All posts by Paul Cruikshank

Wealth Tax 2: Revenge of the Blog…

…or why context is everything.


So, my recent blog post on Richard Leonard’s plans for a Wealth Tax had an audience, which is nice. I mention this, not to brag about #numbers, but because at least one of the members of the audience was a senior partner at Thompsons Solicitors, Patrick Maguire. He disagrees with my view, so decided to produce a rebuttal blogpost on Unison’s Dave Watson’s website (albeit without linking to or describing the post he was rebutting). There were three main points, as far as I can see, about my post:

  1. He didn’t like the writing style.
  2. He didn’t see the ‘legislative competency’ as an issue
  3. I didn’t analyse the human rights argument, which he decided was the main point of my post, enough or correctly.

I want to offer my own opinion on these points.

Writing style and context

The reason my blog post was set out the way it was is because of the audience for which it was written. I wrote the article looking at the legal basis for a Scottish Parliament wealth tax because of a discussion among Labour Party members who are not from a legal background.

I am well aware that I am a trainee solicitor who still requires to be trained, but I wasn’t writing as a trainee. I was writing as someone who has a general understanding of the law and wanted to explain, from first principles, what issues a wealth tax proposal would face. That’s why I wanted to quote legislation as I went along, so people who perhaps weren’t fully aware of where my argument was coming from could follow along. I wasn’t aiming for dynamic legal analysis (though it was not merely ‘superficial’), but an easily to follow argument about legislative competence.

On ‘devolved matters’

On the main bulk of my blog, only one paragraph is written. I will reproduce it in full:

“The blog correctly identified that an Order in Council would be required under section 80B of the Scotland Act 1998 as amended.  But the author of the piece couldn’t help trying to over egg how arduous a process this would be.  Speed in fact the defining characteristic of secondary legislation such as Orders in Council.  If there is political will, there will (good that) be no problem.”

The first sentence agrees with my fundamental point: the Scottish Parliament, as things currently stand, cannot legally pass a wealth tax. Some say it disputes this point (such as Ewan Gibbs writing for the New Socialist this weekend), but it is quite categorical that an Order in Council is needed.

However, I would disagree that I “couldn’t help but over egg” the challenge an Order in Council would overcome. I devote a whole 4 paragraphs to the entire “order in council issue” and I concluded that, theoretically, Westminster could pass such an order if it wanted. But now it’s been mentioned, it’s worth reminding ourselves of how that would have to happen.

Patrick mentioned that the only thing stopping such a tax being devolved via an Order in Council is “political will”. I think that’s right – but I don’t think that will change in any meaningful way. There is no way that an SNP- or Tory-led Scottish Parliament will call for the powers to levy a wealth tax (or at least, not so they could use them). So only a Labour Scottish Government would have the political will to call for these powers. But, who would have the political will to grant them? A Tory UK government? No chance! Only a UK Labour UK Government would grant the Scottish Parliament these powers. But if there was a Labour UK government, why wouldn’t they be instituting a wealth tax at a UK level (from which Scotland would disproportionately benefit)? The policy is either legally road-blocked or politically inexpedient. I don’t think there is an effective political will – there is a problem.

Plus, on a more political level – why do we want to go back to an argument about the constitutional settlement again? It seems that since the middle of 2013 we have spoken about nothing about the Constitution in one way or another. And we know that this is not Labour’s strong turf. We cannot our nationalist the Nationalists and will not defend the UK more bombastically than Ruth Davidson in military uniform or in a tank. What is intended to be a policy promoting a discussion on class and wealth, will lead to further discussion about the constitution.

The human rights argument

As I said previously, my focus was on the devolved/reserved dimension of the Scottish Parliament’s legislative competence – not the convention rights dimension. Indeed, convention rights were mentioned only as a little bit of an afterthought in order to move the debate along.

I could have gone into the proportionality test, applied it and gone through it step-by-step, but I took the decision not to. Indeed, Patrick’s discussion of it is solid, and I wouldn’t necessarily argue against it, as far as it goes. However, and it is at this point I am conscious that I am a trainee and that Mr. McGuire is a senior partner, I do not think it tackles the point of the legislation being retrospective.

