Tories could deliver £21bn of tax cuts

Yesterday's ToryDiary reported the outline of George Osborne's welcome statement on the need for the Tories to control Labour's spending.  The Daily Mail writes of "the prospect of large tax cuts" if the Conservatives are elected and choose to "put an end to Labour's "tax and spend" economics."  Leader-writers at The Telegraph also welcome George Osborne's statement:

"The Conservatives now seem ready to acknowledge, however tentatively, that Labour has provided voters with an education in the futility of throwing more and more money at unreformed, centrally run services. In his speech to the CBI yesterday, the shadow chancellor, George Osborne, repeated what has become the familiar vow to make economic stability his chief priority in government, but on this occasion he laid as much emphasis on restraining spending as he did on his usual insistence on not promising "upfront" tax cuts. Mr Osborne's favourite mantra, that the Conservatives will "share the proceeds of growth between public spending and tax cuts", still appears to fly in the face of economic logic - since lower taxes actually produce economic growth. But the fact that he is now embracing the idea that higher spending is not necessarily an unalloyed good is very welcome."

Research carried out last October by the accountants Grant Thornton - and published at the time in The Business - suggests that £21bn of tax cuts would be possible if George Osborne shared the proceeds of growth in a 1:2 ratio between lower taxation and higher spending.  Grant Thornton assumed economic growth of 2.25%.  Supply-siders would say, of course, that the long-term growth rate would increase if tax relief was focused on the productive side of the economy and therefore boost the proceeds of growth.

Peter Riddell in The Times sees George Osborne's statement on the control of spending announcements as an acknowledgement by the Tories that they need to display the same resolution that won Gordon Brown so much respect before the 1997 General Election.

Comments

[Tony]

We will surely see Labour resurrecting the old line about tax reductions = cuts in services. But then, anything else would require Brown to have a wit and intellectual rigour his closed mind simply cannot offer.

[Og]

It seems to me that the Tories should unveil "a bold new fiscal policy to INCREASE the take-home pay of the bottom 50% of wage-earners, and INCREASE the profitability of UK businesses".

Of course it is tax cuts by another name, but given the party leadership's belief that they can't mention the C word, and also that if you say something often enough it will become accepted fact by the electorate, they surely have nothing to lose.

"The Conservatives - the Party of Increases, not Cuts".

[Drew SW London]

"...the old line about tax reductions = cuts in services."

How about a new line, that Labour tax increases = cuts in the NHS' services?

[Mike Wood]

This comes on the same day that Welsh Conservatives are announcing a £100 Council Tax rebate for pensioners.
http://mike-wood.org.uk/taxrebate

Unlike Gordon Brown's promise before the last general election, this will be an annual rebate - not just an election year gimmick.

[Rachel Joyce]

Well said, Drew SW London

[TomTom]

Some way should be found to regionalise VAT to fund local govt and thereby give them an incentive to develop local businesses and commerce.

[Richard Woolley]

21 billion pounds worth of cuts don't go far enough for a party which is supposed to be in favour of low taxation. There is a phenomenal amount of waste in public spending. There should be at least 50 billion pounds worth of cuts. Those who argue that tax cuts lead to cuts in public services forget that tax cuts mean there is more scope for people to make charitable provisions for their own health and education. They also lead to faster economic growth, boosting public finances and making room for further tax cuts, thus weakening people's dependancy on the State.
I'd like to see inheritance tax abolished, stamp duty and capital gains tax phased out and a flat tax rate of 20p in the pound. Tax cuts would be an election winner. Stop squandering public money on old fashioned, out of date public services!
Cameron says that he will split the proceeds of growth between higher public spending and tax cuts but this is absurd. Public spending is high enough as it is. Conservatives believe do they not in low taxes, in a small state, in limited government? The proceeds of growth should be directed almost exclusively in massive tax cuts. I do not believe that the State should consume more that 35 per cent of GDP.
According to the taxpayers alliance, if public administration were as efficient as that in the US, Japan or Australia it would be possible to knock 73 billion pounds off public expenditure. The Labour government is wasting 200 million here and 200 million there and it all adds up. I'd like to see SureStart and the New Deal scapped and a radcially reduced public sector. Tax credits should be abolished (it is perverse to tax people and then give it them through an expensive bureaucracy) and people taken out of tax instead. Since Labour got in, doctors, teachers and nurses have been awarded ludicrously generous pay rises and there has been no mechanism for cost control in the public sector. The public sector is generally wasteful, inefficient and needs radical reform.

