UK: Scottish Devolution From The Scotland Act 1998 To The Scotland Bill 2012 And Beyond - A Brief Summary

Last Updated: 4 May 2012
Article by Neil Amner and Robin Corbett

Biggart Baillie has many clients from outwith Scotland, who have interests in Scotland. Devolution and the movement towards possible independence are of significant interest to those clients. We provide advice to clients, too, on the workings of the Scottish Parliament, including promotion of private legislation. We offer the following summary of the current position, and are happy to advise on all related matters.

Scotland Act – Scottish Parliament

"There shall be a Scottish Parliament". This is the opening statement of the first section of the Scotland Act 1998. The Act transformed the constitutional position in Scotland within the UK by establishment of its own parliament.

The Act deals with:-

  • How the Parliament is elected;
  • The powers the Parliament has;
  • Provision for the appointment of a First Minister and Scottish Executive and the powers for the First Minister and Scottish Executive;
  • the relationship between the Scottish Parliament and the existing UK Parliament and UK Government;
  • The "tartan" tax ability to raise or lower basic rate of income tax by up to 3p in the pound.

The Parliament has legislative powers, but unlike the UK Parliament its powers are limited. Commonly its powers and limits are referred to as devolved and reserved. The extent of the devolved and reserved matters can be modified which the current Scotland Bill proposes to do.

Scottish Executive – Scottish Government

The legal name of the in power administration under the Scotland Act is the "Scottish Executive".

It was rebranded the Scottish Government in September 2007 by the SNP administration. This rebranding will be formalised by the Scotland Bill, if passed, which will rename the Scottish Executive the Scottish Government.

The official Gaelic title "Riaghaltas na h-Alba" has always meant "Government of Scotland".

Powers – devolved/reserved

There is no list of what is within the competence of the Scottish Parliament although there is a schedule of reserved matters in the 1998 Act. What is not reserved, is devolved. As you would expect, the division of powers and reserved matters is complex with exceptions to general rules. Even in an area such as criminal law where pre the Scotland Act there was a distinct and separate Scottish system, there are reserved matters, for example the Proceeds of Crime (Scotland) Act 1995 (as the confiscation of proceeds of drug trafficking a reserved matter) Matters of national security and terrorism are reserved.

Other examples of reserved matters are:-

  • Constitutional & currency matters;
  • Foreign Affairs;
  • Defence;
  • Energy including electricity, oil and gas, coal, nuclear energy, energy conservation;
  • Business and insolvency law.

Even where a matter is reserved, there is nothing to prevent the Scottish Parliament from discussing and debating the matter. For example, issues regarding oil and gas are of particular interest in Scotland and are extensively discussed and debated in the Scottish Parliament although reserved to the UK Parliament.

Funding – Whose Money?

Funding for the Scottish Parliament is allocated out of the UK Consolidated Fund into which all UK taxes are paid. The mechanism by which this is determined is known as the Barnett Formula. It adjusts the amounts of public expenditure allocated to Northern Ireland, Scotland and Wales automatically to reflect changes in spending levels allocated to public services in England, England and Wales or Great Britain, as appropriate. The formula is widely criticised and will change under the new Scotland Act.

Scottish Parliament legislation creating divergences in UK regions

Devolved powers have already led to divergences between Scotland and England, particularly under the influence of the SNP administration.

So far: -

  • Ban on smoking in public places introduced in Scotland first;
  • Free prescriptions;
  • Free personal care for the elderly;
  • Abolition of tuition fees (for domiciled Scots);
  • Scotland's greater commitments towards climate change by encouraging renewables schemes
  • Planning regime changes – the system is now materially different from England and Wales;
  • Resisting controversial NHS change – current NHS change proposals relate to England & Wales only;
  • "Bonfire of the quangos" in some instances only applies to England & Wales. For example, control of waterways remains in public control. British Waterways Scotland continues to exist renamed Scottish Canals;

How far can the Scottish Parliament go?

The Scotland Act specifically provides that there is no reduction in sovereignty of the UK Parliament. As sovereignty remains with the UK Parliament, it follows that Acts of the Scottish Parliament can be subject to challenge through judicial review.

The legislative competence of the Scottish Parliament has been challenged, most notably in AXA General Insurance Limited and others v The Lord Advocate and others.

This case related to pleural plaques which are evidence of exposure to asbestos and as such they are a marker that an individual has a greater risk of developing more serious conditions than someone who has not been exposed.

For many years the Courts accepted that anyone suffering from pleural plaques, with or without symptoms, was entitled to compensation. From the 1980s onwards, where pleural plaques arose from negligent exposure to asbestos, Courts throughout the UK made awards of damages and those awards were paid by the negligent party or their insurers.

In 2007, however, the House of Lords held in the case of Rothwell v Chemical and Insulating Company Ltd & ors that pleural plaques was not an injury for which damages could be claimed. Although the decision of the House of Lords was not binding in Scotland, it would have been highly persuasive and the Scottish Courts would have been likely to follow that decision.

