Full fiscal autonomy (FFA) – also known asdevolution max,[1]devo-max,[2] orfiscal federalism[3] – is a proposed extension of thedevolved powers of theScottish andWelsh Parliaments overpublic finance. The term has come to describe a proposed arrangement whereby rather than receiving ablock grant fromHM Treasury at Westminster as at present, theScottish Parliament andSenedd would receive all taxation collected in Scotland or Wales; theScottish andWelsh Governments would reimburse theUK government for Scotland or Wales's share of UK-wide programs, mainly defence and foreign relations. Scottish/Welsh fiscal autonomy – stopping short of full political independence – is usually promoted by advocates of afederal United Kingdom. It has also been proposed by theScottish National Party, currently the governing party in Scotland, as a potential third option in a futureindependence referendum.
As early as July 2001, formerConservative Party chancellorKenneth Clarke said he believed that it would be "disastrous for the Scottish economy".[4] On the other hand, Robert Crawford, the former head ofScottish Enterprise, said in February 2004 that the Scottish economy "could be improved" by fiscal autonomy.[5]
David Cameron, then leader of the Conservative Party, stated in 2005 that he would not stand in the way of handing full taxation powers to the Scottish Parliament if the idea was supported by theScottish Conservative Party.[6]
The 2011Scottish Social Attitudes Survey core finding was that while 32% of respondents supportedScottish independence,[7] 43% supported greater autonomy within the UK. 29% of respondents supported devo-max, but only 21% supported the status quo.[8] Theelection of a majorityScottish National Party government in May 2011, committed to holding an independence referendum, also brought the possibility that FFA could be an extra option in the vote.[9] Some seniorScottish Labour Party figures have also suggested that they would support devo max, includingMalcolm Chisholm MSP,[10]Mark Lazarowicz MP,[11] and formerFirst MinisterHenry McLeish.[1]
The "devo-max" option was not included in the2014 independence referendum, however, as theEdinburgh Agreement stipulated that the referendum had to be a clear binary choice between independence or the existing devolution arrangements.[12]
In 2017 a Welsh Labour MS,Mike Hedges advocated for a long term devo-max devolution settlement for Wales.[13] In 2021, he produced a paper on potential devo-max for the Senedd. In it he outlined questions on pension age, social security system including contribution level and payment, alcohol and tobacco duty, UK and devolved taxes and their collection, distribution of financial support for poorer regions.[14]
In 2021, thefirst minister of Wales,Mark Drakeford called for "home rule" for Wales, which was later described as a call for devo-max.[15][16]
In 2022, LabourMayor of Greater ManchesterAndy Burnham called for "maximum" devolution to Wales, Scotland and Northern Ireland. He also proposed a senate of the nations and regions that would replace the House of Lords.[17]
Devo-max is currently being considered as an option for constitutional reform by an independent commission on the constitutional future of Wales, set up by theWelsh Government and headed byLaura McAllister andRowan Williams.[18]
A public opinion poll carried out at the end of October 2011 for theBBCPolitics Show indicated that devo-max was the most popular option with Scottish voters: 33% backed devo-max, 28% supported independence and 29% backed no further constitutional change.[19] A public opinion poll carried out in March 2013 for the SNP indicated that 52% of respondents believed the Scottish Government should be responsible for all tax and spending decisions in Scotland. Also, 53% of respondents believed that the Scottish government would be best suited to decide welfare and pensions policy for Scotland.[20]
In Wales, a YouGov poll in 2020 showed that 59% respondents who had a view said supported ‘devo-max’ for Wales in a referendum (40% in favour, 28% against). The question asked whether respondents supported transfer of powers for control of tax and welfare, but excluding defence and foreign affairs to the Senedd. Support by age group was as follows 82% of 18-24 year olds, 73% of 25-49 year olds, 51% of 50-64 year olds and 43% of 65+ year olds.[21]
In the same poll in 2022, 56% who had a view said supported ‘devo-max’ for Wales in a referendum (40% in favour, 32% against).[22]
The economic effects of full fiscal autonomy have been the subject of debate. TheInstitute for Fiscal Studies published a report in March 2015 that calculated that for the year 2015–16 there would be a gap of £7.6 billion in Scotland's budget under FFA, in comparison with the current system for distributing spending.[23]
This analysis has been criticised by the SNP's deputy leader,Stewart Hosie, on the basis that it represents figures for only one year and that it overlooks the extra growth the SNP says it can generate with more powers.[24]
The Institute for Fiscal Studies responded to some of these criticisms in a later report. It argued:
"Delaying a move to full responsibility for a few years would not on its own deal with the fiscal gap.... Indeed, if anything, given current spending and revenue forecasts, the gap would likely grow rather than shrink over the next few years. It would remain the case that full fiscal responsibility would likely entail substantial spending cuts or tax rises in Scotland. While a big and sustained rebound in oil revenues or significantly higher growth in Scotland could mitigate this, there can be no presumption that either would occur.
"There are a number of aspects of fiscal autonomy which are unclear; the level of payments to the UK government (for debt interest and Trident renewal), the ability of the oil sector to redeploy into other areas filling the productivity gap, and whether economic growth in Scotland is better supported by an Edinburgh or London government".[25]
Devo-max would mean a transfer of powers from Westminster to the Senedd that includes the right to control tax and welfare budgets.[26]
Sioned Williams, Plaid Cymru MS suggested that full taxation powers should be devolved to the Senedd because "any reforms to tackle poverty that we undertake in Wales will always be limited" without full taxation powers.[27]
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