 Oedden nhw, iawn. Fyelch i gael'r Rhwylliannol Fath pobl hyfforddiad. Felly ar gyflawn y Parlmenau ysgwrs, ond hefyd gennym ni fyddai'r eu cyrfodol. Felly, wrth gwrs, rydyn nhw'n cael ei wneud o gwybodol. Rydyn nhw'n gwybodol ar y troi maxo wr boundaries fel Bill Kidd, yn gyflawni ei ddweud â'r cyllidau. Nod yw Nawd Tavish. Ar gyflawni'n ei ddweud o'i gwneud. So, thank you very much for coming along this morning. We have a good panel of witnesses, professors—I'm not gonna read out all your titles, professors, but I will mention my name. David Bell, David Heald, Charlie, Jeffrey, Michael Keating and Nicola McEwen. Thank you for coming along today to help us on the deliberations around the Smith commission proposals. I'm gonna try and run this a bit more like a round table, even though it's not set up in that way to try to get the conversation flowing. But that means a bit of discipline on us all. Members in the way they ask questions, obviously tight panellists to be as concise as they can. I'll try to pull it back if I feel it's going off in a direction that's not where we should be. General questions to begin with then we'll move into tax welfare and probably some of the constitutional stuff around that. So when a member asks you a question just accept that as a question to you all. yn esig i ni ddweud. Felly gallwch gan llawer yn hyn y gweithio. Ac i ddweud, can I just kick the proceedings off with the question of what extent a group of panel members should consider that the Smith commission proposals and the recommendations represent a coherent package of powers for the Scottish Parliament? How implementable gydawn gwaith i ddwylliannau i gaelwchau, sydd wedi ei gweithio gynnwys bob ychydigol. Felly, rydyn ni i gyd yn gwneud hwnnw i gaelwch. O'r hyn yn gyntafol fod yn ein peth o'r ffordd ein syn都? Rydyn ni i gaelwch. Felly, dweud wedi gyda'r ffordd yn oedd oeth fan y pethau, mewn cymrydol a'r cyffredinant yn y cwrs dechysigu Cyfaint a'r cyfoddau, ac y gwestiwch yn amlwg. Rydyn ni i gaelwch gan y gyddiadau mewn cyffredinant, society and portal research that will be required to put together a coherent set of proposals. We know the political circumstances in which the vow was made and the timetable was set, but it doesn't make for good policy making. On the taxation side, it would be better to think about the range of taxes that might be appropriate for the Scottish Parliament. There was an unfortunate fixation on income tax and so practically all the extra tax powers are loaded onto a single tax, which itself has various problems, which I'm sure my colleagues can explain, rather than having a broad range of taxes, which in devolved and federal systems would be more normal. On the welfare side, instead of thinking about what kind of welfare settlement might be appropriate for Scotland and what kind of powers might be devolved in order to create a more coherent welfare system, the approach was to block off pretty much all of universal credit, which doesn't leave very much over, and then just see what can be done at the edges. Finally, the approach, and this maybe stems from the way that it was negotiated amongst political parties, has not been to look at broad policy areas and think about what Scotland might do, but to take existing policies and existing programmes and devolve little bits of them. We have here and there in the report things like the extraction of ability to change the so-called bedroom tax, because that's a sore point, or the ability to legislate for gender equality in public policies, which are a very small slice of a bigger policy area, which is to do with equality legislation. I think it would have been better to have taken a little more time to have taken this through the next general election to allow people like us to do more number crunching and simulation on the taxation, and to get a bigger public input and a real public engagement, because I think the public don't understand really what is in Smith's, because they were not part of the process as the commission was putting together its proposals. I will not cover the same ground as Michael, though I pretty much agree with it. I wanted to go on to the implementability question and connect that to legislative process. Clearly, the Smith commission proposals are set to be transformed into a draft bill in January, which will then have at least some introduction into the House of Commons before the UK election. The UK election will intervene. The Commons will continue. The Lords will have a say and, ultimately, this Parliament will need on the precedent of the 2012 Scotland Act to give its consent. The challenges in that arise from the opportunities that that legislative process in two Parliaments gives to question the content of the Smith commission proposals. We have seen voices from within the parties, which signed up to the agreement, which have criticised it from various directions. There will be opportunity for those criticisms to be voiced and perhaps to gain traction. Then there's a second dimension, which it was rumoured we would hear more about today in the form of a publication by the UK Government of a Command paper on institutional reform in England. It's quite clear that a number of MPs, primarily in the Conservative party to some extent in the Labour party, are seeking to recreate the linkage between progress on the Smith commission proposals with reform in England, which David Cameron initially set out on 19 September and then moved back from. I think we will see attempts to re-establish that linkage, which of course then complicates matters by connecting Scottish reform with English reform, which itself is hardly a matter of consensus in England. So plenty of challenges is the summary. I agree with a lot of what my colleagues have said already. One of the concerns that I have building on what Michael was saying is that I think we're moving away from a reserved powers model, which was one of the strengths of the original devolution settlement. This increases the powers of the Parliament but at the same time makes the Parliament more dependent in a way because of the direct interdependencies in tax policy and welfare policy. That will create some challenges for managing that interdependence, perhaps some new anomalies as well and some constraints on what the policy options could be. I think there are lots of challenges. I think it is implementable and in the implementation process we will start to get some more substance on what the proposals actually mean and that that could maybe change things along the way as well, but I don't think it's sustainable because I think it will, politics might take the process of change anyway, but I think that there will be new anomalies that emerge, that increase pressure to come back to this again and maybe try and get something that's a bit more coherent. I'm more sympathetic than Michael is for the concentration on income tax, which I've been arguing for devolving income tax for a long time, but I've been very worried through the referendum campaign on the Smith commission coverage that people seem to think that more powers means more spend. It actually means a lot more risks and the question of how those risks are managed is crucially important. I think the other point is that the percentage of the Scottish Parliament spend that is actually covered by money notionally under the control of the Scottish Parliament has to be unpacked. Gordon Brown referred to 50 per cent, people now seem to be using a number of 60 per cent, but if you've got no policy control over those taxes it isn't in any sense genuine accountability, so fiscal accountability has to operate at the margin and the tax powers have to be usable and when the tartan tax came in I warned of the danger of power might atrophy from non-use and that's exactly what it did. The problem about non-use is that one carries all the administrative costs without actually having any of the policy control and one of the things that I would fear is that political parties will go into the in 2016 election promising either to reduce the Scottish tax rates or to not to put them above the rate in the rest of the United Kingdom and one saw in the autumn statement the disruptive potential of what the UK Government does. This Parliament spent a long time trying to reform property taxes, stamp duty land tax and produce new tax in principle at the beginning of April. What the UK Government then did is actually basically disrupt that implementation by suddenly changing the rest of the UK tax. So the question of the interaction between the two parliaments is crucially important and I think the package can be made, the Smith package can be made to work, but one's got to think very carefully about what the institutional arrangements are. A long time ago I proposed the territorial exchequer board, I think we've got to come to the point that we require some institution with the capacitor to access treasury data that will actually make sure that all the relevant information gets put in the public domain immediately and not with long-lacts. I won't add to what my colleagues have said but it is crucial in all of this to consider how the block grant will be adjusted in relation to the new powers that may be coming to Scotland and the distinction between annually managed expenditure and departmental expenditure limits is going to be very important in respect of that and I agree very much with David that there is a need to make this much more transparent, the way that the whole system works, because we're still going to be relatively exposed to decisions made at treasury level about how the formula works in practice, which stand to make quite a bit of difference. In my paper, David understandably drew attention to how stamp duty has changed. There's also arguably some gaming going on in relation to air passenger duty and corporation tax but in fact the most crucial decision made by, as far as Scotland is concerned, in the autumn statement made by the chancellor was the continuation of the ring ffencing of health and education spending in Scotland and if that had not been ring ffenced and cuts were spread across the entirety of departmental budgets at the UK level, the Scottish budget would be £2.5 billion less than it is currently going to be. The last couple of areas, one supplementary for me because it takes us into some of the areas that are explored in the papers, the transparency of the block mechanism, the Barnett formula and I think that David mentioned