The key case that sets the law in this is the same reference of the Counsel General of Wales [2015] which lays out the 4-part proportionality test. It states several times that where legislation has a retrospective effect, “special justification” is required [paras 53,57, 65; and separately paras 133, 138]. It isn’t enough to say that the proposal is proportionate, but that you can justify the retrospective effect – and just describing it as “a miniscule 1% of wealth” isn’t a special justification. Nor would “the government needs more money”. I’d be concerned that the

Summary

So, building and expanding upon Mr. McGuire’s analysis of the case, there is a serious question for those who support the proposition that a Scottish Parliament Wealth Tax is legal (assuming the s.80B order-in-council is granted, which it is in no way guaranteed to be); what is the special justification for its retrospective effect? And that question only comes (we can be agreed) after Holyrood has the devolved power to pass the law in any case – and I do not agree that an Order in Council is a dead cert in any case.

This is not to say I don’t agree with the principle of a wealth tax. I do. I think a wealth tax would be a radical and revolutionary idea – and I’m glad it has featured in this leadership election. However, dismissing the substantial (though by no means insurmountable) obstacles in its’ way diminishes our Party and is not enough to make a policy, no matter how good, a reality.

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On Taxes and Turmoil…

…or why reading the interpretation section is always important.


I haven’t blogged (yet) about the Scottish Labour Leadership Race. I probably won’t (until it’s over anyway) – though I did go on a short twitter rant last week about how dreadful the race had been up to that point. It ended with a call for both candidates to  improve themselves and their campaigns, and noted that Anas Sarwar had, just that day, released his tax plan, which is the substance that the campaign had long been lacking.

The week after, Richard Leonard released his tax plan, with the centre-piece being a “1% wealth tax” on the richest 10% – with the aim of raising £3.7billion. That is an eye watering amount.

However – bluntly – this cannot be done in the Scottish Parliament. I want to talk about why.

The Tax

Before I go on, I want to be clear what we are talking about here. It is variously described as a ‘windfall tax’ or ‘wealth tax’ – as opposed to an ‘income tax’. It is not a tax on income (ie. waged, salaries, dividends, investment returns); it is a tax on wealth. It is explicitly differentiated from a tax on income and is explicitly a tax on “…those with over £1million of wealth…”.

So, we are forced to ask, what is wealth?  It is different from assets which enter a person’s hands in a certain period (that’s income). It can be described as the total assets that are in someone’s possession, and indeed, may well have been for many years. I think that that is a fair working definition. But what does this mean? Income is (most of the time) easily determinable. Its a salary, a wage, a return. It has a broadly definable value and is almost always in some cash amount. What a person’s ‘wealth’ is can be is a bit more elusive.

Some of it is simple. My wealth is the money in my Bank Accounts; Houses I own; cars; chattels; investments etc. But there are more complicated areas. What about assets held in trust for someone else? Legally, the trust is separate from the beneficiary – will this still be the same? Similarly, on a practical level, there are those who are money rich but cash poor. How would the policy operate in that regard? I ask these questions, not because I particularly disagree with the policy (nor with the sentiment and aims behind it), but because they have both practical and legal questions and consequences.

The Scotland Act and ‘Devolved Taxes’

The Scotland Act 1998 was amended by the Scotland Act 2016 to give Holyrood some tax powers. It doesn’t have free reign on tax, but it now a much more ‘tax responsible’ Parliament. However, to determine the extent of Holyrood’s Tax power, we muct pay special attention to the way powers held to be devolved or reserved in the Scheme of Scottish Devolution.

The general rule (as laid out in s.29 of the Act) is that a law of the Scottish Parliament is not law insofar as it is outwith the legislative competence of the parliament. s.29(2)(b)  states that a provision is outwith the Scottish Parliament’s competence if it relates to a ‘Reserved Matter’ (outlined in Schedule 5) of the Act. Therefore, it can be inferred that if something is not listed as a ‘reserved matter’ it is ipso facto a ‘devolved matter.

