotland). The NHS has always been oraniseddifferently in Scotland and, since 1999, has beenfully devolved. And the BBC that most folk watch in Scotland is BBC Scotland, with the newsbroadcast from Pacific Quay in Glasgow, not NewBroadcasting House in London.

The core case for the Union may be said tocomprise three strands: common security,economic integration and social solidarity. The Union makes everyone who lives here moresecure. It is easier to defend a united island than it would be if there were two separate countriessharing it and to spread the costs of defencearrangements. There is a safety in numbers, andthe combined defence and security forces of theUnited Kingdom are greater in effectiveness than

77 Colin Kidd, Union and Unionisms: Political Thought inScotland 1500–2000 (Cambridge, Cambridge UP, 2008).

78 Ibid, p. 23.79 When he said this in 1995, Mr Robertson was Labour’s

Shadow Secretary of State for Scotland. He became Secretary of State for Defence in Tony Blair’s first government and is nowa Labour peer.

80 The Independence of Scotland: Self-Government and theShifting Politics of Union, Oxford, Oxford UP, 2009.

19

CHAPTER 4 – A CHARTER OF UNION


would be the case were they to be separated.81

As for trade and the economy, the United Kingdom is of course a fully integrated singlemarket, with completely free movement of goodsand persons. The Union gives the Scottish people a domestic market 10 times the size of Scotland to live in, to work in, to trade with, and to retireto. The solidarity that underpins the UK can bedescribed as “the pooling and sharing of risksand resources”. A Glaswegian’s jobseeker’sallowance is paid by tax receipts from workers in Glamorgan and Gateshead (and vice versa). The state pension – uniform across the whole of the UK – is a pot to which taxpayers fromacross the whole of the UK contribute. And thereare of course less instrumental reasons for theunion, arising out of longstanding personal andcultural interconnections, mutual job sharing,language, common habits and so on.

It is important that these values – the values ofUnion – are borne in mind when developingproposals for constitutional reform in the UK,particularly as they were endorsed by a majority of the votes in the 2014 referendum.

Values articulated by The Royal Commission on the Constitution

When in the 1970s the Kilbrandon Commission wasconsidering questions of “government in relation tothe several countries, nations and regions of theUnited Kingdom” (to quote from its terms ofreference), it identified the following ‘generalprinciples’: (1) the need to preserve unity, whilerecognising that unity does not necessarily meanuniformity and can embrace considerablediversity;82 (2) that the principle of democracymust be preserved and fostered;83 (3) thatproposals for constitutional reform should respectour strong traditions of personal liberty;84 (4) thatconstitutional arrangements, no matter howattractive in theory, cannot be imposed against thewill of the people;85 (5) that flexibility is

desirable;86 and (6) that good communicationbetween government and people is essential.87

The Quebec Secession Reference

When in the 1990s the Supreme Court of Canadawas asked to consider the lawfulness andconstitutionality of Quebec secession it ruled that“the evolution of our constitutional arrangementshas been characterised by adherence to the rule oflaw, respect for democratic institutions, theaccommodation of minorities, insistence thatgovernment adhere to constitutional conduct and adesire for continuity and stability”.88 The Courtidentified four “general constitutional principles”,underlying the written text of the Canadianconstitution. These are: federalism, democracy,constitutionalism and the rule of law, andprotection of minorities. In the Court’s view, theseprinciples function together: no one principletrumps the operation of any other. So it is with theprinciples of union constitutionalism we identify forthe United Kingdom.

4.1 Principles of union constitutionalism

Building on these sources, we would identify thefollowing as the key principles of the UnitedKingdom’s union constitutionalism:

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81 For data supporting these arguments, see HMGovernment, Scotland Analysis: Defence (Cm 8714, 2013) andHM Government, Scotland Analysis: Security (Cm 8741, 2013).

82 Op cit, para 417.83 Ibid, para 418.84 Ibid.85 Ibid, para 419.

86 Ibid, para 420.87 Ibid.88 Quebec Secession Reference, op cit, para 48.

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Consent

The United Kingdom is a voluntary union offour component nations.

Respect for democracy

It is for each nation of the United Kingdom to determine the form of government bestsuited to its needs. Devolution and devolvedinstitutions such as a parliament or agovernment cannot be imposed on any nation that does not want it.


TThhee ttiimmee hhaass ccoommee ffoorr tthheessee ccoonnssttiittuuttiioonnaall vvaalluueessooff tthhee uunniioonn ssttaattee ttoo bbee cclleeaarrllyy aanndd aauutthhoorriittaattiivveellyyeexxpprreesssseedd iinn llaaww.. TToo tthhiiss eenndd,, wwee ccoonnssiiddeerr tthhaatt tthheeUUnniitteedd KKiinnggddoomm PPaarrlliiaammeenntt sshhoouulldd ppaassss bbyy ssttaattuutteeaa CChhaarrtteerr ooff UUnniioonn ddeessiiggnneedd,, aammoonngg ootthheerr mmaatttteerrss,,ttoo eemmbbeedd tthheessee pprriinncciipplleess iinnttoo oouurr ccoonnssttiittuuttiioonnaallllaaww.. The values and principles that underscore ourterritorial constitution have lain undeclared for toolong. It is time to shine light on them and to allowthem in turn to illuminate our constitutional future.

How permanent can such a charter be? We haveseen that in our system, any ordinary statute –even if called a charter – is unlikely to survive anyexpress amendment or repeal by subsequentlegislation. However, some degree of constitutionalstatus can be conferred on such a law. In order toseek to secure such status, wwee pprrooppoossee tthhaatt tthheeCChhaarrtteerr ooff UUnniioonn sshhoouulldd pprroovviiddee tthhaatt tthhee SSccoottllaannddAAcctt,, tthhee GGoovveerrnnmmeenntt ooff WWaalleess AAcctt aanndd tthheeNNoorrtthheerrnn IIrreellaanndd AAcctt ““sshhaallll bbee ccoonnssttrruueedd aanndd hhaavveeeeffffeecctt ssuubbjjeecctt ttoo”” tthhee CChhaarrtteerr.. This echoes thelanguage of the European Communities Act 1972and would serve to show the fundamentalconstitutional status of the Charter.

A CHARTER OF UNION

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Respect for the rule of law

The United Kingdom as a whole, and each ofits component nations, respects the rule oflaw. The rule of law governs processes ofgovernance, inter-governmental relationsand also any processes of self-determination.

Shared commitment to personal liberty andhuman rights

The United Kingdom as a whole, and each of the legal systems in force within it, iscommitted to the protection of personalliberty and human rights.

Social solidarity

The nations of the United Kingdom pool andshare their risks and resources.

Common security and defence

The nations of the United Kingdom takecollective responsibility for the defence andsecurity of all the people who live here.

Common economic framework

The United Kingdom is a fully integratedsingle market, with a single currency andcommon macro-economic framework, inwhich citizens are free to live, to work, totrade and to retire without legal impediment.

Autonomy

Each nation of the United Kingdom enjoysautonomy in the exercise of their lawfulpowers, just as the UK as a whole enjoysautonomy in the exercise of its lawful powers.

Subsidiarity

The purpose of devolution is that the bodybest able to respond to the wishes of the

people and provide a particular serviceshould be the body that carries out that task.The principle of subsidiarity underlines theneed for optimal responsiveness andeffectiveness on the part of our governinginstitutions.

Accountability

The Government of the United Kingdom isconstitutionally responsible to the UKParliament, just as ministers in Scotland,Wales and Northern Ireland are responsibleto their parliaments or assemblies.

Comity, trust and fair dealing

All governments within the United Kingdomshould be loyal to their oblligations to eachother under the constitution and shall co-operate with one another in mutual trust and good faith.


As an Act of Parliament tthhee CChhaarrtteerr ooff UUnniioonn wwiillllbbee iinntteerrpprreetteedd aanndd eennffoorrcceedd iinn tthhee ccoouurrttss – amatter we have addressed in 3.3 above.

HHoowweevveerr,, tthhee ccoonnssttiittuuttiioonnaall ssttaattuuttee tthhee CChhaarrtteerr ooffUUnniioonn wwoouulldd aallssoo hhaavvee ootthheerr ccoonnsseeqquueenncceess,, ssuucchhaass pprroovviiddiinngg aa bbeenncchhmmaarrkk aaggaaiinnsstt wwhhiicchh BBiillllss aannddootthheerr lleeggiissllaattiivvee pprrooppoossaallss mmaayy bbee aasssseesssseedd..CCoommmmiitttteeeess ssuucchh aass tthhee HHoouussee ooff LLoorrddssCCoonnssttiittuuttiioonn CCoommmmiitttteeee,, oorr tthhee CCoommmmoonnssddeevvoolluuttiioonn ccoommmmiitttteeee pprrooppoosseedd bbyy tthhee MMccKKaayyCCoommmmiissssiioonn,, ccoouulldd ssccrruuttiinniissee lleeggiissllaattiioonn wwiitthhrreeffeerreennccee ttoo tthhee CChhaarrtteerr, in the same way as theJoint Committee on Human Rights considerslegislation in relation to the Human Rights Act1998 and other human rights instruments. TThheeCChhaarrtteerr sshhoouulldd aallssoo ppllaayy aa rroollee iinn tthhee ssccrruuttiinnyy oofflleeggiissllaattiioonn iinn tthhee UUKK’’ss ddeevvoollvveedd lleeggiissllaattuurreess..

TThhee CChhaarrtteerr ooff UUnniioonn sshhoouulldd eemmbbooddyy nnoott oonnllyy tthheepprriinncciipplleess ooff uunniioonn ccoonnssttiittuuttiioonnaalliissmm,, bbuutt sshhoouullddaallssoo pprroovviiddee iinn llaaww ffoorr tthhee UUnniitteedd KKiinnggddoomm’’ss iinntteerr--ggoovveerrnnmmeennttaall mmaacchhiinneerryy, as outlined in Chapter 2above, and deal with issues such as secession orother referendums, to which we now turn.

4.2 The principle of consent and secessionreferendums

The principle of consent is of cardinal importance.The United Kingdom is a voluntary union ofnations. The means by which each nation mayexpress what the Scottish Claim of Right called the“sovereign will” of its people is, in the modern era,the referendum. Devolution was delivered inScotland, Wales and Northern Ireland only afterreferendums were held there in which theelectorate signalled its support for devolution.Moreover, the Northern Ireland Act 1998 provides,in section 1, that the means whereby the people ofNorthern Ireland may indicate that they no longerwish Northern Ireland to remain part of the UnitedKingdom is “a poll held… in accordance withSchedule 1”: that is to say, a referendum.

Yet, the Northern Ireland Act notwithstanding, theuse of the referendum in the United Kingdom is adhoc. There are few general powers to hold areferendum in the United Kingdom.89 Rather, most

referendums require their own bespoke legislativeauthority.90 There is no constitutional rulegoverning when a referendum should be held.Thus, while it was thought necessary in 2011 tohold a referendum before the first-past-the-postelectoral system used for the House of Commonscould be abandoned in favour of an alternativesystem, it was thought in 2012 that the House ofLords could be reformed into a largely electedchamber without any referendum.91 The HumanRights Act 1998 was passed without anyreferendum. So too was the EuropeanCommunities Act 1972, although there was areferendum in 1975 on whether the UnitedKingdom should remain a Member State of whatwas then the EEC (now the European Union).

The House of Lords Constitution Committeeconducted an inquiry into the use of referendumsin the United Kingdom. It found that they are oftenused not out of principle but as a tactical device.The committee cautioned that there are“significant drawbacks to the use of referendums”and recommended that “where possible, cross-party agreement should be sought as to thecircumstances in which it is appropriate forreferendums to be held”.92 The committee furthernoted that, if referendums are to be used, they aremost appropriately used in relation to what itcalled “fundamental constitutional issues”.93 Thecommittee offered no definition of this term, butgave the following illustrative examples: “anyproposal to abolish the monarchy, to leave theEuropean Union, for any of the nations of the UK to secede from the Union, to abolish either Houseof Parliament, to change the electoral system forthe House of Commons, to adopt a writtenconstitution, or to change the UK’s system of currency”.94

The Political Parties, Elections and ReferendumsAct 2000 (‘PPERA’) contains rules governingcampaign finance and the conduct of referendumcampaigns (as well as rules concerning electoral

A CHARTER OF UNION

89 Examples may be found in the European Union Act 2011and, for certain local government referendums, in the LocalismAct 2011.

90 See, for example, the Referendums (Scotland and Wales)Act 1997; the Parliamentary Voting System and ConstituenciesAct 2011, section 1; the Scottish Independence Referendum Act2013, section 1; and the Wales Act 2014, section 12.

91 See the (abandoned) House of Lords Reform Bill 2012–13.92 House of Lords Constitution Committee, Referendums in

the United Kingdom (12th report, 2009–10, HL 99), para 62.93 Ibid, para 94.94 Ibid.

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campaigns). The Electoral Commission,established by PPERA, has the statutory function of considering the ‘intelligibility’ of referendumquestions.95 It may make recommendations thatthe wording be changed in order to improveintelligibility. These matters are important, butthere are other equally significant matters that arenot regulated by PPERA, including the franchisefor referendums, the timing (and, in particular, the frequency) of referendums, and whetherreferendums should be subject to any minimum or special threshold. The franchise for eachreferendum is set by the legislation authorisingthat particular referendum. In the context of the Scottish independence referendum, it wascontested in some quarters that, whereas theresult could affect the whole of the UnitedKingdom, the franchise extended only to people on the electoral register in Scotland. There are800,000 people born in Scotland but livingelsewhere in the United Kingdom. They were notpermitted to vote in the referendum (unless theyrelocated back to Scotland and registered to vote there).

There was a referendum in Scotland in 1979 ondevolution. The Scotland Act 1978 stipulated thatfor that Act to be commenced it would require thesupport in a referendum of 40% of electorate.While a majority of those who voted supporteddevolution, the 40% threshold was not met and,as a result, the Act was repealed. There had beenno such threshold requirement in the 1975 EECreferendum. In the devolution referendums heldsince 1997, there have been no thresholdrequirements and nor was there any suchrequirement in the 2014 Scottish independencereferendum. In its report on referendums, theHouse of Lords Constitution Committee was ofthe view that “there should be a generalpresumption against the use of voter turnoutthresholds and super-majorities”. The committeeadded, however, that there may be “exceptionalcircumstances in which they may be deemedappropriate”.96

A pressing question as to the frequency ofreferendums is whether there can be anotherreferendum on Scottish independence and, if so,when. The First Minister of Scotland, Alex Salmond

MSP, said at the time of the 2014 referendum thatit was “a once in a generation, perhaps even aonce in a lifetime” event. His successor NicolaSturgeon MSP said likewise that it was “a once ina generation” opportunity. Nonetheless, all that was required to occur for the 2014 referendum totake place was that the SNP made a manifestocommitment to introduce a Referendum Bill intothe Scottish Parliament and, on the basis of thatmanifesto, won an overall majority of seats atHolyrood. Were a similar commitment to be madein their 2016 manifesto, and were a similarelectoral result to occur, would a secondindependence referendum have to follow? There is no clear answer to this as a matter of law orconstitutional practice. But there is a pointer inthe Northern Ireland Act that might suggest alonger period should properly elapse before any‘indyref2’. That Act provides that the Secretary ofState may not make arrangements for a poll to beheld under section 1 of that Act earlier than sevenyears after the holding of a previous poll underthat section.97 In Quebec, 15 years elapsedbetween the first secession referendum (in 1980)and the second (in 1995). In Scotland, 18 yearselapsed between the devolution referendums heldin 1979 and 1997. If there is an in/out EUreferendum in 2017, as the Conservative party hasproposed, it will take place 42 years after the 1975referendum on the EEC.

It is important that referendums do not become‘neverendums’ in which the same question isrepeatedly put to the electorate until the ‘correct’answer is returned. Referendums are not opinionpolls, but legally authorised means of decidingconstitutional questions. In the Quebec SecessionReference the Supreme Court of Canada notedthat the principle of democracy needs to operateand to be understood in the context and in the lightof the rule of law: democratic institutions anddecisions “must rest, ultimately, on a legalfoundation”.98 IInn tthhee UUKK,, wwee nneeeedd aann iinnssttrruummeennttssuucchh aass oouurr pprrooppoosseedd CChhaarrtteerr ooff UUnniioonn ttoo eexxtteennddtthhee wwaayy tthhee rruullee ooff llaaww ggoovveerrnnss aanndd ccoonnddiittiioonnss tthheeuussee ooff ccoonnssttiittuuttiioonnaall rreeffeerreenndduummss..

And on the basis of the precedents noted above, wweerreeccoommmmeenndd tthhaatt aa ‘‘ggeenneerraattiioonn’’,, ffoorr tthhee ppuurrppoossee ooffaa rreeppeeaatt rreeffeerreenndduumm,, iiss aatt lleeaasstt 1155 yyeeaarrss,, ssuubbjjeecctt

A CHARTER OF UNION

95 PPERA, section 104.96 Op cit, para 189.

97 Northern Ireland Act 1998, Schedule 1, para 3.98 Quebec Secession Reference, op cit, at [67].

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ttoo ccoommppaattiibbiilliittyy wwiitthh aannyy oobblliiggaattiioonn aarriissiinngg ffrroommtthhee NNoorrtthheerrnn IIrreellaanndd AAcctt 11999988..

A number of our principles of unionconstitutionalism show that there are – and oughtto be – limits to what can be devolved within asingle state. Human rights law should be uniformacross the whole of the United Kingdom. Socialsolidarity constrains what can be devolved in terms

of minimum standards of welfare and pensions.Security, defence and a common economicframework are not merely matters that have notbeen devolved yet, but are core attributes of thestate that cannot be devolved at all (withoutbreaking up the state). There is a strong case forsetting this out in a Charter, which also recognisesthe rights of each nation to determine the form ofgovernment best suited to its needs.

A CHARTER OF UNION

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At dawn on the day after the Scottishindependence referendum, the Prime Ministermade a statement from outside No 10 DowningStreet welcoming the result and undertaking thatmore devolution would be delivered for Scotland,as had been promised during the referendumcampaign. He then said this: “Just as the people ofScotland will have more powers over their affairs,so it follows that the people of England, Wales and Northern Ireland must have a bigger say overtheirs… [A] new and fair settlement for Scotlandshould be accompanied by a new and fairsettlement that applies to all parts of our UnitedKingdom… I have long believed that a crucial partmissing from this national discussion is England…The question of English votes for English laws –the so-called West Lothian question – requires adecisive answer”.99

First Secretary of State William Hague MP wasasked by the Prime Minister to chair a newDevolution Committee of the Cabinet to explorewhat a “new and fair settlement for England”should comprise. This committee undertook itswork at the same time as the Smith Commissionwas meeting in Scotland. Initially, the PrimeMinister had stated that this work should allhappen “in tandem”, but in October 2014, MrHague clarified that “the proposals for Scotlandare not tied to our deliberations on other parts ofthe United Kingdom in the sense that they areconditional on them… the vow [to Scotland] is unconditional…”.100 The Smith Commissionlikewise resolved at the beginning of its work that its agreement would “not be conditional onthe conclusions of other political negotiationselsewhere in the UK”.101

In December 2014, Mr Hague’s committee produceda Command Paper, The Implications of Devolutionfor England.102 The paper summarised aspects of“decentralisation and localism in England”103 andof the impact on Westminster of devolution inScotland, Wales and Northern Ireland. It then set out – separately – Conservative and LiberalDemocrat party proposals both on furtherdecentralisation and on the West Lothian question.No Government proposals were contained in thepaper: each party to the coalition set out its own.Nor did this embody any wider consensus; whilethe Labour party had been invited by theGovernment to participate in the process, itdeclined to do so. The Labour leadership wasfurious that the Prime Minister had raised thespectre of “English votes for English laws”,perceiving it to be what Gordon Brown MP called a “Tory trap” that “will in time threaten the veryexistence of the United Kingdom” because, inraising it, “the Government are [sic] deliberatelydriving a wedge between Scotland and England”.104

Despite the controversy over David Cameron’sannouncement about English votes for Englishlaws (‘EVEL’), academic research into ‘the newEnglish politics’ shows that he “ha[d] a point”.105

The Future of England Survey 2014 found furtherevidence, to augment that found in the equivalentsurveys for 2012 and 2013, that “England has adistinctive politics that combines a politicisation ofEnglish national identity with an increasingly clearpolitical prospectus”.106 “The rallying point is anEnglish desire for self-government,” defined by “acontinuing sense that Scotland has privileges thatare uniquely denied to England” and “a perceivedloss of political control due to Europeanintegration”.107 Moreover, the authors of the

99 The West Lothian question focuses on the followingproblem: MPs representing seats in England cannot vote onmatters devolved to Scotland (because such matters are theresponsibility of the Scottish Parliament, not the House ofCommons) but MPs representing seats in Scotland can vote onsuch ‘devolved matters’ when they apply to England (eg, onEnglish education or the health service in England).