in his paper the potential for gaming and you used that same description David. I wonder if you could expand on that a bit more because obviously if you're sitting here in the Scottish Parliament and we've got in future set our tax rates, agree our policies but there's potential for disruption elsewhere in the way it's being described, that could be pretty significant so I think we need to understand it a bit more but also what mechanisms we need to put in place to begin to deal with that and I think you began to touch on some of that David. Can we just explore that a wee bit more? I've made a good academic living out of the Barnett formula for a very long time. The reason I've been able to make a good academic living is that the proper information isn't put in the public domain at the right time so for example how the block mechanism works, how things are determined to be comparability, I'm sure members have heard about the arguments about whether the Olympics, whether the regeneration of East London connected with the Olympics was Barnett relevant. There's a recent paper from the Institute of Physical Studies arguing that Scotland is currently £1 billion overfunded because of a complicated issue about how business rates in England are treated within the programme for communities and local government and that has effects which are said to benefit Northern Ireland and Scotland and damage Wales. One of the worrying things about Barnett is that because the Labour Government didn't actually maintain the system during the period of plenty of money around in the 2000s Scotland to some extent has lost Wales and the complaints of Wales are increasingly used by London against Scotland and to some extent against Northern Ireland so that without the numbers in the public domain presented in an annual paper to all the parliaments and assemblies of the United Kingdom there will always be arguments about whether there have been political fixes that are to the advantage of some or the disadvantage of others and the point I made to the Finance Committee recently is that I don't think the finance secretary in Scotland can actually propose an increase in the Scottish income tax rate above the rest of the United Kingdom income tax rate unless one is sure there will not be punishment through some adjustments on the block grant and similarly the reason why when this parliament had too much money in the 2000s because of Barnett consequences coming from English health and education and it was all piling up in end-year flexibility at risk of being taken away by the Treasury the reason why the parliament couldn't use the tartan tax in the downwards direction is that people feared that people feared that the Treasury would actually come and punish the parliament by amending the block grant so you can only have serious tax varying powers at an evolved level if there's confidence there are not secret repercussions in terms of your grant settlement so I think the Smith commission proposals can be made to work but they can only be made to work as Michael earlier said that there now needs to be proper technical discussion of the detail but they can only be made to work if there's proper transparency about how the system operates I know when Mark has got a supplementary in that area which is specifically on the Barnett stuff is it? It touches on what David Bell was talking about in terms of adjustments and it relates to the present experience around the land and building transaction tax now at the moment as you say the cabinet secretary outlined his proposals for the rates for LBT at the time he said he didn't know at that stage for sure that they would prove to be revenue neutral because the block grant adjustments had not yet been made clear I understand that to date with you know only a couple of months to go until the budget has to be set that remains unclear and so the concern would be that that kind of approach on simply on LBT if that plays out for other devolved taxes we might find ourselves in a very troubling position when it comes to trying to set rates or being put in the position of setting rates before we know what the adjustments are likely to be finding out later the adjustments are not what we anticipated they would be and having to make a recalculation and a readjustment and all of the knock-on consequences that could have for wider Scotland so I'd be interested in your views on that and how we overcome that so David you want to go on this one? Yeah just going on I mean so inevitably if you take on tax powers you will take on new risks and new opportunities that's clear how these are kind of mediated really comes through how the block grant is adjusted so you can kind of share some of the risks by adjusting the formula in in one way or another for example you could adjust the block grant in relation to changes in population and that takes out the population risk so how this is done is is tremendously important and really nerdy I'm afraid but but but it is extremely important and that's why it's it it is absolutely um I think essential to have the rules agreed in advance way in advance of of you know the current situation and also transparently as as David has said so that everyone knows where they stand now that being the case you know it is still quite possible to have in relation for example to income tax to have tax competition on the same tax base so the the UK government is taxing the incomes of people in Scotland and in the rest of the UK and Scotland is also taxing that that same tax base and there's quite a literature on this issue because the same thing happens in the US where you have state and federal income taxes or you don't have it in all states but in most states and the question then is do people end up getting overtaxed and depends what kind of decision is being made and and David is taking the view that it won't be possible for the Scottish government to increase the the headline tax rates over the UK rates it might be possible to play around with the with the bans because that may be seen to be less headline grabbing but I think we do have to be aware of this possibility as well that that you can end up with a situation where people are because they're being taxed on the same on the same tax base twice that it's possible you end up being overtaxed could I just clarify I didn't say you couldn't use all to the headline rates I said you couldn't use the headline rates unless you had certainty about what the grant repercussions were that that's essentially that's essentially my point but responding responding to the question um I think there are two issues one of them is there are big technical issues about calculating the block grant deduction when you get a tax that's particularly the case where you have a transactions tax like the property tax I don't personally I don't like transactions taxes it'd be better if it was an annual tax but I understand the political difficulty of that so there's a there's a serious technical issue which you one should do openly and you need to do it sufficiently ahead of decision the decision about how it's done how how the deduction will be calculated needs to be done sufficiently ahead of the political decision on what the rate what the rates are but but the but the other issue is a concern that the UK government could cut income tax rates and put up national insurance rates so the kind of substitutability the substitutability of taxes by by the UK government could put pressure on scotland and on wills wills if wills get wills wills gets wills gets an income tax and the important point was that this parliament at least tried to do the change in in property transaction tax in a revenue neutral way what the UK government did in the autumn statement wasn't revenue neutral there was a substantial budget cost paid for by a paid for by other taxes and that's obviously when you've got a narrow portfolio of taxes that's obviously a risk for the devolved parliament we've gone into the area taxation and benefit very quickly quickly unexpected but it was my fault for doing that but i'll let Lewis come on in i've got Stuart McMillan was to ask question as well i have a general question but it does relate substantially to tax because the issue of implementation has been touched on already and there's a report this morning from the auditor general on the implementation of the 2012 act now clearly time is not the key constraint here at least if it is then it would be quite surprising because this has been two years in the implementation the conclusion of the auditor general is that the Scottish government has done what it needs to do in terms of the legislative framework which is one of the things we've talked about but that the actual provision of the people and the IT systems and so on for this one relatively small or two relatively small tax items is not yet in place and that that might have consequences i wonder if we can draw any lessons from that and generally from the implementation of the 2012 act thus far for the prospect of implementation of the next government tax is ever going to be easy i mean one only has to look at the record of hrmrc to see to see that but the crucial point about the smith commission proposals is that is that the implementation rests with rest with hrmrc once not revenue scotland isn't going to have a direct implementation role in the smith commission income tax but the crucial point is that for the first time in the UK the question of whether one's a scottish resident is actually going to be important and one number which i think people should bear in mind is that presently or the latest data that hrmrc have published is that 42 000 Scottish income tax payers pay 22 percent of Scottish income tax revenues and that means that the effort that hrmrc put into implementation is actually going to be going to be going to be very important and we can just in the same way as the big accounting firms have sold corporation tax avoidance schemes one can imagine one can imagine either that they'll be selling schemes on how to avoid either Scottish residents or to get Scottish residents depending on what the relative tax rates are so one need for the credibility of the taxes one needs clearly needs good implementation i just want to see if anybody also wants to comment this stage before i come back to you it's a wideness out of it it's okay just on the the issue of implementation i think it's absolutely critical because we know that it systems in these fields