[Dick Wishart]

Oq, I think you've got it spot on!

[Matt Davis]

The question really is are the electorate sophisticated and interested enough to take notice of a debate based around the concept that it isn't how much money is spent on public services that counts, it is how that money is spent.Ultimately New Labour have managed to prove beyond any doubt that more money does not necessarily equal better services at all. Just look at the NHS.

[David Belchamber]

Richard Woolley @10.17:

"According to the taxpayers alliance, if public administration were as efficient as that in the US, Japan or Australia it would be possible to knock 73 billion pounds off public expenditure".

I absolutely agree with the general thrust of your argument but unfortunately, largely thanks to Nulab, public administration is nowhere near as efficient as it is in those other countries.

This is the key; the tories have to get in and start reforming the public services which are already absolutely fed up with government tinkering.

Liam Halligan demonstrated how Nulab "reforms" in the NHS have gone round in circles and have ended up close to where they started when they took over in 1997.

We also have to remember that Brown inherited a huge surplus and by his profligacy has turned it into a huge deficit, partly by increasing bureaucracy but also by increasing massively the number of bureaucrats.

These are people and you cannot just lay them all off overnight.

[Denis Cooper]

I'm afraid the obvious conclusion is that the Tories WILL cut public services.

[Richard Woolley]

I read on one website that there are 8 administrators for every nurse in the national health service compared to 2 for every one in private hospitals! So there are about 4 times as many administrators in the NHS as what there needs to be. I watched a programme on Channel 4 the other night about the NHS "Where has all the money gone?" and despite NHS spending rising to £80 billion annually there are still people waiting 6 months for an operation. Services haven't risen in proportion to the amount of money being spent. We still have a Bevanite model for the NHS from the 1940s/50s which is inappropriate for the 21st century just as we still have a Croslandite state comprehensive system from the 1960s which has failed a generation of pupils yet Cam's people seem to be ruling out radical reform of the public services lest they fall prey to Brown's attacks of 'Tory Cuts'. Only an insurance model can deliver a high quality health service and only a system of educational vouchers can bring about higher educational standards for all.

[Jonathan M. Scott]

Tony Robinson on "This Week" last night highlighted the problem that palliative care for the elderly is chronically under-funded. This is just one of many areas that needs increased funding. Tax cuts are a no-go area politically.

[Peter Hatchet]

Trouble is, in the eyes of the swing voter - "Public sector cuts" is always heard over "tax cuts".

Some of us don't want to accept this, but unfortunately it's the truth. I would have thought most of us had learnt this lesson over the last 10 years. It is *not* an election winner by itself.

If we start going around saying we're going to slash this and slash that and radically downsize this and that, the swing voters will run a mile.

Yes, it is possible to do both, but a delicate, sensitive and cautious approach to tax cuts is
needed. Just what Cameron is doing now - doesn't mean he is a sellout!

Remember - most voters still do not trust us to run public services *period*. Yet alone to run them well, deliver efficiencies and tax cuts - all at the same time.

I have no doubt Cameron will deliver tax reductions over the next Conservative government, but we won't get a Conservative government at all if we scare the horses with all this talk of "slash'n'burn".

[Matt Wright]

Richard, there would be a large lag though in achieving such changes in society. In the short term rash tax cuts would equal service cuts. I think Cameron and Osbourne are playing this just right,

Matt

[Denis Cooper]

No, official Tory policy is that Cameron would deliver tax increases. Increases in tax revenues, that is, making it possible to increase spending on public services. Even if tax rates were cut, the average person would still be paying more £s in tax because the economy would grow faster and therefore the average income would increase. There would be no "tax cuts". Careless talk costs votes!

[IRJMilne]

"Mr Osborne's favourite mantra, that the Conservatives will "share the proceeds of growth between public spending and tax cuts", still appears to fly in the face of economic logic - since lower taxes actually produce economic growth."

What is wrong with these people? I can't actually be bothered to explain yet again why this is rubbish. Stupid, stupid Daily Wail.

