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After the Referendum – the next steps

The result

The result of the referendum on independence – which saw Scotland vote to remain in the UK by 55% to 45% - brought an end to a long political campaign, and most probably the start of another.

Some of the key issues which had the greatest potential implications – including currency and membership of the EU – have been settled for now by the result. Consequently, there is less immediate uncertainty about the implications for businesses, organisations and individuals. However, the main political parties at Westminster have outlined plans to increase the devolution of power to the Scottish Parliament in areas of tax, spending and welfare and these will have their own legal implications.

Below is the timetable that Prime Minister David Cameron has set out for implementing the proposed powers. Lord Smith of Kelvin, most recently the Chairman of the Organising Committee for the Glasgow 2014 Commonwealth Games, has been asked to oversee the implementation of increased devolution.

What happens next?

  • By 31st October 2014 – the current UK Government plans to publish a "command paper" setting out proposals for devolution of an increased range of powers to the Scottish Parliament, followed by initial consultation – so-called "devolution-max" or "devo-max".
  • By 30th November 2014 – publication of a White Paper setting out "heads of agreement" for a new Scotland Act, followed by further consultation on the proposed new powers.
  • By 25th January 2015 – draft of the new Scotland Act to be published for the House of Commons to vote on.
  • Immediately after the May 2015 General Election – Second Reading of the new Scotland Act.

Of course, the realpolitik of Westminster will have a huge say in the final version of these proposals. Although all three parties made a commitment to increase the level of devolution in Scotland, they have not yet agreed on the details.

Meanwhile, David Cameron has already spoken of the need to address the constitutional arrangements as they affect the rest of the UK, and not just Scotland – perhaps finally trying to answer the 'West Lothian' question in the process. The current funding model for all parts of the UK will also have to be addressed in the event of further devolution. Only time will tell if the political parties will able to stick to the timetable originally set out by former Prime Minister Gordon Brown. If wider UK constitutional reform is required before Scotland can be granted further devolution, that may be difficult – particularly with a General Election to come next year.

Before all that, there are already tax raising powers set to take effect under the Scotland Act 2012, which will introduce the Land and Buildings Transaction Tax (LBTT) and a Scottish Landfill Tax from April 2015. The following year will see the introduction of a Scottish rate of income tax. Scotland may not be an independent country, but this is still set to be a period of great change.

Comment

By Martin Darroch, Chief Executive of Harper Macleod

The decision has been made. There will be plenty of debate today about the merits of that decision, but to be brutally honest that doesn't matter now.

There will be relief for some and disappointment for others, and no doubt some lingering resentment on both sides. However, continuing the argument after the country has delivered its verdict would be counterproductive for everyone, including Scotland's lawyers and our clients. It almost goes without saying, but at a time of political division there is a greater imperative for the country to send out a united message.

This is where we are. What do we do next?

That's not to downplay what was a historic moment but we'll let politicians and others ruminate on that while we focus on the future. The referendum result may have settled the debate over independence for now, but as always there is change on the horizon.

As a firm, like many others, we remained neutral throughout the debate. We have a strong shared vision as a business, but that doesn't necessarily extend to our individual political views, nor should it. Our primary function is to enable our diverse range of clients to achieve their objectives whatever the constitutional, economic or regulatory framework they face. Throughout the campaign some of our key stakeholders and clients – concerned about the potential effects for them should the vote go either way - looked for our counsel and we gave them the answers we could based on the information available. The No vote has removed some uncertainty, but not all of it.

It has been made clear that the vote to remain within the United Kingdom does not simply mean retaining the status quo, but will result in a move towards increased devolution. Lord Smith of Kelvin, most recently Chairman of the Organising Committee for the successful Glasgow 2014 Commonwealth Games, has been asked to oversee the implementation of this and we will wait for more information on what that will involve, so we can determine any associated opportunities or risks for our clients. While that process takes place business must go on as usual.

There have been plenty of other things going on in Scotland since the referendum was first announced. The Commonwealth Games themselves showcased the very best that Scotland has to offer and it is this kind of message that the country must continue to emphasise.

Scotland has made its decision to remain part of the United Kingdom. Scottish law firms, along with everyone else, must now play their part in making it a success.

Summary

We will continue to provide updates as and when legislative proposals related to increased devolution arise.

Should you have any further queries in relation to the above or in connection with any other matter, please do not hesitate to contact us via info@harpermacleod.co.uk This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Please note that the contents of this paper are provided for guidance purposes only and do not constitute, should not be construed or taken as constituting legal, financial or taxation advice.