never work they're always over budget they're delayed governments are sold systems that are too complicated and that are invented in order to create work for the providers we know this and this is going to happen but this is exacerbated if you do things piecemeal and if you introduce too much complexity into the system what nicola was talking about earlier on complicated interrelationship of uk and Scottish whether it's taxation or welfare and so that's why it's important to get the principles right firstly and indeed we've got as you're saying about the 2012 act and then another thing following that we don't know what the relationship of these is going to be so it'd be much better to sort out the basis first have a proper discussion on that and then think about the implementation this again is another warning against rushing six things through too rapidly in response to political events charlie your lord do either i would uh i would add to that we've um david the davids have talked about the spillover effect um that can arise when the uk makes a tax decision which then has a significance for a tax power here um my another concern is has also been touched upon by the others and i wanted to put it in a slightly different way and that is that the the the balance of reduction of the block and the financial possibilities of new tax powers has to bear in mind the relationship of incentive and risk and the incentive has to be there for the Scottish parliament decision maker um to make a decision and if that decision produces more revenues per capita than is the case elsewhere in the uk then the Scottish parliament should benefit from that and there shouldn't be a consequent penalty through changes in in the block element equally and of course this is much less likely um the Scottish parliament could make bad decisions with its with its tax powers and end up with fewer tax revenues per head than elsewhere in the uk and it should bear that risk now i think getting those balances right and alongside other provisions which might produce compensation effects for for asymmetric shocks which are not the fault of the Scottish parliament decision maker is going to be absolutely crucial and i do think that's a question of principle which needs to be addressed before you get into the to the nerdy stuff that david has been talking about which is really really important but it's only important once you have a clear sense of principle at the outset do you mind come back in in that case at this stage well no just to say i think on the income tax thing as david says the the key issue for hmrc has been this decision about whether individuals are Scottish taxpayers or rest of uk taxpayers that work has largely been done i think that marginal cost then of allowing variation in rates and in bans is probably not going to be quite as quite as difficult for them to achieve interestingly one of the things that hasn't been spoken about very much is the cost to businesses of this the the change in the income tax system because i guess one of the things that maybe limited the changes to rates and bans was the possibility of of having a substantial or allowing the Scottish parliament substantial powers to define it in a taxable income and that would have i think meant much more significant costs to to the business sector in particular if the pa y system somehow was compromised lose something out of supplementary in terms of the implementation of the 2012 act and the criticisms that have been raised clearly colleagues will not have the opportunity to read the detail of the criticism but is the does it does it suggest that there is a risk of underestimating the institutional task of implementing changes that particularly those that involve the introduction on new tax new taxes and new tax power actually that's on that be quite useful to understand where the risk most lies most is it lies most in the uk whereas where we might require a lot of change is the biggest risk why here that's actually quite interesting i mean there's obviously a lot of reputational risk for the Scottish parliament if the tax power if devolved tax powers don't get implemented effectively um but a bit of obviously these things are difficult these things are difficult because the system the tax and benefit system are complex our computer IT systems have to cope with millions of millions of millions of people people and transactions and was only got to look at the difficulties with universal credit to see that this is an area a very very high risk area that one has to think about think about very carefully and clearly that means you have to put sufficient resources into these things and give it sufficient amount of time over optimistic timescales are driven by say election cycles are obviously risky Nicola? Just on the the delivery arrangements the Smith's report leaves open to the parliament to determine around those areas of devolved social security whether a similar exercise in establishing a Scottish bureaucracy be gone through here or whether delivery partnerships be put in place with DWP so i mean i haven't read the report from this morning i think from the reports on the radio was mostly about Revenue Scotland and clearly there would be lessons there to be learned but there's always going to be trade-offs with these things so one of the advantages of setting up a separate bureaucracy would be that it would give greater scope to deliver things in a way that most matched policy intentions or policy design of course that would come with some costs in terms of maybe waiting on implementation to get it right financial costs for setting up and running that kind of bureaucracy but you know some issues around that is where where does the trade-off best lie and to what extent do you think that this might be investing for the future is it likely that further social security powers would be devolved at some point in the future in which case you know that the investment might be worthwhile okay Stuart thank you good morning panel this morning we've heard some some interesting contributions and certainly some some interesting words in terms of lack of transparency gaming punishment and secret repercussions to name just just a few as well as lack of cohesion and so in terms of what Smith has proposed um does the the panelist think that that Smith's proposals actually are workable particularly regarding the financial elements and also is the is the constitutional architecture there between Scotland and the UK government to ensure that actually the financial arrangements actually please not yet no um smith page 15 i've got in front of me needs to there is a need to lay out the details of new bilateral governance arrangements which will be required to oversee the implementation and operation of the tax and welfare powers to be devolved by the way of this agreement they are not there um and they need to be there and I think we've heard from the panellists some of the the features of the machinery which would be needed including regularity transparency and a clear set of principles which would underlie the operation of such arrangements but those arrangements are clearly not yet in place sorry can i just comment that I mean I think that there's a distinction to be made between constitutional arrangements and then intergovernmental machinery intergovernmental arrangements and then it there is the joint exchequer committee which is completely again transparency but you know it's something to perhaps build upon my understanding of that is that it's being focused on implementation of the scotland act 2012 but what i think would be needed is something more like a standing arrangement to oversee um not just the operation of those areas that are devolved but their relationship with what's not devolved and what's not reserved because there would be that constant mutual dependence in a way in the smith report there there are a lot of good intentions and good words about cooperation and so on but unless that's underpinned by institutions then it doesn't necessarily amount to very much what's been lacking in this debate is any appreciation of what happens in federal systems there's been a lot of loose talk about federalism and a federalism as the answer but the point about federal systems is that both levels have guaranteed powers guaranteed institutional capabilities which then allow them to cooperate otherwise it just becomes a one-way traffic it just becomes the treasury laying down the law and the Scottish parliament having to accept those rules we don't have that federal spirit here at all in the united kingdom i think it has to develop and the other thing is that it's very difficult to talk about this as a bilateral uk scotish arrangement when other parts of the uk are putting forward demands themselves and they will have to be part of the process now maybe they won't have exactly the same arrangements but it's be very difficult to imagine a system in which there's one set of arrangements for scotland and a completely different set of arrangements for weld and a completely different set of arrangements for the united for for for northern island responding to different principles and different ideas so this shows us once again having settled the independence issue at the referendum we've got to think about the united kingdom as a whole because if it's just scotland they're dealing with the treasury we'll lose but but if you have devolved administrations around the united kingdom we can develop some kind of federal spirit in which there's a greater equality in these relationships therefore that in terms of the overall kind of tax policy then there is a kind of lack of coherence with that and also a lack of potential lack of respect because there's a lack of understanding of the federal type operations that you're suggesting yeah i think it's all of those things now the answer of that is not new clever institutional arrangements the answer that will come from the political domain but but the institutions have got to be right and at the moment it seems to me going back to what david hill was saying and what both davids were saying there's a lack of transparency in these arrangements there's not even uh the kind of institution you'd have in a federal system that says but here are the figures we are verify these are figures are accurate uh we we know that both sides have the same amount of information if you've got an asymmetry of information that then you don't have the federal spirit and