100 HC Deb, 14 Oct 2014, col 171.101 Smith Commission Agreement, op cit, para 7(4).

102 Cm 8969.103 Ibid, p. 7.104 HC Deb, 4 Feb 2015, col 391.105 C Jeffery, R Wyn Jones, A Henderson, R Scully and G Lodge,

Taking England Seriously: The New English Politics (The Futureof England Survey 2014), p. 3.

106 Ibid.107 Ibid.

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CHAPTER 5 – THE ENGLISH QUESTION


Future of England Survey found that “people inEngland are not just reacting against their ‘others’in Scotland and the EU. They are also searchingmore positively for an institutional recognition ofEngland that can express their concerns betterthan the current political system, whichsubmerges the representation of England with the wider UK’s institutions in Westminster and Whitehall”.

These powerful findings deserve to be takenseriously. Along with the equivalent surveys in 2012and 2013 they show: first, that there is “deepdissatisfaction among people in England with theway England is governed” and secondly, that thereis “strong devo-anxiety” – that is to say, aperception that devolution has conferredadvantages on Scotland and the other devolvednations that are unfair to England.108 In short,“people in England see a democratic deficit” and are looking for a remedy “in the form of self-government”, although there is little clarity aboutwhat form such stronger self-government might take.109

In this chapter we consider both main aspects of“the English question”: that is to say, the matter ofEngland’s voice and representation in the UnitedKingdom parliament, and the issue of devolution(or decentralisation) within England and the reformof English local government.110

5.1 Representation: English votes for English laws?

The most authoritative examination of the WestLothian question is the report of the McKayCommission. This independent (non-party)commission was established by the Coalitiongovernment in early 2012 and reported in March2013.111 Very similarly to the Future of EnglandSurveys, it found that “people in England do not

perceive themselves as predominant, but rather asdisadvantaged and lacking a voice under currentarrangements”.112 Accordingly, McKay’s startingpoint was that “now is the right time to enable afuller, clearer and positive expression of a voice for England in the UK’s political system”.113 TheCommission quickly rejected options that wouldsee England divided into regions or the creation of a new English Parliament: neither approachcommanded sufficient public support. Rather, thesolution lay in transforming the procedures of theHouse of Commons so that Westminster couldmore manifestly and transparently become bothEngland’s legislature and the legislature for theUnited Kingdom as a whole. The McKayCommission formulated a core principle uponwhich its recommendations would be based:“decisions at the United Kingdom level having aseparate and distinct effect for a component partof the United Kingdom should normally be takenonly with the consent of a majority of the electedrepresentatives for that part of the UnitedKingdom”.114 This principle, McKay argued, was already expressed for the devolved nations of the UK through the Sewel convention and theoperation of legislative consent motions.115

What now needed to happen, in McKay’s view, was to find a means of extending the principle also to England.

To this end, McKay identified a number of options.The commission’s preference was for legislativeprocedure in the House of Commons to be amended in two main ways. The first was that a new ‘legislative consent’ procedure be added beforesecond reading so that a Bill could proceed only withthe consent of a majority of the MPs representingseats in the part(s) of the UK affected by the Bill. Thesecond was that the committee stage of a Bill shouldbe undertaken only by MPs representing seats in thepart(s) of the UK affected by the Bill.

Disappointingly, the Government never published adirect response to the McKay Commission’s report(presumably because the two parties to thecoalition disagreed as to what that responseshould be). However, the parties’ proposalsoutlined in the December 2014 Command Paper,

THE ENGLISH QUESTION

108 Ibid, p. 5.109 Ibid, p. 6. For the 2012 and 2013 surveys, see The Dog that

Finally Barked: England as an Emerging Political Community(IPPR, 2012) and England and its Two Unions: The Anatomy of aNation and its Discontents (IPPR, 2013).

110 To be clear, we regard these as two different issues. Inparticular, we do not consider that devolution with England isany kind of answer to the West Lothian question.

111 McKay Commission, Report on Consequences ofDevolution for the House of Commons (2013).

112 Ibid, para 65.113 Ibid, para 66.114 Ibid, para 109 (emphasis in the original).115 We describe in Chap 1.

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The Implications of Devolution for England, built onMcKay’s work.116

The Conservative party’s position was as follows:

• Westminster is and should remain England’slaw-making body.

• Westminster elections and elections for localgovernment in England should continue touse the first-past-the-post electoral system,but there should at the same time be greaterdirect democracy for local communities, suchas through the use of local referendums.

• There should be more bespoke Growth Deals,including metropolitan mayors where locallysupported: “we will champion England’slong-standing towns, boroughs, cities andcounties and will continue to oppose theimposition of artificial regional structures”.117

• While localism and decentralisation arecrucial, they do not and cannot answer theWest Lothian question: “introducing Englishvotes for English laws is crucial and cannotbe ignored any longer”.118

• In particular, “on legislation relating toEngland only or to England and Wales only,we must enhance the role of MPs fromEnglish constituencies, or English and Welshconstituencies. This must be done in parallelto the implementation of the SmithCommission in Scotland: as a matter offairness and for the long-term good of the Union”.119

• The Conservatives support the guidingprinciple set out in the McKay report, that“decisions at the United Kingdom level with aseparate and distinct effect for England, orfor England and Wales, should normally betaken only with the consent of a majority ofMPs for constituencies for England, or forEngland and Wales”. The Conservatives add:“we believe that all parties should adopt theMcKay principles as a minimum basis forimplementing English votes for Englishlaws”.120

• The Conservatives see the McKay principleand EVEL as being on a par with the Sewel

convention: they say that, as Sewel is to beput on a statutory footing, so too should thearrangements for England (or England andWales), even if they are implemented in thefirst instance through changes to theStanding Orders of the House of Commons.

• The implementation of EVEL should be“clear, decisive and effective”; changesshould not significantly increase either thecomplexity of the legislative process or thetime taken to pass legislation; the changes“must have the effect of helping to bindtogether the United Kingdom for the long term”.121

• The Conservatives are not in favour ofcreating an English Parliament; nor are theyin favour of reducing the number of ScottishMPs at Westminster (although they remaincommitted to reducing the overall size of theHouse of Commons).

The Conservatives then put forward three optionsfor implementing EVEL. The first, based onrecommendations made in 2000 by a committeechaired by Lord Norton, is that:

• Bills on English matters that are devolved tothe other nations would proceed through anentirely English-only process (ie, secondreading, committee stage, report stage andthird reading).

• Option 2, based on recommendations madein 2008 by a Conservative Party ‘task force’chaired by Ken Clarke MP, is that Bills onEnglish matters would have their second andthird readings as normal (with all MPseligible to take part) but that their amendingstages (committee and report) would betaken only by MPs from England (or, as thecase may be, England and Wales).

• Option 3, based on the McKay report, is morecomplex: second reading would be taken byall MPs; committee stage would be taken byEngland (or England and Wales) MPs; reportstage would be taken by all MPs; an EnglishGrand Committee would then vote on alegislative consent motion (‘LCM’) and only ifthat motion is passed would the Bill proceedto third reading, which would be for all MPs.As noted above, McKay had suggested an


116 Op cit.117 Ibid, p. 23.118 Ibid.119 Ibid, p. 24.120 Ibid. 121 Ibid.

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English Grand Committee LCM stage beforesecond reading: for the Conservatives theadvantage of moving this stage so that itwould take place after report is that it wouldmean English (or English and Welsh) MPshave the decisive say on whether legislationthat applies to England (or England andWales) should be passed.

In February 2015, the Conservatives indicated theirsupport for the third of these options.122 This wasconfirmed in the party’s 2015 general electionmanifesto.123

The Liberal Democrats’ position, as set out in theDecember 2014 Command Paper, is as follows:

• There should be legislative and fiscaldevolution within England (significantlyreducing the policy areas in which the WestLothian question would apply).

• This should be ‘devolution on demand’,delivered through an enabling Bill, whichwould permit areas of England to demandfrom Westminster and Whitehall powersfrom a menu of options.124

• Even thereafter, the Liberal Democratsrecognise that the West Lothian questionwould continue to arise: in their view it “canno longer go unanswered”. English MPs“should have a stronger voice and a strongerveto over purely English” matters.125

• This should be achieved by inserting a newparliamentary procedure before third readingso that a committee “composed of MPsproportionately representing the votes cast in England” could determine whether a Bill“which unambiguously affect[s] Englandonly” should proceed further. This wouldmean that “any legislation affecting Englandonly would be subject to a ‘double lock’ – itwould need approval by both a majority of UK MPs and by English MPs representing amajority of the English vote at the lastgeneral election”.126

• The Liberal Democrats support theestablishment of a Constitutional Convention

“to discuss the relationship between theconstituent parts of the United Kingdom andalso to explore the values and principleswhich bind us together”.127

• As noted above, the Labour party was invitedto participate in the process that led to thepublication of the Command Paper, butdeclined to do so. In the House of Lords,Baroness Royall said the following from theOpposition front bench: “In England, citiesand towns are demanding a greater say inthe running of their affairs. Labour hasresponded to these demands, committing tointroduce an English devolution Act in ourfirst Queen’s Speech. This will involve skills,transport and economic development… It isright that we look at how parliament works…and yes, we do need to consider ways inwhich English MPs, or English and WelshMPs, can have a greater say over legislationthat affects only England, or only Englandand Wales”.128 Beyond that, Baroness Royallsaid only that Labour would look further atthe McKay report and would study theoptions presented in the Command Paper.129

Labour’s 2015 election manifesto states asfollows: “It is also time to consider howEnglish MPs can have a greater role in thescrutiny of legislation that only affectsEngland. This includes the option put forwardby Sir William McKay, of a committee stagemade up of English-only MPs. These ideasmust now be considered as part of theConstitutional Convention process.”130

Conclusions and recommendations

FFoorr aass lloonngg aass EEnnggllaanndd sshhoowwss nnoo aappppeettiittee ttoo bbeebbrrookkeenn iinnttoo rreeggiioonnss tthhiiss sshhoouulldd nnoott hhaappppeenn..Devolution in Scotland, Wales and Northern Irelandhas been demand-led: governance in Englandshould be according to the same principle.

However, ggrreeaatteerr rreeccooggnniittiioonn nneeeeddss ttoo bbee ggiivveenn ttootthhee ffaacctt tthhaatt WWeessttmmiinnsstteerr iiss EEnnggllaanndd’’ss ppaarrlliiaammeennttaass wweellll aass tthhee ppaarrlliiaammeenntt ooff tthhee UUnniitteedd KKiinnggddoomm..


122 See http://www.bbc.co.uk/news/uk-politics-31099106.123 Conservative Party Manifesto 2015, p. 70.124 Op cit, p. 28.125 Ibid, p. 30.126 Ibid, p. 31.

127 Ibid.128 HL Deb, 16 Dec 2014, col 113.129 Sadiq Khan MP said the same in the House of Commons:

HC Deb, 16 Dec 2014, cols 1268–9.130 Labour Party Manifesto 2015, p. 64.

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TThhee MMccKKaayy rreeppoorrtt iiddeennttiiffiieedd tthhee ccoorrrreecctt pprriinncciippllee::““ddeecciissiioonnss aatt tthhee UUKK lleevveell wwiitthh aa sseeppaarraattee aannddddiissttiinncctt eeffffeecctt ffoorr EEnnggllaanndd ((oorr ffoorr EEnnggllaanndd aannddWWaalleess)) sshhoouulldd nnoorrmmaallllyy bbee ttaakkeenn oonnllyy wwiitthh tthheeccoonnsseenntt ooff aa mmaajjoorriittyy ooff MMPPss ffrroomm EEnnggllaanndd ((oorrEEnnggllaanndd aanndd WWaalleess))””.. AAllll ppoolliittiiccaall ppaarrttiieess sshhoouullddeennddoorrssee tthhiiss aass aa mmaatttteerr ooff pprriinncciippllee (to date theConservatives have done so expressly; the LibDems have done so implicitly; and the Labourparty has not done so, although some Labourcommentators have suggested that the partyshould do so).

WWee eennddoorrssee tthhee MMccKKaayy iiddeeaa tthhaatt tthhee bbeesstt mmeeaannss ooffggiivviinngg ffoorrccee ttoo tthhiiss pprriinncciippllee iiss ttoo bboorrrrooww ffrroomm tthheeSSeewweell ccoonnvveennttiioonn,, ssuucchh tthhaatt bbiillllss,, oorr pprroovviissiioonnss ooff bbiillllss,, wwiitthh aa sseeppaarraattee aanndd ddiissttiinncctt eeffffeecctt ffoorrEEnnggllaanndd ((oorr EEnnggllaanndd aanndd WWaalleess)) aarree nnoott ppaasssseedd bbyytthhee CCoommmmoonnss wwiitthhoouutt tthhee ccoonnsseenntt ooff aa mmaajjoorriittyy ooffMMPPss ffrroomm EEnnggllaanndd ((oorr EEnnggllaanndd aanndd WWaalleess))..IImmpplleemmeennttaattiioonn sshhoouulldd bbee tthhrroouugghh aammeennddiinngg tthheeSSttaannddiinngg OOrrddeerrss ooff tthhee HHoouussee ooff CCoommmmoonnss,, nnootttthhrroouugghh ssttaattuuttee:: tthhiiss iiss nnoott aa mmaatttteerr tthhaatt sshhoouullddaattttrraacctt lliittiiggaattiioonn iinn tthhee ccoouurrttss ooff llaaww..

5.2 Making English votes for English laws work

However, it is one thing to identify the rightprinciple and institutional reform: it is another toknow how the principle should be implemented inpractice.131 In particular, it is notoriously difficultto understand what ‘separate and distinct’ shouldmean and who should decide whether a Bill, or aprovision, has such an effect. While Bills routinelyspecify their ‘territorial extent’, the effects of a Billare often not the same its formal extent. A Bill mayextend to Northern Ireland or Scotland, forexample, only technically: some Bills which extendto the whole of the United Kingdom have effectsonly in one part of it. The Wales Act 2014 is a goodexample – this legislation extends to the whole ofthe UK but its main effects will be in Wales only.

The converse may also apply: a Bill may extendonly to England and Wales but may nonethelesshave consequential effects also in Scotland and

Northern Ireland. Some commentators havesuggested that this will be the case for anyEngland-and-Wales Bill that affects publicspending. As we explain in the next chapter the‘block grant’ system used to fund devolvedgovernment relies on a formula – the Barnettformula – that calculates Scottish, Welsh andNorthern Ireland budgets in relation to Englishbudgets. If public spending is cut in England, theremay be consequential cuts in the devolved nations,even if the original government cut applies only inEngland.132 However, for others this is a redherring. Professor Jim Gallagher, writing in 2012,pointed out forcefully that even where substantivelegislation has (indirect) financial consequences, it does not change the budget provision voted byparliament.133 In parliamentary terms, the latter iscontrolled by appropriation procedures, in whichall MPs have a vote. On this view, there are no‘Barnett consequentials’ of a measure (forexample) such as the Health and Social Care Act2012 (which reformed aspects of the health servicein England). The substantive matter of healthservice reform in England, on ProfessorGallagher’s analysis, needs to be distinguishedfrom subsequent decisions as to supply. Theformer may require the formal consent of amajority of English MPs, even if the latter is amatter for the House as a whole.

It is rare that a government does not enjoy amajority of English seats in the House of Commons(as well as a majority of seats overall). Indeed, thishas happened only twice since the Second WorldWar: from 1964–66 and from February–October1974. For this reason it is unusual to seelegislation affecting England being passed in theCommons despite a majority of MPs from Englandvoting against it. The two best-known examples ofthis occurring are the Health and Social Care(Community and Standards) Act 2003 (concerningfoundation hospitals) and the Higher Education Act


131 There is also the question of who should implement it. The Speaker seems an obvious choice, using a scheme ofcertification akin to that relating to Money Bills under theParliament Acts 1911–49. There is a risk, however, that thiswould further politicise the office of Speaker.

132 There are some who take the view that there really are nosuch things as ‘English laws’ which MPs representing seats inthe rest of the UK have no legitimate interest in. Researchpublished in November 2014 by the House of Commons Libraryfound that in the 2010–15 parliament there had been only foursuch bills passed: the Mobile Homes Act 2013, the WaterIndustry (Financial Assistance) Act 2012, the Academies Act2010 and the Local Government Act 2010: see House ofCommons Library, The English Question (Standard NoteSN/PC/7027, November 2014).

133 J Gallagher, England and the Union: How and Why toAnswer the West Lothian Question (London, IPPR, 2012), p. 23.

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2004 (concerning ‘top-up’ university tuition fees).On both occasions, sizeable rebellions amongLabour MPs representing seats in England were‘cancelled out’ by the votes of (mainly) Labour MPsrepresenting seats in other parts of the UK,despite the fact that neither piece of legislationextended to Scotland (both the health service andhigher education being devolved there). Furtherresearch by the House of Commons Librarysuggests that in more than 3,600 divisions in theCommons between 2001 and 2014, the outcomesof only 22 would have been different had Scotland’sMPs not taken part.134 Of these 22, about ninewere concerned with issues that are devolved inScotland, the remainder being on reserved/non-devolved subject-matter. “English votes for Englishlaws” may, on this view, be a solution in search of a problem.

Be that as it may, the problem of effective Englishvoice and representation in the House of Commonsmay become more acute in the near future. As wesaw in chapter 1, the Smith CommissionAgreement provides that decisions about the ratesand bands of income tax for Scottish taxpayersshould be made by Scottish Ministers in Edinburgh,not by the Chancellor of the Exchequer in London.Were some form of McKay-style EVEL reform to be implemented, this would imply that decisionsabout the rates and bands of income tax fortaxpayers in the rest of the UK should be takenonly by MPs representing seats in the rest of theUK (and not by Scottish MPs). If there were to be a government in the future that did not enjoymajority support in England (as happened in1964–66 and 1974), would this raise the prospect of the United Kingdom having a government thatmight not be able to get key provisions of itsBudget through the House of Commons? Theprospect of imminent and substantial fiscaldevolution makes answering the West Lothianquestion all the more pressing.

BBuuiillddiinngg oonn tthhee bbaassiiss ooff tthhee pprriinncciipplleedd wwoorrkk ooff tthhee MMccKKaayy CCoommmmiissssiioonn,, ccoonnssiiddeerraattiioonn sshhoouulldd bbeeggiivveenn ttoo tthhee ffoolllloowwiinngg:: ((11)) eessttaabblliisshhiinngg aa mmoorreessttrruuccttuurreedd aapppprrooaacchh ttoo tthhee ffrraammiinngg aanndd ddrraaffttiinnggooff lleeggiissllaattiioonn,, ssoo tthhaatt BBiillllss ccoonnttaaiinniinngg ‘‘ddiissttiinncctt aannddsseeppaarraattee’’ pprroovviissiioonnss wwiitthh ffoorr EEnnggllaanndd ((oorr EEnnggllaanndd

aanndd WWaalleess)) ddoo nnoott aallssoo ccoonnttaaiinn pprroovviissiioonnss ffoorrootthheerr ppaarrttss ooff tthhee UUKK,, oorr nnoonn--ddeevvoollvveedd mmaatttteerrss;;aanndd ((22)) sseeppaarraattiinngg ddeecciissiioonnss aabboouutt ppoolliiccyy ffrroommtthhoossee aabboouutt ffiinnaannccee.. Parliament’s consideration ofthe process of supply is poorly understood andattracts little interest from most MPs, although itis vital to the operation of the state and historicallyhas been central to the ensuring the supremacy ofparliament over the executive. A greater focus onsupply would have two advantages as far asdevolution is concerned: it would clarify financialarrangements, which – as chapter 6 argues – areopaque at present, and likely to become even moreso as fiscal devolution proceeds. Additionally, itwould enable a distinction to be drawn betweenpolicy applying only in England (or England andWales), and the financial implications of thatpolicy.135 All MPs would remain able to vote onfinancial allocations through the Supply andAppropriations bill since those relate to the UK asa whole, but this would limit voting on non-financial matters such as the organisation of thehealth service in England or policing in Englandand Wales to English or English and Welsh MPs.

KKeeyy ttoo tthhiiss wwiillll bbee ttoo iiddeennttiiffyy BBiillllss,, oorr pprroovviissiioonnsswwiitthhiinn BBiillllss,, wwhhiicchh hhaavvee aa ddiissttiinncctt aanndd sseeppaarraatteeeeffffeecctt ffoorr EEnnggllaanndd aanndd WWaalleess,, aanndd ttoo eessttaabblliisshh wwhhoowwiillll bbee rreessppoonnssiibbllee ffoorr aappppllyyiinngg tthhaatt tteesstt.. This testmust relate not only to the territorial impact of theBill but also its wider effect, particularly itsnecessary financial implications.

Whether a Bill, or provisions within one, has a‘distinct and separate’ effect or not is a matter that needs to be determined as part of the processof introducing the Bill into Parliament, andparticularly the House of Commons where this rulewill apply. No doubt the legislative drafter will haveregard to this question, and the ministerresponsible for the Bill may wish to make his/herviews known. But ultimately, this is a matter forthe Parliamentary authorities, and thedetermination needs to be made withinParliament. TThhiiss rroollee wwoouulldd sseeeemm bbeesstt ssuuiitteedd ttoo


134 House of Commons Library, England, Scotland, Wales:MPs and Voting in the House of Commons (Standard NoteSN07048, December 2014), pp 10–11.