On Tory public service cuts: Polly Toynbee looked at this herself. She reckoned they'd not cut NHS/education/defence expenditure, the big ones - just axe an assortment of quangos and interest groups and so on, which she proceeded to defend. Myself, I hope she's right.

[Opinicus]

@Peter Hatchett
Some of us don't want to accept this, but unfortunately it's the truth. I would have thought most of us had learnt this lesson over the last 10 years. It is *not* an election winner by itself.

So the brighter minds in CCHQ might have tried to come up with a way of circumventing this political truth without swallowing Nu Labour economics wholesale. Public service reform would allow us to cut public expenditure without "cuts" as the two schemes would not be comparable. As the public services are crying out for reform this would actually be the right thing to do too - irrelevant, I know.

[Peter Hatchet]

Denis: What's your point?

People care about what % of their income is taken up by tax. If I get a salary increase, I'm not concerned about the extra pounds I pay automatically. Most people see this as fair. I get angry if I pay more % of my income as tax.

Most people would prefer that their salary grew whilst paying the same % tax, than it stayed the same and the tax rate was cut.

All that matters is that the tax burden decreases as % GDP of the economy over time.

[TaxCutter]

Conservatives should get out of this habit by putting a £bn number on tax cuts. The evidence in tax-cutting countries, eg Ireland, USA and Australia confirms that tax cuts actually increase revenues. Secondlly, £21bn means nothing to a voter, tax cuts should be expressed in terms that are meaningful to punters. Third - it plays to Labour's argument that Tory tax cuts mean cuts in public services.

The party needs to move on from DC's "economic stability" point, made on the hoof during the leadership campaign.

[Comstock]

You could deliver 25 billion at a stroke if you scrapped Trident....

[James Maskell]

The speech by Osborne was a shot in the foot of all the goodwill he had been building up with critics. The economics really doesnt add up. Hes pledging to increase spending whilst not increasing spending now. Does that mean that he has removed all previously proposed spending increases from policy?

[Derek Buxton]

I must agree with Mr. Woolley, it is essential to reduce the ridiculous tax burden we are carrying. No one expects it to happen overnight, especially as Brown has squandered the legacy he got from the Tories in 1997. Nevertheless there are savings to be made, all the extra money that has gone into the NHS and we are left with it in a worse state than before. Something is seriously wrong in it and it must be sorted before the Country runs out of money. The same can be said of every government department, not one runs efficiently.

[George Hinton]

Tax cuts do not necessarily mean cuts in service, that's the Old Labour saw, adopted by NuLab, to scare the voters into voting NuLab.
What this country so desparately needs is a public sector that can actually deliver services to a budget, to a time-scale, efficiently and effectively.
We do not need to spend billions on an ID card when more efficient policing of our borders would achieve the end of keeping undesirables and illegals out. Indeed, a volte face on ECHR would enable this country to accept only bona fide asylum seekers, rather than the tidal waves of bogus seekers, who are schooled by unscrupulous legal types and others in manipulating our chaotic systems.
NuLab are guilty of using public funds for grandiose schemes, B-Liar has even said that he wants to leave a legacy, that the taxpayers will have to fund. We do not need this wasteful expropriation of revenues. Cutting waste and more efficient collection of revenues will bring in more money to the state coffers, reducing taxes will make this country a more attractive investment opportunity and may well result in company's investing here rather than India.
NuLab have been given 10 years of our time and money, they have wrecked everything left to them from the previous Conservative government. The legacy they leave is one of waste, overspending, overtaxation and incredible future debt with sleaze and corruption that beggars belief.
B-Liars legacy should be a 10 stretch at a nice HMP with a rather strict regime, along with the rest of the shower.

[real conservative]

"Tories could deliver £21bn of tax cuts"

But they won't.

[Denis Cooper]

Peter,

The point is so simple that it should be self-evident. Talking about "tax cuts" inevitably creates the impression that there would be less money available for public spending, so there would have to be cuts to public services. However as I understand the Tory policy is that there would in fact be MORE money for public services - it's just that the rate of increase in public spending would be kept below the rate of economic growth, rather than above the rate of economic growth as has been the case in recent years. Which would stimulate economic expansion,
and that would mean EVEN MORE money available for public services.