Turning then, to Schedule 5 of the Scotland Act 1998 (as it has been amended by the 2012 and 2016 Acts), we must see if taxes are lists as a reserved matter. If they are not, then the Scottish Parliament’s tax power is unlimited; if they are, then it is limited. Schedule 5, Part II, Head A – Financial and Economic Matters, Section 1A lists “…taxes and excise duties…” as reserved. However, it does state that there are exceptions for “Local taxes to fund local authority expenditure” (i.e Council Tax) & “Devolved Taxes”. So, taxes in general are reserved, however there is a species of tax, “Devolved Taxes”, which are devolved – and so within the legislative competence of the Scottish Parliament.

The question is now, then, ‘What is a Devolved Tax’? To find the answer to that, we must look at a section, and indeed a whole Part of the Act, that was added in 2012 when the Scottish Parliament’s Tax Powers were expanded for the first time. Part 4A of the Act exhaustively details the tax powers of the Parliament and the powers the parliament may exercise in relation to those taxes.

The part starts with s.80A, which is an overview of the part. s.80A(4) states that “In [The Scotland Act 1998 as amended], “devolved tax” means a tax specified in [Part 4A] as a devolved tax”. So, if a tax is a devolved tax, it must be listed in Part 4A as being a devolved tax. There is, however, a corollary to that in s.80B which states that an Order in Council (a kind of Secondary legislation) may amend Part 4A to “specify, as an additional devolved tax, a tax of any description” – meaning there is a possibility that the Scope of Part 4A may be expanded.

What taxes, then, are listed (exhaustively) as devolved taxes in Part 4A? In addition to the Scottish Rates of Income Tax, they are:
– Tax on transactions involving interests in land. [s.80I]
– Tax on disposals to landfill. [s.80K]
– Tax on carriage of passengers by air [s.80L]
– Tax on commercial exploitation of aggregate [s.80M]

It is clear, that for wealth tax purposes, none of these are sufficient. The only one that would be even approximately near to the purposes would be the ‘tax on transactions involving interests in land’  – and even then, we are some way off. It is a tax on the transaction, not on the land itself. If no transaction is made (i.e the land is not sold or gifted) then no tax can be levied. It is not concerned with the value of the land, but the value of the transaction itself (which is what LBTT in Scotland does just now).

Therefore, it is clear, that a ‘Wealth Tax” is outwith the current legislative competence of the Scottish Parliament.

A new Devolved Tax

As noted above, there is a power under s.80B to add new devolved taxes. Let us examine that in more detail:

80B) Power to add new devolved taxes

(1)Her Majesty may by Order in Council amend this Part so as to—
     (a) specify, as an additional devolved tax, a tax of any description, or
     (b) make any other modifications of the provisions relating to devolved taxes which  She considers necessary or expedient.

So by Order-in-Council, a tax may be specified as an additional devolved tax. How, would this be done, then? Schedule 7 of the Scotland Act 1998 states that any subordinate legislation (such as an Order-in-Council) are subject to the ‘Type A’ procedure. This, as detailed in paragraph 2 of Schedule 7, means that a draft Order-in-Council must be laid before and approved by the House of Commons, the House of Lords and the Scottish Parliament.

However, moving into the realms of Statutory interpretation for a moment, would it be competent to specify as a devolved tax, a tax not currently in existence? s.80B(1)(a) does say that a tax “of any description” may be designated as a devolved tax, and Westminster does have the power (reserved) to levy a wealth tax (though it chooses not to exercise it), so the power is there, though dormany. However, it is a novel and possible contentious legal argument which, politically, would lead to a discussion about the proper scope of the Scottish Parliament’s legislative competence.

Human Rights

For all the talk of devolved and reserved powers, it is not only Schedule 4 which bounds the Scottish Parliament’s competence. s.29(d) states that a provision of an Act of the Scottish Parliament is outwith its legislative competence insofar as it is “incompatible with any Convention rights…”. Convention Rights are stated in s.126 of the Act (its Interpretation Section) as being those defined in the Human Rights Act 1998. Section 1(1)(a) and (b) of the Human Rights Act 1998 state respectively that “Articles 2 to 12 and 14 of the [European Convention on Human Rights]” and “Article 1 to 3 of the First Protocol [to the European Convention on Human Rights]” are Convention Rights. This would include Article 1 of Protocol 1 to the ECHR [A1P1].