135 This would mean that the legislation to reorganise theNHS in England, for example, could proceed with considerationunder an EVEL procedure, as any consequential financial effectswould be dealt with through the separate supply process, inwhich all MPs would take part. Thus, English MPs alone wouldbe able to determine what happened to the health service, butall MPs would be involved when it came to financial implicationswhich affect the devolved parts of the UK as well.

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tthhee SSppeeaakkeerr ooff tthhee HHoouussee ooff CCoommmmoonnss.. In somecases, that determination will be controversial, butif EVEL is to work at all such a determinationneeds to be made.

Some legislative changes that might be made forEngland only would have such substantial effects ondevolved parts of the UK that it would be untenableto say they had a distinct and separate effect forEngland, even if they only applied there. Thestanding orders addressing how EVEL might workwill need to make this issue clear. For example, aBill to abolish the NHS entirely, or to alter its fundingso it was paid for by individual insurance accountsrather than out of general tax revenues, would be sofar-reaching in its financial implications for devolvedgovernments that it would be impossible to separatethe policy from issues of supply. Understandably thisis more likely to apply to Bills that reduce publicspending rather than increase it.

5.3 Devolution within England

The Coalition Government in office from 2010–15sought to make a number of reforms to localgovernment in England. The Localism Act 2011,section 1, confers a new ‘general power ofcompetence’ on local authorities. RegionalDevelopment Agencies were abolished andreplaced by Local Enterprise Partnerships. Fifteenauthorities now have directly elected Mayors.There are plans for a new Metropolitan Mayor for Greater Manchester in 2017: the ChancellorGeorge Osborne has spoken of a “northernpowerhouse”. The Regional Growth Fund, GrowthDeals and the Growing Places Fund are designedto provide bespoke deals and packages for localareas. The Localism Act 2011 has made provisionfor local referendums and for a Community Rightto Challenge.

Despite all of this, the House of CommonsPolitical and Constitutional Reform Committeewas on safe ground when it concluded in a reportpublished at the very end of the 2010–15parliament that “England remains the nation ofthe Union where devolution has had the leastimpact”.136 The Committee found that, despite

the progress towards decentralisation that hadbeen made, it remained the case that centralgovernment “micro-managed” the process, thepracticalities being that local government is “apuppet” with central government “holding all the strings”.137

In July 2014, another House of Commons selectcommittee – the Communities and LocalGovernment Committee – published a lengthy anddetailed report on Devolution in England.138 Itnoted – and welcomed – the fact that the argumentthat “local authorities should have greater powersto raise, retain and spend money locally” was backon the political agenda, citing in particular the CityDeals, which “have given England’s large urbanauthorities new opportunities to stimulateeconomic growth and decide how public money is spent locally”.139 The committee identified twofactors driving this change: that centralgovernment had put localism on its agenda and,echoing the Future of England Surveys cited above,that devolution elsewhere in the UK had broughtinto question how England is governed.

However, the committee also noted that byinternational standards the UK and, especially,England, have a very highly centralised system oftaxation and expenditure: “As of 2011, theproportion of tax set at a sub-national… level wasat most 2.5% of GDP. This compared with 15.9% inSweden; 15.3% in Canada; 10.9% in Germany; and5.8% in France”.140 The committee noted that localauthorities in England have power over only one“out-of-date, declining and centrally controlled tax,the council tax” whose “only and most recentvaluation was in 1991”.141 The committeeconcluded that “England is still firmly in the fiscalgrip of central Government”142 and that, therefore,if devolution is to be meaningful and effective itmust include fiscal devolution: “without it, localauthorities will be agencies of centralGovernment”.143


136 House of Commons Political and Constitutional ReformCommittee, The Future of Devolution after the ScottishReferendum (11th report, 2014–15, HC 700), para 60.

137 Ibid, paras 68–9 (citing evidence from the RSA City GrowthCommission and the Chair of the County Councils Network).

138 House of Commons Communities and Local GovernmentCommittee, Devolution in England: The Case for LocalGovernment (1st report, 2014–15, HC 503).

139 Ibid, para 1.140 Ibid, para 5.141 Ibid.142 Ibid, para 15.143 Ibid, para 25.

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A limited step in this direction was taken in theLocal Government Finance Act 2012, under whichlocal authorities may keep half their business ratesyield. The committee welcomed this as “a systemwhich balances equalisation and incentives forlocal growth”144 but it is only a small step towardsmeaningful fiscal devolution for local authorities inEngland. Of greater potential, in the committee’sview, is the City Deals programme. Thisdecentralises spending powers through economicinvestment funds, localised skills funding andyouth contracts and local transport funding.Moreover, some of the receipts generated throughlocal investment are kept by local authoritiesrather than returned to the Treasury, via an “Earn Back” or “Gain Share” scheme.145

This kind of city-based or city-region baseddevolution in England has been advocated for by a range of bodies, including the RSA City GrowthCommission146 and the think tank ResPublica147.The City Growth Commission noted in its finalreport that “internationally, growth is increasinglydriven by cities. But very few in the UK are at theforefront of the nation’s economy and all are overlydependent on top-down funding. It is clear that ourcentralised political economy is not fit for purpose.UK cities compete within a global economy, inwhich the drivers of urbanisation and connectivityare evolving together, and fast”.148

Importantly, the City Growth Commission expresslyargued against a top-down blanket policy ofdevolution for cities in England and in favour ofwhat it called “a process through which the UK’smajor metros can benefit from new powers andflexibilities that match their capability andambition”.149 One of the aspects of the City Dealsprogramme is that it accepts the asymmetryalready present in the United Kingdom’s

constitutional and governance arrangements. Whatis best for Manchester might not work for Bristol;the ways in which Newcastle may wish to growmay differ from the priorities preferred inLiverpool; the needs of Leeds and West Yorkshiremay be distinct from those of Sheffield and SouthYorkshire; and so on. Each City Deal is negotiatedand agreed separately: each is bespoke, and this isone of the core features of the programme,150 as isthe drive for economic development, under theassumption that excessive centralisation isinhibiting such development. However, the case fordevolution is not purely economic, “it is also aboutbetter democracy, better governance and morecost-effective service delivery”.151 As policy in thisarea developed between 2010 and 2015, argumentcontinued as to how greater devolution should beaccompanied by democratic reform and greateraccountability. One focal point was whether anelected mayor had to be part of the process. Inevidence to the Commons Local GovernmentCommittee in March 2014 the responsible minister,Greg Clark MP, said that in his view “it helps tohave a directly elected mayor” but that he wouldnot make it a “red line” issue.152 But as the biggestand most important city-region devolution packageyet agreed was put together in the later part of2014, Chancellor of the Exchequer George OsborneMP insisted upon it and, as a result, it featuresprominently in the Greater Manchester DevolutionAgreement, to which we now turn.

The Greater Manchester Combined Authority(‘GMCA’) has been at the forefront of developmentsin city-region devolution in England. It is not theonly combined authority in England,153 but it is thebiggest and, with very strong personal and politicalsupport from George Osborne, whose role hasbeen instrumental, it has gone furthest towardsrealising the sorts of aspirations set out by the CityGrowth Commission and others. The GMCADevolution Agreement was signed in November


144 Ibid, para 45.145 See ibid, para 10.146 Their final report, Unleashing Metro Growth, was

published in October 2014.147 See for example, their Devo Max-Devo Manc: Place-Based

Public Services (2014) and resoring Britain’s City States:Devolution, Public Service reform and Local Economic Growth(2015).

148 Ibid, p. 2. ResPublica reported in 2015 that in the UK, citiestake up 9% of the land mass but account for 58% of jobs, 60% ofthe economy and 72% of high-skilled workers: RestoringBritain’s City States: Devolution, Public Service Reform andLocal Economic Growth (2015), p. 7.

149 Unleashing Metro Growth, op cit, p. 32.

150 We should note that the City Deal programme is notexclusive to England. A City Deal for Glasgow and the ClydeValley was agreed in 2014, for example.

151 ResPublica, Restoring Britain’s City States: Devolution,Public Service Reform and Local Economic Growth, op cit, p. 8.

152 House of Commons Local Government Committee, op cit,para 75.

153 Of the eight English core cities, five have now formedcombined authorities: see ResPublica, Restoring Britain’s CityStates: Devolution, Public Service Reform and Local EconomicGrowth, op cit, p. 11.

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2014, with a follow-up Memorandum ofUnderstanding on Health and Social Care agreed inFebruary 2015.154 The GMCA comprisesManchester City Council, Salford City Council andthe Metropolitan Borough Councils of Bolton, Bury,Oldham, Rochdale, Stockport, Tameside, Trafford,and Wigan. The GMCA Devolution Agreement wassigned by the leaders of these 10 local authoritiesand, for the UK Government, by the Chancellor ofthe Exchequer George Osborne MP. Under theagreement, a new directly elected Mayor of GreaterManchester will have powers over a devolved andconsolidated transport budget; powers overstrategic planning; and control of a new £300million Housing Investment Fund. He or she willalso become the Police and Crime Commissionerfor Greater Manchester. At the same time theGMCA – that is, the leaders of the 10 localauthorities acting together – will haveresponsibility for business support budgets;control of the apprenticeship grant for employers;the opportunity jointly to commission (with theDepartment of Work and Pensions) the next phaseof the Work Programme (concerned with returningthe long-term unemployed to employment); andpowers to develop an integrated plan for healthand social care with all the Clinical CommissioningGroups in Greater Manchester. In addition, “furtherpowers may be agreed over time and included infuture legislation”.155 City-region devolution, itseems, is also a process rather than a one-offevent.

The GMCA Devolution Agreement records that“strengthened governance is an essential pre-requisite to any further devolution of powers to anycity region” – without a directly elected mayor, inother words, the deal is off. The mayor will beaccountable not to a freshly elected assembly (as is the case in London) but to the GMCA – that is, to the leaders of the 10 local authorities in Greater Manchester.

The influence of the thinking underpinning the City Growth Commission and others is obvious. The focus is sharply on economic development andits key drivers: transport, planning, skills and

housing, with a supporting role being played byintegrated health and social care. This is notlegislative devolution such as we have in Scotland,Wales and Northern Ireland: the GMCA will not beenacting Mancunian law. The model owes more toLondon than to Scotland, Wales or NorthernIreland.

While aspects of the GMCA Devolution Agreementmay be welcomed, reservations remain that it goesnothing like far enough in terms of fiscaldevolution. While it is notably cross-party (most ofthe local authorities concerned are controlled bythe Labour party) it reflects a backroom dealrather than the outcome of a deliberative process.From a rule of law or constitutional perspective,however, the agreement is rather more troubling.While its future implementation will require freshlegislation in parliament, its development wasshrouded in secrecy. Certainly there has been noequivalent in the north-west of England of anythingresembling Scotland’s constitutional conventionfrom the 1990s. Worse, there has not even beenthe equivalent of a Calman or Silk Commissionprocess, with the public gathering of evidence and public engagement that such Commissionsembody. When the GMCA agreement was signed,there was not even a ministerial statement inparliament. For a while, the most authoritativesource one could cite on the matter was a reportof the agreement on the BBC website.156 Beforethe Mayor of London and Greater LondonAuthority were created there was a referendum in which London’s voters were asked whether they were in favour of the institutions beingestablished.157 In a 2012 referendum, voters in theCity of Manchester (only part of the GMCA area)voted to reject an elected mayor. It is not clearwhether the implementation of the GMCADevolution Agreement will be subject to a similar referendum.

In evidence to the House of Commons Political andConstitutional Reform Committee in March 2015,the responsible minister, Greg Clark MP said that:“We have been pursuing the decentralisation of


154 Both documents are available online: see https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/369858/Greater_Manchester_Agreement_i.pdf andhttp://www.nhshistory.net/mou%20%281%29.pdf.

155 GMCA Devolution Agreement, op cit, p. 1.

156 See S Jenkins. “The Secret Negotiations to RestoreManchester to Greatness”, Guardian online, 12 Feb 2015,available here: http://www.theguardian.com/uk-news/2015/feb/12/secret-negotiations-restore-manchester-greatness.

157 The result, on a 34% turnout, was 72% Yes and 28% No.

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powers, first to cities and then beyond, throughoutthe whole of this parliament. The way that we havepursued it has been different from in Scotland and Wales. There it has proceeded from aconstitutional debate… My concern was that to dothat in England would be to get it bogged down…[so we have instead been] more pragmatic…”.158

These remarks speak volumes about how far England still has to travel in terms ofunderstanding its own constitutional status and reform.

Conclusions and recommendations

The last Government’s preference for bespokedeals rather than one-size-fits-all, top-downreorganisation is to be welcomed. It seems thatthis policy will be continued as the Labour partymanifesto featured an English Devolution Act159

under which both funding and powers would betransferred to “city and county regions”. TheConservative and Liberal Democrat manifestoslikewise spoke of “building on the success of City Deals and Growth Deals”.160 HHoowweevveerr,, ffoorrddeevvoolluuttiioonn wwiitthhiinn EEnnggllaanndd ttoo mmeeeett iittss ppootteennttiiaall,, iitt hhaass ttoo iinncclluuddee ssiiggnniiffiiccaanntt ffiissccaall ddeevvoolluuttiioonn::mmeeaanniinnggffuull ddeecceennttrraalliissaattiioonn iiss iimmppoossssiibbllee wwiitthhoouutt iitt..

IItt iiss iimmppoorrttaanntt tthhaatt rruurraall aarreeaass aarree nnoott oovveerrllooookkeeddiinn tthhee ffooccuuss oonn cciittiieess aanndd cciittyy--rreeggiioonnss:: wwhhiillee cciittiieessaarree ‘‘eeccoonnoommiicc eennggiinneess’’,, ccoouunnttiieess ccoovveerr nneeaarrllyy 5500%%ooff tthhee ppooppuullaattiioonn ooff EEnnggllaanndd aanndd hhaavvee tthhee hhiigghheessttrraattee ooff pprriivvaattee--sseeccttoorr jjoobb ccrreeaattiioonn iinn tthhee ccoouunnttrryy..

The focus of City Deals and devolution to city-regions has been economic development andregeneration: the question remains open whetherthey may have a broader constitutional dimension(and if so, to what extent). Even if they extend adegree of subsidiarity and enhance localaccountability, it is not clear that they contribute to a strengthening or safeguarding of the Union.

TThhee pprroocceessss ooff nneeggoottiiaattiinngg CCiittyy DDeeaallss aanndd cciittyy--rreeggiioonn ddeevvoolluuttiioonn nneeeeddss ttoo bbee mmaaddee mmoorreettrraannssppaarreenntt..

FFiinnaallllyy,, wwee nnoottee tthhaatt ddeecceennttrraalliissaattiioonn iiss aann iissssuueennoott oonnllyy iinn EEnnggllaanndd,, bbuutt aallssoo iinn SSccoottllaanndd aannddWWaalleess; a concern in both Scotland and Wales isthat all the emphasis has been on devolutionfrom London to Edinburgh/Cardiff, and thatfurther devolution (or ‘double devolution’) fromHolyrood and Cardiff Bay to local authorities and other communities within Scotland andWales has been minimal or, in some cases, even reversed.


158 House of Commons Political and Constitutional ReformCommittee, The Future of Devolution after the ScottishReferendum (11th report, 2014–15, HC 700), para 65.

159 Labour Party Manifesto 2015, p. 64.160 Liberal Democrat Manifesto 2015, p. 26.

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This chapter is concerned with issues of howdevolved governments are funded: with questionsof fiscal devolution, the funding of devolved publicservices, and the implications choices about thosequestions have for the UK as a ‘social union’.These are not conventionally considered to beconstitutional questions, but they directly affect thelives of people as much as laws do, and they needto be reflected in a constitutional system and sharetheir values and ways of working. They thereforecannot be treated in isolation from matters thatare traditionally understood to be part of theformal constitution and will need to be reflected inthe Charter of the Union.

6.1 Social solidarity in the Union

A Union is not founded simply on constitutionalarrangements, political institutions and a sharedcitizenship. It is also underpinned by a set offinancial and welfare arrangements, whichmanifest a practical experience of sharedcitizenship and which express a form of solidaritybetween the people living in it. These are clearlyrelated; welfare services are expensive and how thecosts of paying for them are distributed is central tohow a state functions. The UK has one of the oldestwelfare states in the world, dating in its modernform to the introduction of old-age pensions andNational Insurance before the First World War. Ithas experienced a range of such welfarearrangements – from the minimalist and localisedwelfare state at the turn of the twentieth century,through its expansion into old-age pensions andunemployment insurance under the Liberalgovernments of the 1900s, the expansion ofNational Assistance in the 1920s, and theexpansion, after 1945, to create a welfare stateproviding health care, education and social supportfrom ‘cradle to grave’. The traditional Britishwelfare state has been based on the idea that allcitizens should enjoy access to similar services –

whether health care, education, pensions, housingor other forms of social security – wherever in theUK they live. The entitlements of people living in theWestern Isles would be the same as people livingon Canvey Island; if they had a similar level of need,they would receive similar help. Organisation ofthese services might vary across the UK, but theservices themselves would be the same.

Devolution has already led to considerabledifferentiation in welfare matters. NHSprescriptions are free for all patients in Scotland,Wales and Northern Ireland, while prescriptioncharges remain for some in England. Long-termcare for the elderly is provided without charge inScotland, and there are no university tuition feesthere, while there are lower university fees inWales and more generous support for studentsfrom poorer families there. The organisation of thehealth service varies considerably across the UK,to the point where it is inappropriate to talk of ‘the’NHS, as there are four distinct systems. However,the evidence suggests limited difference in healthoutcomes, for all the political criticism directed atthe Welsh NHS.161 This differentiation has led to afragmentation of that shared ‘social citizenship’,even if the differences in policy areas remainlimited at present.162

As matters stand, the UK has found itself in asituation where social rights have been fragmentedfollowing devolution, in a way that may fuel sensesof injustice even if they are not well-founded.

Finance and public services are intricately linked.Key to these are welfare functions. Includingdistributive services like health and education aswell as pensions and social security, these account

161 See G Bevan et al The four health systems of the UnitedKingdom: how do they compare? (London: The HealthFoundation and the Nuffield Trust, 2014).

162 See further SL Greer (ed.) Devolution and CitizenshipRights in the United Kingdom (Bristol: Policy Press, 2009).

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CHAPTER 6 – FUNDING DEVOLVED GOVERNMENTS:FISCAL DEVOLUTION, PUBLIC SERVICES AND THE

‘SOCIAL UNION’


for about two-thirds of the UK’s total publicspending. The question of what levels of welfarethere are is connected to how those benefits andservices are paid for, and who pays for them – howthat burden is located in society between rich andpoor people, richer and poorer areas, and betweengenerations. Pensions, in particular, createtransfers not just between people living in differentareas, but across people’s lifetimes, and betweengenerations.

The 2010s bring two challenges. One is theretrenchment and restructuring of the welfarestate, triggered by financial austerity followingthe global financial crisis of 2007–8 but alsoembracing the new Universal Credit, which ispredicated not so much on financial constraintbut on the elements of the new credit being the same across the UK. The other is welfaredevolution, which clearly has support fromScottish voters and is a key element of theproposals made by the Smith Commission. Nor is devolving welfare simply a Scottish issue, asexemplified by the controversies in NorthernIreland about welfare reform there.163 Carryingout retrenchment and devolution at the sametime is a considerable practical undertaking,especially as the first is the subject ofconsiderable political disagreement and thesecond is questioned by the SNP, thoughsupported by the three pro-UK parties inScotland. Moreover, lurking behind them are other policy issues, such as the role thecontributory principle should play in the welfarestate, and how that is brought into operationthrough the National Insurance system.

TThhee iimmppaacctt ooff ddeevvoolluuttiioonn iiss ssuucchh tthhaatt aa ssiinnggllee bbiiggcchhooiiccee nnooww nneeeeddss ttoo bbee mmaaddee:: hhooww mmuucchh tthhee UUKKaass aa wwhhoollee wwiisshheess ttoo bbee bboouunndd ttooggeetthheerr bbyy aasshhaarreedd ffoorrmm ooff ssoocciiaall ssoolliiddaarriittyy,, aanndd wwhhaatt tthhee UUKK--wwiiddee ssoocciiaall uunniioonn mmeeaannss.. TThhee cchhooiiccee ooff wwhhaatt lleevveellooff ssuuppppoorrtt,, rreellaattiinngg ttoo wwhhaatt aassppeeccttss ooff lliiffee,, tthheeUUnniioonn sshhoouulldd aassssuurree aass aa mmaatttteerr ooff UUnniioonn--wwiiddeessoocciiaall cciittiizzeennsshhiipp,, iiss aa ccoonnssttiittuuttiioonnaall cchhooiiccee.. FFrroommtthhiiss cchhooiiccee aa rraannggee ooff iinnssttiittuuttiioonnaall cchhooiicceess aannddooppttiioonnss ffllooww..