Why allow the careless choice of language to create the damaging impression that there would be cuts to public services, when that is not the intention?

By the way, talking about "cutting waste" and "improving efficiency" also creates the impression that there would be cuts to public services, because people know what that has usually meant in the past.

[David Belchamber]

Denis @ 15.20:

"it's just that the rate of increase in public spending would be kept below the rate of economic growth, rather than above the rate of economic growth as has been the case in recent years".

Spot on; the key is in the language. No talk of "cuts" but make it policy to match Brown's projected spending on the NHS and Education over the next x years (as he is intending to do exactly what Denis suggests).

Then get on with cutting out unnecessary quangos and trying to make various government departments fit for purpose.

After a few years, substantial savings will have been effected.

[Jake]

I work in the public sector and see daily that it leeks money in every direction . It also often receives very bad value for money for work done ( though sometimes veru good value ! )

A way to save another £13 billion per annum for England would be to abolish the Barnett Rules - and thats only for Scotland !

[Yet Another Anon]

You could deliver 25 billion at a stroke if you scrapped Trident
Defence Spending needs at least doubling for the UK to have a credible Defence to meet world threats - just because there has been a brief spell where the UK is not at emnity with another major superpower does not mean that this will not happen - China or Russia could easily become a threat quickly.

Indeed the UK needs to be working on a trully independent system for launching nuclear warheads, there should be a higher number of warheads stockpiled and more than currently ready on standby for quick launch.

Future Defence threats and Security threats are difficult to predict, the NHS budget and Education budget could be cut substantially through commercialisation and some government departments scrapped and the sports budget scrapped and museums required to charge admission fees, libraries could be commercialised and there is scope for privatisation of Parcelforce, Royal Mail, Royal Mint, Port of London Authority, remaining shares in Mersey Harbour and Docks Co, Covent Garden Market Authority and a number of others and scrapping of much labour market regulation and the dti could save money, scrapping many regulators and tribunals as well, organisations such as ACAS could be sold or closed. Parts of the BBC could be sold.

[Paul Oakley]

Jake's point about public sector waste is a good one. Recommended reading is "Wasting Police Time". Author "David Copperfield" (ahem) is of the view for example that we do not need more police officers but that those we do have should utilise their time on the street instead of filling in a multiplicity of forms. There are far more of these than the infamous dockets which must be completed whenever a member of the public is stopped for a quiet word.

[Goldie]

Osborne doesn't have a clue. It's that simple. The Cameron Conservatives basically have no economic policy. How they expect to beat the former Chancellor come the next General Election is an absolute mystery.

[barry]

wouldnt it make more sense to highlight the fact that brown is no economic genius? We cannot commit to tax cuts because we have no idea what a horror show we will inherit. I am staggered by the easy ride they are given on teh economy. Browns numbers are fiction, his forecasts are optimistic and irresponsible so far into a business cycle. It should be clear to all that we are heading for very tricky times, our growth has been artificially boosted by massive public spending, that cannot continue.

The household credit binge is indeed ugly but can be managed down reasonably quickly and painlessly, same for house prices. It is hard to see what really could force interest rates materially higher from here, maybe 1% this year if inflation comes about, if the US hits the fan which has to be a risk.

The fact is what option does osbourne have at this stage? Instead of talking about half-cocked tax support for marriages we should be telling people what stealth taxes will be reduced and how.

[Simpleton]

you don't have to actually cut ncome tax to mae the bottom end of society better off just raise the threshold for everyone to £10000 and people like myself would only be paying tax on about 5-6k of our annual basic salary. then introduce a flat tax at 23% so everyone is paying the same percentage but nothing on the first 10k

[Martin Bristow]

We should not shy away from arguements because we think they contradict an accepted logic.There is no linkage between high public expenditure and excellent service delivery.The Labour NHS fiasco shows this.The goal must be as Richard Wooley argues well to radically reduce the size and scope of the public sector.

This will be achieved only through radical reform.Any new administration will not achieve any lasting change by simply attempting to manage public services in the same old way.We must have an end to overbearing micro management in the NHS and Education. This needs to be accompanied by a drive to increase both the power and accountability of those who lead on the ground.Public services must be run for the consumers (public) and not those employed by them.A more diffused local democracy with decision on health provision school expansion and provision must be put in place by a tory government.