A1P1 states:

(1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

(2) The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

This has the effect that people, companies and other legal entities (e.g trusts) cannot be deprived of their property except when the act is:
– In the public interest; and
– subject to the conditions provided by law; and
– subject to the conditions provided for by the general principles of international law.

One of the principles of International Law, and ‘Convention Law’ is that of legal certainty (i.e that people should know what law applies at a particular time). It is arguable that by taxing wealth held by somebody acquired when there was no (further) tax liability, that they would be a lack of legal certainty and so the provision could not be deemed proportionate. It is certainly true that the European Court of Human Rights (and UK Domestic courts) acknowledge that not all retrospective legislation breaches A1P1, but it is usually accepted in the context of correcting a tax loophole or unintended tax avoidance scheme – not in the imposition of an all new species of tax liability. It is more likely than not that this would be held to be too large a deviation from a principle of legal certainty, and so incompatible with the general principles of international law as applicable to the convention.

This would mean that the Legislation imposing a new tax liability on wealth accumulated would be held as in contravention of A1P1. It would, therefore breach convention rights and so, therefore, be outwith the scope of the Scottish Parliament’s legislative competence.

Conclusion

In conclusion it would appear that, as the Scotland Act stands, Richard Leonard’s proposal to create a ‘Wealth Tax’ of 1% on those who own more than £1million in wealth is outwith the Legislative competence of the Scottish Parliament as it is an attempt to create a new tax which is not a “Devolved Tax”as currently defined.

It is possible that ‘a tax on accumulated wealth” may be created an “additional devolved tax” by an Order-In-Council which is approved by the House of Commons, House of Lords and Scottish Parliament. However, any such steps would most likely be challenged on the grounds of its compatibility with Convention Rights (as defined in the Scotland Act 1998 and Human Rights Act 1998), specifically, Article 1 or Protocol 1 to the European Convention on Human Rights due to the legislation not meeting with the general principle of International law, which is that of Legal Certainty.

 

 

Thanks Kez

…and how quickly things can change.


This will not be the first Scottish Leadership Election I have written about. When I looked back on Johann Lamont’s leadership I said that there were two things that the Scottish Labour Party had to face up to and change if we were to improve and succeed with going forward: We must be Scottish Labour and we must be Scottish Labour. Under Kez Dugdale, we have done both.

When Kez stood for leadership way back in…2015, Labour was in dire straights. Less than a year ago we had won the Referendum on Scottish Independence – but soon after had been labeled a branch office by our outgoing leader and suffered a polling slump. Their successor, Jim Murphy, had a very different style of leadership to them – and was bound to be a divisive figure from the start. The “get out in the streets and see if anyone punches me” Campaign of #GE2015 will lead to many great political memoirs in 10-20 years. But it was, ultimately, an unsuccessful attempt at staving off the SNP menace, with only Ian Murray being returned to Westminster as a Labour MP – not even the leader himself saving his seat.

And so, to Kez. Kez who started out as Leader of a Scottish Party alongside a UK Leadership election which was nasty and personal. Kez who started out with all and sundry telling her she had assumed the most unwanted job in Scottish politics. Kez who was in charge of the ‘Branch Office’.Kez who inherited a party that was assumed to be in terminal decline.

And yet – here we are now – almost 2 years later.

Not dead.

We became a more distinctly Scottish Labour Party. Under Kezia, we became braver in asserting our own distinct position in certain issues, and became slightly more comfortable in our Scottishness. Albeit, this is easier when the Scottish PLP is pretty self-determining and the UK Party isn’t relying on Scottish representatives to succeed. But, nonetheless, Scottish Labour embraced its national identity without aping nationalism. Kezia fought – and won – a Scottish Party seat on the UK Labour NEC despite fierce opposition from factions in the party. The 2016 Scottish Parliament Manifesto was miles to the left of the 2017 General Election one – and was not afraid to take it’s own approach in devolved areas, even when it did not mirror UK policy stances.

But also, we became more Scottish Labour. It is glib to say that, after Jim Murphy, that wasn’t hard – but in certain ways, it is right. Jim Murphy was and is a Labour man through and through, but he did not run a Labour Campaign in 2015. Some of the policies were Labour – but they seemed more policies of convenience of conviction. When Kez took over, the policy process went back to basics. The values of Solidarity, Socialism and Equality were firmly embedded in the policy process and, I think, were reflected in the tax and economic platform in the 2016 Manifesto – and in policies it was intended to fund. But policies, it must always be remembered, lost elections. Three Elections.