A variety of instruments exists, and are used inother systems, to assure different forms of socialsolidarity. Some of these would be highly politicallycontentious in the UK, to the point of beingunworkable: the sort of conditional grants used in Australia or the US, for example. (Conditionalgrants are grants tied to applying specific policies or achieving outcomes required by thefederal/central government which provides them.)A relationship that provides scope for centralgovernment to set specific priorities for sub-national governments indicates a degree ofsubordination that would be highly contentious.Similar problems might apply to the use offramework legislation setting out key elements of services to be provided, at least at a minimum.(To be effective, framework legislation needs to besupported by grants conditional on the frameworkbeing respected.) But broader statements of thesort of ‘life chances’ which all UK citizens were,collectively and as a minimum, entitled to expectare an option that might be pursued. Suchguarantees of life chances would not, by theirgeneralised nature, be legally enforceable,especially as they would need to apply at acollective level as, to the extent they are ‘rights’,they apply within a society more generally and not to individuals.164 Despite that, a statement ofstandards rooted in Union-wide life chances would have considerable political, and even moral, authority.

6.2 Principles for funding devolution

Any understanding of UK-wide equity needs to takeinto account both fiscal devolution and grantfunding. Three options are available to funddevolved government:

1. Matching tax revenues to devolved services,so that devolved services are funded solelyby tax revenues of the devolved governmentconcerned;

2. Reliance on a mixed system of funding,through devolved tax revenues and a grantdesigned to secure equalisation on the basisof tax capacity – which would ensureequality in relation to the tax resourcesavailable to devolved governments;

FUNDING DEVOLVED GOVERNMENTS: FISCAL DEVOLUTION, PUBLIC SERVICES AND THE ‘SOCIAL UNION’

163 It is worth noting that the welfare system did not form partof devolution for Scotland or Wales in 1998, or subsequently.For Northern Ireland, devolution with the ‘parity principle’ wasrequired by the Good Friday Agreement.

164 Cf R Dahrendorf Life Chances: Approaches to social andpolitical theory (Chicago: University of Chicago Press, 1979).

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3. Reliance on a mixed system of devolved taxrevenues and a grant designed to deliverequalisation on the basis of spending need rather than fiscal capacity (or fiscalcapacity alone).

The first approach is relatively good for thoseterritories with ‘average’ or above-average taxbases. It assumes that it is both possible anddesirable to match revenues with expenditures,in a way that also makes sense in fiscal terms.The Scottish Government’s proposals for ‘fullfiscal autonomy’ are a variant of this, as they also assume extended expenditure devolution.Such approaches are based on the principle that sub-state governments will not share their resources with other regions, and that there is either limited shared social solidarity or that expressing such social solidarity isentirely a matter for the federal/centralgovernment.

The second and third approaches entail the sort of mixed system that is common in federal andregionalised systems around the world, includingCanada, Switzerland, Australia and Spain. The keydifference is whether equalisation only relates totax-raising capacity – as is the case in Canada orSwitzerland – or spending capacity, as in Australiaor Spain (or, by a different route, Germany). The former approach is sometimes called ‘fiscalequalisation’, the latter ‘resource’ or ‘revenueequalisation’. Both approaches share a use of avertical fiscal imbalance (the difference between thetax bases available to a government and its spendingobligations) to address horizontal inequalities(inequalities between regions). In other words, theyuse the wider tax base (in both geographical andeconomic senses) of a federal or central governmentto address differences between the revenue-raisingabilities of sub-state governments and deliver moreequitable outcomes. In many cases, these areunderpinned by constitutional commitments.


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Constitutional and legal bases for equalisation grants

Most federal and decentralised countries have formal constitutional bases for operating equalisationsystems.

In SSwwiittzzeerrllaanndd, it is Article 135 of the 1999 Constitution, headed ‘Equalization of Financial Resourcesand Burdens’, which provides:

(1) The Federation issues regulations on the equitable equalisation of financial resources andburdens between the Federation and the Cantons as well as among the Cantons.

(2) The equalisation of financial resources and burdens is intended in particular to:a. reduce the differences in financial capacity among the Cantons;b. guarantee the Cantons a minimum level of financial resources;c. compensate for excessive financial burdens on individual Cantons due to geo-

topographical or socio-demographic factors;d. encourage intercantonal co-operation on burden equalisation;e. maintain the tax competitiveness of the Cantons by national and international

comparison.(3) The funds for the equalisation of financial resources are provided by those Cantons with a

higher level of resources and by the Federation. The payments made by those Cantons with ahigher level of resources amount to a minimum of two-thirds, and a maximum of 80 per cent,of the payments made by the Federation.

The CCaannaaddiiaann principle is set out in section 36(2) of the Constitution Act 1982, which provides

Parliament and the government of Canada are committed to the principle of making equalisation payments toensure that provincial governments have sufficient revenues to provide reasonably comparable levels of publicservices at reasonably comparable levels of taxation.


As it happens, all three devolved parts of the UKhave lower-than-average fiscal capacity andhigher-than-average costs of providing servicesand levels of need compared to England. Thedifferences are limited in the case of Scotland,and significantly greater for both Wales andNorthern Ireland.167 There are also veryconsiderable variations within England, andparticularly between London and the south eastand areas further from London in the north orwest. A resource equalisation approach wouldtherefore be to the financial benefit of all three

devolved parts of the UK, though incurring ameasure of additional costs for taxpayers fromEngland. Fiscal equalisation systems are easierto operationalise and implement, however.Resource-based approaches need estimates notmerely of fiscal capacity (which can themselvesbe difficult and contentious), but also of what‘spending need’ is. By definition, need isimpossible to quantify objectively, and to becomean operational concept has to be understood inrelative needs – needs ‘relative’ to something. Inthe case of the UK, the necessary reference pointfor those relative needs is spending on similarfunctions in England. It is necessary for thepractical reason that any system will be driven bythe choices made for England, and by the politicalone that it is inappropriate to ask Englishtaxpayers to pay for services that are inherentlybetter than those which they could enjoythemselves. This presents a range of problems,


165 See for example, CM Gray ‘Smoke and Mirrors: Howregional finances complicate Spanish-Catalan relations’,International Journal of Iberian Studies vol 27(10, 2014, pp. 21–2.

166 Commonwealth Grants Commission Annual Report2013–14 (Canberra, 2014), paragraph 4.

167 See A Trench, Funding Devo More: Fiscal options forstrengthening the Union (London: Institute for public PolicyResearch, 2013), chapter 5.

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GGeerrmmaannyy takes this a stage further, by empowering the federal parliament to act in various areas of Land competence ‘if and to the extent that the establishment of equivalent living conditions [aresimilar] throughout the federal territory’ (Basic Law, Article 72(2). It also mandates that a federal law‘shall ensure a reasonable equalisation of the disparate financial capacities of the Länder’ (includingmunicipalities) (Basic Law, Article 107(2)).

SSppaaiinn has operated a system of fiscal equalisation since 2009, based on Article 158 of the 1978Constitution and an ‘Organic Law on the Finance of the Autonomous Communities’ first enacted in 1980 (though the evidence is that it works highly imperfectly)165. Article 158 provides for

an allocation may be made to the Autonomous Communities in proportion to the volume of State services and activities for which they have assumed responsibility and to their guarantee to provide a minimum level of basic public services throughout Spanish territory.

It also provides for the establishing of a ‘clearing fund’ for investment expenditure ‘with the object ofcorrecting inter-territorial economic imbalances and implementing the principle of solidarity’.

The AAuussttrraalliiaann principle is more categorical but non-constitutional in nature. Constitutionally, it rests on the power of the federal (Commonwealth) government to make financial payments to theStates under section 96 of the Commonwealth of Australia Constitution Act. In operation, its basis iscurrently the 2009 Inter-governmental Agreement on Federal Financial Relations and (for the federalgovernment) the Federal Financial Relations Act 2009). This is the latest iteration of a system whichdates back to 1933. In making grants, the federal government acts on the advice of theCommonwealth Grants Commission (CGC) and is bound to apply the principle of ‘horizontal fiscal equalisation’; the CGC describes this as meaning that

State governments should receive funding from the pool of [Goods and Services Tax] revenue such that, after allowing for material factors affecting revenues and expenditures, each would have the fiscal capacity to provide services and the associated infrastructure at the same standard, if each made the same effort toraise revenue from its own sources and operated at the same level of efficiency.166


both conceptual and practical, though these are also capable of solution, as the HolthamCommission set up by the Welsh Governmentshowed.168 (This approach was also endorsed by the Lords Select Committee on the BarnettFormula, which reported in 2009.169)

Comparatively speaking, federal anddecentralised countries vary a good deal in theextent of welfare devolution, or more accuratelyin the extent to which welfare functions aredivided between different tiers of government.Again, however, there are substantialcommonalities. Health, education and socialhousing are commonly functions of lower tiers ofgovernment, closer to the citizen and provided ata more local level; social security and pensionsare often in the hands of higher tiers ofgovernment. There are good practical reasons for this, but also reasons of principle, and thedistinction between the two classes of functionsreflects a number of other distinctions. The firstis between public services that both have adistributive welfare function and can be regardedas public goods, and those that are redistributivein character and are essentially ways ofmanaging social and economic risks. Serviceslike health and education are needed and used by all when need arises, and public provision ofthem both means that economics of scale can berealised and that negative externalities (such asan ill-educated workforce or a population withoutcollective immunity to preventable contagiousdiseases) can be avoided. Services like pensionsand social security more generally redistributemoney from richer to poorer people, and can beregarded as ways of sharing and managing risks.The nature of risk is such that the wider thegeographical area and tax base that can be used to manage the risk the better, as it will bemore able to respond to challenges that affectaffordability. There are strong arguments of botheconomic efficiency and financial effectivenessfor a central government to take on suchresponsibilities.

Looking around the world, such patterns can beseen in many systems. Education and health care(as well as transport and environmental services)are regional or sub-state government functions inalmost all systems, though often partly funded bygrants or transfers from the federal/centralgovernment. This is the case in Spain, Canada andSwitzerland. In the US, public funding of healthcare for poor people (Medicaid) is federally fundedbut administered at state level; the insuranceexchanges for working people are run by somestates, and the federal government where stateshave not chosen to establish an exchange, whileMedicare (health care for those over 65) is afederal programme. Australian health care isfunded partly by the federal government (theMedicare programme that provides primary carethrough general practitioners) while hospital careis a state matter. By contrast, social security andpension schemes are almost invariably a statematter, the chief exception being Canada (wherethere are two old-age pension schemes, one inQuebec and another for the rest of Canada, anddistinct arrangements for Employment Insurancethat have different conditions of eligibility inAtlantic Canada to reflect seasonal patterns of employment.)

Many states also allow variation in their welfarestate between different sub-state governments.Sometimes this is simply the consequence of such functions being in the hands of sub-stategovernments, sometimes it is managed byinstruments such as ‘framework laws’ giving astate-wide underpinning to the overall working ofthe policy. Sub-state governments are also oftenable to take policy initiatives, which may then betaken up more widely. Perhaps the most famoussuch innovation was the Canadian province ofSaskatchewan’s introduction of a system ofpublicly funded health care in the early 1960s,leading to the federal introduction of a Canada-wide scheme.

The UK’s distribution of functions betweendevolved and non-devolved tiers of governmentalready largely parallels this approach. The mainissue is welfare devolution, where Scotland hasambitions – reflected in both the SmithCommission recommendation and proposals by the Scottish Government – to take on a greater role.


168 Independent Commission on Funding and Finance forWales. Final report: Fairness and accountability: a new fundingsettlement for Wales (Cardiff, 2010).

169 House of Lords Select Committee on the Barnett FormulaThe Barnett Formula 1st Report of Session 2008–09, HL Paper139 (London, 2009).

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6.3 The block grant and the working of theBarnett formula

As well as issues regarding social solidarity andthe welfare state, there are major problems withthe present arrangements for funding existingdevolved governments. Since 1999, these havebeen mostly funded using the Barnett formula,which was also used before then to allocatefunding to the Scottish and Welsh Offices andNorthern Ireland Office. Originally introduced inthe late 1970s, the Barnett formula is widelyconsidered to have long outlived its usefulness.171

The Barnett formula system has a number ofadvantages. It is simple to operate, and offerspredictability and stability to the devolvedgovernments in planning their spending andsetting it from year to year. The untied nature ofthe grant – the power of devolved governments to move spending freely between theirresponsibilities – grants a good deal of autonomyto devolved governments. It has the furtheradvantages of familiarity, and of strong politicalsupport from Scotland.

However, there are two sets of problems with the Barnett formula. One is amounts it allocates.For all three devolved parts of the UK, these aregreater on a per capita basis than the amounts


170 D Heald and A McLeod ‘Embeddedness of UK DevolutionFinance within the Public Expenditure System’, RegionalStudies (2005), vol 39:4, pp 495–518.

171 For example: I Maclean The Fiscal Crisis of the UnitedKingdom (Basingstoke: Palgrave Macmillan, 2005); House ofLords Select Committee on the Barnett Formula The BarnettFormula 1st Report of Session 2008–09, HL Paper 139 (London,

2009); Independent Commission on Funding and Finance forWales. Final report: Fairness and accountability: a new fundingsettlement for Wales (Cardiff, 2010).

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How the Barnett formula works

The Barnett formula is an incremental formula; it allocates funding to the devolved governments as changes are made for England, according to the extent to which these are considered to becomparable and the proportion of the population living there compared to England or England and Wales. Thus, the formula works by multiplying the change in spending for England (whether anincrease or reduction in spending) by two factors: a population share and a ‘comparability percentage’,which reflects the extent to which the work of a Whitehall department is devolved. Departments likeEducation or Health are almost entirely devolved, while others like Transport are more mixed. Theformula therefore works like this:

Change in spending on function in England X comparability percentage X population percentage

Once devolved funds reach devolved governments, they are free to allocate those funds as they see fit. The grant is wholly unconditional; it is not connected to spending on particular functions, or onachieving any specified standards or policy goals. If a devolved government wishes to spend aconsequential payment triggered by spending on education in England on health or transport, it can do so. Equally, there is no constitutional or other formal requirement to have a national health service, provide free schooling to the age of 18, or any other policy outcome.

The formula has a number of curious features. One is the extent to which it drives, or should drive,convergence on English levels of spending, assuming increases in spending, over time. In practice, ithas done this to only a limited extent. The reasons for this failure are not clear, as it is evidently anarithmetical property of the formula. One reason appears to concern the population numbers used,particularly for Scotland. As these remained wholly unchanged between 1976 and 1992, despitesignificant falls in the Scottish population during that time, they served to increase the amountavailable on a per capita basis. A second reason appears to be, simply, that the formula does not in fact work as the description of it suggests, but that the numbers are distorted by other factors. This is partially borne out by the one detailed examination of how it works that has been done.170


that are allocated to England (taken as a whole).However, they do not relate to the relative need of those parts of the UK. The only assessment ofrelative need that has been done was in the late1970s, and was never brought into effect.172 It iswidely believed – and supported by data assembledby such bodies as the Holtham Commission inWales – that Scotland and Northern Ireland are‘over funded’ by the standard of relative need, and Wales is funded at or a little below its level ofrelative need. There are also problems with howfunding is allocated within England, which arefurther complicated by the effect of such factors as housing costs. WWhhaatteevveerr tthhee BBaarrnneetttt ffoorrmmuullaa’’ssootthheerr mmeerriittss,, iitt ddooeess nnoott ddeelliivveerr eeqquuiittyy bbeettwweeeenn tthhee vvaarriioouuss ppaarrttss ooff tthhee UUKK..

The second set of problems arises from the statusof the Barnett formula and how it works. It is setout in a document that has no constitutionalstanding at all – it is ‘merely a statement offunding policy’, not even a White Paper, let alonelegislation.173 Funding is then allocated throughthe mechanism of parliamentary supply, via eachyear’s Appropriation Act. Even then, it is notallocated directly to the devolved governments, but to the Secretary of State for Scotland, Wales or Northern Ireland, who remits the block grant tothe devolved Consolidated Fund after deducting thecosts of running the Scotland, Wales or NorthernIreland Office (as the case may be). Thus, the granthas to cover not just the costs of providing devolvedpublic services, the administration that deliversthose, and the devolved legislature to which theadministration is accountable, but also the costs of the UK Government’s relations with thatadministration. When it comes to the drafting andworking of the Statement of Funding Policy, theTreasury makes all the key decisions; decidingwhat changes in spending will trigger aconsequential adjustment to the block grant andthe amount of that, what the ‘comparabilitypercentages’ are, and how any disagreements areresolved. Similarly, HM Treasury controls decisionsabout whether, and how much, underspent moneymay be carried over from year to year (formerly

called ‘end-year flexibility’, now called ‘budgetexchange’) and access to the UK Reserve forunexpected contingencies. While there is someconsultation with devolved governments aboutrevisions of the Statement of Funding Policy, theseare wholly informal, and approval for it comes fromthe territorial Secretaries of State, not devolvedgovernments themselves. While disagreementscan be referred to the ‘disputes resolution panel’ ofthe Joint Ministerial Committee, this only appliesto the application of the Statement of FundingPolicy and not to changes made when it is revised.In any case, this has only happened on oneoccasion and, as the Treasury refused to change itsposition on the issue in question, the devolvedgovernments were left dissatisfied by the outcomebut unable to alter it, and have not made furtheruse of this mechanism.174 IInn tthhiiss rreessppeecctt,, tthheepprreesseenntt aarrrraannggeemmeennttss ffaallll sshhoorrtt ooff oouurr pprriinncciipplleessooff ccoonnsseenntt aanndd rreessppeecctt ffoorr tthhee rruullee ooff llaaww..

TThhee BBaarrnneetttt ffoorrmmuullaa aarrrraannggeemmeennttss mmaayy hhaavvee bbeeeenn aapppprroopprriiaattee ffoorr aaddmmiinniissttrraattiivvee ddeevvoolluuttiioonn ttoo tteerrrriittoorriiaall ddeeppaarrttmmeennttss wwiitthhiinn aa ssiinngglleeggoovveerrnnmmeenntt,, aass wwaass tthhee ccaassee wwhheenn tthhee ssyysstteemm wwaassiinnttrroodduucceedd.. TThheeyy aarree nnoott aapppprroopprriiaattee ffoorr tthhee ssoorrtt ooffddeecceennttrraalliisseedd ccoonnssttiittuuttiioonn tthhaatt tthhee UUKK nnooww hhaass..They mean that devolved governments are in effectspending agencies, responsible for distributingpublic services but not funding them and withsignificant constraints on how they manage thefunds available to them. Moreover, the definition ofwhat the devolved model of public services shouldbe is dependent on what the UK Government doesfor England. Such a narrow vision of the role ofdevolved governments is clearly no longer inaccord with their constitutional role.

6.4 Tax devolution and its implications

Tax devolution to date has been approached in avariable and ad hoc way. Only in Scotland did anyquestion of tax powers form part of the originalproposal for devolution in 1997. There, a secondquestion was part of the referendum aboutwhether the Scottish Parliament should have apower to vary income tax. This power was verylimited; a power to vary only the standard rate of


172 HM Treasury Needs Assessment Study – Report (London:The Treasury, December 1979).

173 The most recent version is HM Treasury Funding theScottish Parliament, National Assembly for Wales and NorthernIreland Assembly: A Statement of Funding Policy, sixth edition(London, 2010).

174 See further A Trench Inter-governmental Relations andBetter Devolution, UK’s Changing Union project, December2014.

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income tax, by up to three pence in the pound. Itwould have raised very little money if used (around£250–300 million per additional penny of tax,compared to a devolved budget of £20–30 billion),and depended on HM Revenue and Customsmaintaining a list of ‘Scottish taxpayers’ subject tothe Scottish rate. That list was prepared in 1998–9but not maintained very accurately, until it ceasedto be maintained at all in 2007 following a changein computer systems.

For Wales and Northern Ireland, there was no tax power as part of the initial devolutionarrangements.

All three governments did have control over localtaxation. However, these arrangements were alsolimited. The Statement of Funding Policycontained provisions for HM Treasury to reducethe block grant if it considered increases in localtaxation to be excessive.175 While Non DomesticRate was wholly devolved in Scotland and differentarrangements applied in Northern Ireland, apooling arrangement existed for Wales that alsoreduce devolved control of NDR. Only Walessought to use its powers in relation to Council Tax,with a revaluation in the early 2000s and theintroduction of a new band for higher-valuedproperties. Proposals to introduce a nationallydetermined ‘local income tax’ in Scotland weremade by the SNP Government in 2007, butabandoned after it became clear that HM Revenue& Customs would not collect the tax and that itsintroduction would also result in Scotlandforfeiting around £300 million per year in CouncilTax Benefits.

Since 2007, there have been proposals for taxdevolution for all three governments. For Scotland,the Calman Commission recommendations fordevolution of 10 ‘points’ of income tax on earnedincome, as a ‘Scottish rate of income tax’, plusother measures of fiscal devolution wereimplemented by the Scotland Act 2012. (Theseproposals were discussed in Chapter 1.)

The Scottish proposals have been extendedfollowing the independence referendum, and thevarious proposals for further devolution made by

the pro-UK parties, and the Smith Commission.The UK Government has set out proposals forimplementing these.176 (See further Chapter 1.)