This would unleash a demand for service value and drive efficiency and accountability moving forward.This is the way to rebalance the public sector long term and reduce taxes over time.I think we can make such an arguement both attractive andelectorally viable.

[Denis Cooper]

Now, Jake, you know as well as I do that the "subsidy" to Scotland is fictitious.

[David Sergeant]

" Mr Osborne's favourite mantra, that the Conservatives will "share the proceeds of growth between public spending and tax cuts", still appears to fly in the face of economic logic" Telegraph

And this is immediately followed by Grant Thornton demonstrating how to share the proceeds. Trust someone from the Telegraph will read, at least, the headline of this blog and tell the editors to grow up and get their politics and economics straight.

[Jake]

Nothing at all fictitious about the English subsidy to Scotland via the Barnett Rules , Denis .
The true extent of this subsidy is probably even worse than the £13 billion quoted . The real figures are kept carefully out of date by this corrupt government and are anyway just as carefully confused with overall "British" expenditure - a longstanding ploy (predating this particular bunch of crooks)by the civil servants and British politicians to deceive all of the people of the "United" Kingdom as to where the money flows end up - but , needless to say , seized upon eagerly by them ( rather like PFI really ! ) to further the confusion and theft .

This is just one argument , quite apart from any issue of the injustice of national subsidies by England to the rest in the post 1998 British state , for national fiscal independence for all the component countries within a federal Bitish state .

If one adds in the subsidy by England to Northern Ireland and Wales the situation is even worse . By the way , we now know that , in the case of Wales , there is such a thing as " Barnett Rules Plus " - kept ever so out of site by the British government .

Consider also that there is mounting evidence of the inequity of the application of the taxation and welfare payments in the various countries with England always being the worse treated of course .

[Philip]

The new border police and reversing tax and benefit disincentives to marriage must be essential, given the overwhelming necessity for these policies declared by David Cameron. These and other necessary commitments (e.g. on security, the armed forces and law and order) will have to be paid for by cuts elsewhere.

As for the NHS, surely it is possible to improve front line health care while cutting the waste evidenced by Labour increasing spending but bringing about redundancies among medical staff and threatened ward, A&E and maternity unit closures.

[Denis Cooper]

Apparently people in north east England are even more heavily subsidised than people in Scotland, but without any compensating oil revenues being paid to London ... should we dump them as well? See Chart 2 on page 21 here:

http://www.oxfordeconomics.com/free/pdfs/regcont.pdf

"... our calculations show clearly that the widely recognised picture of England ‘subsidising’ other parts of the UK does not tell the full story. In practice it is
not England as a whole that is subsidising other parts of the UK, but the most prosperous parts of the UK ‘subsidising’ both the non-English parts of the UK
and the rest of England as well. It is only the wider south east (Greater London, the South East and the Eastern Region) that made a positive net contribution
to the UK public finances in 2004/05, with the northern regions, the midlands
and the South West joining Northern Ireland, Wales and Scotland as a net
drain on the exchequer. In terms of the per capita balance of spending over tax payments (Chart 2), it is clear that Northern Ireland gains the most from the unequal regional composition of the UK public finances, with a net balance of spending over receipts of over £3,700 per person. This is followed by Wales,
the North East and Scotland. Although the non-English parts of the UK stand
out as significant beneficiaries of the unequal pattern of UK regional spending, whether the figures are looked at in total or per head, it is the relatively small
but economically less successful North East that benefits most out of the English regions when looking at the figures per person, rather than the much more heavily populated North West."

[Jake]

Hardly the point Denis .
The UK is a mutinational state composed of several countries . The Scotland Act recognised Scotland specifically as a NATION and a COUNTRY and gave them a parliament on that basis . England , including the north East of England , is a nation and a country and has been carefully denied recognition by the British government as such .Thus also denied a parliament .
The south east of England is possibly ( "possibly "because there are some pretty deprived parts in it - the 13 of the poorest boroughs in England are in the SE )
the richest part of England , in which case it should be for the English , via their own parliament , to determine how to spread their own national income around within their own country - not to have it seized from them by a rapacious celtic dominated British governemnt and sent to the celts .
Your argument is out of date - it would have made some sense prior to 1998 when there was a unitary British state but since then it has made no sense and I suspect simply reflects a sentimental attempt at denying the fact of the fundamental altering of the nature of the British state by the assymetrical and divisive policy of partial devolution to some countries but not to England .

