Moore discovers the force – Did Scotland really lose the power?

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POLITICS…
Well, it didn’t take long for Michael Moore to realise the real purpose of the role he wanted abolished but now finds himself occupying with apparent relish.

Until last week the new Secretary of State for Scotland had what can only be described as a lacklustre start to his new Ministerial career.  The Fossil Fuel Levy fund, dangled before the Scottish electorate immediately after the forming of the Con Dem coalition, has been whisked back into the vault of the London bank account it languished in when Labour were the jailers, an open goal missed by Moore.

Moore’s lack of influence at cabinet was further exposed when the Con Dem coalition bungled the Strategic Defence Review announcements relating to the Moray Air Bases.  The area has been left high and dry with no idea what is being planned for the one remaining air base at Lossiemouth.

The role of Secretary of State for Scotland is a position routinely ignored by the London based media – with the advent of the Scottish parliament in 1999, whoever occupies the role is a de-facto Minister without portfolio, he has little to do.  The position still carries status by dint of the history of the Scotland Office but in truth its occupier is similar to the Chewbacca character from Star Wars – visible but having no significant role.

Michael Moore was in danger of melting into the shadows from whence he came when all of a sudden he appears to have finally realised just what being the Secretary of State for Scotland is all about.  The impotent Wookie went to bed on Wednesday and Thursday awoke to find himself the influential and powerful Darth Vader with an army of media storm-troopers ready to do his bidding.

How must Moore have felt when, within hours of his ‘tartan tax’ letter being delivered, every news outlet in Scotland took the claims contained therein as gospel and set about attacking John Swinney.  Not just that but such was the force that ‘the dark side’ has bestowed upon Darth Moore that he even has Scottish Labour and their arch rivals the Tories holding hands and dancing to his tune.

Questions, accusations and suggestions that Swinney’s political career is in jeopardy (Hamish MacDonell is the latest journalist to suggest this) have swamped the Scottish newspapers and airwaves.  The First Minister has answered questions, John Swinney too in a committee hearing on Tuesday – Swinney will also make a statement to the chamber on Thursday and will face questions from the opposition parties.

Meanwhile, Darth Moore sits unperturbed by it all.  Nobody is interested in asking questions of the man whose claims are behind all of this.  Even a strongly worded letter from the First Minister casting doubt on the veracity of Moore’s claims isn’t enough to compel journalists to scrutinise the Lib Dem MP.

Like Jim Murphy before him, Michael Moore now realises that he has ‘diplomatic immunity’ from the Scottish media.  This ordinary, fair to middling MP has, by a series of unforeseen chance events just become arguably the most influential person in Scotland.

So, what was it exactly that Moore said in his letter?

Well, here it is:

Dear Alex

I noted that John Swinney MSP made the following remarks in the Scottish Parliament yesterday:

‘Within the Parliament’s existing revenue powers, we have explored options for maximising our income. We have been mindful of the need to consider the effect of the significant tax rises that the UK Government has announced before we act. Itherefore confirm that we will not raise the Scottish variable rate of income tax.’

I was about to write to you and others on the Scottish variable rate (SVR) to make it absolutely clear that this is a power which cannot, at this time, be exercised by the Scottish Parliament. Indeed, for the reasons I explain below, it could not now be used until 2013-14 at the earliest.

You will be aware that the arrangements between HM Revenue and Customs (HMRC) and the then Scottish Executive, put in place at the commencement of devolution and intended to ensure the SVR of income tax could be invoked within 10 months, lapsed in 2007.

Section 80 of the Scotland Act 1998 allows for any administrative costs incurred by HMRC in relation to the Scottish Parliament’s tax varying power to be met by Scottish Ministers. It is an established principle that the costs of devolution should be met from the Scottish Budget.

I am not privy to the dialogue which took place between your Administration and the previous UK Government in the past three years. However I do know that the Scottish Government confirmed in August this year that it was not able to commit the necessary resources to enable HMRC to proceed with work on PAYE systems to allow the SVR to be available in the first tax year after the 2011 election.

As the system has not been funded and maintained to allow for delivery within the ten month time frame under the original arrangements, HMRC would, in fact, now need two years’ notice in order to invoke the SVR. This would mean that a new Scottish Parliament, elected at the May 2011 elections, would not be able invoke the SVR until at least the 2013-14 tax year.

It is not yet publicly known whether the Scottish political parties will propose using the SVR in their programmes for the 2011-15 Parliament. I do believe that they must be advised well in advance of next year’s elections that the SVR, in practical terms, cannot be invoked until the penultimate year of the next Parliament. For that reason, I am copying this letter to Annabel Goldie MSP, lain Gray MSP, Margo MacDonald MSP, Tavish Scott MSP and Patrick Harvie MSP as well as to David Gauke MP, the Exchequer Secretary to the Treasury.

As Brian Taylor might say – it is intriguing.

A number of things stand out.  The first is that he says he was about to write to the First Minister to make it clear that the [tartan tax] power cannot, at this time, be exercised by the Scottish parliament.  Why does Moore feel he has to make this clear to the First Minister?  It suggests that things are not as clearly understood and as universally accepted as we are being led to believe.

Michael Moore then explains that the arrangement (contract) for the Scottish government to pay £50,000 annually “lapsed” in 2007.  Note the wording here, Moore does not say that the power lapsed but that the “arrangement” lapsed.  He does though concede that, even had the payment continued, the power would still need a 10 month lead time before being used.

Michael Moore then moves onto an entirely different matter, one that we now know was the IT upgrade proposed by HMRC that led to a demand for payment of £7 million from the Scottish budget.  We know that negotiations were ongoing and the Scottish government were awaiting a response from Moore on this matter – the response did not come.