Despite what I have said, Scottish Labour lost badly 3 times during Kez’s tenure as leader. So badly, in fact, we lost to the Tories! Even in 2015 – things weren’t that bad. But a major factor in that is the constitutional tumult in which Scotland is still caught. With a pious Pro-Indy position from the SNP and a staunch Unionist military mantra coming from the Tories, an unclear and (at times) mixed-message from Labour won us few friends in constitutional terms. Where we gained votes (and we did gain votes) in 2017, it was on the Health Service, Education, public spending and the sense that we need to start thinking about those things again.

And that will be the legacy of Kez’s Leadership – that she has ushered in the beginning of the end of Scotland’s constitutional conversation. When literacy and numeracy standards were falling in Scotland’s schools and the SNP’s response was to withdraw from the international tests that highlighted this – Kez made sure it was front page news. When Nurses are facing a pay freeze and patients face longer waiting times – Kez made sure their voices were heard. And people heard. And people got angry. And they didn’t vote SNP because of it.

But we still lost.

So, if Kez has decided to leave, what do we do now? The next leader has to continue to make the Labour case for Scottish problems and cannot afford to be sucked back into a new constitutional debate on Tory terms. They also cannot run away from the UK party’s direction of travel either, because – and I will accept that I was wrong on this before – it resonates with people more than could have been imagined. But most importantly, they must be able to speak to people.

Kez re-normalised the Labour Party in Scotland. During 2015 people hated us on the doorstep. In 2016, the didn’t really like us. But in 2017, people were listening to us – and in some cases actually agreeing! Along with re-normalising politics she helped re-normalise us.

And for that, Kez, thank you.

Back to Blogging…

…a summary exhortation on the Summer elections.


I’ve been off the blog for a while for two very different, but equally important reasons:

  1. I changed phones in March and I forgot to change my phone number on WordPress, so my two-factor Authentication wouldn’t let me in and I needed to hunt on old laptops for the back-up codes.
  2. Elections got in the way.

The first is my own fault.The second, which probably increased the time it took to solve the first, was caused by the decisions and unavoidable circumstances of many others – but I can honestly say that it was one of the most exciting and interesting experience of my life so far. I never expected to be running the Local Elections for the 3 wards in Glasgow Anniesland – and definitely didn’t expect to become an Election Agent over the course of 3 days – but I immensely enjoyed both of these times, despite the time and planning both involved.

I will write more thoroughly over the coming weeks about both the Local and General Elections, but I wanted to give a few thoughts – and in some ways having a few weeks’ distance from the 4th May and 8th June has been useful to see how things have panned out.

At a local level, my reaction can be summed up as almost complete satisfaction. At the Local Elections, there were 5 Labour Candidates standing across Glasgow Anniesland’s 3 wards – and all 5 were returned. That’s a 100% hit rate. It is testament to the Labour Campaign in Glasgow and the way we ran it – but also the amazing talents of our Council Candidates. And for the General Election, while Labour didn’t win in Glasgow North West, if you had said that the SNP majority wouldn’t just be halved, but quartered, you would not have been believed. But that was exactly what happened, not just in Glasgow NW, but across the city – and across the whole of Scotland the SNP’s seemingly immovable grip suddenly became a lot weaker.

Hopefully, and I genuinely say this more in hope than expectation, I will be able to finish and post my thoughts on both elections before the next one is called – and I think there are lots of lessons Labour can learn from these elections, both at a Scottish and UK level. And whenever the next General Election is called – there is one thing I know:

The Labour Party needs to win 64 seats to form the next government. Glasgow North West is Target number 58. The Road to the next Labour Government goes through Glasgow!

Immediate Thoughts on #IndyRef2

Shortly after The EU Referendum I was with a few like minded Labour friends discussing where we go from here. We had all been part of the No campaigns in the #IndyRef in 2014 and all bore the scars of that 18 month long campaign. We remembered the long days,the abuse we faced, the lack of sleep, the 20+ hour polling day – but also the celebrations afterwards.