most federal systems have developed mechanisms in which these these things can be put out into the open at least we know what the figures are in spain which is like the uk halfway to a federal system this is one of the biggest problems simply the lack of of information from both sides as to what the other side is is doing may i add a comment to my calls um it would be utterly characteristic of this state for different arrangements to be produced for different parts of it each with their own impenetrable in complete impenetrable complexities um that would be the the natural modus operandi um and i think there's a challenge uh on this parliament uh and this this committee in preparing the parliament's thinking on on the smith commission powers and that is uh to situate scotland's debate within the wider uk and not see it as something self-contained within scotland there are very very clear linkages across debates um the welsh debate about fair funding is essentially a debate about what many see as unfair funding for for scotland and the the drive which is becoming significant in english public opinion for some kind of institutional recognition of england has an awful lot to do with perceptions about scotland and if if we are to come to something like the the set of uh uk wide transparent regular uh uh arrangements then those debates need to be connected and reconciled as one single set of things and not issues dealt with bilaterally through bespoke arrangements for each bilateral relationship. People now who've suggested they want to ask a question but rob gibson think was the first person to cut my eye. Thank you good morning panel. Do you mean are the matters related in the smith commission to external affairs are very sketchy indeed but michael keating has just mentioned spain being on a trajectory somewhat similar to britain at the moment in terms of the relationship with the sub-state governments. I wonder if we could look to some better practice in other places to find the methods that have worked for example in terms of the shared transparency in the next jacker board for example ideas of the kinds of taxes which other sub-states in other quasi federations and federations are able to call upon in order to fund their interests. With tax side many places have the ability to tax corporations us states canadian provinces have corporation tax powers they tend to converge because of competition but nevertheless they do have the power and sometimes what is more important than changing the headline rate of corporation taxes is the details the allowances for a search and development or whatever the way you can actually use that tax in detail uh excise taxes uh are widely devolved vehicle duty can't be devolved under european rules capital gains taxes inheritance tax inheritance taxes is widely devolved because uh it's on generally on fixed property which is easy to locate uh road tax is devolved even in france most centralised of countries road tax is devolved um there are possibilities in land taxation and here the review of local taxation is going to be very very important because that would give the opportunity to give local authorities more taxing powers and and then the scolish parliament would be able to attack less because uh you'd have local responsibility there and as far as uh excheca boards and so are concerned i think david heild knows a lot more about this than i do but in in australia in candor and in germany certainly there's a lot of transparency there's not a lot of transparency in spain or france or italy but in those other cases there are arrangements whereby you can actually see what's going on and you can get some kind of common database that both sides can share well just uh i mean so there are tax equalisation uh mechanisms in in different different uh states and it is important at the outset to kind of think about what kinds of differences in taxable capacity a state is prepared to contemplate so you get wide vary massive variations say across switzerland between different cantons and so part of the debate i think has to be around what kinds of differences in taxable capacity and in spending capacity are if you go to what charlie was talking about in relation to a wider debate within the uk's a whole what kind of differences are are acceptable within a federal state i'm going to do another 10 15 minutes in this day and i think we'll need to move on to this sort of general welfare stuff but linda you said you've got a very small stuff yeah very tiny tiny question that i was interested in what charlie was saying about the requirement well generally for more transparency but also the requirement that scotland doesn't act in isolation here um it strikes me that that uh the uk as an entity has always been very slow to embrace change and i wondered if you felt that the willingness would be there at the nation state level down in westminster to fully embrace the kind of changes that the panellers suggesting would be required to make all the component parts of the uk work with a degree of autonomy um and transparency that would be necessary for success that was a small supplementary was that yeah it just didn't say yes or no no not yet um there is a provider because um to the extent now that the institutional recognition of england in the uk's political system is being actively considered uh and there's a lot of um partisan tactic uh in that um but it may well happen in some form or other then that would give the the uk level authorities parliament and government uh a heightened rationale for distinguishing uk wide business that it transacts from english business that it transacts and once england becomes to be considered uh as a as a distinct political unit then you can have that consideration of the different component parts of the uk in a more systematic way than now but it probably does require england to be disentangled from the uk in terms of the uk parliaments and the uk government okay um bilkid and then come to drew smith thank you convener panel in terms of um what we've been discussing this morning which has actually been extremely beneficial for me to sort of try and set my head around where we stand following the referendum and the and the smith commissions deliberations i'm trying to see as i think a lot of people in scotland will be whereabouts we actually stand in terms of anything moving forward um within a timescale which is the type of timescale that was promised at the time of the referendum or just thereafter and um and professor jeffrey has in his submission talked about the draft bill expected to be introduced by the end of january then there's have to be substantive debate in the uk parliament but that wouldn't be finished by the time we came to the uk elections next may um and then there would have to be full scrutiny in the scotish parliament and where it can ask um you know this seems to be pushing things not into long grasp into the jungle you know um and i'm just wondering about the potential in place correct me if i'm wrong here about um where there are where there is agreement by all such in votes for 16 and 17 year olds um would a section 30 be able to bring that around bring that forward um from from the general debate that we've had over taxation bring that forward so that it would be in place much sooner and if so if that is the case can you envision any other powers that could be devolved through section 30 um and see what we can actually try and achieve within a timescale that most of the people who voted one way or the other in the referendum could actually imagine was a real change taking place at all anyone i'm not gonna finish off i'm gonna leave that to some of it um i noticed that in in david bell's um very artful submission to this committee he talked about the the scotland act 2015 i think that's an ambitious timescale uh for for that process which i outlined in my paper to have been gone through there there is no commitment i think gordon brown envisaged this when he first set out the timetable um there is no commitment on the uk government to have a second reading of of the draft bill before the uk election um so that may not happen before then um and so i think 2015 in those circumstances would be extremely tight um and if you get into 2016 then you've got a an election here which could complicate matters as well um so in those respects it may well be sensible on some matters to look for opportunities to accelerate um uh the the devolution of powers where there is um clear agreement among the signatures to the smith commission report and i suspect 16 to 17 year olds voting is one that could be put into that category and there may well be others this is straightforward question for charlie and others can this bit of legislation because we heard last week from the secretary of state and that he thought this could all be done by early 2016 in your view can the legislation be in place by the time we get to the next Scottish Parliament elections because that will be quite an important moment because they can unless that yeah i mean unless there's active interventions of one or more players to prevent that from happening i think it can it can be and i think there is a a politic there would have to be a political motivation to make sure that there is something in place before 2016 um but i think spring 2016 is probably realistic and that's just for legislation of course implementation is a much longer process okay sorry and thanks for not um one potential um uh area could be the crown estate does anyone believe that that is possible that could actually take place within that timescale under this proposal i'm not constitutional lawyer so i need to sort of consult on that to see if that would be it would require primary legislation or not uh drwsma you know um it was just to go back to it we've had quite an interesting um discussion today and reminded of the um expression that you know the british constitution uh maybe he doesn't always work that well in theory but it has served us reasonably well in practice um and i suppose i mean but but the point i'm actually about to come on to is is actually the the fact that our constitutional states in Scotland it's a contested issue um and and i think we hear that from their actions of fellow members of the committee and that um puts us in quite a different situation from some of the relationships that you described elsewhere in the world um and why i would you know perhaps agree with a lot of what's been said