A delegation of the Canada-United Kingdom
Inter-Parliamentary Association visited London, England, Edinburgh and Glasgow,
Scotland, United Kingdom from January 17 – 24, 2015.
The delegation was led by Mr. James Rajotte, M.P.
and included the following members: Hon. Joan Fraser, Senator, Hon. Nancy Ruth,
Senator, Mr. Ray Boughen, M.P., Mr. Gerald Keddy, M.P., Mr. Pat Martin, M.P.,
and Ms. Irene Mathyssen, M.P. The delegation was accompanied by Ms. Elizabeth
Kingston, Executive Secretary of the Canada-United Kingdom Inter-Parliamentary
Association.
The prescribed themes of the visit were:
To gain a better understanding of constitutional
matters in the United Kingdom, especially the negotiations towards a new
constitutional arrangement with Scotland post-referendum 2014, including;
1)History ofdevolution and constitutional
reform in the United Kingdom as it affects Scotland, especially in light of the
discussions concerning the new constitutional arrangements with Scotland
post-referendum:
2)Economic overview of Scotland, including any
Canadian investments;
3)United Kingdom priorities for 2015;
4)Trade and investment including CETA;
5)Foreign Affairs issues, including a discussion
regarding ongoing security matters in light of ISIL and the situation in Ukraine
– the United Kingdom perspective;
6)The role of the Bank of England, including a
meeting with the governor of the bank, Mark Carney.
1.History ofdevolution and constitutional reform in the United Kingdom as it
affects Scotland, especially in light of the discussions concerning the new
constitutional arrangements with Scotland post-referendum
The delegation had the opportunity to meet with
the Members of the Devolution (Further Powers) Committee of the Scottish
Parliament and had the opportunity to discuss the results of the Smith
Commission Report and the response from the UK Government entitled, Scotland
in the United Kingdom: An Enduring Settlement.
In 2013, the Scottish Government brought forth
legislation to hold a referendum on Scottish Independence in September 2014.
The referendum, held on September 18, 2014, resulted in a “No” vote, and subsequently
each of the three main UK parties promised more powers for the Scottish
Parliament. The referendum question was "Should Scotland be an independent
country?" The "No" side won, with 55.3% voting against
independence and 44.7% voting in favour. The turnout of 84.6% was the highest
recorded for an election or referendum in the United Kingdom. It should be
noted that 16 and 17 year olds in Scotland were given the right to vote for
purposes of this referendum only. Results indicated that 71% of 16 to
17-year-olds voted for Scotland to be independent and 29% voted against.
Following the referendum, Lord Smith of Kelvin was
asked to convene all five of Scotland’s main political parties to discuss a
possible agreement on which additional powers for Scotland should be devolved.
The terms of reference for the Commission were as
follows:
To convene cross-party talks and facilitate an
inclusive engagement process across Scotland to produce, by 30 November 2014,
Heads of Agreement with recommendations for further devolution of powers to the
Scottish Parliament. This process will be informed by a Command Paper to be
published by 31 October and will result in the publication of draft clauses by
25 January. The recommendations will deliver more financial, welfare and
taxation powers, strengthening the Scottish Parliament within the United
Kingdom.
What resulted was an efficient convening of
meetings, producing in the words of Lord Smith, an unprecedented achievement.
As he states in the introduction to the Report:
This agreement demanded compromise from all the
parties. In some cases that meant moving to devolve greater powers than had
been previously committed to, while for other parties it meant accepting the
outcome would fall short of their ultimate ambitions. It shows that, however
difficult, our political leaders can come together, work together, and reach
agreement with one another. Taken together, these new
powers will deliver three important improvements to the devolution settlement,
making it more responsive, durable and stable.
Among the recommendations contained in the report
were the following:
To provide an adequate check on Scottish
Parliament legislation changing the franchise, the electoral system or the
number of constituency and regional members for the Scottish Parliament, UK
legislation will require such legislation to be passed by a two-thirds majority
of the Scottish Parliament.
The Scottish Parliament will be made permanent in
UK legislation and given powers over how it is elected and run. The Scottish
Government will also be made permanent. The Parliament will also have the power
to extend the vote to 16 and 17 year olds, allowing them to vote in the 2016 Scottish
Parliament election.
Weak inter-governmental working is a potential problem.
The two governments need to work together to create a more productive, robust,
visible and transparent relationship. In essence, formal processes should be
developed for the Scottish Parliament and the UK Parliament to collaborate more
regularly in areas of joint interest to hold the respective Governments to
account.
While foreign affairs will continue to be a matter
reserved for the UK Government, there is recognition of the need to
reflect fully the views of other devolved administrations when drawing up any
revised governance agreements in relation to Scottish Government representation
of the UK to the EU.
