Retro-Maxers, show us your working

by | 10 Jan 2022

The question of Devo Max returns to Scotland with a dispiriting regularity. It is time for its proponents to do some work and explain their proposals - if they can

I love retrofuturism, returning to previous eras and their own idiosyncratic visions of the world to come. I love Victorian visions of space flight in petticoats or 1960s psychedelic imaginings. But they’re curiosities, not action plans to which we can return. That is precisely why I was paying no attention to the ‘Devo Max’ distraction last week.

But since it still sputters on, I’d like to seek some rigour in how this debate is conducted – you know, the kind of rigour expected of independence supporters. If we are in the media saying we support independence we are expected to answer a barrage of detailed questions about how it will all work.

Can we have the same approach applied to those ageing retrofuturists from the 1990s touting Devo Max as some kind of solution to where we are now?

Let’s kick off with the first question I would put to them – could you show me the funding formula to be used to top up a wholly-autonomous Scottish tax system please? If we’re still trapped in the UK using UK monetary policy we will continue to suffer from ‘not being London’.

Every economist in existence now takes as for granted the arguments that unionists dismissed during indyref – that London is a big black hole that sucks wealth away from every other part of the country. So long as that remains the case there needs to be some fiscal transfer from the capital to any other part of the country, Devo Max or not.

So can Retro-Maxers please set out their proposed solution to this very substantial problem. If the Barnett formula is complex and contentious, producing a successor formula to deal with fiscal transfers across two separate fiscal systems inside one monetary union will prove fiendishly difficult.

Currently the assumption is that Scotland and the rest of the UK all exist in a broadly consistent fiscal environment with broadly the same envelope of funding and mostly the same tax system such that, other than minor tweaks at the edges, the purpose of devolution is to ‘spend differently’.

In that context you can fairly easily work out what one component part of the UK’s share of ‘spending money’ would be and so comparatively easily work out what ‘top up’ funding it should receive.

But create two entirely different fiscal systems with different tax codes (Devo Max) and that immediately becomes something other than an easy task. It is not just technically difficult, it would probably be politically impossible (certainly if ‘consent of all involved’ is key).

If the Barnett formula is complex and contentious, producing a successor formula to deal with fiscal transfers across two separate fiscal systems inside one monetary union will prove fiendishly difficult

Perhaps there is a wonderfully elegant way to address this. Great – can I see it so I can just poke it a bit and see just how elegant and sustainable it really is? Until then, can I file it away as ‘not credible, not serious, not achievable’?

Can Retro-Maxers also be asked to explain how their ‘proposal’ (it’s more like a vague notion) can be taken in good faith? We have been through two rounds of enhancing the devolution settlement (the Calman and Smith reviews) and you need to squint quite hard to make out what difference they made.

I’m not particularly criticising Smith or Calman. I’ve looked at this too and I’m really not sure what it is that can easily be added to the devolution settlement through increment. There are powers on things like drug laws or media regulation which could be transferred, but substantial as these are, they are very limited in their application.

The obvious big missing part of devolution is proper borrowing powers, but I wouldn’t particularly thank you for them without full fiscal powers. So let’s assume that full fiscal powers must also be part of that package.

Except I wouldn’t particularly thank you for all the fiscal powers without all the monetary powers as well. To say that we have changed our economic paradigm since the 1990s (the time of peak Devo Max but a land before quantitative easing) is an understatement. Name me a nation state since 2007 running a fiscal policy not intrinsically linked to a monetary policy.

Is company law to be devolved along with the entire tax system? Monopolies and merger? How do we run a domestic fiscal policy if UK company law and monopolies policing keeps chipping away relentlessly at Scotland’s domestic big business base which is melting away like snow off a dyke?

And what exactly is it about the UK’s defence and foreign policy stance that is so, so attractive to Maxers? Can they explain?

What exactly is it about the UK’s defence and foreign policy stance that is so, so attractive to Maxers?

Oh, and don’t get be started on federalism, the promise of a new marriage in which one partner has no idea the wedding is being planned. It takes very little time at all to completely dismantle the loose talk about federalism in the UK – and yet still it persists.

These are only a handful of examples of questions which are much trickier to solve than the apparent difficulties with achieving independence and nor is this an independence supporter looking for excuses. When the Smith Commission asked what more could be devolved we at Common Weal looked at it honestly and open-mindedly.

And when we did we were quickly dragged down the above rabbit hole. The matters that can be devolved without dragging other related policy areas with them have mostly been devolved. What remains could be summed up crudely as a package of policy areas which collectively govern the macroeconomic environment of the UK.

You can say that you’re going to extricate a number of individual bits of that package of policy issues but you’ll find it an awful lot harder to do in reality without the whole thing falling down.

Devo Max is the happy place of a breed of liberal commentators who had their glory days in the Scotland of the 1990s, a comfort blanket to which they return over and over. Their privileged position in Scottish political debate means they never seem to need to follow up their musings with any substance – which is just as well for them.

I’m not saying Devo Max is impossible, I’m saying achieving it is very, very complex and a nightmare politically. Every barrier reached in the discussion will return relentlessly to the same core question:

What benefit do we gain from what we are leaving behind that counteracts the serious problems that arise from ripping a system apart but leaving half of it behind? Or, put simply, how is any of this actually better for Scotland than independence?

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