Moore makes a contentious claim and says:

“Section 80 of the Scotland Act 1998 allows for any administrative costs incurred by HMRC in relation to the Scottish Parliament’s tax varying power to be met by Scottish Ministers. It is an established principle that the costs of devolution should be met from the Scottish Budget.”

This paragraph has been challenged by the First Minister in his letter of response.  A letter the thrust of which has been all but ignored by the Scottish main stream media.

Here is the relevant paragraph cited by the First Minister in his letter:

HM Treasury’s recently-updated Statement of Funding Policy states at paragraph 3.2.8 that:

“Where decisions of United Kingdom departments or agencies lead to additional costs for any of the devolved administrations, where other arrangements do not exist automatically to adjust for such extra costs, the body whose decision leads to the additional cost will meet that cost.”

This suggests that changes of the nature being referred to by Moore are the responsibility of the department driving the change, as are the costs – not the devolved administration affected.

Then comes the specific charge from Michael Moore on which the media stories are hanging: “As the system has not been funded and maintained to allow for delivery within the ten month time frame under the original arrangements, HMRC would, in fact, now need two years’ notice in order to invoke the SVR”.

It is this paragraph that political opponents of the SNP and media commentators have latched on to and built their rhetoric around.  Moore is saying that the ending of the £50,000 payment has effectively added another year onto any lead time to implement the ‘tartan tax’.

This is the claim that the Scottish media have taken at face value.  It may be correct, it may be tripe but as far as we are aware no one has made any attempt at questioning Michael Moore on his figures or sought clarification from HMRC and/or previous Labour Ministers to ask why, if true (a big if!!) this startling revelation has remained unannounced for fully three years.

The other major point being ignored by everyone is this:

If the principle of a delay (or lapse) in implementing the tartan tax is as scandalous as it is being portrayed then what about the ten month delay … or ‘lapse’.  For this ten month delay means that the tartan tax has never been available to implement immediately.  It has been allowed to ‘lapse’ from the very day the Labour party agreed to the £50,000 maintenance payments.

Furthermore, the proposed IT upgrade that led to the demand for £7 million will also lead to a delay.  Has the IT upgrade been factored in to the 2013/14 delay claimed by Mr Moore?  If it has then what proportion of the delay is down to the upgrade – or is Mr Moore suggesting a huge IT upgrade costing £30 million will have no impact whatsoever whilst a £50,000 underspend will double the lead time?

But there’s more; for in January 2009 The Times reported on a letter sent by HMRC’s head David Hartnett to Holyrood’s Sir John Elvidge (1) dealing with the SNP’s local income tax plans:

“Your proposal for a tax where the rate was set by the Executive (sic) and the proposed tax was collected and administered by HMRC is a reserved matter under The Scotland Act 1998, and therefore a matter for the UK Government.

“HMRC does not have the power to collect or administer a local income tax: its role in relation to the devolved administration is confined to administering the Scottish Variable Rate,”

So, a letter from HMRC in January 2009 specifically about the Scottish Variable Rate (tartan tax) makes no mention of any two year delay.  A delay that would have meant the SNP’s LIT plans were effectively redundant.

The Times article also contained a reference to a statement from one Andy Kerr:

“Andy Kerr, Labour’s finance spokesman at Holyrood, said that local income tax was flawed and should be dropped in light of Mr Hartnett’s letter to Sir John.”

So, Andy Kerr was aware of the letter, it is reasonable to assume that the then Scottish Secretary Jim Murphy was also aware of the letter. A letter from HMRC that makes no mention of the Scottish Variable Rate having been constitutionally abandoned, lost or lapsed.

So did the ability to collect this tax still exist in 2009 as it had done since the Scottish parliament’s inception? If this letter is anything to go by then yes, it seems that it did.

As Brian Taylor would say ….. intriguing.

Finally, we come to our old friend BBC Scotland.  They have been running with this story for days – as has the rest of the main stream media in Scotland.  Two aspects of their coverage we would like to take issue with:

The first is simply this; Why do they appear to be accepting at face value Michael Moore’s claim that a two year delay is entirely due to the ending of the £50,000 payment?  Is it not reasonable to expect the state broadcaster to at least scrutinise Mr Moore’s claims to see if they stack up?  The HMRC letter from January 2009 needs explaining as it suggests a contradiction between the understanding of the HMRC head and Michael Moore.

The second is why, on his blog, has their senior political editor Brian Taylor failed to mention First Minister Alex Salmond’s letter published in response to Mr Moore’s claims?  A letter that points out the very clear omissions in Michael Moore’s letter?  Yes, the £7 million demand from HMRC is now in the public domain, but it was missing from Mr Moore’s letter – why?

Is it too much to ask that, given the history of Westminster government’s when it comes to disputes with the Scottish government, that the BBC in Scotland treat both sides equally until the facts have been established and both parties subjected to thorough and probing interviews?

We leave you with Tuesday’s Good Morning Scotland broadcast where the language adopted is, shall we say, less than favourable towards John Swinney – the intro could have been written by Michael Moore himself.

Gary Robertson says “whether by accident or by design this has become a complicated yarn”.
We at Newsnet Scotland would suggest that yes, this is a yarn, but that it has been spun quite deliberately – it is no accident.

Read Brian Taylor’s blog here: http://www.bbc.co.uk/blogs/thereporters/briantaylor/2010/11/taxing_times.html

Notes:
1. http://www.timesonline.co.uk/tol/news/article5576475.ece