Scotland's Union

'It is no accident that the SNP now regard these plans for a Scottish parliament as the fastest way to achieve complete separation because they realise that the Scottish people would never forego the benefits of the Union unless they were faced with the sort of constitutional mess that would be created by devolution..' Scottish Conservative & Unionist Policy Document.

Scotland's Union

The future of Scotland’s place as a full and equal partner in the United Kingdom is the most serious political issue which we face today. It is only the Conservative and Unionist Party which stands unequivocally for the Union; all our opponents have policies which, if ever implemented, would lead to the break-up of that Union.

Under the plans put forward by the SNP, there is the option of immediate and complete separation, while the devolution proposals of the Labour and Liberal Democrat Parties would eventually lead to the same result by dint of their sheer impracticality. It is no accident that the SNP now regard these plans for a Scottish parliament as the fastest way to achieve complete separation because they realise that the Scottish people would never forego the benefits of the Union unless they were faced with the sort of constitutional mess that would be created by devolution.

Nobody should underestimate the dire consequences that would result from the loss of that Union. Scotland enjoys considerable advantages from being a full member of the most enduring and successful political and economic partnerships in history:

• Higher Public Spending - Scotland receives 10% of all UK Government spending but contributes only 8.9% of all taxes. That amounts to a financial benefit to Scotland of some £8 billion per annum, a sum which an separate Scotland would have to finance through higher taxes, lower spending or higher borrowing. There are not Conservative figures, but ones calculated by economists at the Scottish Office and substantiated by well-respected and independent economic bodies such as the Fraser of Allander Institute. Even if a separate Scotland were to have all North Sea Oil and Gas Revenue, that would still leave a deficit of over £6 billion to be financed;

• Economic Benefits - The 1707 Union created one of the world’s first single markets and single currencies and has brought enormous economic benefits not just to Scotland, but also to the other parts of the United Kingdom. The prosperity of many of our cities was originally founded on trade with countries formerly part of the British Empire, and today the same Union gives Scotland’s rich seam of entrepreneurs, industrialists and businessmen easy access to the UK and EU markets and helps make Scotland attractive to inward investors;

• A powerful voice - As a result of the Union, Scotland has a stronger voice in the British Isles, the EU and on the wider world stage. The strength of the United Kingdom is far greater than the sum of its parts and its dissolution would considerably weaken all its nations.

However, it is simply not true to say that our party pays no heed to Scotland’s needs by steadfastly refusing to consider any change whatsoever. Throughout the history of the Union, it has been the Conservative and Unionist Party which has introduced radical changes to the system of Government in Scotland. It was our party which created the post of Scottish Secretary of State and the Scottish Office in the last century and which, more recently, has given substantial new powers to the Scottish Grand Committee (the body of all 72 Scottish Members of Parliament).

However, the crucial points about our evolutionary changes is that they are designed to strengthen the system of Government in Scotland and the Union. The policies of the other parties would inexorably weaken and ultimately destroy the Union.

On St Andrew's Day last year, Michael Forsyth unveiled a further package of measures designed to improve the visibility, accessibility and accountability of the system of Government in Scotland which build on the Taking Stock reforms introduced by his predecessor, Ian Lang. They key changes are:

• An enhanced role for the Scottish Grand Committee (SGC) - It now meets on a more regular basis at various locations throughout Scotland. To date it has met in Edinburgh, Glasgow, Stirling, Kilmarnock, Aberdeen and Inverness. It now has increased powers to handle Scottish legislation and can question any government Minister, including the Prime Minister and the Chancellor of the Exchequer. Indeed, in theory there is nothing which a Scottish parliament could do that cannot be done by the SGC except raise the Tartan Tax. Nor could a Scottish parliament hold to account the United Kingdom Chancellor (who would still be responsible more most of the Scottish budget) and the Prime Minister could only have a seat in the visitors' gallery. Anyone who argues that the SGC can ultimately be overruled by the Commons is effectively arguing for Scottish separation;

• An enhanced role for the Scottish Economic Council - The remit of this body (which exists to advise the Scottish Office on economic matters) will be expanded to embrace every issue which affects Scotland’s economic performance; its membership will be broadened to reflect the widest possible range of Scottish economic opinion; it will meet much more frequently and it will be chaired by the Secretary of State for Scotland.

• More powers for local government, communities and individuals - We wish to see local government restored to public credibility and have enhanced powers. Conservatives regard local government as the mortar binding civic society and we wish to see it once again being the cornerstone of our communities. That is why we have launched an ambitious programme of devolution of power downwards from central Government, through local government to community councils, residents’ associations, school boards and governors, health trusts, tenants’ associations, crofters, local groups, families and individuals.

This is real devolution giving power to the people, powers based on the free exercise of choice. They stand in marked contrast the plans of the Labour and Liberal Democrat parties which would, in effect, centralise power and create such tensions between Edinburgh and London that the Union would be fatally weakened.