[Denis Cooper]

So are you saying, Jake, that if England also had a Parliament, equivalent to the Scottish Parliament, then you would no longer object to subsidising the Scots?

[Jake]

Nothing so obtuse Denis .
I am saying that there should be an end to cross subsidies, secret and not so secret, within the United Kingdom and that this should be achieved by the fiscal independence of the component nations in which each nation has its own parliament, government and budget - just like most other nations across the world have!
In such a system , the true national incomes and liabilities of each country would become immediately apparent. A short and sharp process of economic growing up and collision with reality would occur in which even those English people, who are determined to cooperate in the financial rape and plunder of their own country, would have to justify themselves.

Points
1. I very much doubt if , in the entirety of the picture , the North East of England is subsidised by the British government more than the average of Scotland , etc .

2 . With parliaments for each component country of the UK it would be left for those parliaments to decide wether or not to contribute to the finances of the overarching British state - for transparent and justifiable " British " expenditure eg defence .

[Denis Cooper]

I asked because you said "Your argument is out of date - it would have made some sense prior to 1998", which implied that you didn't object to subsidising
the Scots before there was a Scottish Parliament. Now that there is a Scottish Parliament, with devolved powers broadly similar to those enjoyed by pre-war county councils, you do object, and as I understand you would continue to object even if there was an English Parliament with similar powers. On the other hand, you don't object to the south east of England subsidising the north east, and apparently that can continue indefinitely because you wouldn't expect it to also have fiscal independence so that the dire position of its public finances could be exposed. I have to say that this makes no sense at all as far as I'm concerned, unless it's based upon a feeling of alienation from the Scots which I don't share, and in that case I wonder what you would think if it was established that Union with Scotland was not financially draining but actually very profitable for England. Nor can I see how in a federal structure with an over-arching British state each of the four Parliaments could be allowed to decide whether or not to contribute to the common defence, and in any case it is quite usual for a federation to have mechanisms whereby some states are subsidising other states at a given time.

[Jake]

Denis, no matter how much you want to kid yourself , the Scottish parliament is the parliament of the nation , country and people of Scotland . Just ask any Scot and , assuming that they are not in a mood to take the micky , the answer will be in the affirmative . Absolutely , in no way is it on a comparable basis with a "pre war county council".
The Scottish parliament is the resumption of the ancient parliament of Scotland - that same parliament which , along with the equivalent parliament of England

( the parliament of the nation , country and people of England )

jointly with that of England , decided to abolish itself and unite its sovereignty with England , via the Act of Union 1707 , as the newly created British parliament of the newly created British state .

The fact of the setting up of a Scottish pariament by the Scotland Act 1998 constituted a monumental fracturing of the original agreement - comparable to a marriage bond between nations - which underwrote the Act of Union . That this this awful , ignorant and vandalistic act was undertaken , in a totally undemocratic way in that the English were never consulted , by the shallow and ignorant fool of a man ,ie Blair , who presided over its happening , is now a matter of historical record . Nevetheless , it happened and effectively ended the British state ( in its previous existence anyway )from that time forward . Hence the rather weird atmosphere of the last few years in which we have a government attempting to deceive the English that all is at it was for the last 300 years , a Scottish Chancellor banging on about "Britishness" in a desparate, hollow sort of way and large numbers of people , mainly in England, who would prefer that all was is it was before 1998 and don't want to face the reality of the effective ending of he old familiar order - based on the English notion of fair play and equal dealing throughout the whole of the country - in this case the country , for that is what it became for huge numbers of people, of Great Britain .
( Fair play is an English notion , not a British one , despite the attempts of Brown et al to hijack it for Britain ) .
You might consider the topic of prescription charges throughout the "United" Kingdom in the light of this .

You suggest a feeling of alienation from Scotland on my part which is innapropriate. Scotland is not my country . England is . I see no reason why people of my own country , England , should be forced to subsidise - and that IS the case - the people of another country , particularly when there is dire ned for that same money to be spent in our own country and , also , particularly ,when that money is spent in a foreign country , the population of which which has made no secret of its general antipathy for all things English .
It is peculiar that this should even have to be argued .