around the need for institutions which um can balance and can be seen as fair arbiters uh uh uh in a process whether it's about taxation or whether it's about policy or or whatever i just the really two points i wanted to to put to the panel and get their actions because i think this would be interesting to know from either elsewhere or just from your own expertise uh what what we can learn in a situation because i suppose exactly my professor keating said earlier that um the the issue of independence had been settled in september um which is a very brave thing for him to say in the scottish parliament because if i said that on the chamber um it provoked a reaction um and i think it goes to it it's it is frankly the elephant in the room on this whole issue you know we can we can debate the workability um of devolution uh and our specific proposals of course we can but there seems to be there are two distinct issues one is the constitution itself is politically um contested um and so a resolution to some of this through institutional architecture i just frankly feel is is unlikely to work um and a second issue which is for me really around incentives because um the uh i've got no doubt that the scottish government would pursue a course through all this where they would want to see scotland disadvantaged i'm no doubt that they're genuine in that um in that approach but they have no incentive um to find a constitutional relationship or architecture that works because they don't believe that there should be a UK constitutional framework not the only country of that problem this is the dilemma of Canada spain and many other countries which are multinational countries in which there is no agreement on where sovereignty lies or on the foundations of the constitution now i'm not suggesting you have to dig all the way down to the foundations to get a consensus on the basis of sovereignty because you never will so you can put that aside but in the meantime talk about institutions that work now and i said the issue of independence was settled i mean it was settled for some time in the future otherwise why have a referendum unless but it's not settled forever it never will be settled and even if scotland did became independent we don't really quite know what independence means and whether we'd have our own currency and so on this is a whole area of uncertainty around there uh and there are issues there that would never agree on so just put them aside because most of the time they don't matter that's the pragmatism but principle comes in because we've got to have institutions that can work in the medium term and if we look at what's happened in Canada they had two referendums they've never settled the question of sovereignty for kebek but the institutions are actually working pretty well because between referendums they agree well we'll agree to disagree upon that but in the meantime we've got to get institutions that can work in kebek there's been a strong concentration on institution building we may not have sovereignty but we're going to use the powers that we've got more effectively and at the level of canada there's been a greater recognition of diversity a greater recognition of kebek on the part of of canada and they've done things like sorting out their fiscal equalisation system which is a huge challenge everywhere like getting agreement on safeguarding the powers of the two levels and safeguarding provincial powers against federal encroachments and the second point I'd make is that in these cases and in Scotland although there's this difference in principle about independence or not it seems to me these are two ways of getting at the same destination because there's a broad consensus that Scotland should be self-governing in one way and there's also a broad consensus that it shouldn't be an old-fashioned nation state because it's going to be part of the european union we may have currents union there are the the six unions that alexamond talked about at which we would keep five so although there's this difference in theory there's a lot of a lot more common ground than you might have think thought just looking at the referendum debate so in this sense it's it's the politicians who are the ones who obsessed with theories and we academics actually very often are the ones who talk about practical things you can do even when you disagree on basic principles additional point about the constitution working in practice even though it's theoretically impossible in the uk well i think the constitution is being rejected in practice by substantial numbers of people in different parts of the uk we saw that in 45 percent of scots voting yes in effect to end that constitutional relationship not enough to win that argument but suggesting that there is a significant challenge to the legitimacy of the institutions of the uk here in scotland which has now prompted this process which we're we're currently sitting in but it's not just scotland in in work that we have done on public attitudes in england looking at constitutional alternatives to the status quo in england we can find a maximum level of support for the status quo no matter how we ask the question of 25 percent of people in england in other words this constitution is under challenge not just in scotland but also in other parts of the uk and i take that as a prompt to go back to my earlier point we're thinking about changing one of the parts here but there are other parts changing alongside it and some recognition of the interaction of the parts is necessary if we are to have a period of stability i think there's a couple of points i'd like to make connect to with that i think one of the things that we've not discussed at all this morning is about austerity in terms of public spending cuts about half the according to the ifs about half the public spending cuts are still to come and they will transmit themselves through the through the kind of barnet through the through the barnet system there is a very the the kind of fiscal consolidation is very heavily spending based and it will be you need more than the fiscal consolidation if there's also going to be tax cuts at the same time so the kind of pressure downward pressures on spending in the next five years are going to be very extreme and that's going to make it very difficult for the parliament in terms in in terms of its budget the other point that is important is David bell earlier mentioned about fiscal equalisation um there's a there's what i find a disturbing tendency in england about english local government of actually moving away from a system of fiscal equalization that's roughly been going for 150 years so for example the northern cities northern cities of england have been very much more hit by by the changes in english local government finance so there's a much more of an attitude about you keep what you kill so the kind of whereas the uk has always had a strong commitment at local government level to fiscal equalisation and a commitment in terms of reasonably equal equal living standards across the united kingdom it's a constitutional requirement in germany we don't have such a thing but there's been an implicit assumption that living standards shouldn't depart and public services shouldn't depart too much from different parts of the country that raises an issue that came up earlier which is about scotland not being on its own i think this is really important but one's got to recognise that wells and northern island are in significantly different positions than scotland scotland is sufficiently close to the uk average though we don't need to worry too much about tax base equalisation in terms of in terms of income tax wells and northern island have income levels way below the level of the uk as an average and their income tax revenues are going to be affected by the uk practice of putting up the personal allowance so much putting up personal allowance has a different effect in different regions of the regions of the united kingdom depending on the depending on the depending on the distribution distribution of income in those countries so i think there is a kind of broader issue both about the role of the state and how far spending cuts are going to go and also the extent to which there is a continuing commitment to commitment to fiscal to fiscal acquisition because i don't think that you can have income tax devolution in wells and northern island without actually addressing that addressing that issue and i agree with earlier panellists who say that if scotland's in the room on its own with the uk government we're going to find it extremely difficult of course i've heard and i'm going to come to the tabish and i'll really need to be working with you okay tabish okay sorry sorry for being late earlier on um what role does should the scottish parliament play in improving the accountability and transparency of the new intergovernmental relationships and it does currently doesn't play any role the moment does it exactly doesn't do anything at the moment i mean i read some of the the transcript from last week's evidence sessions and there's talk about presenting minutes and and so on to the parliament i'm not sure that will get you very far um i mean i think if if there was a way that could be done to have a sort of pre gmc type meeting with parliament and then a post one then you might get a little bit more insight into the nature of the discussion and but i can see why that would be politically quite difficult um i mean the smith process smith commission wasn't in any way transparent that was just as unfortunate and there were reasons for that and i think similar reasons will be applied to intergovernmental arrangements as well um but i think there is a real need for greater oversight of the parliament particularly given the greater complexities and interdependences and intergovernmental relations will become more important and whether or not they become more formalised um so i i i do think that there is an important issue here take a point that uh and strongly agree because i made this argument that it had to be Wales and all around and everyone in the room in the context of those arrangements um but would the would you accept that what we might choose to do in holy would be different from the Welsh assembly or different from other parliaments in relation to how they might scrutinise these arrangements yeah i mean i think the scrutiny arrangements are a matter for this parliament um i differ slightly from