Ian Swanson: MSPs must scrutinise new powers before they begin

File picture: Ian Georgeson

File picture: Ian Georgeson

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THE deal is done and the argument is over, it seems. After months of wrangling, the row about Scotland’s future funding from the UK appears to be settled – at least for now.

Accusations that the Treasury was trying to use the latest transfer of new powers to Holyrood as cover to rob Scotland of billions of pounds are in the past.

And the agreement between the Scottish and UK governments on the so-called fiscal framework – setting out how Scotland’s share of cash from Westminster will be calculated – has been welcomed by almost everyone.

The debate has already moved on to how the new powers will be used – with both Labour and the SNP detailing their plans to vary welfare provision.

But the funding deal – essential for implementing the new tax and welfare powers for Holyrood, expected to come into effect in 2017 – has still to be scrutinised by the Scottish Parliament’s devolution committee.

And it is important the MSPs do give careful examination to what the two governments have agreed on, even though it has found few critics so far. Any sudden consensus should always be regarded with a degree of scepticism – especially when the controversy which raged before was so robust and the discussions all took place behind closed doors.

Politicians, officials and commentators alike may be relieved to leave behind the technical and perhaps even tedious arguments over which formula would have what effect. But these are crucial matters with major consequences which up until now have not been properly exposed to outside scrutiny.

The deal which was agreed involved the Scottish Government accepting a version of the Treasury’s preferred model to calculate the funding, but amended to include the “no detriment” guarantee that the cash paid will be not a penny less than Scotland would have got under its own preferred model.

Then, after five years, the whole matter will have to be debated and a new agreement reached – with no default to any one formula or another.

Some of the academics who warned most strongly of the dangers of getting the wrong deal have given their blessing to the agreement.

Leading economist Professor Anton Muscatelli – who said Scotland could end up billions of pounds out of pocket if the Treasury got its way – has said the deal now secured is “a good one for both the UK and Scottish taxpayers”.

But a note of caution has been sounded by the Liberal Democrats about the longer term prospect. Their leader Willie Rennie says once the Treasury model – however tweaked – is embedded in the arrangements, it will be harder to move to something else five years down the line.

Scottish Government insiders insist even if the review at the five-year point cannot find an agreed alternative and decides to continue with the existing arrangements, that “status quo” will be the formula which guarantees no detriment.

The review can be seen as a useful safeguard, offering the opportunity to correct any problems which emerge over the next five years. On the other hand, it carries the prospect of a rerun of the prolonged negotiations we have just been through with who knows what outcome.

This is supposed to be the start of a new era of devolution with more powers at Holyrood than ever before. MSPs must be thorough in their examination of the financial arrangements before it gets going.

ian.swanson@edinburghnews.com