All aspects of the state pension will continue to
be shared across the United Kingdom. However, certain aspects of the Universal
Credit (UC), such as benefits for carers, disabled persons, and those
who are ill will be devolved to the Scottish Parliament. The initial devolution
of these powers would be accompanied by an increase in the block grant
equivalent to the existing Scottish expenditure by the UK Government on the
benefit being devolved. In addition, any savings arising to the UK Government
from no longer administering these benefits in Scotland will be transferred to
the Scottish Government. The Scottish Parliament would also be given the power
to create new benefits in areas of devolved responsibility. To offset this, the
UK’s Benefit Cap would be adjusted to accommodate any additional benefit
payments that the Scottish Parliament would provide.
With respect to transport, the power to change
speed limits as well as power over all road signs would be devolved. Moreover,
the licensing of onshore oil and gas extraction would be devolved while the
licensing of offshore oil and gas extraction would remain reserved for the UK
Government.
Income tax would remain a shared tax with both the
Scottish Parliament and the UK Parliament sharing control of Income Tax, while
the Scottish Parliament would have the power to set rates of Income Tax and the
thresholds at which these are paid. The UK and Scottish Governments would work
together to avoid double taxation and to make the administration as simple as
possible for taxpayers.
With respect to the Value Added Tax (VAT) those
receipts raised in Scotland by the first 10% would be assigned to the Scottish
Government’s budget. Moreover, the power to charge tax to air passengers
departing from Scottish airports would be devolved.
The devolution of further responsibility for
taxation and public spending would be accompanied by an updated fiscal
framework for Scotland that would be consistent with the overall UK fiscal
framework. The following elements would be incorporated into this fiscal
framework:
·The block grant from the UK Government to
Scotland would continue to be determined via the operation of the Barnett
Formula, or the system of grants for Scotland, Wales and Northern Ireland that
is based partly on which powers have been devolved to them, and partly on
population.
·The revised funding formula would result in the
devolved Scottish budget benefiting fully from policy decisions made by the
Scottish Government;
·There would be no detriment to Scotland as a
result of the decision to devolve further powers.
·There would be no detriment to Scotland
resulting from either UK or Scottish Government policy decisions post-devolution;
·Scotland`s fiscal framework should provide for
sufficient, additional borrowing powers to ensure budgetary stability, to
support capital investment. The Scottish Government’s borrowing powers should
be agreed to by the Scottish and UK Governments and kept under regular review.
Moreover, a revised fiscal framework should be reviewed periodically to ensure
that they continue to be seen as fair, transparent and effective. A mechanism
to revise an review should be accompanied by an update to both the Scottish and
UK Parliaments, including the laying of annual update reports, setting out he
changes agreed to Scotland`s fiscal framework.
The delegation also had the unique opportunity to
attend the conference in Edinburgh which included the outline of the UK
Government response to the Smith Commission report, entitled Scotland in the
United Kingdom; An Enduring Settlement. The conference hosted by The Right
Honourable David Cameron, Prime Minister and The Right Honourable Alistair
Carmichael, MP, Secretary of State for Scotland, strongly supported the
work of the Smith Commission. They stated that with the Scottish people voting
in September 2014 to remain part of the United Kingdom, and the Smith Report
agreed to unanimously by all five main Scottish parties, the next stage is the
introduction of the draft clauses in a Scotland Bill to implement the provisions
of the Smith Report, allowing for the next UK Government to introduce them in
the new Parliament.
2.Economic Overview of Scotland, including any
Canadian investments
While in Scotland, the delegation had the
opportunity to travel to Glasgow to meet with the offices of Scottish
Development International, the investment and trade promotion agency of
the Scottish Government which works in partnership with the Scottish Enterprise
and Highlands and Islands Enterprise. It attracts inward investment to Scotland
and assists Scottish based companies to trade overseas.
Mr. Neil Francis, the International and Trade and
Investment, Scotland Director for Scottish Development International, the
international arm of Scotland’s enterprise agencies, brought together a panel of
business people whose business interests span the Canada – Scotland trade
relationship, notably in aerospace, defense, marine, BPO, chemical sciences,
creative industries, education, energy, financial services, food and drink, ICT
and electronic technologies, life sciences, textiles, and tourism sectors. Its
offices span Canada and the United States, Asia Pacific and Europe, the Middle
East and Africa.
Canada is one of Scotland’s largest inward
investors and Canadian companies located in Scotland support more than 5000
Scottish jobs. Canadian companies based in and around Aberdeen recover 30% of
the oil and gas produced in the North Sea, underlining Canada’s strong oil and
gas links. Canada is also one of Scotland`s most significant tourism markets.
Over 100,000 Canadians visit Scotland every year spending more than $100
million annually. Approximately 50 Canadian companies have operations or
representation in Scotland, including Talisman Energy, Nexen, Shawcor and Notus
Electronics.