what others have seen i mean i think there is a need for yes stronger multilateral arrangements but also bilateral arrangements because there are specific issues for the Scottish UK relationship here as a result of this settlement um so i think you need both Michael Keating would you be able to just give us some any international perspective on how parliaments scrutinise these relationships in federal systems is there any good example you'd care to know but there are a lot of a lot of bad examples it's it's what should we not to do well it's a fundamental problem that that intergovernmental negotiations tend to be behind closed doors even where you have formal arrangements as you were having kind of the first ministers conference or spain the sectoral conferences the real work of course is not done in point of the media it's done somewhere else and the more complex the arrangements get and the more you get into governmental policymaking to relate to nicolas earlier point than the more of a problem this this becomes uh if you look at the capacity of parliaments to hold governments to account for negotiations probably in the Nordic countries and especially Denmark in relation to european negotiations you have an example shows where it can be done ministers have to come explain their position they have to a committee that is very specialized and knows the dossiers they and then have to report back again something like that could be done for intergovernmental relations here and all these arguments about well you can't show what you're hand away oh this has got to be components and this is just special pleading by by governments who don't want to be held accountable and again in the case of scott and i would add that if the scottish parliament or the scottish parliament and government are going to get greater responsibilities with regard to european matters participating more fully in the council of ministers once again the accountability arrangements here as it was a Westminster will really have to be improved i mean we've been having a discussion on the themes of transparency communication and how it has to be better at all levels between different governments and so on but um professor keating and opening you said the public don't understand what is in smith i think that is a fair point and we're we're at this point today because of a fantastic participative process where people really got involved in politics and i just wondered how you think we might ensure that that wider civic voice is heard in regard to these proposals in the coming months as we in here you know scrutinize these proposals what can we do to make sure that that wider civic voice isn't excluded from these discussions really struck by the civic groups are still are still mobilized and they're still interested in smith and what is happening beyond smith frustrated by the process but still interested in it so i think there is a capacity to do that there are vehicles to do that and it's up to the politicians to make sure they are included we no longer have to go out and shake people up and say you've got to be interested because they are interested but if they're not involved in this continuing process in the immediate future then they'll go away again they'll be disillusioned and things will be worse than they were before uh there's been a talk about constitutional conventions i'm a little bit skeptical but it's it's an idea worth worth thinking about but it's skeptical because constitutional conventions tend to stick to generalities and and they're not normally very good at arriving at compromises but they are a good way of setting the agenda and informing citizens about what is happening there's talk of a UK constitutional convention in the next parliament it'd be extremely difficult given all the different views there but it will be a way of debating this publicly uh there was talk of a constitutional convention in the case of an independent Scotland but there may be a case for something like that uh short of independence to think about a Scottish constitution we don't have a constitution we have the scotland act and the reformed by the other scotland act and more bits and pieces of legislation we don't actually have a constitution and it might be useful to think about having a constitution for scotland whether or not we're part of the united kingdom and once again you can think of involving civic society in that thinking about what the principles might underlie that what kind of rights we might have uh what what kind of whether you want to put social entitlements into a constitution or not how you can improve accountability all of these things might usually be discussed because they're going to be important whether or not we become independent so this is not necessarily as divisive as the referendum i think something that might be useful to improve the democratic performance of our institutions in any case one of the reasons why the mobilisation engagement was so successful in the referendum is because people had a decision to make and they wanted to be informed about it and engaged in that process i think if you try to mobilise and engage people without giving them any opportunity to influence the outcome then that could have the reverse effect in a way but there are a number of areas that that could be done it might be about this process it might be about the constitution it might be about another issue that i know they can say on the views else and about devolving power within scotland you know that's a debate that we just haven't really had there's lots of things said about it but the implications of it are not really discussed at all so you know there are lots of areas that are within the responsibility of this parliament that could mobilise people engage people as long as they have an opportunity to affect the outcome i think one of one of the interesting things that we hopefully we can help as a committee on that process is in january it's certainly we're considering whether or not we can have the sdcs the the churches the scvo here to talk to us and that may be one of the ways we can help this discussion to improve things so i think we need to move on to welfare areas now folks because otherwise i've only got about 20 just over 20 minutes left and i think alex johnson i wanted to let in lynda farbiani and then louis and martin mcdonnell as well thank you very much convener we heard earlier the line that welfare cuts will transmit themselves through barnett it appears that the faith that was placed in barnett during the devolution or during the independence debate and then subsequently around the smith commission could put us in a position where rather than barnett acting as a crutch it could actually expose us to some considerable variation in funding do you see barnett as being the the support mechanism that some people place their faith in or do you see it as a potential elephant trap in this process the point that barnett wouldn't generally be related to welfare because welfare welfare in the sense social security sense is actually annually managed expenditure so barnett isn't real isn't real from that what barnett does do is produce certain constraints on how the treasury can actually act are the those constraints have operated those constraints have operated largely in largely without any public transparency about them but they have been there have been constraints the advantages for the treasury of a system like barnett because they don't have to have bilateral negotiations about everything to do with scotland-wilson northern island so there is some protection for it so it speeds up the process after speeds up the process after a after a uk spending view or or autumn statement the the kind of barnett consequences at the moment barnett should if public spending is going up and relative populations stay the same barnett actually leads to some convergence in in the expenditure per expenditure per head if but if expenditures are going down in nominal terms actually barnett actually leads to reverse process so i think that having something like barnett is an important is an important protection but if the UK government decides the state is going to be a lot smaller that is certainly going to come through barnett yes but the wealth that what people now the social security type areas that people now tend to call welfare are actually largely done outside barnett because they're part of annually managed expenditure so i mean the way that barnett has worked has helped the treasure i think in the sense of having all of the levers to control the UK macroeconomic policy so it can control departmental expenditure limits through the spending review process and annually managed expenditure on a year to year basis and on that basis it gets an idea of how much it's going to spend what it hasn't done very well in the last seven or eight years is predict how much money it's going to take in and as a result of this you've got this yawning gap between the amount that the the UK spends relative to the amount of of taxes raised now as i said earlier actually and although david is right there is there is implicitly perhaps a process of convergence built into the barnett formula that ultimately spend per block grant per head would be the same in all parts of the UK that the the rate of convergence has been achingly slow and decisions about the distribution of spending actually make a difference to the rate of convergence and i don't think we're going to see much convergence over the next few years because as i mentioned earlier the UK government has decided to protect health spending which is a much bigger share of the of scotland's budget than it is of the UK's old budget and also school spending where the school population in england is rising fast and it's not the case in scotland so scotland is going to do well on on both of these counts out of barnett what it the welfare effects will come through the objective of the UK government to balance the budget in 1819 involving cuts both in the del budget and also in the annually managed expenditure budget and 12 billion is going is is the amount that they're expecting to take off the welfare bill there and of course the issue with that in a sense is that pensioner benefits are protect pretty much protected and have been so throughout the last five or six years and therefore the cuts do tend to fall on working or will tend to fall on on working age benefits we spoke earlier about the the issue of