[Denis Cooper]

Whoever says that "the Scottish parliament is ... the resumption of the ancient parliament of Scotland - that same parliament which, along with the equivalent parliament of England ... decided to abolish itself and unite its sovereignty with England", and it "effectively ended the British state (in its previous existence anyway) from that time forward" has got it completely wrong.

If that was the case, there would be no MPs elected in Scotland sitting in the British Parliament, and the latter could not have reserved a comprehensive list
of the most important powers to the British government and Parliament:

http://en.wikipedia.org/wiki/Reserved_matters_(Westminster)#Executive_powers

plus the catch-all reservation in Subsection 28(7) of the Scotland Act:

"This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland",

which means that if it chooses Westminster can still legislate for Scotland even on matters which it has previously classed as devolved.

Constitutionally Scotland with its Parliament is no more separate from the United Kingdom than New South Wales is separate from Australia:

http://en.wikipedia.org/wiki/Parliaments_of_the_Australian_states_and_territories

or Ontario is separate from Canada:

http://en.wikipedia.org/wiki/Provinces_and_territories_of_Canada

Whether the Holyrood body was called a Parliament, an Assembly, a Legislative Council or just a Council would make no difference to the constitutional reality that it is not the legislature of a sovereign state, but merely the creation of the sovereign Westminster Parliament through its Scotland Act. Nor does it make any difference to the constitutional position that the present government has chosen to pander to the Scottish Executive.

[Jake]

Denis, you have have a touching faith in the power of bits of paper . In practice , they are of variable use , largely depending on the respect which societies and relevant interested parties collectively decide to have for them .
A case in point might would be the former USSR which you might recall was underwritten by large amounts of bits of paper including a written constitution and various international treaties . However , there was a collective withdrawal of approval and recognition from the bits of paper in 1989 and the rest is history.

I suspect that the Scottish parliament is already recognised both at home and abroad ( "abroad" includes England )as the national forum of the Scottish people and the repositary of Scottish sovereignty. That that same body chooses , at present ,to go along with its , extremely advantageous to them , agreement with another parliament is a passing thing .
It might , at any time , decide simply to end the association ,and, being sovereign ,would be recognised as having the power to do so . Not many people , certainly virtually no one in England , would seek to stand in the way of the Scottish parliament if it decided to declare for Scottish independence . The problem for the Scottish parliament would be to allay the concerns of its population not of foreigners.

In the event , we are likely to see something of this scenario unravel after early May 2007.

[Denis Cooper]

I suspect that you suspect wrong. The constitutional position is perfectly well understood by governments around the world, in many cases themselves the governments of federations, who routinely deal with the British government and only deal with the Scottish Executive when the British government permits that to happen. Just as it may allow a foreign government (or the European Commission)
to deal directly with a local or county council, or a regional assembly or agency - the Scottish Parliament in fact being no more than an elected EU Regional Assembly, just like the Welsh, Northern Ireland and London Assemblies. There's no question of the Scottish Parliament already being the repository of Scottish sovereignty, outside the fevered imaginations of the more extreme nationalists both sides of the border. And there's not the remotest chance that either the Scottish Parliament or the Executive would issue a unilateral declaration of independence, even if the SNP had control of both, because they know that foreign governments would not recognise Scotland as an independent state,
not least because it could set a dangerous precedent for the disintegration of their own states. Except Cuba - maybe Cuba would extend recognition.

[Jake]

Time will tell , Denis .
I am more interested in the welfare of England than that of a foreign country .

It might be painful for you to accept it but Scotland is a foreign country to England and always has been , despite the Act of Union 1707 in which both countries decided , after negotiation , to pool their sovereignties . Scotland retained its individuality as enshrined in the Act , as also did England .
Personally , I would far rather that the agreement of the last 300 years whereby we are all British and we perceive Great Britain to be our country , still pertained . It is not though and we all ought to face this . England has always been there throughout those 300 years and is in the process of re-emerging despite the dogged efforts of some ( including most of those 529 MP's who sit for English constitencies in the British parliament and who remain silent at the vast injustices enacted by the British government against the English ) to pretend that nothing has changed since 1998.

It has though - fundamentally .