Scotland is looking for more direct flights to its
airports, so that visitors do not always have to travel through London. It was
thought that businesses investing in Scotland would find direct flights to be
of tremendous benefit.
3.United Kingdom priorities for 2015
The delegation visited the Westminster Parliament
and had the opportunity to meet with the Rt. Hon. William Hague, First
Secretary of State and Leader of the House of Commons. He noted that the
Conservatives were pleased to embrace the challenge poised with devolution,
particularly in light of the close referendum results in Scotland. Given that
85% of the population and economic influence is English and accounting for the
geography and history of the United Kingdom, a federated model is not
necessarily an appropriate model for devolution. Rather, he suggested, the
three main parties are looking to a model of decentralization with local
authorities. Any option for future devolution in the United Kingdom would need
to address the asymmetry of devolution in Scotland, Wales, Northern Ireland and
in England itself.
Following the May 2015 election, all three
parties- namely the Conservatives, the Liberal democrats and the Labour
parties, have undertaken to bring forward a Scotland Bill in the next
Parliament. Indeed the Scottish referendum has brought about a wider debate
about how the entirety of the United Kingdom is to be governed.
Also discussed was the West Lothian Question - the
fact that non-English MPs can vote at Westminster on legislation that affects
English politics, while English MPs do not have an equivalent say in the
legislatures of Scotland, Wales and Northern Ireland. The Scottish referendum
has brought the discussion to the fore, with potential responses to the issue
being proposed, including a further decentralization of England, or a reduction
in the number of Westminster MPs from outside England. Also discussed was the
possibility of the reform of voting arrangements within Parliament to enhance
the voice of English MPs on English matters, or English and Welsh MPs deciding
on matters affecting England and Wales, for example. It was suggested that the
decision for such would be a matter of procedure, to be certified by the
Speaker.
4.Trade and investment including CETA
The issue of attracting a greater number of small
and medium enterprises into the international marketplace was also discussed.
As Canada is Britain’s second largest trading partner after the United States,
it was suggested that a means to further increase that partnership is by the promotion
of SME’s, especially in the areas of transport, energy, broadband, water and
waste treatment.
Moreover, within the context of the G20, Canada
and Britain look to improve global economic conditions so that enhanced
international trade and investment can thrive.
The United Kingdom has been a strong supporter of
the Comprehensive Economic and Trade Agreement (CETA) and has strongly endorsed
the agreement. The United Kingdom government is also looking to rebalance its
economy away from an over-dependence on the financial and services sector by
putting a renewed emphasis on high-value manufacturing, and CETA would present
a real opportunity for UK exports.
5.Foreign Affairs issues, including a discussion regarding ongoing
security matters in light of ISIL and the situation in Ukraine – the United
Kingdom perspective
The United Kingdom has maintained a unique
relationship with the European Union, given its geography and history as an
island nation and reflective of its own political and legal traditions. It has
negotiated a number of exclusions and exemptions as it continues to stay
outside the Eurozone and Schengen Area. Prime Minister Cameron has announced
his intention to hold a referendum in 2017 on whether the United Kingdom should
remain in the EU.
With respect to Ukraine, and like Canada the
United Kingdom has undertaken sectoral sanctions designed to impact Russia’s
access to capital markets, arms supplies, and energy sector technology.
Moreover, it has called on the Russian Federation to abide by international law
and to respect Ukraine’s territorial independence. Also like Canada, the U.K.
supports diplomatic dialogue, in essence the Minsk agreements, as a means to
resolve the crisis.
Also of note is the engagement of the United
Kingdom in air strikes on ISIL in Iraq as part of the US led coalition.
6.The role of the Bank of England, including a
meeting with Mark Carney
The delegation was pleased to have had the
opportunity to meet with Mark Carney, Governor of the Bank of England. The Bank
of England is both the central Bank as is the Bank of Canada and the
macro-prudential monetary regulator of the United Kingdom. In this respect it
fulfills a similar mandate to that of Office of the Superintendent of Financial
Institutions (OSFI).
Mr. Carney used the opportunity to explain the
structural workings of the Bank, namely the nine member Monetary Policy
Committee (MPC) which plays a similar role to the Bank of Canada`s Governing
Council charged with monetary policy as well as the Financial Policy Committee
(FPC) charged with micro-prudential financial stability. Financial scrutiny for
the bank rests with the Westminster Parliament.
In closing, the delegation would like to extend
its thanks and appreciation to the Scottish Parliament as well as CPA–UK at
Westminster for hosting and arranging a tremendously interesting program. Also,
the kind assistance and support extended by the Canadian High Commission in
London as well as the Department of Foreign Affairs and International Trade in
providing a briefing prior to our departure are all most appreciated.
Respectfully submitted,
Hon. Joan Fraser, Senator
Canada-United Kingdom Inter-Parliamentary
Association