This form of fiscal devolution will mean thatbetween 47 and 60 per cent of Scottish devolvedspending comes from taxes either assigned to the Scottish Government, or under its control.However, this also provides only limited scope for the Scottish Government to raise significantlygreater revenue than the present arrangements,even if it were to increase tax rates significantly.Our calculations are that such steps as raising thehigher rate of tax from 40 per cent to 45 per cent,lowering the income level at which the higher ratestarts from the current £41,865 to £35,000 orincreasing the basic rate by 1 per cent to 21 percent would each raise around £500 million. By thesame token, a 0 per cent starting rate on the first£1,000 of taxable income (in effect, increasing thepersonal allowance for Scottish taxpayers by£1,000) would cost around £500 million. Thesechanges are probably the outer limit of whatScotland could realistically do without becominghopelessly unattractive relative to the rest of theUK in fiscal terms – an implication of economicreality rather than the constraints of what is devolved.

Following the work of the Holtham and SilkCommissions (though not implementing theirrecommendations), the UK Government proposed a similar approach to tax devolution for Wales aswas enacted in Scotland.177 As for Scotland, therates of income tax would be reduced by 10 points,the block grant reduced, and stamp duty land taxand landfill tax devolved. There would also be apower to introduce new taxes. The power to setpart of income tax would only come into effectafter a referendum, which would need to beinitiated by the Welsh Government and the support


175 HM Treasury Funding the Scottish Parliament, NationalAssembly for Wales and Northern Ireland Assembly op cit,chapter 6.

176 The Smith Commission Report of the Smith Commissionfor further devolution of powers to the Scottish Parliament,November 2014; HM Government Scotland in the UnitedKingdom: An enduring settlement Cm 8990.

177 Independent Commission on Funding and Finance in Walesop cit (the Holtham Commission); Commission on Devolution inWales Empowerment and Responsibility: Financial Powers toStrengthen Wales, (Cardiff:, 2010 (the Silk Commission); HM Treasury and Wales Office Empowerment and responsibility:devolving financial powers to Wales, November 2013 and Wales Office Draft Wales Bill Cm 8773, December 2013; HM Government Wales Bill: Financial Empowerment andAccountability Cm 8838, March 2014.

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of two-thirds of the National Assembly. While theproposals were similar to those in Scotland, issueswhich were uncontroversial in Scotland becamecontroversial in Wales. One was ensuring that theblock grant was adjusted to reflect relative needand so deliver ‘fair funding’, before income taxdevolution would take place or a referendum called(a condition of the Welsh Government). Anotherwas the ‘lock-step’, the requirement to set devolvedtax rates at the same level across all bands, whichhad not been recommended by either the Holthamor Silk Commissions. After much discussion, thisrequirement was removed in autumn 2014, and theWales Act 2014 as passed enables the NationalAssembly to set different rates on all bands –unlike Scotland. The conclusion of the St David’sDay process included an agreement that thereshould be a ‘Barnett floor’ to deliver ‘fair funding’by preventing convergence from happening infuture, but without specifying what this would be or how it would work, and it was promptly said tobe vague and insufficient basis on which to call a referendum by the Welsh Government.178

For Northern Ireland, following extensivepreparatory work since it figured in theConservative 2010 general election manifesto,there is now legislation providing for devolution ofcorporation tax on trading profits (the CorporationTax (Northern Ireland) Act 2015).179 Devolution isexpected to take effect from April 2017. The lowerrate of corporation tax in the Republic of Ireland,the land border with it, and the very weak conditionof the private sector and the need to rebalance theNorth’s economy are considered to justify themove, which has broad support from all the partiesthere and all the major parties at Westminster.Corporation tax devolution has been discussed inScottish and Welsh contexts, but dismissed, andhas support from none of the pro-UK parties.However, this treatment of one part of the UKinevitably raises the question of just how‘exceptional’ Northern Ireland is.

In each case, ffiissccaall ddeevvoolluuttiioonn hhaass bbeeeenn aapppprrooaacchheeddoonn aa ppiieecceemmeeaall aanndd aadd hhoocc bbaassiiss.. QQuuiittee aappaarrtt ffrroommpprroobblleemmss tthhaatt aarriissee ffrroomm tthhee ooppeerraattiioonn ooff tthhee

BBaarrnneetttt ffoorrmmuullaa aanndd tthhee bblloocckk ggrraanntt.. TThhee uuppsshhoott iissaa ssyysstteemm tthhaatt ccaannnnoott bbee rreeaaddiillyy uunnddeerrssttoooodd oorreexxppllaaiinneedd ffoorr tthhee UUKK aass aa wwhhoollee..

There are clearly limits to how far fiscal devolutioncan go without undermining the economic or socialunions that underpin the United Kingdom. We havenoted the difficulties that ‘devo max’ would causefor these in chapter 3. Ironically, more extensivefiscal devolution might be possible if there werealso limits on the ways devolved taxes might vary,broadening the tax base to which devolvedgovernments had access while minimising therisks of harmful tax competition. Whether thiswould be an acceptable approach remains an open question.

A further issue, which we have not addressed indetail, is the question of borrowing by devolvedgovernments. Clearly, governments which areresponsible for raising substantial amounts oftheir own spending need to be able to borrow tomanage their revenues as well as for capitalinvestment. This implies significant powers toborrow money. How that should be done, fromwhom and subject to what constraints from the UKGovernment are major questions which will needto be resolved in order to create a sustainablebasis for devolved finances.

6.5 The block grant and fiscal devolution

The difficulties that the Barnett formula poses atpresent will be aggravated by the way that furtherfiscal devolution will be implemented. The generalprinciple of all the current proposals is simple:that the Barnett formula will remain theunderpinning of funding for devolved governments,but the block grant will be reduced to allow fordevolved taxes, where these are established. Thatreduction is intended to relate to the tax capacitytransferred to the devolved government.

The difficulty comes in calculating the amount of the reduction, particularly after the first year.(The initial reduction should be relativelystraightforward, since the amount of tax foregonecan easily be calculated. The difficulty arises insecond and subsequent years.) The deduction from the block grant will need to grow over time,as the economy, tax revenues and/or publicspending grow.


178 HM Government Powers for A Purpose: Towards a lastingdevolution settlement for Wales, Cm 9020, February 2015.

179 Devolution is conditional on the delivery of permanentlysustainable finances for the Assembly and welfare reform; seeStormont House Agreement – Financial Annex, December 2014.

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The first consideration is to use the correctapproach. The Holtham Commission subjected thisissue to a detailed analysis, and recommended amodel known as the ‘indexed deduction’ approachfor the partial devolution of income tax itrecommended.180 The indexed deduction approachtakes the proportion of the UK’s overall income tax base that is devolved, and makes a reduction by an amount that is adjusted to reflect thatchange; so if the UK income tax base grows bythree per cent, so does the amount of thereduction in the block grant. Central to the choiceof approach is not administrative simplicity buttransferring the appropriate degree of risk. Theindexed deduction approach means that the UKExchequer bears risks relating to the overall UK economy and tax base, but the devolvedgovernment will bear risks relating to the taxdecisions it makes.181

The indexed deduction approach has been adoptedin principle as the basis for reducing the blockgrant for both Scotland and Wales, to reflect thepartial devolution of income tax set out in theScotland Act 2012 and the Wales Act 2014. TheSmith Commission recommended that changes to the block grant for devolved taxation should be‘indexed appropriately’, and the UK Governmentnotes that this needs to be done ‘dynamically andmechanically’.182 By ‘mechanical’ we understandthat the government intend to operate on aformula basis, rather than case by case or by the unilateral decision of one government.

Use of the indexed deduction approach isappropriate for income tax devolution, but notnecessarily for other taxes. The nature of the riskstransferred needs to be taken into account whenconsidering which approach to use. The indexeddeduction approach was formulated with thepartial devolution of income tax in mind, and thebulk of the risks involved remaining with the UKGovernment. Other approaches may be appropriatewhere other taxes such as corporation tax, airpassenger duty or VAT are to be devolved.

These adjustments will be comparatively easy to make in the first few years of a new system,though they will inevitably be contentious.However, as time goes by, they will become moreand more notional, and at increasing risk of beingout of step with the changes in tax bases in thereal world. Moreover, tax policy changes made bythe UK Government for taxes remaining whollyunder its control may well have a dynamic impact,which would not be wholly reflected by that grant-adjustment mechanism. Even choosing the ‘right’approach to reductions in the block grant will leavea significant area where there can be argumentand debate. It will be very hard to make suchchanges ‘mechanically’, particularly given thelikely behavioural consequences of tax devolution.Some UK decisions – whether on spending or tax –may increase devolved resources; others mayreduce them. In the case of decisions that reducedevolved revenues, whether from tax income or theblock grant, this may in turn mean more borrowingby a devolved government.

Another difficulty for the block grant arises fromthe way reductions from it are made and relatesboth to the introduction of a ‘no detriment’principle relating to post-devolution policydecisions. This is stated by the Smith Commissionas

Where either the UK or the Scottish Governments(sic) makes policy decisions that affect the taxreceipts or expenditure of the other, the decision-making will either reimburse the other if there is anadditional cost, or receive a transfer from the other ifthere is a saving… Changes to taxes in the rest of theUK, for which responsibility in Scotland has beendevolved should only affect public spending in the restof the UK. Changes to devolved tax in Scotland shouldonly affect public spending in Scotland.183

Apart from a reference to a ‘shared understandingof the evidence to support any adjustments’, it ishard to see how such decisions might be made,and Scotland in the United Kingdom offers littleclarity about this but illustrates the complexity ofsuch issues.184 There will therefore need to be yetfurther adjustments made to the block grant toreflect the ‘no detriment’ principle, made in avariable and ad hoc way, with few principles to


180 Independent Commission on Funding and Finance in Walesop cit, chapter 5.

181 See further Independent Commission on Funding andFinance in Wales op cit, Table 5.1, p. 54.

182 Smith Commission, para. 95; HM Government Scotland inthe United Kingdom: An enduring settlement Cm 8990, para.2.4.7.

183 Smith Commission, para 95 (4).184 Scotland in the United Kingdom, paras 2.4.13–2.4.17.

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guide them. It will be impossible for such changesto made ‘mechanically’; they will be highlysubjective and controversial. In effect, the way theUK Government proposes to implement the Smithproposals in Scotland in the United Kingdom turnsthe existing arrangements from using one ‘blackbox’ (the Barnett formula) into using three: theBarnett formula itself, which will becomeincreasingly notional, the adjustments made toallow for devolved tax capacity (and the ‘Barnettfloor’ in Wales), and then to implement the ‘nodetriment’ principle. The existing system may beopaque but it is simple. The new system will beboth more opaque and more complex.

WWee eennddoorrssee tthhee pprriinncciippllee tthhaatt cchhaannggeess ttoo tthhee ggrraanntt eelleemmeenntt ooff ffuunnddiinngg iinn ccoonnsseeqquueennccee ooff ffiissccaallddeevvoolluuttiioonn sshhoouulldd bbee mmaaddee aass ‘‘mmeecchhaanniiccaallllyy’’ aassppoossssiibbllee.. HHoowweevveerr,, wwee ddoo nnoott bbeelliieevvee tthhaatt tthhee UUKKggoovveerrnnmmeenntt’’ss eexxiissttiinngg pprrooppoossaallss wwiillll aacchhiieevvee tthhaatt..Indeed, it is hard to see how such a system canlast for more than a very few years, and in thattime it will result in a sequence of ongoing,potentially acrimonious inter-governmentalnegotiations which may well produce outcomesthat are unsatisfactory for all parties. This is an impractical approach for any suitable orsustainable financial system, and action is urgentlyneeded to resolve the problems this will cause.

A yet further approach is being taken for thedevolution of corporation tax to Northern Ireland,provided for by the Corporation Tax (NorthernIreland) Act 2015. As part of that process, and tosatisfy not just HM Treasury but also the EuropeanUnion’s rules on state aids, a reduction in the blockgrant must be made – but the amount of thatreduction remains unclear, partly as the currentyield of corporation tax there is still unknown.However, the First Minister has asserted thatagreement with the Treasury about the amount of a such a reduction, and that it is a modest one(between £100 and £150 million; most estimatessuggest the yield of the tax there is nearer to £300million).185 It is unclear how that figure has beencalculated or will be adjusted in future years,

despite a long period of discussion between the UK Government and Northern Ireland Executiveabout corporation tax devolution, nor is it clearwhat discussion there has been with the EuropeanCommission, and whether a state aids consent is being sought or, if not, how such a modestreduction does not constitute a state aid.

We have already noted how existing arrangementsfor managing the block grant fall short of ourprinciples of Union constitutionalism. The changesmade to these arrangements for tax devolutioncompound the problem and make it all the morepressing that appropriate, robust arrangementsare made to address them. Such arrangementsmust not only balance the interests of bothdevolved and UK Government, but also beadequately transparent and rule-driven to ensurethat autonomy, accountability, democracy and therule of law are respected.

6.6 England within the Union: the implications of English choices for the rest of the UK

England is by far the largest of the four constituentnations of the UK, with 85 per cent of thepopulation. Inevitably, it will serve as a referencepoint for financial arrangements that shape thewhole country. Sometimes this is by design; agrant structured like the Barnett formula blockgrant allocates changes in spending depending onwhat happens for England. Devolved parts of theUK therefore have an interest in such decisions.Sometimes this is an effect of tax or otherdecisions having spill-over effects for other partsof the UK, which is central to the structure of theBarnett formula arrangements.

This has implications not just for financial mattersbut for more clearly constitutional ones, such as‘English votes for English laws’. While there maybe little constitutional reason for devolvedgovernments or MPs from devolved parts of the UK to be involved in decisions which only affectEngland, the financial impact cannot beoverlooked. One way of addressing this might be toseparate parliamentary votes about the financialaspects of such policies – the question of supply –from those about the provision and organisation ofpublic services. Such a mechanism would requirethe exercise of considerable discretion indetermining whether a Bill’s legislative framework


185 ‘Corporation tax more affordable than first thought, saysNorthern Ireland First Minister Peter Robinson’, BelfastTelegraph 17 February 2015. Available at http://www.belfasttelegraph.co.uk/business/news/corporation-tax-more-affordable-than-first-thought-says-northern-ireland-first-minister-peter-robinson-30997729.html

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itself was of such a magnitude that it mean the Billnecessary had an effect for the whole UK and notjust a separate and distinct effect for England.

While England – in the aggregate – serves as areference point for devolved services, theprocesses of decentralisation within England makeit harder to understand how funding is distributedwithin England. The use of needs-based formulasfor allocating funding to schools and for generallocal government purposes have collapsed, withthe increasing number of free schools andacademies in the former case, and the increasingretention of both council tax and non-domesticrates, and the use of funds obtained by biddingexercises such as the City Deals, in the latter.(Health care reforms also make it much harder totrack the allocation of funding within the EnglishNHS.) In this case, decentralisation has come notjust at the expense of equity, but also the data withwhich to understand how equitable the system is.

6.7 How to reform the system

IItt iiss cclleeaarr tthhaatt tthhee aapppprrooaacchh tthhee UUKK hhaass ttaakkeenn ttoorraaiissiinngg rreevveennuuee aanndd ffuunnddiinngg sseerrvviicceess iiss nnoott jjuussttddiissjjooiinntteedd aanndd iinnccoonnssiisstteenntt,, bbuutt ffaallllss sshhoorrtt ooff aannuummbbeerr ooff oouurr ccrriitteerriiaa ffoorr tthhee UUnniioonn ccoonnssttiittuuttiioonn.. IIttddooeess nnoott aassssuurree ssoocciiaall ssoolliiddaarriittyy iinn aannyy ssyysstteemmaattiiccoorr ccoonnssiisstteenntt wwaayy.. IItt ddooeess nnoott pprroovviiddee eeffffeeccttiivveellyyffoorr aauuttoonnoommyy ooff eeiitthheerr ddeevvoollvveedd oorr UUKKggoovveerrnnmmeennttss,, ggiivveenn hhooww eennttaanngglleedd tthheeaarrrraannggeemmeennttss aarree.. IItt iiss nnoott eeffffeeccttiivvee aatt eennssuurriinnggaaccccoouunnttaabbiilliittyy,, aanndd tthheerreeffoorree rreessppeeccttiinnggddeemmooccrraaccyy oorr tthhee rruullee ooff llaaww..

We do not have a blueprint for a complete newsystem, but would identify a number of keyfeatures that a new system should have:

1. The relationship between equity and autonomy

TThhee ddeecciissiioonn aabboouutt tthhee rreellaattiioonnsshhiipp bbeettwweeeenneeqquuiittyy oorr ssoocciiaall ssoolliiddaarriittyy aanndd aauuttoonnoommyy –– tthheeeexxtteenntt ttoo wwhhiicchh tthhee UUnniioonn aassssuurreess ppaarrttiiccuullaarrssoocciiaall rriigghhttss,, aanndd llooookkss ttoo ddeevvoollvveedd ggoovveerrnnmmeennttssaanndd lleeggiissllaattuurreess ttoo ddeelliivveerr tthheessee –– iiss aa ppoolliittiiccaalloonnee.. HHoowweevveerr,, iitt iiss oonnee wwhhiicchh ppoolliittiicciiaannss nneeeedd ttoo aaddddrreessss,, aanndd aabboouutt wwhhiicchh tthheeyy nneeeedd ttoo rreeaacchhaaggrreeeemmeenntt.. IItt ccaannnnoott bbee aalllloowweedd ttoo ddeevveelloopp iinn aann uunnccoonnssiiddeerreedd wwaayy,, rreefflleeccttiinngg ppoolliittiiccaallbbaarrggaaiinnss ssttrruucckk aatt oonnee mmoommeenntt ooff ttiimmee wwiitthhoouutt

ccoonnssiiddeerraattiioonn eeiitthheerr ffoorr iittss wwiiddeerr iimmpplliiccaattiioonnss ffoorr tthhee UUKK aass aa wwhhoollee,, oorr hhooww dduurraabbllee iitt mmiigghhttbbee. In any constitutional convention or otherdeliberative process, this needs to form part of the agenda.

There may also be a case not merely for devolvingspecific programmes to devolved governments, butfor allowing them to opt out of programmes intheir part of the UK but making a compensatorytransfer to them in respect. This approach raises anumber of questions: ones of principle about thenature of the social union, and ones of practiceabout how such a compensatory payment would be calculated and whether it might be subject to conditions.

2. The relationship between grant funding anddevolved taxes

TThhee pprroobblleemmss ooff tthhee wwoorrkkiinngg ooff tthhee bblloocckk ggrraanntt,,ddiissccuusssseedd aabboovvee,, ssuuggggeesstt tthhaatt ssiimmppllyy ccaallccuullaattiinngg aaddiissccoouunntt ffrroomm tthhee bblloocckk ggrraanntt ttoo aallllooww ffoorr ddeevvoollvveeddttaaxx ppoowweerrss iiss aa sshhoorrtt--tteerrmm pprraaggmmaattiicc eexxppeeddiieennttnnoott aa lloonngg--tteerrmm bbaassiiss ffoorr ccoonnssttiittuuttiioonnaall oorr ffiissccaallssttaabbiilliittyy.. TThhee rreellaattiioonnsshhiipp bbeettwweeeenn ggrraannttss aannddffiissccaall ddeevvoolluuttiioonn nneeeeddss ttoo bbee ccoonnssiiddeerreeddhhoolliissttiiccaallllyy,, aanndd ttoo hhaavvee mmaacchhiinneerryy ffoorr ppeerriiooddiiccrreevviieewwss –– ssaayy eevveerryy ffiivvee ttoo sseevveenn yyeeaarrss.. AA ggrraannttbbaasseedd oonn cclleeaarr ccrriitteerriiaa ssuucchh aass rreellaattiivvee nneeeedd,, wwiitthh aa ddiissccoouunntt ffoorr ddeevvoollvveedd ttaaxx ccaappaacciittyy,, ooffffeerrss aa ssiimmppllee wwaayy ffoorrwwaarrdd..186

TThheerree nneeeeddss ttoo bbee aa mmoorree ssttrruuccttuurreedd aannddccoonnssiisstteenntt pprroocceessss ttoo ccoonnssiiddeerr ffiissccaall ddeevvoolluuttiioonn aass iitt ddeevveellooppss,, aass wweellll aass aannyy ccoonnddiittiioonnss oonn tthheeeexxeerrcciissee ooff ddeevvoollvveedd ttaaxx ppoowweerrss,, ttoo ttaakkee iinnttooaaccccoouunntt tthheeiirr iimmppaacctt oonn tthhee UUKK aass aa wwhhoollee aanndd ttoolliimmiitt tthhee ssccooppee ooff aannyy ‘‘nnoo ddeettrriimmeenntt’’ pprriinncciippllee..

