╨╧рб▒с>■  ■                                                                                                                                                                                                                                                                                                                                                                                                                                                   ▄еhcр eАРЛ#Р"К"КК"К"К"К"К"Ю"Ю"Ю"Ю"Ю"Ю" и" Ю"┤"1▓"▓"▓"▓"▓"▓"▓"▓"▓"┤"┤"┤"┤"┤"┤"х"X=#N┤"К"▓"▓"▓"▓"▓"┤"▓"К"К"▓"▓"▓"▓"▓"▓"К"▓"К"▓"▓"p!╝FЦ╞Ю"Ю"К"К"К"К"▓"▓"▓"▓"Unsatisfactory All Round Jim Cuthbert Margaret Cuthbert June 2006 The Education Bill, enshrining BlairТs reform of the school education system in England, received its third reading in the Commons in May. Its passage highlighted one of the recurrent controversies of devolution, namely, should ScotlandТs Westminster MPs vote on issues, like the establishment of Trust schools and Academies, University top-up fees, or Foundation Hospitals, which appear at first sight to be purely English domestic issues. We show here that, given the way that the funds for the Scottish Parliament are determined, Scottish MPs have both an absolute right, and indeed a duty, to vote on such issues: rarely is abstention appropriate. Nevertheless, there are inherent problems with the current constitutional set-up, which makes the situation fundamentally unsatisfactory for both Scotland and England. To understand the full implications of this issue, we need to consider the mechanism which determines the bulk of the funding of the Scottish Parliament. This is the Barnett formula which says that the change per head in the funds allocated to Scotland should equal the planned change per head in expenditure in England on devolved programmes, like Health and Education. Thus, if a decision on an English domestic programme affects the requirement for public expenditure in England, then Barnett means this will have a direct impact on the funding of the Scottish Parliament. English Ministers have denied that the Education Bill has Barnett consequences for Scotland: however, in saying this they are being, at best, naяve. Important Barnett consequences can arise, not just through direct changes in planned expenditure, but from more subtle backdoor effects. For example, as we pointed out in papers published in the Fraser of Allander Quarterly Economic Commentary, (September 1999 and December 2002), the public expenditure aggregates on which the Barnett calculations are based are NET of fees, charges, and also other sources of income coming from non-governmental sources. So any change which affects the relative amount of such other income will have knock on Barnett consequences. The more other income that comes in to, say education, in England, the smaller the amount of finance the public sector will need to contribute Ц hence reducing the funding coming to the Scottish Parliament. But the very design of Trust schools is intended to encourage other parties to get involved, so the effect on other income could be large. It is estimated that the private contribution to an individual Trust school will be г2 million. Also note that the government is likely to be under extreme pressure in the medium term to maximise other income. Barnett consequences for Scotland are implicit, therefore, not just in headline spending decisions for England, but also in the very nitty-gritty of detailed decisions on English education and health programmes. This is the feature which makes it essential, under the present constitutional set-up, for ScotlandТs Westminster MPs to get closely involved in consideration of English devolved issues Ц and to do so from the point of view of considering the funding interests of the Scottish Parliament. This argument gives the lie both to the traditional Tam Dalyell formulation of the West Lothian question: and to the traditional stance of LabourТs Scottish lobby-fodder MPs, voting for the party line at Westminster, even though this may be directly counter to the funding interest of the Scottish Parliament. Note, for example, that Higher Education top-up fees in England passed into law with a margin of only 5 votes: in the crucial Division, 46 Scottish Labour MPs supported the Bill. And yet, the existence of top-up fees in England is now causing acute financial pressure in the Higher Education sector in Scotland. Or to put this argument another way Ц suppose that Scottish MPs were barred from voting on English domestic issues. Since the Barnett formula is the key determinant of the bulk of the funding for the Scottish Parliament, this would mean that Scottish MPs, and the Scottish people, would have no way of influencing the decision process determining the funding of the Scottish Parliament. In this respect, Scotland would be unique among advanced Western democracies, in having democratic institutions concerned only with spending money, but having no control on raising the money to be spent. But while Scottish MPs have a clear duty to vote on English domestic issues, nobody could argue that the present system is at all satisfactory. For one thing, while Scots do possess this means of influencing the funding coming to the Scottish Parliament, it is neither desirable nor efficient that our only means of doing so is by interfering in the domestic affairs of another country. This is not merely unjust to the English: the situation has, quite understandably, aroused such a degree of anti-Scottish feeling in England that it appears very unlikely that there will ever again be another Scottish Prime Minister of the United Kingdom after Gordon Brown Ц even assuming he ever makes it to No.10. So in a fundamental sense the present system has resulted in a basic disenfranchisement of Scotland. Both Scotland and England, therefore, can quite justifiably be thoroughly dissatisfied with the implications of the current constitutional settlement. What we have here, in fact, is one particular manifestation of a deeper fault line running through current constitutional arrangements. This arises because the Westminster Parliament is, at one and the same time, attempting to fulfil the two inconsistent roles of being both an English national parliament, and a UK federal parliament. Fundamental difficulties will recur until this contradiction is resolved. For a Nationalist, the natural resolution is, of course, full independence for each of the constituent countries in the UK. Until then, there would be considerable advantages for moving to a formal federal structure for the UK. For Scotland and Wales, there would be particular attractions to this option, for the following reason. Given the current political makeup of the UK the natural complexion of an English national government would be Conservative: while there is a good possibility that any federal UK government, and the Scottish and Welsh Parliaments, would be left of centre. Scotland and Wales would then be able to watch with a good deal of satisfaction the evolution of the resulting political dynamic. !С─бЬ─Э─дВ.е╞Aжзиайак╗ ╛ Р│■№uUБ&8BCxy║╗U │ ┤ hi&'ПР¤····°°°°°°°°°°°°°°°K@ё Normala c@ Heading 1UБ"A@Є б"Default Paragraph FontРР    │Р @1РTimes New Roman РSymbol "РArial"АЁ╨h)┤жЖ)┤жЖТ*ж&▓ Г,ЁNUnsatisfactory All RoundMargaret CuthbertMargaret Cuthbert ■   ¤   ■   ■                               ■                                                                                                                                                                                                                                                                                                                                                                                                       Root Entry         └Fp!╝FЦ╞АWordDocument    Л#CompObj            jSummaryInformation(        ф■    ■    ■                                                                                                                                                                                                                                                                                                                                                                                                                                                                           ■       └FMicrosoft Word Document MSWordDocWord.Document.8Ї9▓q■ рЕЯЄ∙OhлС+'│┘0┤Ша─╨ь° 0< d p | ИФЬдмфUnsatisfactory All RoundjШЦ°Margaret CuthbertЮЛpb?NormalvMargaret Cuthbert20.Microsoft WoDocumentSummaryInformation8             ▄                                    ■       └FMicrosoft Word Document MSWordDocWord.Document.8Ї9▓qxфself:Х╠, Unsatisfactory All Roundrd for Windows 95@F├#@УЁАИ╞@О╛BЦ╞@О╛BЦ╞▓■ ╒═╒Ь.УЧ+,∙о0м@HX` hp xфself:Х╠, Unsatisfactory All Round