After the House of Lords issued its decision, the Scottish Parliament passed legislation to ensure that Rothwell did not have effect north of the border and that legislation was passed the Scottish Parliament. The Damages (Asbestos-related Conditions) (Scotland) Act 2009 (the 2009 Act) came into force in June 2009 and provides that asbestos-related pleural plaques do constitute personal injury which is actionable under Scots law.

Later in 2009, a number of insurance companies raised a judicial review in the Court of Session to challenge the lawfulness of the 2009 Act. The challenge was unsuccessful and, having appealed in Scotland, the challenge was ultimately taken to the Supreme Court.

In the Supreme Court the insurance companies challenged the validity of the 2009 Act on two grounds:

  1. That it was incompatible under Article 1 of Protocol 1 of the European Convention on Human Rights and therefore outside the legislative competence of the Scottish Parliament under the Scotland Act 1998. The restrictions on legislative competence of the Scottish Parliament include prohibitions on legislating in breach of ECHR rights.
  2. That, under the common law, 2009 Act was open to judicial review as an unreasonable, irrational and arbitrary exercise of the legislative authority of the Scottish Parliament. The insurers contended that
the Scottish Parliament was in a quite different position to that of Westminster and that, as a creation of statute, it should be viewed as more akin to a local or regional authority whose actions were subject to judicial review on the ordinary grounds.

    The insurers argued that the Scottish Parliament had acted irrationally in imposing on them a substantial financial burden in order to compensate individuals for a condition which produced no symptoms and which did not impair their physical health.

The Supreme Court rejected the insurers' appeal.

In relation to the first ground, the Court held that the insurance companies were entitled to bring proceedings under the Human Rights Convention, but this particular challenge failed.

In relation to the second ground of challenge, the Court held that Acts of the Scottish Parliament are in principle subject to judicial review at common law, but not on the grounds of irrationality, unreasonableness or arbitrariness. This was not needed as there is already a statutory limit on the Scottish Parliament's legislative competence if a provision is incompatible with any of the Convention rights.

The result of the AXA decision is that there is now a different position in Scotland and in England & Wales as to whether those who have developed pleural plaques as a result of negligent exposure to asbestos are entitled to compensation. The latter are still bound by the Rothwell decision so pleural plaques is not an actionable personal injury south of the border. This leads to the possibility of "forum shopping" by claimants who will attempt to establish a basis for raising proceedings north of the border when it would otherwise be more appropriate to pursue an action in England or Wales.

The competence of the Scottish Parliament isn't clear in all aspects. There has been much debate as to whether the Scottish Government can hold an independence referendum without additional powers from the UK Parliament. This looks increasingly unlikely to result in court action as there are ongoing negotiations between the two parliaments on holding a referendum.

The Scotland Bill

The Scotland Bill proposes the "biggest transfer of fiscal power since the UK was created". It follows on, and largely implements the recommendations of the Calman Commission on Scottish Devolution.

On 18th April 2012 the Scottish Parliament passed the required motion supporting the passing of the Scotland Bill clearing the way for it to finish its passage through the UK Parliament.

The Scotland Bill completed its passage through Westminster on 26th April 2012. It is expected to get Royal Assent next week becoming The Scotland Act 2012.

The most significant provisions in the Bill give the Scottish Parliament greater responsibility for raising its own revenue. It stops short of the full fiscal autonomy that the SNP wants. The proposals are to reduce the rate of Income Tax in Scotland by 10% in each band (accompanied by a reduction in the Block grant for Scotland), allowing the Scottish Parliament to raise as much or as little tax by way of a Scottish income tax as it wishes. It would devolve Stamp Duty Land Tax and Landfill Tax, which would no longer apply in Scotland and could be replaced with Scottish taxes of a similar nature. It would create a power to request the creation of new taxes subject to approval at the UK level. The Scottish Government's borrowing powers would also be extended. This would result in the Scottish Parliament raising approximately 35% of its own budget from the current approximately 15% it raises.

There are also additional matters devolved and reserved. New devolved powers:-

  • Administration of Scottish Parliament elections;
  • Regulation of air weapons (this is arising out of a tragic case of a toddler killed in Glasgow);
  • Licensing the prescription of controlled drugs to addicts;
  • The national speed limit;
  • Drink driving limits. (Clearly this could result in a driver driving from England to Scotland and vice versa not being over the drink drive limit in one country but being over the limit in another.)

Controversially, as far as the SNP are concerned, it only provides for consultation for Scottish Ministers in appointing a BBC Trust Member for Scotland and a Scottish Crown Estate Commissioner. Especially with regards to the Crown Estate, the SNP wish to see this fully devolved to Scotland.

And the future for Scotland?

Both the Scottish and UK governments have ongoing consultations on the holding of a referendum on the question of Scottish independence. There is controversy over the number of questions, and timing. The SNP want to hold the referendum in August 2014, which coincides with the 700th anniversary of the battle of Bannockburn. The UK Government is seeking an earlier date. However, the question does seem to be when it will be held rather than if it will be held. There is already talk of further devolution of powers in order to head off full independence, so the Scotland Bill is not going to be an end to the question of devolution in powers to Scotland.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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