3. A revised block grant

TThhee BBaarrnneetttt ffoorrmmuullaa nneeeeddss ttoo bbee rreeppllaacceedd,, bbootthh aass aa wwaayy ooff ddiissttrriibbuuttiinngg rreessoouurrcceess ttoo ddeevvoollvveeddggoovveerrnnmmeennttss aanndd bbeeccaauussee ooff tthhee aammoouunntt ooffrreessoouurrcceess iitt aallllooccaatteess.. IItt sshhoouulldd bbee rreeppllaacceedd bbyy aaggrraanntt ccaallccuullaatteedd oonn tthhee bbaassiiss ooff rreellaattiivvee nneeeeddss,,rreefflleeccttiinngg pprriinncciipplleess ccoommmmoonn ttoo ffeeddeerraall aannddddeecceennttrraalliisseedd ccoouunnttrriieess.. TThhee ccrriitteerriiaa ffoorr tthhee ggrraannttnneeeedd ttoo bbee cclleeaarr aanndd ddeetteerrmmiinneedd iinn aaddvvaannccee,,


186 For discussion of this approach see Trench Funding DevoMore op cit, chapter 6.

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rreevviieewweedd eevveerryy ffiivvee ttoo sseevveenn yyeeaarrss,, aannddaaddmmiinniisstteerreedd iimmppaarrttiiaallllyy..

SSuucchh aa rreeppllaacceemmeenntt ffoorr BBaarrnneetttt ccoouulldd nnoott,, aannddsshhoouulldd nnoott,, bbee iinnttrroodduucceedd iimmmmeeddiiaatteellyy.. Whileadministrative arrangements and the structure of a new grant should come in straight away,adjustments to the amounts paid to devolvedgovernments which reduce their grant should be phased in over a number of years.

4. Decision-making and the machinery ofdevolution finance

TThhee mmaacchhiinneerryy ffoorr aaddmmiinniisstteerriinngg ddeevvoolluuttiioonn ffiinnaanncceeccaann nnoo lloonnggeerr bbee lleefftt ttoo tthhee ssoollee ddiissccrreettiioonn ooff HHMMTTrreeaassuurryy, with some consultation with devolvedgovernments. These arrangements must not onlybalance the interests of both devolved and UKGovernment, but also be adequately transparentand rule-driven to ensure that autonomy,accountability democracy and the rule of law arerespected. A replacement wwiillll nneeeedd ttoo iinncclluuddee:

1. AAnn iinnddeeppeennddeenntt bbooddyy ttoo aaddvviissee HHMM TTrreeaassuurryyaabboouutt ddeevvoolluuttiioonn ffiinnaannccee,, ppeerrhhaappss ttoo bbeeccaalllleedd tthhee UUKK FFiinnaannccee CCoommmmiissssiioonn,, aannddppaarrttiiccuullaarrllyy aabboouutt ggrraanntt mmaatttteerrss.. TThheessttrruuccttuurraall mmooddeell ooff tthhee AAuussttrraalliiaannCCoommmmoonnwweeaalltthh GGrraannttss CCoommmmiissssiioonn hhaassmmuucchh ttoo ccoommmmeenndd iitt..

2. SSccooppee ffoorr eexxtteerrnnaall rreevviieeww aanndd aauuddiitt ooff tthheeaammoouunnttss ooff bblloocckk ggrraanntt,, ooff aannyy rreedduuccttiioonnssffrroomm iitt ttoo aallllooww ffoorr ddeevvoollvveedd ttaaxx ccaappaacciittyy,,aanndd ooff cchhaannggeess iinn tthhee ffiissccaall ccaappaacciittyy rreellaattiinnggttoo ddeevvoollvveedd ttaaxxeess.. This may be anappropriate task for the National AuditOffice, the Office of BudgetaryResponsibility, or a new body established for this specific purpose.

3. AAnn iinnddeeppeennddeenntt bbooddyy ttoo aaddjjuuddiiccaattee iinn tthheeeevveenntt ooff aannyy ddiissppuutteess bbeettwweeeenn ggoovveerrnnmmeennttsstthhaatt tthheeyy ccaannnnoott rreessoollvvee bbeettwweeeenntthheemmsseellvveess.. This might be the UK FinanceCommission or some other body. CClleeaarr aannddrroobbuusstt aarrrraannggeemmeennttss ffoorr aaccccoouunnttaabbiilliittyy aarreenneeeeddeedd wwhheerree UUKK--wwiiddee aaggeenncciieess aallssoo aacctt oonn bbeehhaallff ooff ddeevvoollvveedd ggoovveerrnnmmeennttss –– iinnppaarrttiiccuullaarr,, ffoorr HHMM RReevveennuuee && CCuussttoommss ifthat continues to collect ddeevvoollvveedd ttaaxxeess oonn bbeehhaallff ooff ddeevvoollvveedd ggoovveerrnnmmeennttss..

4. AAtt tthhee ssaammee ttiimmee,, tthhee mmaacchhiinneerryy ooff ppuuttttiinnggggrraanntt ffuunnddiinngg iinnttoo tthhee hhaannddss ooff ddeevvoollvveeddggoovveerrnnmmeennttss nneeeeddss ttoo bbee cchhaannggeedd aanndd ttoo bbeeuunnddeerrppiinnnneedd bbyy ssttaattuuttee. The mechanism ofcalculating the grant needs to have devolvedconsent, and a more robust legal form – aninter-governmental agreement if notunderpinned by statute – and to lead to a transfer from the UK Exchequer to thedevolved government’s consolidated fund,not via a Secretary of State. The costs of UK


47

The Australian Commonwealth Grants Commission

Australia’s Commonwealth Grants Commission is an advisory body to the federal (Commonwealth)government with terms of reference framed by the Commonwealth Treasurer, after consultation with the states and territories. Presently, it has four members in addition to the chairman. Thebackgrounds of three of the present members of the commission and the chairman includeexperience as civil servants working for state or federal governments (or both), and one is anacademic. None are or have been elected politicians. In practice, the ‘advice’ the Commission offers the Commonwealth government has always been accepted, promptly and without demur. Its impartiality is accepted by the States and territories, even when they have concerns about the implications of the system overall.

The calculations of state relativities are carried out annually, and there are periodic reviews (every fiveyears or so) of the overall methodology used by the Commission. The next is due in 2015.

The CGC employed 40 staff (as full-time equivalents) in 2013–14, in addition to the part-time chairmanand commissioners. Its total running costs were about $AU6.3 million (about £3.2 million at thecurrent exchange rate).


Government departments concerned withdevolution should clearly form part of theUK Government’s running costs.

Ironically, given our misgivings about theworkability of the ‘no detriment’ principle, that principle increases the need for impartialmachinery for the operation of the block grant. HM Treasury cannot be left to have sole control ofhow that principle is applied, so long and so far as‘no detriment’ forms part of the UK’s fiscalarchitecture. Similar considerations apply whiledecisions about spending or tax policy applying inEngland continue to have such profound effects onresources available to devolved governments.

5. Focusing the attention of the UK Parliament on supply

The problems of ‘English votes for English laws’are discussed in chapter 5 above. It is clear thata significant element of these relate to thefinancial implications for devolved governments

of policy decisions taken for England – even ifdevolved parts of the UK have limited interest inthe immediate subject-matter such as theorganisation of the NHS or schools in England.AAss mmaatttteerrss ssttaanndd,, ppaarrlliiaammeennttaarryy pprroocceedduurreeffooccuusseess mmuucchh mmoorree aatttteennttiioonn oonn ssuucchh lleeggiissllaattiioonnaanndd rreellaattiivveellyy lliittttllee oonn tthhee iissssuuee ooff ffiinnaannccee aannddssuuppppllyy,, cceennttrraall tthhoouugghh tthhiiss iiss ttoo ppaarrlliiaammeenntt’’sshhiissttoorriicc rroollee aanndd tthhee rreellaattiioonnsshhiipp bbeettwweeeenn tthheelleeggiissllaattuurree aanndd tthhee eexxeeccuuttiivvee.. TThhee aaddooppttiioonn ooffppaarrlliiaammeennttaarryy pprroocceedduurreess tthhaatt ffooccuusseedd mmoorreecclleeaarrllyy oonn ffiinnaanncciiaall iissssuueess,, wwhheerree aallll MMPPss hhaavveeaann iinntteerreesstt,, wwoouulldd eennaabbllee ggrreeaatteerr ccllaarriittyy aabboouutttthhee rroollee ooff EEnngglliisshh MMPPss wwhheenn iitt ccaammee ttoo‘‘oorrddiinnaarryy’’ lleeggiissllaattiioonn.. This would represent aconsiderable upheaval in parliament, but mighthave benefits as well.

Implementing this will require a degree ofjudgment and discretion on the part of the Speakeror whoever determines that a provision’s separateand distinct effect for England is such that a votelimited only to English MPs is appropriate.


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Chapter 2

The architecture of the union state

1. That Whitehall has changed so little as aresult of devolution gives the unfortunateimpression that the centre has not fullycaught up with the magnitude of thechanges to the state that devolution hastriggered. Every review of devolution hasconcluded that the centre needs to bereformed to take account of the implicationsof devolution and, in particular, that the UK’s inter-governmental machinery is not fit for purpose.

2. Inter-governmental relations in the UnitedKingdom are characterised by informalityand, to the extent to which they areregulated at all, are regulated by convention,concordat, memorandums of understanding,and guidance notes. The most importantdocument is the Memorandum ofUnderstanding, but this has no statutorybase. There is no requirement that it be laid before the legislatures of the UnitedKingdom. To the extent that it is subject toparliamentary scrutiny at all, this is posthoc, sporadic and of only peripheral effect. It makes no provision for joint policy-making by participants. Nor does the MoUmake any provision for the effectiveaccountability or parliamentary scrutiny ofthe JMC’s activities, meetings or decisions.This is inappropriate. The constitutionalprinciples of transparency, openness,accountability and effective parliamentaryscrutiny should govern the UK’s inter-governmental arrangements.

3. Before devolution, there was a ScottishOffice, a Welsh Office and the Northern Irish Office, each headed by a secretary ofstate in the Cabinet. After devolution, thisremains the case. But it is not clear that itshould. Consideration should be given to

rolling the three departments into a singleDepartment for the Union, in which therewould be a single secretary of state (in theCabinet) and three junior ministers of state,one for each of Scotland, Wales andNorthern Ireland.

4. Reform of the civil service is a further aspectof the issues pertaining to the architecture of the union state which requires to beaddressed in the light of devolution.

Chapter 3

Devolution and federalism

5. We agree with the Smith Commission thatdevolution to the nations should now bepermanent.

6. Moving towards a more federal, codifiedconstitutional arrangement for the UK would therefore establish ‘permanent’devolution on the basis of more clearlydefined principles and rules. As with allwritten constitutions, it would be open toamendment, such as to allow secession, on the basis of an established measure ofconsensus.

7. We recommend that legislation (preferablyunder the Charter of Union which we proposein Chapter 4 below), set out principles toguide judicial interpretation of the extent ofthe devolved authorities’ powers as plenarylaw makers.

8. The United Kingdom Supreme Court shouldgive careful consideration to whetherdevolution appeals should ordinarily be heardby enlarged panels of seven or nine Justices,to include judges from Scotland, fromNorthern Ireland and from England andWales and, as Welsh law may increasinglydiverge from English law, from Wales.

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CHAPTER 7 – CHRONOLOGICAL SUMMARY OFCONCLUSIONS AND RECOMMENDATIONS


9. We recommend that a constitutional provisionof solidarity (or loyalty) be enacted in UnitedKingdom statute.

10. We regard it as important to have political aswell as official participation at the centre, so asto emphasise the nature of ‘shared rule’ as wellas ‘self rule’ in the devolution settlements. Tothis end, we recommend serious considerationof a reformed House of Lords, formallyrepresenting in Westminster the nations and regions of the United Kingdom.

11. The conclusions reached more than 40 yearsago by the Royal Commission on theConstitution (the Kilbrandon Commission)still hold: “no advocate of federalism in theUnited Kingdom has succeeded in producinga federal scheme satisfactorily tailored to fitthe circumstances of England”; and “there isno satisfactory way of fitting England into afully federal system”.

Chapter 4

A Charter of Union

12. The time has come for the constitutional values of the union state to be clearly andauthoritatively expressed in law. To this end, weconsider that the United Kingdom Parliamentshould pass by statute a Charter of Uniondesigned, among other matters to embedthese principles into our constitutional law.

13. The Charter of Union should provide that theScotland Act, the Government of Wales Act andthe Northern Ireland Act “shall be construedand have effect subject to” the Charter.

14. As an Act of Parliament, the Charter of Unionwill be interpreted and enforced by the courts.

15. As a constitutional statute, the Charter ofUnion will also be a benchmark against whichBills and other legislative proposals may beassessed. Committees such as the House ofLords Constitution Committee couldscrutinise legislation by reference to theCharter. The Charter should also play a rolein the scrutiny of legislation in the UK’sdevolved legislatures.

16. The Charter of Union should embody not onlythe principles of union constitutionalism, butshould also provide in law for the UnitedKingdom’s inter-governmental machinery.

Secession referendums

17. In the UK, we need an instrument such as ourproposed Charter of Union to extend the waythe rule of law governs and conditions theuse of constitutional referendums.

18. A secession referendum should be held nomore than once in a generation. We considerthat, for this purpose, a generation is at least15 years, subject to compatibility with anyobligation arising from The Northern IrelandAct 1998.

Chapter 5

The English question: representation

19. For as long as England shows no appetite to be broken into regions this should nothappen. Devolution in Scotland, Wales andNorthern Ireland has been demand-led:governance in England should be according to the same principle.

20. Greater recognition needs to be given to thefact that Westminster is England’s parliamentas well as the parliament of the UnitedKingdom.

21. The McKay report identified the correctprinciple: “decisions at the UK level with a separate and distinct effect for England(or for England and Wales) should normallybe taken only with the consent of a majorityof MPs from England (or England andWales)”. All political parties should endorse this as a matter of constitutionalprinciple.

22. We endorse the McKay idea that the bestmeans of giving force to this principle is toborrow from the Sewel convention, such thatBills, or provisions of Bills, with a separateand distinct effect for England (or Englandand Wales) are not passed by the Commonswithout the consent of a majority of MPs

CHRONOLOGICAL SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

50


from England (or England and Wales).Implementation should be through amendingthe Standing Orders of the House ofCommons, not through statute: this is not amatter that should attract litigation in thecourts of law.

23. Building on the basis of the principled work ofthe McKay Commission, consideration shouldbe given to the following: (1) establishing amore structured approach to the framing anddrafting of legislation, so that Bills containing‘distinct and separate’ provisions for England(or England and Wales) do not also containprovisions for other parts of the UK, or non-devolved matters; and (2) separatingdecisions about policy from those aboutfinance. Key to this will be to identify bills, orprovisions within bills, which have a distinctand separate effect for England and Wales,and to establish who will be responsible forapplying that test. This would appear to be arole best suited to the Speaker of the Houseof Commons.

The English question: devolution

24. For devolution within England to meet itspotential it has to include significant fiscaldevolution: meaningful decentralisation isimpossible without it.

25. It is important that rural areas are notoverlooked in the focus on cities and city-regions: while cities are ‘economic engines’,counties cover nearly 50% of the populationof England and have the highest rate ofprivate-sector job creation in the country.

26. The focus of City Deals and devolution to city-regions has been economic development andregeneration: the question remains openwhether (and if so to what extent) they have adeeper constitutional dimension. Even if theyextend a degree of subsidiarity and enhancelocal accountability, it is not clear that theycontribute to a strengthening or safeguardingof the Union.

27. The process of negotiating City Deals andcity-region devolution needs to be made more transparent.

28. We note that decentralisation is an issue not only in England, but also in Scotland and Wales.

Chapter 6

Funding devolved governments: fiscal devolution,public services and the ‘social union’

29. The impact of devolution is such that a singlebig choice now needs to be made: how muchthe UK as a whole wishes to be boundtogether by a shared form of social solidarity,and what the UK-wide social union means.The choice of what level of support, relatingto what aspects of life, the Union shouldassure as a matter of Union-wide socialcitizenship, is a constitutional choice. Fromthis choice a range of institutional choicesand options flow.

30. Whatever the Barnett formula’s other merits,it does not deliver equity between the variousparts of the UK. In this respect, the presentarrangements fall short of our principles ofconsent and respect for the rule of law.

31. The Barnett formula arrangements may have been appropriate for administrativedevolution to territorial departments within a single government, as was the case whenthe system was introduced. They are notappropriate for the sort of decentralisedconstitution that the UK now has.

32. Fiscal devolution has been approached on apiecemeal and ad hoc basis. Quite apart fromproblems that arise from the operation of theBarnett formula and the block grant. Theupshot is a system that cannot be readilyunderstood or explained for the UK as a whole.

33. We endorse the principle that changes to the grant element of funding in consequenceof fiscal devolution should be made as‘mechanically’ as possible. However, we do not believe that the UK Government’sexisting proposals will achieve that.

34. It is clear that the approach the UK has takento raising revenue and funding services is not


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just disjointed and inconsistent, but fallsshort of a number of our criteria for theUnion constitution. It does not assure socialsolidarity in any systematic or consistent way.It does not provide effectively for autonomy of either devolved or UK governments, givenhow entangled the arrangements are. It is not effective at ensuring accountability, andtherefore respecting democracy or the rule of law.

35. The decision about the relationship betweenequity or social solidarity and autonomy – theextent to which the Union assures particularsocial rights, and looks to devolvedgovernments and legislatures to deliver these – is a political one. However, it is onewhich politicians need to address, and aboutwhich they need to reach agreement. It cannotbe allowed to develop in an unconsideredway, reflecting political bargains struck atone moment of time without considerationeither for its wider implications for the UK asa whole, or how durable it might be.

36. The problems of the working of the blockgrant suggest that simply calculating adiscount from the block grant to allow for devolved tax powers is a short-termpragmatic expedient not a long-term basis for constitutional or fiscal stability. Therelationship between grants and fiscaldevolution needs to be considered holistically,and to have machinery for periodic reviews –say every five to seven years. A grant basedon clear criteria such as relative need, with adiscount for devolved tax capacity, offers asimple way forward.

37. There needs to be a more structured andconsistent approach to consider fiscaldevolution as it develops, as well as anyconditions on the exercise of devolved taxpowers, to take into account their impact on the UK as a whole and to limit the scope of any ‘no detriment’ principle.

38. The Barnett formula needs to be replaced,both as a way of distributing resources todevolved governments and because of theamount of resources it allocates. It shouldbe replaced by a grant calculated on thebasis of relative needs, reflecting principles

common to federal and decentralisedcountries. The criteria for the grant need tobe clear and determined in advance,reviewed every five to seven years, andadministered impartially.

39. Such a replacement for Barnett could not,and should not, be introduced immediatelybut phased in over a number of years.

40. The machinery for administering devolutionfinance can no longer be left to the solediscretion of HM Treasury. Its replacementwill need to include:

1. We recommend an independent,impartial body to advise HM Treasuryabout devolution finance, and particularlyabout grant matters, perhaps to be calledthe UK Finance Commission. Thestructural model of the AustralianCommonwealth Grants Commission has much to commend it.

2. Scope for external review and audit of theamounts of block grant, of any reductionsfrom it to allow for devolved tax capacity,and of changes in the fiscal capacityrelating to devolved taxes.

3. An independent body to adjudicate in theevent of any disputes betweengovernments that they cannot resolvebetween themselves. This might be theUK Finance Commission or some otherbody. Clear and robust arrangements foraccountability are needed where UK-wideagencies also act on behalf of devolvedgovernments – in particular, for HMRevenue & Customs if that continues tocollect devolved taxes on behalf ofdevolved governments.

4. At the same time, the machinery ofputting grant funding into the hands of devolved governments needs to be changed and to be underpinned by statute.

41. As matters stand, parliamentary procedurefocuses much more attention on suchlegislation and relatively little on the issue offinance and supply, central though this is toparliament’s historic role and the relationshipbetween the legislature and the executive.The adoption of parliamentary procedures


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that are focused more clearly on financialissues, where all MPs have an interest, wouldenable greater clarity about the role ofEnglish MPs when it came to ‘ordinary’legislation. Implementing this will require a

degree of judgment and discretion on the partof the Speaker or whoever determines that aprovision’s separate and distinct effect forEngland is such that a vote limited only toEnglish MPs is appropriate.


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Professor Sir Jeffrey Jowell QC (Chair)

Jeffrey Jowell is the Director of the BinghamCentre for the Rule of Law a London-basedinternational body. He is also a practising barristerat Blackstone Chambers. He is Emeritus Professorof Public Law at University College London (wherehe was twice Dean of the Law Faculty and a ViceProvost). He was knighted (KCMG) in the Queen’sHonours List 2011 “for services to human rights,democracy and the rule of law”.

One of the UK’s leading public law scholars, he has authored numerous publications in the area of public law. He has honorary Degrees fromthe Universities of Cape Town, Ritsumeikan, UCL,Athens and the University of Paris 2. He has served on the Boards of public bodies in the UKand elsewhere.

He assisted with a number of nationalconstitutions and acted as constitutional advisor to a number of governments in theCommonwealth, Asia and in the Middle East.From 2000–2011 he served as the UK’s memberon the Council of Europe’s Commission forDemocracy through Law (known as the ‘VeniceCommission’) where he assisted with theconstitutions and public law of a number of Central and East European countries.

