The Calman Commission Commission on Scottish Devolution

Lesson Starter Outline the Barnett Formula. Outline the key features of the Scotland Bill 2011 You have 10 minutes to complete this task. Help each other!

About the budget of Scotland. The Calman Commission What will I learn?

Success Criteria I will be able to identify where Scotland’s budget comes from. I will outline the key recommendations of the Calman Commission. I will identify the main changes that were proposed under the Calman Commission.

What is the Calman Commission? The remit of the Commission on Scottish Devolution is: "To review the provisions of the Scotland Act 1998 in the light of experience and to recommend any changes to the present constitutional arrangements that would enable the Scottish Parliament to serve the people of Scotland better, improve the financial accountability of the Scottish Parliament, and continue to secure the position of Scotland within the United Kingdom."

Scotland’s Budget Scotland receives money from the UK parliament – block grant. Currently 30 billion a year. George Osborne wants to cut the Scottish budget as it has doubled since devolution.

Scotland’s Budget One crucial feature of the Scottish Block grant is that it allows ministers to decide how the annual budget is spent. Expenditure is granted en bloc, not per service (health, transport)- thereby giving ministers the opportunity to relocate funds between services in line with their priorities.

The Calman Commission Recommended new fiscal accountability to Scotland. Before the Scottish Government had no link between spending and taxation, and between its decisions, consequences and economic growth.

INCOME TAX – More control of its own revenue raising- half of the income tax raised in Scotland along with stamp duty and air passenger duty would be collected by the Scottish Government and would form one third of the budget. The Scottish Parliament has always had the power to vary the standard rate of income tax - the so-called Tartan Tax - by 3p, but this has never been used.

INCOME TAX – The Calman Commission has called for a new Scottish-set tax, still collected by HMRC. Cut income tax by 10p. Scottish Government would be able to set its own rate of the tax.

Scotland set its own rate of borrowing- up to £2.7 billion. In return, the annual block grant from Westminster to Holyrood would be cut and MSPs would be directly responsible for raising about a third of the money they spend (from taxes such as stamp duty and land fill tax) The increased borrowing power would help capital projects like new roads and schools.

These changes are being phased in over the next few years. See handout for details.

OIL - Gaining control over "Scotland's oil" has been a key SNP policy since the 70s - but Calman warned of the reliability of North Sea revenue because of volatile world oil prices, and said value was likely to decline in future. The commission also recognised that oil and gas revenue would continue to contribute to the UK-wide pot, therefore continuing to add to the total level of public spending in Scotland.

BARNETT FORMULA - The controversial population-based formula used to work out Scotland's share of Treasury cash under the block grant. Calman said the Scottish Parliament still needs a grant from Westminster, as many taxes are not devolved or assigned - and also recommended Barnett should stay for now. Critics of the formula, in use since 1978, say it gives Scotland an unfairly large slice of the funding cake.

There have also been wide-ranging calls from Holyrood parties to devolve the power to run elections north of the border. Its report also called for Scottish ministers to be responsible for appointing a Scotland representative on the BBC trust.

THE UNION - The Calman commission - backed by the pro- union parties - has been much derided by the SNP for deciding not to consider the independence issue. In its conclusions, the commission has declared devolution to be a success and said the Union works to Scotland's advantage, especially in economic matters.

Can I... I will be able to identify where Scotland’s budget comes from. I will outline the key recommendations of the Calman Commission. I will identify the main changes that were proposed under the Calman Commission.