taxation but many of the same arguments could conceivably apply to the issue of welfare specifically the smith commission proposals contain a wide range of options for bringing in additional benefits or top ups however how do you perceive that working in a practical sense where if the Scottish Government choose to introduce an additional welfare benefit will that then be used in the assessment for universal credit for example and how will that margin be applied in terms of universal credit payments in Scotland once additional benefits are taken into account I think that I mean this is something that you clearly need an agreement before you go into any new benefits that Scotland might choose to support otherwise you know if the UK government is in the position to react against that then then that becomes self-defeating you know it undermines the whole process and you know you could imagine a situation maybe where Scotland with control over some of its benefits choose to implement the notion of austerity which is about getting a more long-term sustainable budget by having a different balance between tax increases and spending reductions might be possible to move somewhere along that along that kind of path with the powers that Smith is proposing but I mean I do think even the existing welfare powers that are being proposed are going to be a huge challenge for it for the Scottish Government you've got the I think an interesting question about whether they should be devolved to the Scottish Government or down to local authority level you think about what happened with council tax benefit in England it went down to local authorities and Scotland it stayed at the Scottish government level and with attendance allowance really it's local government that's delivering social care policy so you've got one policy of free personal care in people's homes that is funded by the Scottish Government and then you've got these two benefits attendance allowance and disability living allowance for pensioners which also are actually supporting that objective as well in a sense so you know introducing some coherence around that you know has potential for big gains but it would be a very complex process to think about setting up and it probably would mean that there would be some losers as well as some gainers out of the process but I think issues like that you know charge contain it possibly a bigger challenge than some of the tax cuts the sorry tax powers that that are being proposed yeah I mean there's a paragraph in the smith report paragraph 55 which to me seems to suggest that what you if there are top ups new benefits or changes to the areas that are devolved that have financial implications or gains within Scotland that a that should be financed by the Scottish government but b it should not then lead to reductions in benefit entitlement in those areas that are reserved however that has to be more than a commitment in good faith it has to be more than a good will intergovernmental agreement it has to mean something when somebody goes to the claimant office or submits the claim online and somebody in an office somewhere is trying to process that claim you know it has to filter all the way down to that that secretary or whoever administrator who's processing the claim and that's the challenge I think is making it work and it's a long-term process I mean what concerns me is a lot of the discussion about welfare devolution is that it assumes that Scotland will spend more and if Scotland is going to spend more it's going to have to be at the expense of something else on a technical level I presume it would be possible for Scotland to spend to spend to ask the treasury to transfer some of its del say that come from health into into aiming so so basically technically you can see how it would happen but politically that is not going to be easy at the time one's got such extreme spending pressures and particular problems in health so that it would be possible to be possible in a in a technical sense if the treasury was amenable to actually get that del to aiming transfer but the question is what do you spend less on the things which are now within del the word coherence has been used over and over again in relation to the proposals in the Smith commission paper I would like your opinion on the lack of or whether you believe there is a lack of coherence at top level for example between the ability to affect the economy the macroeconomic stuff that David Bell mentioned and then the ability to use that for welfare powers and I would use as an example the work programme being given the power to help people into jobs but not being given the power in my opinion to be able to actually create jobs through a more vibrant economy I would like your views on the sustainability of that and whether you in fact feel if you're willing to say so that there may perhaps be vital bits missing in this that would allow us to have a more sustainable way of working in the future that's where we should have started with with that kind of question because right across the western world there's this problem about the relationship between job creation welfare payments taxation economic development nobody's got it right but in this country we've certainly got it wrong our trading policies are not well linked into job creation or welfare the incentives are very odd some of the programmes are very dysfunctional and it's important that those programmes work together now these programmes all these job creation and economic development is not something that largely happens at a UK level it happens within local labour markets and very localised economies and it may well be that some of these things could be more effectively addressed at a Scottish level or at a local level rather than at a UK level so we need to step back and think about what is the kind of balance of welfare and taxation powers that will be most effective in getting people into work because there is a political consensus the best way to deal with poverty is to get people into work and get them into well paid work the benefit system can't solve poverty on itself it got a link into labour markets now I don't have a blueprint of exactly what part should be located here but I am actually convinced that we've got a very dysfunctional system at the moment and if we did have such a system there is evidence that this could yield economic benefits itself that you could have efficiency enhancing forms of welfare rather than passive welfare all governments have tried to get there none of them have tried to do it so that you could use existing welfare spend much more effectively and that Scotland might want to do that in a way that is somewhat different from the rest of the United Kingdom in fact almost certainly Scotland will want to do it differently from what is happening in the south of England because labour markets are different and the way that the economy functions and economic development is quite different so we should have started that question and then asked what are the implications rather than looking at existing welfare benefits and saying which bits can we devolve back to Scotland because that just makes risks making the matter even worse by making it more complex and less coherent. With a microphone on this point Scotland has never had more people in work than it has at the moment you know there is a real issue around the quality of a lot of the jobs there there's a real issue it seems to me around real living standards because wages have not been increasing as fast as prices have been increasing over the last five or six years you know there are many labour markets that are operating a lot worse than the Scottish labour market is at the minute. One point though that I would make is that in relation to the powers that are proposed is that it seems to me that the ability to influence the life chances of people at the bottom end of the income distribution those people who are in work but would like to work more hours are being you know their hourly pay is not as high as it might be. The Smith commission doesn't deliver a whole lot of parts so the income tax powers are possibly not very relevant to a lot of these people the welfare powers are in terms of the spend is mostly focused on older people one of the things that I was a little puzzled about was that there was no mention even of a discussion about the possibility of affecting the minimum wage or having some having some control over that in Scotland which didn't seem to me necessarily to to carry a great economic risk and might have had more effect there but the labour market is doing not too badly the real problem which is a problem not just of the UK but of the US and indeed most of Europe is getting productivity up I don't agree with anything just agree with anything David has said I the labour market is not generating high paid jobs that was my point it's generating low paid part-time jobs so I think we're impressed us agree with each other Nicola point about the coherence issue and that's the relationship between the work program and job centre plus and I know that some of the proposals of the parties to the Smith commission I had envisaged at all for the Scottish government in job centre plus I think liberal democrats wanted to have it and that hasn't materialised in the recommendations I think that disjuncture is going to be problematic as the work program moves north which will come with substantial cuts I'm sure of that but also just the issues around conditionality I suspect that will keep many people awake at night have to try and try and merge these things together Mark Thanks convener I think you know touched on the point there which is obviously one of the ways that you can reduce welfare spend is to improve the quality of work and the quality of pay which allows for a reduction in in work benefits the question I would pose though is obviously the Smith commission talks about the ability to top up it talks about the ability to create new benefits but there is an absolute link obviously between tax and welfare in terms of how you fund things and do you have concerns that given that for example the substantial tax that we will have control of will be income tax that there isn't that flexibility of approach available to perhaps provide that funding for additional benefits and top ups so it might be that these become in the way that you were speaking about earlier in terms of the atrophy of some of the initial tax powers that came