Professor Linda Colley

Linda Colley is a historian who specialises in post-1700 British history, a focus which has led her into studies of nationalism, Empire and globalhistory. She is author of a number of critically-acclaimed books. They include In Defiance ofOligarchy: The Tory Party 1714–1760 (1982),Namier (1988), Britons: Forging the Nation1707–1837 (1992) which won the Wolfson Prize,Captives: Britain, Empire and the World 1600–1850 (2002) and The Ordeal of ElizabethMarsh (2007), which was named by The New YorkTimes as one of the 10 best books of the year.

In 2014, Linda Colley was listed by Sunday Timesas one of the 100 most influential Britons.

Her most recent work is Acts of Union andDisunion, a 15-part BBC Radio 4 series and book about what has held the United Kingdomtogether – and what might drive it apart. She alsowrites regularly on history, politics and art fornewspapers and magazines; including TheGuardian, London Review of Books, New YorkReview of Books and New Republic. She hasserved on the Board of the British Library, theCouncil of Tate Gallery of British Art, the AdvisoryBoard of the Yale Center of British Art and been a Trustee of Princeton University Press.

She is currently the Shelby MC Davis 1958Professor of History at Princeton University in the United States.

Gerald Holtham

Gerald Holtham chaired the IndependentCommission on Finance and Funding for Wales. He is the managing partner of Cadwyn Capital LLP, visiting professor at Cardiff Business Schooland a Fellow of the Learned Society of Wales.

He is a former Head of the General EconomicsDivision, OECD; Visiting Fellow, the BrookingsInstitution, Washington DC; Chief Economist atLehman Brothers, Europe; Director, Institute forPublic Policy Research; Chief Investment Officer,Morley Fund Management (Aviva Investors). He hasadvised several governments on economics andfinance, published several books and articles inlearned journals and written numerous articles inpress and periodicals on public policy issues andinvestment topics.

Professor John Kay

John Kay is one of Britain’s leading economists.His interests focus on the relationships betweeneconomics and business. His career has spannedacademic work and think tanks, business schools,

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CHAPTER 8 – BIOGRAPHIES OF COMMISSION MEMBERS


company directorships, consultancies andinvestment companies.

John Kay chaired the Review of UK Equity Marketsand Long-Term Decision-Making which reported tothe Secretary of State for Business, Innovation andSkills on 23 July 2012. He is a visiting Professor ofEconomics at the London School of Economics, anda Fellow of St John’s College, Oxford. He is a Fellowof the British Academy, and a Fellow of the RoyalSociety of Edinburgh. He is a director of severalpublic companies and contributes a weekly columnto the Financial Times. He is the author of manybooks, including The Truth about Markets (2003)and The Long and the Short of It: finance andinvestment for normally intelligent people who are not in the industry (2009) and his latest book,Obliquity was published by Profile Books in March2010. Some of his most influential, recent work hasbeen on banking regulation.

Sir Maurice Kay

Sir Maurice Kay was called to the bar in 1975following a period in academia. During his careerat the bar, Sir Maurice embraced a wide-rangingpractice which included sitting as an Arbitratoroverseas. He was appointed a High Court Judge(Queen’s Bench Division) in 1995. He also held thefollowing positions: Judge of Employment AppealTribunal (1995–2003); Judge of AdministrativeCourt (1997–2003); Judge in Charge of theAdministrative Court (2002–2003); and PresidingJudge of Wales and Chester Circuit (1996–1999).

In 2004, he was appointed a Lord Justice of Appeal,in which capacity he sat until 2014. Sir Mauricewas also Vice President of the Court of Appeal(Civil Division) for five of those years. During histime in the Court of Appeal, Sir Maurice sat onsome of the country’s most significant appeals.

Sir Maurice now accepts appointments as anArbitrator for both domestic and internationalarbitrations whether independently or as amember of arbitral panels.

Professor Emerita Elizabeth Meehan

After a spell in the Foreign and CommonwealthOffice, Elizabeth Meehan graduated from the

universities of Sussex and Oxford and went on to teach politics at Bath University and Queen’sUniversity Belfast (QUB). Prior to retirement, shewas the founding Director of QUB’s interdisciplinaryInstitute of Governance and Public Policy.

She has held research fellowships at theuniversities of Manchester and Edinburgh as wellas Trinity College Dublin. In addition to having anemeritus chair at QUB (School of Law), she is avisiting professor in the School of Politics andInternational Relations at University College Dublin where she is involved in the work of itsInstitute for British Studies.

Her research and publications cover laws andpolicies on equality for women in employment inthe United Kingdom, United States and EuropeanUnion (EU); citizenship and the EU; and theterritorial politics of Ireland and Britain. The last ofthese is based on the EU context behind changingrelationships amongst the islands of Ireland andBritain and its role in aspects of the peace processwithin Northern Ireland. It also includes a study ofthe Common Travel Area and the Irish choice toprioritise it over the Schengen free movementarrangements. These British-Irish and EU matters were the basis of her responsibilities as apartner in a long-running funded programme onmonitoring devolution throughout the UK. In 2007she returned to live in Scotland.

Professor Monica McWilliams

Monica McWilliams is Professor of Women’sStudies at the University of Ulster, based in theTransitional Justice Institute at the University of Ulster.

Monica McWilliams was the Chief Commissionerof the Northern Ireland Human RightsCommission from 2005–2011 and responsible for delivering the advice on a Bill of Rights forNorthern Ireland. She was the co-founder of theNorthern Ireland Women’s Coalition political partyand was elected to a seat at the Multi-Party PeaceNegotiations, which led to the Belfast (GoodFriday) Peace Agreement in 1998. She served as a member of the Northern Ireland LegislativeAssembly from 1998–2003 and the NorthernIreland Forum for Dialogue and Understandingfrom 1996–1998.

BIOGRAPHIES OF COMMISSION MEMBERS

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Her published work focuses on domestic violence,human security and the role of women in peaceprocesses. She was the Distinguished Lecturer atthe 2010 Women Peace Makers Conference at theUniversity of San Diego’s Institute for Peace andJustice. She is the recipient of two honorarydoctorates and a special Profile in Courage Awardfrom the John F Kennedy Library Foundation. Sheis a graduate of Queen’s University, Belfast and theUniversity of Michigan, Ann Arbor.

Philip Stephens

Philip Stephens is Chief Political Commentator andAssociate Editor at the Financial Times, where heis also a member of the Editorial Board. He is ViceChair of the Council of the Ditchley Foundation, amember of steering group of the Anglo FrenchColloque and a member of the advisory board of the Institute for Public Policy Research.

He is a frequent speaker and moderator at international conferences on European,Transatlantic and global affairs, and offers analysisand advice to business leaders on geopolitical risk.He has won the three main prizes in Britishpolitical journalism, being named successively aswinner of the David Watt prize for OutstandingPolitical Journalism, as Political Journalist of theYear by the UK Political Studies Association, and asPolitical Journalist of the Year in the British PressAwards. He is the author of Politics and the Pound,a study of British economic and European policy,and of a biography of former prime minister TonyBlair. He is a frequent broadcaster. Philip Stephenswas educated at Wimbledon College and OxfordUniversity, where he took an honours degree inmodern history.

Professor Adam Tomkins (rapporteur)

Professor Adam Tomkins has held the John MillarChair of Public Law at the University of Glasgowsince 2003, having previously taught at StCatherine’s College, Oxford (2000–03) and King’sCollege London (1991–2000). He specialises inconstitutional law and has research interests inBritish, EU and comparative constitutional law.

Since 2009, he has been a legal advisor to theHouse of Lords Select Committee on the

Constitution. He was a leading commentator for the Better Together campaign in the Scottishindependence referendum; he was an advisor to the Strathclyde Commission on FutureGovernance in Scotland and was appointed in 2014 to the Smith Commission on FurtherDevolution for Scotland.

He has lectured throughout the United Kingdom,as well as in Australia, Canada, France, Germany,Israel, Italy, Malaysia, New Zealand and the UnitedStates. He was a founding member of the ScottishPublic Law Group, and he maintains closeconnections with public law practitioners at theFaculty of Advocates and at the English bar. Hewas elected a Fellow of the Royal Society ofEdinburgh in 2014.

Professor Tony Travers

Tony Travers is Director of British Government @LSE, a programme at the London School ofEconomics. He is also a professor in the LSE’sGovernment Department and co-director of LSELondon. His key research interests include publicfinance, local/regional government and Londongovernment. He has recently been an advisor to the House of Commons Education SelectCommittee and also the Communities and Local Government Select Committee. He has also advised House of Lords committees.

He was a Senior Associate of the Kings Fund from1999 to 2004, and also a member of the ArtsCouncil’s Touring Panel during the late 1990s.From 1992 to 1997, he was a member of the AuditCommission. He was a member of the Urban TaskForce Working Group on Finance.

He is a research board member of the Centre forCities and a board member of the New LocalGovernment Network. He is an Honorary Memberof the Chartered Institute of Public Finance &Accountancy. In 2012–13, he chaired the LondonFinance Commission and was a member of the CityGrowth Commission in 2013–14. He was a memberof the CIPFA/LGA Independent Commission onLocal Government Finance In 2014–15.

He has published a number of books on cities and government, including Failure in BritishGovernment The Politics of the Poll Tax (with


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David Butler and Andrew Adonis), Paying for Health,Education and Housing: How does the Centre Pullthe Purse Strings (with Howard Glennerster andJohn Hills) and The Politics of London: Governingthe Ungovernable City.

He also broadcasts and writes for the nationalpress.

Alan Trench (advisor)

Alan Trench is an academic, associated with the University of Ulster where he is Professor ofPolitics, the University of Edinburgh, where he is an honorary fellow in the School of Social andPolitical Science and the Constitution Unit atUniversity College London, where he is anhonorary senior research associate. He is asolicitor admitted in England and Wales, now non-practising.

His work on devolution has concentrated on inter-governmental relations and how devolution affectsthe UK state at the centre, though he has alsodone a good deal of work on Wales and itsdeveloping constitution, and on financial issues.

He has published numerous papers and bookchapters on various aspects of devolution, andedited several books, including recently Devolutionand Power in the United Kingdom and The State ofthe Nations 2008. He’s written for papers such asThe Herald, The Scotsman, the Western Mail andthe Guardian’s Comment is Free blog, and madebroadcast appearances on various radio and TVprogrammes in Scotland, Wales and across the UK.

He contributed sections on inter-governmentalrelations to the Devolution Monitoring Reports for Scotland and Wales co-ordinated by theConstitution Unit at UCL from 2005 until they ended in 2009.


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The courts’ case law on devolution contains anumber of principles which may be used to shapea deeper understanding of devolution and theunion state. As we shall see, the courts’ devolutionjurisprudence has not been entirely consistent.Nonetheless, a careful reading of the case lawreveals that a number of important constitutionalprinciples may be distilled from it.

Minimalist beginnings

The first case in which the Scottish courtsconsidered the workings of the newly establishedScottish Parliament was Whaley v Watson.187

Individuals connected with hunting in Scotlandwished to prevent a backbench MSP (Lord Watsonof Invergowrie) from presenting a Bill to banhunting with dogs. The petitioners argued thatwere the MSP to present the Bill, he would beacting contrary to article 6 of the Scotland Act 1998(Transitory and Transitional Provisions) (Members’Interests) Order 1999, which prohibits a Member ofthe Scottish Parliament from doing anything in hiscapacity as an MSP which relates to the affairs orinterests of, or which seeks to confer a benefitupon, any person from whom the Member hasreceived or expects to receive remuneration. In theCourt of Session, the First Division of the InnerHouse held by a majority of two-to-one that whilethe matter fell within the jurisdiction of the Court,article 6 of the 1999 Order was not intended toconfer on members of the public a right to securethat an MSP complied with its terms. Lord Watsonhad argued that article 6 of the Order was for theParliament’s standards committee to oversee (andhe noted that the committee had concluded that hehad not breached article 6 in seeking to present hisBill to the Parliament).

At first instance, the Lord Ordinary ruled that theCourt was incompetent to grant the remedy sought,as doing so would achieve by a back-door route thatwhich is prohibited by section 40(4) of the ScotlandAct 1998, which provides that in proceedings

against a member of the Parliament the Courtshall not make an order if the effect of doing sowould be to give relief against the Parliament. Forthe Lord Ordinary it was for the Parliament itself todecide whether or not the member was entitled topresent the Bill: it was not a question for the Court.

In the Inner House, the Lord President (LordRodger) took a markedly different view. He warnedthat “the Lord Ordinary gives insufficient weight tothe fundamental character of the Parliament as abody which – however important its role – has beencreated by statute and derives its powers fromstatute”. As such, Lord Rodger said, “it is a bodywhich, like any other statutory body, must workwithin the scope of those powers”.188 Amplifyingthe point, Lord Rodger added that “the Parliament,like any other body set up by law, is subject to thelaw and to the courts which exist to uphold thatlaw”. Subject to section 40 of the Scotland Act1998, Lord Rodger said, “the Court has the samepowers over the Parliament as it would have overany other statutory body and might, for instance, inan appropriate case grant a decree against it forthe payment of damages”. Lord Rodger noted thatit had been suggested by counsel in the case thatthe courts should exercise a “self-denyingordinance in relation to interfering with theproceedings” of the Scottish Parliament. But theLord President ruled this out, declaring that hecould see “no basis upon which this Court canproperly adopt a self-denying ordinance whichwould consist in exercising some kind of discretionto refuse to enforce the law against the Parliamentor its members”. Lord Prosser agreed. He saidthat counsel’s argument:

“seemed to rest upon some broad view that since theScottish Parliament was a Parliament, rather than forexample a local authority, the jurisdiction of thecourts much be seen as excluded, as an unacceptableintrusion upon the legislative function which belongedto Parliament alone. A variant of this argumentseemed to be that if the Court’s jurisdiction was notexcluded as a matter of law, the Court should

187 Whaley v Watson 2000 SC 340. 188 Emphasis added.

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Bingham Devolution Report Appendix 13/5/15 09:41 Page 59

nonetheless be slow or hesitant or reluctant orunwilling to use the jurisdiction which it had, in orderto avoid an undesirable intrusion on Parliament’sfreedom in relation to legislation. Both forms ofargument appear to me to be entirely withoutfoundation… [I]nsofar as a Parliament and its powers have been defined, and thus limited, by law, it is in my opinion self-evident that the courts havejurisdiction in relation to these legal definitions andlimits, just as they would have for any other bodycreated by law.189 If anything, the need for such ajurisdiction is in my opinion all the greater where a body has very wide powers, as the ScottishParliament has: the greater the powers, the greaterthe need to ensure that they are not exceeded.”

A more expansionist re-reading

The line taken by the Court in Whaley v Watson thatthe Scottish Parliament (and, by extension, theother devolved legislatures) is a public body “likeany other statutory body” is sharply at odds withthe majority decision of the law lords in Robinson vSecretary of State for Northern Ireland190 and withthe unanimous Supreme Court decision in AXAGeneral Insurance v Lord Advocate.191 Robinsonremains an extraordinary decision, in which by thenarrowest of margins the House of Lords ruledthat an unlawful election was lawful, in order tokeep Northern Irish devolution afloat and so as toprevent the DUP and Sinn Fein from obtainingoffice. Lords Bingham and Hoffmann suggestedthat the Northern Ireland Act 1998 is “in effect aconstitution” (rather than an ordinary statute)which should be interpreted “generously andpurposively” rather than in accordance with thecommon law’s normal standards of statutoryinterpretation.192 Lord Hutton, dissenting stronglyfrom this approach, reminded the judges that “theNorthern Ireland Assembly is a body created by aWestminster statute and it has no powers otherthan those given to it by statute”.193 The dissentingopinions of Lords Hutton and Hobhouse saw theNorthern Ireland Act as the Inner House had seenthe Scotland Act in Whaley v Watson. The majorityin the House of Lords saw the legislation instrikingly different terms. The reasoning of themajority in Robinson has not been followed in

subsequent Supreme Court case law and, whilethe decision has not been overruled, it is perhapsbest understood as having been confined to itsfacts.194

Much of AXA focused on the meaning andapplication of the right to property in Article 1 ofProtocol 1 to the European Convention on HumanRights (‘A1P1’) but the constitutionally interestingdimension of the case lies elsewhere, in theSupreme Court’s analysis of the question whetherActs of the Scottish Parliament (‘ASPs’) may besubject to common law judicial review. We knowthat section 29 of the Scotland Act 1998 limits the legislative competence of the ScottishParliament:195 but is section 29 an exhaustive list of the grounds on which an ASP may bechallenged, or could a petitioner also argue that anAct of the Scottish Parliament is unreasonable orirrational? The Supreme Court ruled that an ASPcould not be challenged as if it were the decision of an ordinary public body (thus, ordinary commonlaw judicial review would not apply to an ASP) butthat if an ASP was violative of the rule of law, the


189 Emphasis added.190 [2002] UKHL 32.191 [2011] UKSC 46, [2012] 1 AC 868.192 Robinson, op cit, at [11].193 Ibid, at [54].

194 Robinson was a difficult case and a word explaining thebackground is in order. At the time of the case it was felt, inLondon as well as in Dublin, that devolution’s best chance ofsurvival in Northern Ireland was under a power-sharingagreement between the UUP and the SDLP. It was the electionof the leaders of these parties as First Minister and Deputy FirstMinister that Peter Robinson, the leader of the DUP, challengedin the litigation. He wanted their election as FM and DFMannulled on the basis that it had not been achieved conformablywith the law as then set out section 16 of the Northern IrelandAct 1998 (since repealed). Had he been successful, this wouldhave led to fresh elections for the Assembly, which, had theytaken place, may well have seen the DUP replace the UUP asthe largest unionist party, and Sinn Fein replace the SDLP asthe largest nationalist party. Dublin and London both considereda DUP/Sinn Fein power-sharing agreement to be unworkable. In Robinson the law lords effectively interpreted the 1998 Act soas to prevent fresh elections and maintain the UUP and SDLP in power. In the event, the arrangement did not last long:devolution and the Assembly were suspended in October 2002until May 2007. Upon their re-establishment the DUP and SinnFein did indeed become larger parties than the UUP and SDLP;they have been in a power-sharing agreement since 2007, withMr Robinson as First Minister since 2008.

195 Section 29 provides that an Act of the Scottish Parliamentis not law if it is outside the legislative competence of theParliament. A provision is outside legislative competence if: (a)it would form part of the law of a country or territory other thanScotland, (b) it relates to reserved matters, (c) it is in breach ofthe restrictions in Schedule 4, or (d) it is incompatible with aConvention right or with EU law. Reserved matters are listed in Schedule 5 to the Scotland Act. Schedule 4 lists enactments(such as certain provisions of the Act of Union and the HumanRights Act 1998) which the Scottish Parliament may not modify.

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courts would step in to rule it unlawful (even if wasotherwise within competence under section 29).Lord Hope arrived at this conclusion via ananalysis which in certain respects placed Holyroodlegislation and Westminster statutes on the sameconstitutional plane, describing the ScottishParliament as “self-standing” and ruling that ASPs within competence enjoy “the highest legalauthority”.196 Lord Hope cited no authority forthese propositions.

Lord Reed arrived at the same conclusion but via a different route. First, he noted that while section29 sets limits to the legislative competence of theScottish Parliament, within those limits “its powerto legislate is as ample as it could possibly be:there is no indication in the Scotland Act of anyspecific purposes which are to guide it in its law-making or of any specific matters to which it is to have regard”.197 In these circumstances, theordinary common law grounds of judicial reviewbased on improper purpose or failure to take intoaccount relevant considerations could not apply to the judicial review of an Act of the ScottishParliament: “its powers are plenary”, Lord Reedsaid, meaning that “they do not require to beexercised for any specific purpose or with regard to any specific considerations”.198 For the exerciseof its powers within section 29, the ScottishParliament is accountable not to the courts but tothe electorate, Lord Reed observed. As for judicialreview on grounds of irrationality (rather thanimproper purpose or relevancy of considerations)Lord Reed said that “considerations of justiciabilitylead to the same conclusion”:199

“Law-making by a democratically elected legislatureis the paradigm of a political activity, and thereasonableness of the resultant decisions is inevitablya matter of political judgment. In my opinion it wouldnot be constitutionally appropriate for the courts toreview such decisions on the ground of irrationality.Such review would fail to recognise that courts andlegislatures each have their own particular role toplay in our constitution, and that each must be carefulto respect the sphere of action of the other”.

