The best answer to the West Lothian question is to ignore it

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The West Lothian question was named for Tam Dalyell, a former MP for that constituency. His four decades of service at Westminster were marked by his irritatingly insistent integrity. Why, he asked, was a Scottish member such as himself able to vote on health and education matters in England when an English MP had no say on similar policies in Scotland since their devolution to Edinburgh?

Forty years after the West Lothian question was first posed, the UK government has announced a scheme for “English votes for English laws”. Bills, or clauses of bills, that the House of Commons speaker asserts affect England only will require the legislative consent of a majority of English members.

The logic of English votes for English laws is irresistible. The problem lies in determining what are English laws. Suppose parliament decreed that all classrooms in England should display the flag of St George, financed by an increase in the English income tax rate. (Overlook, the fiscal impact of this on Wales and Northern Ireland, although their politicians will not.) The measure has no effect in Scotland and would clearly be an example of an English law.

Wrong. Under the Barnett formula, a complex grant system put in place in 1978, Scotland would automatically re­ceive funding to fly Saltires in every school, since the spending allocation is based on UK-wide spending on all de­volved services — in this case education.

And although the power for Edinburgh to impose and receive its own income tax — proposed in the wake of the narrow defeat for independence in last year’s referendum — is accompanied by a deduction from the Barnett formula’s grant to Scotland, that deduction is linked to the income tax base in the UK (rather than the amount actually collected from that base).

The issue becomes most contentious when the change is in the other direction. Suppose the UK government rolled back the National Health Service in England through privatisation and charging patients more for their treatment, with lower (English) taxes in consequence. The Barnett formula would force Scotland to increase its own taxes to maintain spending and service.

And these are simple cases. The UK Treasury is for good reason adamantly opposed to hypothecation — the matching of specific taxes to specific expenditures. In general, it is impossible to tell whether England-only measures are financed by English-only taxes, where either English or UK-wide taxes go, and whether UK-wide spending is financed by UK taxes or England-only taxes.

This year’s policy document on devolution — entitled, with Walter Mittyish optimism, An Enduring Settlement — suggests these questions can be resolved using a “no detriment” principle. That is, there should be compensation when actions of one government have financial consequences for another. With sufficient mutual goodwill, adjustments could be made, compromises found.

But there is little goodwill, as heated exchanges in the past week show. Scottish Nationalist MPs at Westminster are not there to make the “enduring settlement” work but to show their constituents it does not. And the UK’s Conservative government, with little support in Scotland, must pander to its own (primarily English) backbenchers. Even if ignorant of the intricacies of the Barnett formula, they are increasingly restive having been made aware in the run-up to last year’s referendum that grumpy Scotland receives a very good financial deal from the union.

A more rational funding formula than Barnett might facilitate a more coherent debate. But the core issue is that it is genuinely difficult to identify purely English matters in a United Kingdom of which England constitutes 85 per cent of the population. The best answer to the West Lothian question is, as it always has been, to ignore it.

 

This article was first published in the Financial Times on July 8th, 2015.

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