when the Parliament was first established to become powers that we have but we lack the flexibility of approach to be able to actually use them in a meaningful way so our work suggests that it depends how people react and the 42,000 people who are responsible for a large chunk of the income tax are crucial in this but one pens increase in the income tax rates going to raise maybe 300 million pounds the welfare budget in scotland is about 16 17 billion pounds so you're only going to you're only going to affect things very much at at the margin unless you're prepared to have very substantial or make very substantial use of the income tax power in which case you may you're going to run into risks with having a large neighbour next door where income tax rates are lower and and you might end up actually having a negative effect on on the potential revenue was yeah just in terms of that coherence clearly one of the principles underlying the smith commission accepted with smith commission at the outset was that there should continue to be a coherence across the UK as well in terms of the pooling and sharing of resources and providing comparable benefits to people in similar circumstances in different parts of the UK do you believe that the smith proposals achieve that coherence in a way that still allows the Scottish Government Scottish Parliament to take initiatives that address particular issues specific to scotland both in the area of welfare and support and also in the area of job creation five of the most stumped not I mean not especially I mean I don't think it's started from that I think that was a statement rather than a guiding principle in a sense so you know if you if you go back to what Michael was saying about starting with these broader issues if that's the objective then move from there and then think about you know the whole picture and the whole distribution of powers there but I don't really I think it's just been much more piecemeal than that and pragmatic in a way about political compromise rather than that bigger picture it's a critical question and this came up during the referendum a lot once the Labour party saying well this is a sharing union which is a coherent concept we understand what that means but then what are the practical implications so what should be shared should we have the same health service we don't should we have the same unemployment benefits maybe that's the stronger case should we share pensions that raises other kinds of considerations so yes we need to have diversity we need to have some common social entitlements that seems to be a widely shared view but translating that into particular services that's where the difficulty arises and how much variation would be reasonable you know you do have some benefits that are contributory so I mean there certainly is a case that if you've made the same amount of contribution you should get the the same reward whether you're in Scotland England or in Spain as many are I think I think that is an important point I think the one in terms of the welfare area the test I would apply is that can Scotland manage it better now there'll be certain areas like the interface where the interface between housing benefit and housing benefit and provision of council houses and housing association houses are where UK policies gone gone haywire so where you think in the long term you can actually do things better there are obvious gains but there might be a short term hit but there might be a long term gain I think the thing that the issue which would disturb me most is there's a question of political attitudes in Scotland seem somewhat different to those in England on average and the question about how if the UK is going to move to a much smaller state with much less provision of public services out of taxes the extent to which Scotland Wales and Northern Ireland can be different from that because of the relative populations I mean the good one of one of my favourite statistics is that if you thought of the UK as a federation as becoming federation there's no Ontario is 35% of the population of Canada England's 84% of the population of the United Kingdom and that's a really a quite fundamental problem one of the great difficulties is this is tending to get formulated in Scotland versus England question whereas I'm deeply worried about what's actually happening to the north of the north of England at the midlands and where the concentration of economic activity and high paid jobs and migration of labour of skilled labour from the rest of England into the southeast I think that England has got a massive problem which has not been recognized. Charlie and Robin London need to go in a minute to go to questions but we'll carry on just for a few moments so Charlie on you go. I just wanted to report some evidence from a survey we did of public attitudes while the Smith commission was sitting which throws some light on to this discussion and reveals the Scots as somewhat paradoxical. Over 60% of Scots want welfare devolution whatever they mean by name over 60% so a clear majority and we've seen that in surveys for a decade or more 51% at least want the same level of benefits as in the rest of the UK and in terms of old age pensions for example 55% think that they should be paid for by the UK taxpayer other welfare benefits 48% think they should be paid for by the UK wide taxpayer and only 31% by the Scottish taxpayer so there's something rather strange there about wanting the power not necessarily wanting to do anything different with it and having a significant level of contribution of the UK wide taxpayer to finance the benefits I'll leave you to puzzle out how you reconcile that. Drew, I think Drew had a quick question. I think that that's very interesting to unpack what people actually mean when they say that they support more powers in the Scottish Parliament I think that is at the heart of the rest of us but just go back to that around welfare and I think David said that there seems to be an attitude in Scotland that if you like is more sympathetic to welfare I just wondered if anyone had any actual academic evidence the attitudes to welfare in Scotland are significantly different and the only evidence I'm aware of is Professor Curtis's evidence which says they're broadly the same. I didn't actually use the term welfare I mean I said the size of the state which would cover health and education. We did a survey actually and asked a question about benefit cap and Scots were slightly more willing to see a higher cap but it wasn't a huge difference. And then in public attitudes research the Scots appear to be a little more left wing on most of these kinds of measures but not by very much the big difference between Scotland and England is that the Conservative Party is rather weaker here and therefore you get a different dynamic of political debate which is not structured in the more straightforwardly left right pattern that applies in the House of Commons which is dominated by MPs from England. Humor me, convener, thank you. I suppose that goes to, in a sense I would say it's quite easy to be radical about a political debate around some of these things we don't have any power or responsibility to actually deal with it then that's a very easy form of radicalism and I suppose Lord Smith himself said to the committee when he was here that he felt there was a need for both Governments to be clearer about what they actually do. I wonder if there was any examples internationally of you know how do substantial levels of government that work more effectively than our own? Do we see that same tendency to spend time talking about the issues that you don't control? Yes and you also get the same paradox that Charlie has mentioned in fact there's comparative research done by Charlie himself and some of it from elsewhere. Federalism or devolution paradox that people want to control the services but they want the levels to be the same as elsewhere. I don't think it's necessarily as paradoxical as that because you could literally say would like to control the services but we don't want to lose out on any particular that's the way you put the question but if you say should we be allowed to spend less on roads and more on schools say put it that way you might get a different kind of answer but in any case public policies don't come from a public opinion polls they come from social compromises among social groups and I think it's quite clear that in Scotland the social compromise is a bit different from what it is in the south of England because the evidence that the north of England is a little bit like Scotland and that is why consistently the Scottish Parliament under both administrations the coalition and the SNP administration have gone for more universalism less selectivity which is not necessarily more redistributive but it's a different way of defining the public domain that there should be a sharing that all people should share the same kind of public services there's less support for private education we did surveys amongst professionals a while ago at least there were surveys done showing there's less support in the medical profession here for marketisation there's less support amongst the teaching profession to move away from comprehensive education so at all levels of society there's a commitment to something it looks a little bit more like the Nordic countries where everybody pays in and everybody gets the same services which is more egalitarian but not necessarily redistributive and that I think is where Scotland would probably go and that's where we see these divergences in public policy which have then got to have the fiscal space to realise them without differences in taxation powers you can't actually realise that except in very marginal ways I think we'll be preventing this to a closing I'm afraid thank you very much but can't just one question try something novel try and get a yes and no answer from five professor 2016 way if this legislation's passed successfully do you think we need to come back here again and do some more of this yes yes yes okay thank you oh thank you very much thank you very much for your considered contributions this morning we've all found it very valuable and thank you no doubt we will be back again with some of you at some stage next meeting next Thursday and we'll have the electoral management board focusing on the electoral administration of the referendum thank you very much everybody that's the conclusion of the meeting