However, none of this meant for Lord Reed that thecourts possess no powers to intervene on grounds

other than those in section 29. In “exceptionalcircumstances”, such as if for example it could be shown that legislation “offended againstfundamental rights or the rule of law”, the courtscould intervene.200 Lord Reed based thisconclusion on the principle of legality as set out by Lord Hoffmann in Simms.201 As Lord Reed putit, “the principle of legality means not only thatParliament cannot itself override fundamentalrights or the rule of law by general or ambiguouswords, but also that it cannot confer on anotherbody, by general or ambiguous words, the power todo so”.202 The Scotland Act, Lord Reed concluded,is to be interpreted bearing in mind the valueswhich the constitutional provisions are intended toembody: “Parliament did not legislate in a vacuum:it legislated for a liberal democracy founded onparticular constitutional principles and traditions.That being so, Parliament cannot be taken to haveintended to establish a body which was free toabrogate fundamental rights or to violate the rule of law”.203

The basis of the challenge in AXA to the Damages(Asbestos-related Conditions) (Scotland) Act 2009was twofold: that the legislation was adisproportionate interference with the petitioners’right to property under article 1 of the first protocolto the European Convention, and that it was “anunreasonable, irrational and arbitrary exercise of…legislative authority”.204 Both challenges failed.What is important about AXA is what the SupremeCourt says about the constitutional status of theScottish Parliament and, indeed, of Acts of theScottish Parliament. In the Court of Session in AXAthere had been several days of argument aboutwhether an ASP is primary legislation (like an Actof Parliament) and therefore not subject to commonlaw judicial review or whether it is secondarylegislation (like an Order in Council or statutoryinstrument) and therefore judicially reviewable. Inthe Supreme Court Lord Hope cut straight throughthis argument and said “we are in unchartedterritory”.205 The issue, he said, was “not answeredin the authorities” but had to be addressed “as oneof principle”. He then said this:


196 AXA, op cit, at [46].197 Ibid, at [146].198 Ibid, at [147].199 Ibid, at [148].

200 Ibid, at [149].201 R v Secretary of State for the Home Department, ex parte

Simms [2000] 2 AC 115.202 AXA, op cit, at [152].203 Ibid, at [153].204 Ibid, at [17].205 Ibid, at [48].

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“The dominant characteristic of the ScottishParliament is its firm rooting in the traditions of auniversal democracy. It draws its strengths from theelectorate. While the judges, who are not elected, arebest placed to protect the rights of the individual,including those who are ignored or despised by themajority, the elected members of a legislature of thiskind are best placed to judge what is in the country’sbest interests as a whole”.206

A parliament, Lord Hope continued, has “theadvantages that flow from the depth and width ofthe experience of its elected members and themandate that has been given to them by theelectorate. This suggests that the judges shouldintervene, if at all, only in the most exceptionalcircumstances”.207

Clearly, the views of the Supreme Court in AXA arevery different from those expressed by LordsRodger and Prosser in the Inner House in Whaley vWatson. For the Supreme Court, the ScottishParliament is plainly not an ordinary public body“like any other”, but a legislature, democraticallyelected, with plenary powers, which produceslegislation that the courts may review on commonlaw grounds only in the most exceptionalcircumstances. In our view, this is precisely howthe Scottish Parliament – and indeed all the UK’sdevolved legislatures – should be understood.

Between minimalism and expansionism: a middle way

Nonetheless, if the Inner House was too restrictive in Whaley v Watson, there are somedicta in Robinson and AXA that may go further than was necessary. Most of the case law sinceAXA has sought to maintain the general approachto devolution set out in that case while, at thesame time, expressing that approach in a moreconsidered tone. This can be seen, for example, in Imperial Tobacco (both in the Inner House208

and in the Supreme Court209), in the Welsh LocalGovernment Byelaws Reference210 and in theWelsh Agricultural Wages Reference.211

In Imperial Tobacco the petitioners argued that twoprovisions of the Tobacco and Primary MedicalServices (Scotland) Act 2010 were outside thelegislative competence of the Scottish Parliament.Section 1 of that Act banned the display of tobaccoproducts at the point of sale, and section 9 of theAct prohibited the sale of tobacco products invending machines. The petitioners’ principalargument was that the provisions in questionrelated to the reserved matters of consumerprotection and product standards and safety. The Scottish Ministers argued that the Act relatedprincipally to public health and that it therefore fellwithin the legislative competence of the ScottishParliament. The petitioners were unsuccessful inboth the Inner House and the Supreme Court, bothCourts unanimously upholding the lawfulness ofthe ASP.

In the Inner House, Lords Reed and Brodie soughtto distance judicial interpretation of the ScotlandAct 1998 from what Lords Bingham and Hoffmannhad said about the Northern Ireland Act inRobinson: the Scotland Act is “not a constitution”,they each ruled, but an Act of Parliament.212

There was no authority for the Scotland Act to beinterpreted any more generously or purposivelythan any other statute: there was no internationalagreement such as the Belfast Agreementunderlying the Scotland Act, and what was said inRobinson about constitutional statutes and the like was “not readily applicable” in the case ofScotland.213 Even though section 101(2) of theScotland Act provides that an ASP “is to be read as narrowly as is required for it to be withincompetence, if such a reading is possible, and is to have effect accordingly” Lord Brodie ruled thatthere is “no basis for suggesting that the ScotlandAct should be construed with a view to finding thata provision which has been enacted by the ScottishParliament is within competence rather thanoutside of it”.214 These dicta are welcome.

In the Supreme Court, Lord Hope, for a unanimousCourt, set out three rules governing theinterpretation of Acts of the Scottish Parliament,as follows. First, the question of competence must


206 Ibid, at [49].207 Ibid.208 [2012] CSIH 9, 2012 SC 297.209 [2012] UKSC 61, 2013 SC (UKSC) 153.210 [2012] UKSC 53, [2013] 1 AC 792.211 [2014] UKSC 43, [2014] 1 WLR 2622.

212 Imperial Tobacco (Inner House), op cit, at [71] (Lord Reed)and [181] (Lord Brodie).

213 Ibid, at [182] (Lord Brodie); see also the Lord President(Hamilton) at [14].

214 Ibid, at [183].

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be determined in each case according to theparticular rules contained in the devolutionlegislation; Parliament defined these rules “whileitself continuing as the sovereign legislature of theUnited Kingdom”.215 Secondly, “those rules mustbe interpreted in the same way as any other rulesthat are found in a UK statute”.216 The devolutionlegislation, said Lord Hope, was designed to create a system that is “coherent, stable andworkable”.217 The best way of ensuring this is to adopt an approach to interpretation that is“constant and predictable”.218 Thus, the Court will take the same approach whether the subject-matter of the legislation is the sale of tobacco or areferendum on independence. Thirdly, Lord Hopesaid, “the description of the Act as a constitutionalstatute cannot be taken, in itself, to be a guide toits interpretation”.219 Like Lord Brodie (but withoutciting section 101(2)) Lord Hope said that there isno “presumption in favour of competence” andconcluded that the Scotland Act “was intended,within carefully defined limits, to be a generousgrant of legislative authority”.220

The core devolution case law from Scotland hascome from challenges brought by private parties,such as AXA General Insurance, Imperial Tobacco,the Scotch Whisky Association,221 Moohan,222 and,most recently, the Christian Institute and the FamilyEducation Trust.223 This is not the case in Wales.The United Kingdom Government has referred tothe Supreme Court two Bills passed by the National

Assembly. Both challenges failed.224 In the former(the Local Government Byelaws Reference), theSupreme Court ruled that the principles governingthe interpretation of ASPs set out in ImperialTobacco apply equally to the interpretation Billspassed by the Welsh Assembly.225

The second reference concerned a Bill that madeprovision for agricultural wages. The AttorneyGeneral argued this was outwith competence as itrelated to remuneration for employment, which hesaid was a matter reserved to Westminster. TheCounsel General (on behalf of the Welsh Ministers)argued that the Bill was within competence, as itconcerned agriculture, which under theGovernment of Wales Act 2006 is devolved to theAssembly. The Supreme Court ruled that the Billcould be characterised in either way. Under theGovernment of Wales Act 2006, section 108, a Billis within competence if it relates to one or more ofthe subjects listed in Schedule 7. As agriculture isone such subject, the Bill in question was held tobe lawful and within competence: the Court notedthat section 108 does not provide that a Bill iswithin competence if it relates to a devolved matteronly and cannot be characterised as relating alsoto a reserved matter.226

The Government of Wales Act 2006 lists thosepowers devolved to the Assembly (everything elsebeing reserved), whereas the Scotland Act 1998 liststhe powers reserved to Westminster (everythingelse being devolved). The latter approach isgenerally preferred to the former. The SilkCommission on Devolution in Wales recommendedin 2014 that Welsh devolution should move to theScottish model – ie, abandoned the “conferredpowers” model used in the 2006 Act in favour of the“reserved powers” model used in Scotland.227 In aCommand Paper published in February 2015, theGovernment accepted this recommendation: its


215 Imperial Tobacco (Supreme Court), op cit, at [13].216 Ibid, at [14].217 Ibid.218 Ibid.219 Ibid, at [15].220 Ibid. This is reminiscent of Lord Reed’s description in

AXA of the “plenary” powers of the Scottish Parliament.221 Scotch Whisky Association v Lord Advocate [2013] CSOH

70, [2013] 3 CMLR 34 (challenge on grounds of EU law and ongrounds of incompatibility with the Act of Union to Scottishlegislation on alcohol minimum pricing; the challenge failed in the Outer House).

222 Moohan v Lord Advocate [2014] UKSC 67, [2015] 2 WLR141 (challenge on grounds of incompatibility with Conventionrights to the exclusion from the franchise for the Scottishindependence referendum of prisoners serving terms ofimprisonment; the challenge failed in the Court of Session and in the Supreme Court).

223 Christian Institute v Lord Advocate [2015] CSOH 7, 2015SLT 72 (challenge principally on grounds of incompatibility withConvention rights to Scottish legislation providing for a “namedperson” to be appointed as a guardian for every child inScotland; the challenge failed in the Outer House; a reclaimingmotion (ie, appeal) is liable to be made to the Inner House).

224 Local Government Byelaws Reference [2012] UKSC 53,[2013] 1 AC 792 and Agricultural Wages Reference [2014] UKSC43, [2014] 1 WLR 2622.

225 Local Government Byelaws Reference, ibid, at [79]–[81].226 In reaching this conclusion, the Court cited section 154(2)

of the Government of Wales Act 2006, which provides that aprovision of an Act of the Assembly “is to be read as narrowly asis required for it to be within competence…, if such a reading ispossible”. We noted above that the equivalent provision in theScotland Act 1998 (section 101(2)) was not cited by the SupremeCourt in Imperial Tobacco. See further on section 154(2) below.

227 Silk Commission, Empowerment and Responsibility:Legislative Powers to Strengthen Wales (March 2014).

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implementation will require fresh legislationfollowing the May 2015 general election.228 In theAgricultural Wages Reference, however, the factthat Wales has a conferred powers model was whatthe Court relied upon to rule that the legislation inquestion was within the Assembly’s competence:the legislation related to a devolved matter listed inSchedule 7 and was therefore within competence.Had the Schedule listed reserved matters, the logicof the Court’s position is that the legislation wouldhave been declared to be incompetent: the Courtstated that the Attorney General was not wrong toargue that the bill related to employment andindustrial relations.

A backwards step?

The Supreme Court’s most recent ruling on the lawof devolution was handed down on 9 February2015: the Medical Costs for Asbestos Reference.229

The Recovery of Medical Costs for AsbestosDiseases (Wales) Bill was referred to the SupremeCourt by the Counsel General: not because hethought it was outwith competence (he argued thatit was within competence) but because he knewthat the vires of the Bill was in any event going tobe challenged by insurance companies. Ratherthan endure years of litigation going up throughthe judicial system, he referred the matter directlyto the Supreme Court for a ruling.

The Bill made employers liable to the WelshMinisters for the costs to the Welsh NHS oftreating their employees’ asbestos-relateddiseases (where the exposure to asbestos hadoccurred during the course of employment). TheBill additionally required employers’ insurancecontracts to be read as if they covered suchliability. In other words, the Bill transferred thecosts of medical treatment for certain industrialdiseases to be transferred from the taxpayer (ie,from the Welsh NHS) to employers and theirinsurers. Section 2 of the Bill concernedemployers; section 14 concerned insurers. LordThomas (with whom Lady Hale agreed) would haveheld that section 2 was within competence and wascompatible with the right to property in A1P1, butthat section 14 was drafted with unnecessarybreadth that made it incompatible with A1P1.

Lord Mance (with whom Lords Neuberger andHodge agreed) ruled that the Bill was outwithcompetence in that it did not relate to devolvedmatters and that both sections 2 and 14 wereincompatible with the right to property in A1P1.

It is convenient to consider the dissent first. Undersection 108 of the Government of Wales Act 2006the Assembly has competence to legislate if a Billrelates to one or more of the subjects listed inSchedule 7. The “organisation and funding” of theNHS in Wales is listed in Schedule 7. Lord Thomasnoted that ‘funding’ could mean the raising offunds or the mere allocation of funds. He ruledthat it meant the former and that, accordingly, theAssembly has in principle the “competence toenact legislation that makes provision for chargingfor services by way of the treatment and long-termcare of those with asbestos-related diseasesprovided that the moneys [sic] so raised are usedexclusively for the Welsh NHS”.230

As for A1P1, Lord Thomas ruled that there weretwo questions arising: did the legislation pursue alegitimate aim, and was a fair balance struckbetween the demands of the general interest of the community and the protection of the right toproperty. This second question, he said, “canproperly be described as the issue ofproportionality”.231 On the first question, LordThomas stated that making the wrongdoer (ie, theemployer) pay, rather than the public as a whole “isclearly an objective on which different views canreasonably be held” but that it was “in everyrespect pre-eminently a political judgment inrelation to social and economic policy on which it is for the legislative branch of the State to reach ajudgment”.232 On the question of proportionality,Lord Thomas stated that “great weight” should beaccorded to the judgment of the legislature,233 justas would be the case were the Court considering anAct of the UK Parliament. Lord Thomas gaveconsiderable emphasis to this last point, concludingthat each of the democratically elected assembliesand parliaments of the United Kingdom “must beentitled to form its own judgment about publicinterest and social justice in matters of social andeconomic policy within a field where, under the


228 HM Government, Powers for a Purpose: Towards a LastingDevolution Settlement for Wales (Cm 9020, 2015).

229 [2015] UKSC 3, [2015] 2 WLR 481.

230 Ibid, at [95].231 Ibid, at [105].232 Ibid, at [108].233 Ibid, at [118].

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structure of devolution, it has sole primarylegislative competence”.234 He acknowledged thatthe courts would not necessarily defer to a localauthority to the same extent, but cases concerningwhat Lord Thomas called “the judgment of amunicipality” were distinguished from those, suchas this case, concerning “a legislature enactingprimary legislation”.235

Lord Mance took a markedly narrower approach,both as regards reserved/devolved matters and asregards A1P1. As to the former, his starting pointwas a dictum of Lord Walker’s in the Scottish caseof Martin v Most236 that the expression “relates to”(in section 29 of the Scotland Act and section 108of the Government of Wales Act) indicates “morethan a loose or consequential connection”. There isa difficulty, however, in reading across what is saidabout section 29 of the Scotland Act as if it appliesequally to section 108 of the Government of WalesAct. Of course, there are parallels between thethree different devolution schemes in force inScotland, Wales and Northern Ireland: as LordHope noted in the Local Government ByelawsReference, “the essential nature of the legislaturesthat the devolution statutes have created in eachcase is the same”.237 Equally, however, LordNeuberger remarked in the same case that theyare “different statutes” and that, even where thesame words are used in each, one must be “waryof assuming that they have precisely the sameeffect, as context is so crucially important wheninterpreting any expression…”.238

The words “relates to” do not have the same effectin section 29 of the Scotland and section 108 ofthe Government of Wales Act. As noted above, ifan Act of the Scottish Parliament relates to areserved matter listed in Schedule 5 to theScotland Act it is outwith competence. On theother hand, an Act of the Welsh Assembly mustrelate to a devolved matter listed in Schedule 7 tothe Government of Wales Act in order to be withincompetence. This is the difference between the“reserved powers” model used in Scotland and the “conferred powers” model used in Wales. Theeffect of interpreting “relates to” as indicating

“more than a loose or consequential connection”in Scotland is that the competence of the ScottishParliament is treated generously: an ASP musthave more than a loose connection with a reserved matter before it may be held on thatground to be outwith competence. However, theeffect of interpreting “relates to” in this way inWales is the opposite, and diminishes thelegislative competence of the Assembly: an Act ofthe Assembly risks being held ultra vires unlessthe Assembly can show that it has more than aloose or consequential connection with a subjectlisted in Schedule 7.

Applying this approach to the matter before him,Lord Mance ruled that “rewriting the law of tort and breach of statutory duty by imposing on thirdpersons… liability towards the Welsh Ministers tomeet the costs of NHS services” was, at best, onlyloosely connected to the organisation and funding ofthe NHS and was therefore outwith the Assembly’scompetence. He contrasted the matter withprescription charges, where there is a directconnection, as users are directly involved with, andbenefitting from, the service in question.239 LordMance made no mention of, and did not cite, section154(2) of the Government of Wales Act. As we sawabove, this provides that a provision of an Act of theAssembly “is to be read as narrowly as is requiredfor it to be within competence…, if such a reading ispossible”.

As for A1P1, Lord Mance ruled that “rewritinghistorically incurred obligations” retrospectively to impose the recovery of hospitalisation costs onthose whose breach of tortious or statutory dutycaused them to be incurred requires “specialjustification”. As none was shown, he ruled that theright to property had been breached – apparentlyas regards both employers and their insurers.240

Lord Mance conceded that the recovery of suchcosts “could be thought” to be a perfectlyappropriate legislative policy and “would no doubthave been proportionate if introduced in relation tofuture exposure to asbestos and future insurancecontracts”.241 It was the retrospective nature of theBill that offended against A1P1, in the judgment ofthe majority.


234 Ibid, at [122].235 Ibid, at [123].236 [2010] UKSC 10, 2010 SC (UKSC) 40.237 Op cit, at [81].238 Ibid, at [50].

239 Medical Costs for Asbestos Reference, op cit, at [27].240 Ibid, at [66].241 Ibid.

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Whereas, for Lord Thomas, the Court should givethe same “great weight” to the judgment of theWelsh Assembly as it would to that of the UnitedKingdom Parliament, for Lord Mance, the Courtshould give “weight” to the Assembly’s judgmentwhile remembering that “it is the Court’sfunction, under GoWA, to evaluate the relevantconsiderations and to form its own judgment”.242

Lord Mance noted that, in the light of article 9 ofthe Bill of Rights, there is “perhaps… a relevantdistinction between cases concerning primarylegislation by the United Kingdom Parliamentand other legislative and executive decisions”.243

Again, the contrast with Lord Thomas is stark:the minority see all the UK’s legislatures insimilar terms, distinguishing them from localauthorities: the majority see Westminster asconstitutionally distinct and suggest fewerdifferences between devolved legislatures and local authorities.

Absent from Lord Mance’s judgment is any echo ofwhat Lord Hope had said in AXA about how “electedmembers of a legislature… are best placed to judgewhat is in the country’s best interests as a whole”,about the “advantages that flow from the depth andwidth of the experience of [a legislature’s] electedmembers”, and about “the mandate that has beengiven to them by the electorate”.244 Yet AXA, too,was a case in which insurance companiescomplained that legislation passed by a devolvedlegislature was incompatible with their Conventionrights under A1P1. In AXA, Lord Hope said that “thedemocratic process is liable to be subverted if, on aquestion of political or moral judgment, opponentsof an Act achieve through the courts what they couldnot achieve through Parliament”.245 It is worthnoting that Lord Mance gave a short judgment inAXA in which he agreed with Lord Hope, stating that he was in essential agreement with all hisreasoning (para 85).

The Welsh legislation struck down in the mostrecent Supreme Court decision is certainlydistinguishable from the Scottish legislation thelawfulness of which was upheld in AXA. As LordMance noted in AXA, when the relevant insurancepolicies were taken out, “there was no certainty

whatever how the law might treat claims forpleural plaques if and when they ever emerged”(para 95). In the Welsh case, by contrast, there isclearly a more manifest retrospective effect. Evenif this explains the outcomes of the cases beingdifferent from one another, however, it does notappear to explain the majority’s approach todeference, to weight and to proportionality being sostarkly at odds with the approach taken by theSupreme Court in AXA.

Conclusions to draw from the case law

The devolution case law reveals three strands ofauthorities, or three different judicial approaches.First, there are those that interpret devolution, itsconstitutional innovation and its consequencesnarrowly (eg, Whaley v Watson; aspects of LordMance in the Medical Costs for AsbestosReference). Secondly, there are those that gofurthest in the opposite direction (eg, the majorityin Robinson). Thirdly, there are those that strike a balance (AXA, Imperial Tobacco, Lord Thomas in the Medical Costs for Asbestos Reference). In our view, it would be preferable for the courts’devolution case law to be clearly and consistentlybased on this third approach.

A number of principles can be distilled from thecase law. Among these are the following:

• that devolution exists in order to strengthenand improve the governance arrangementsof the United Kingdom as a whole;

• that devolution is intended to be a system of government for the UK that is ‘coherent,stable and workable’;

• that the devolved legislatures enjoy plenarylaw-making powers and that, within thelimits of their competence as set byWestminster, they possess a generous grant of legislative authority;

• that, while there are differences of detailbetween the three devolution regimes, theyare nonetheless best seen as a single body oflegislative reform for the United Kingdom,accompanied by a single body of case law;

• that under devolution, the UK has fourlegislatures that enact primary legislation –that is to say, the devolved legislatures arenot public bodies akin to local authorities,but parliaments or assemblies that make law.


242 Ibid, at [67].243 Ibid, at [56].244 Op cit.245 Op cit.

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