Why we reject the devolution plans of the Labour and Liberal Democrat Parties

The Labour Party, aided and abetted by the Liberals, seek to create a directly-elected Scottish parliament sitting in Edinburgh which would deal with all matters currently the responsibility of the Scottish Office (including Health, Education, Housing, Law & Order, Local Government and Rural Affairs). While this may seem superficially attractive to some, it is a deeply flawed and dangerous set of proposals which will inexorably weaken Scotland’s ties with the rest of the United Kingdom. Our chief criticisms are:

• The threat to Scottish representation in Parliament and at the Cabinet table - In the aftermath of devolution, there would be no meaningful role for the Secretary of State for Scotland which effectively means that Scotland loses her direct voice in Cabinet. In addition, it is highly likely that Scotland’s current over-representation in the Commons would end, and we would therefore also be left with a smaller influence in Parliament which would still be taking important decisions affecting Scotland. Labour, for selfish electoral reasons, wish to keep the current 72 Scottish MPs after devolution, but even some of their own senior figures, such as Peter Mandelson, argue that the representation would be reduced;

• The Imposition of the Tartan Tax - which would make Scotland the highest taxed part of the United Kingdom, with all the economic problems that would bring (see below for full details);

• The financial tensions that would be created between a Scottish Parliament and Westminster - Labour wish to continue the generous funding arrangement currently enjoyed by Scotland, but also to give the Scottish parliament some tax-raising powers, the Tartan Tax. While the Tartan Tax will be damaging enough in itself, as it will account for only a tiny fraction of the total Scottish budget (around £390 million out of £14.5 billion) it is inevitable that a Scottish parliament eager to raise public spending will start to demand extra money from Westminster. However, far from being willing to grant extra money, English MPs at Westminster could well be trying to rein back some of Scotland’s generous funding as they no longer have any say over how it is spent and, of course, Scotland’s weakened representation would be unable to resist such pressure. This recipe for perpetual financial bickering can only fan the flames of separation;

• The West Lothian Question - which Labour still cannot answer nearly twenty years after it was proposed by their backbench MP, Tam Dalyell (who at the time represented the constituency of West Lothian). The basic problem is that following devolution, English MPs will be unable to vote on Scottish domestic matters as they are now the responsibility of the Scottish parliament, yet Scottish MPs would still be able to vote on those matters as they affect England. This situation would irritate the English MPs and tensions such as the financial one outlined above would result. Labour’s only response has been to describe this an irrelevant “anomaly”. They once suggested the creation of English Regional Assemblies as the answer but soon ditched this policy when they discovered it was unpopular in England;

• The creation of tensions between a Scottish parliament and local government - Unlike our policy of giving more powers to local authorities, it is inevitable that a Scottish parliament would centralise many of the powers held by councils. This is not just our view, but that of respected academics and senior Labour figures in local government;

• The absence of checks and balances - as the House of Lords would have no power to revise legislation passed by the Scottish parliament, Scotland would be in the unique position of having no system of checks and balances;

• The cost of a parliament - although Labour refuse to be drawn on the costs involved with setting up and running a Scottish parliament, the Scottish Office has estimated the annual cost to be around £40 million, money that will either have to be raised through the Tartan Tax or be cut from existing budgets such as Health or Education;

With all these in-built tensions, it is small wonder that the SNP now regard the creation of a Scottish parliament as the fastest way of delivering their ultimate goal of complete separation.

Implications of the Tartan Tax

One of the certain results of devolution would be the imposition of a Tartan Tax on Scotland. Labour and the Liberal Democrats would give the Parliament the power to raise the rate of income tax in Scotland by 3p. It is virtually certain that it would be imposed. Labour claim that the Tartan Tax is just a Tory lie and that the parliament could cut the rate of income tax by 3p as well.

However, scarcely a week goes past without some Labour or Liberal politician, including Labour frontbenchers, outlining how they would spend the Tartan Tax. It is nonsensical to suggest that a Scottish parliament could cut the tax rate - given the higher level of public spending enjoyed by Scotland, a cut in Scottish tax rates would effectively mean that English tax payers were paying higher tax in order that people in Scotland could have tax cuts!

The imposition of a Tartan Tax would have severe implications for Scotland. It would:

• Create huge anomalies and problems for the tax system - people pay tax according to their place of work. Thus Scottish people paid from London (such as MPs) would be exempt from the Tartan Tax, while English people paid from Scotland may become liable;

• Penalise those on lower wages - the Tartan Tax is a regressive tax as taxpayers on a lower income would face a higher % increase than those on higher earnings;

• Make Scotland the highest taxed part of the United Kingdom - thereby making Scotland a less attractive location for inward investors;

• Threaten Scotland’s financial industry and people’s savings - the Tartan Tax would also apply to interest and income from savings, thereby penalising people who rely on savings income for their livelihood and placing Scotland’s financial institutions at a huge competitive disadvantage.

• Create inflationary pressures - as workers seek higher salaries to counter the effect of their higher tax bills.

The Tartan tax plans have been roundly condemned by Scotland’s business and financial community, with the Chairman of the Scottish Chambers of Commerce, Lex Gold, describing it as “fatally flawed” (Scottish Daily Mail, 6 March 1996)