In spite of this, we all agreed that, if there was another independence referendum was called, after the 2015 Election; after the Scottish Elections just past; after Brexit; after Theresa May…we’d  vote Yes.

We were angry. We were angry with Brexit that Scotland opposed, but the UK accepted. We were angry with the Tories exploiting the situation during the election and presenting themselves as the only opposition voice in Scotland. We were angry with the UK leadership casually flirting with the SNP as part of a ‘progressive alliance’. We were angry and ready to give up.

But, in time, we all went back to No. The moment was over before it had begun. After the Summer passed so did our brief flirtation with independence. Our heads regained control of our hearts – and our hearts remembered what they really loved.

There is no doubting, I think, that Brexit has changed things. The dynamics in place in 2014 no longer apply in 2017, and won’t in 2018/2019. Something ‘feels’ different. I’m still not convinced a second referendum is needed – or, indeed, wanted – but it has been clear for some time that it was coming. Not because the country was crying out for it; not because Nicola Sturgeon particularly thinks she can win it; but because there is only so long you can promise to lead the faithful to the promised land before they leave you alone in the desert. It had to come – sooner or later, for better or worse.

But then, when you think about it, what does Brexit change, exactly? If notification under Article 50 is given by the end of March 2017 – we will be out of the EU by April 2019. So, unless Sturgeon is suggesting that we can go from referendum to independence within 7 months, Scotland will be leaving the EU. It won’t be ‘negotiating from the inside’ or seeking a ‘continued membership’ (as was dubiously argued by Yes in 2014), we would be on the outside looking to get back in. This has already been confirmed by EU (and NATO) spokespeople. This is now a fact no longer up for debate.

So – if we are outside we will, presumably be looking to get back in. This isn’t a given since remaining something is not the same proposition as becoming something – but if we didn’t re-apply for EU membership, what would Independence be for? So, when we apply we will have to meet the convergence criteria to join the EU – which include joining the ERM and agreeing to eventually join the Euro. At least that solves on of the 2014 #IndyRef’s biggest issues for the Yes Campaign – except the first 2 (at least) years where we won’t be allowed to use the Euro until we show we can meet the convergence criteria. So we still need to decide what we want to do for that time.

And then we have to actually go about meeting the convergence criteria which include a limit on the Deficit to GDP ratio of no more than 3% – Scotland’s is currently estimated to be about 9%. So we either have to increase tax or cut spending. Given that the current Scottish government have shown no inclination for the former (despite now having the power to do so – which they campaigned for during the 2014 referendum), one can only assume they would pursue the latter.

If that were the case, then how would their social policy, or investment in public services be any different to that currently being pursued by the UK Government? You can argue that the current party of government won’t necessarily be the first party of an independent Scotland’s government – but any government would face the same choices. We would need to get our deficit down if EU Membership was the end goal.

And it may not even be a choice to cut spending – it would almost certianly be required out of economic necessity. The most recent GERS figures show that Scotland has a larger than expected deficit. This taken with the fact that the Barnett Formula gives Scotland c. £1,400 per head means that some policy decision will have to be taken by necessity – whether or not EU Membership is the goal.

All this while we have to deal with the problems of current Scotland. Scotland where education is underfunded and under-resourced to such an extent that parents are having to take on classroom based roles. A Scotland where the NHS is facing budget cuts and in Glasgow had to cut £60million in one year to stay within budget, with the job cuts and reduction in service delivery that involved and when it’s newest shiniest hospital has faced issue after issue with no long term answers in sight. A Scotland where the Police Force is underfunded, the Crown office overworked, courts being closed, the already poorly paying Legal Aid budget shrinking in real terms year-on-year and cases take longer and longer to reach trial. A Scotland where Local Authority budgets have been cut – in Glasgow by over £300million in 10 years – and cuts of £58million this year alone leading to under-investment in roads, schools, breakfast clubs, bin collection and social care where a 15 minute care visit becomes the goal, not the baseline.

And that’s why, after a few weeks, me and my Labour Party friends returned to where we began – agreeing Scotland is stronger when part of the United Kingdom.

Because as ‘engaging’ as the first Independence Referendum was in 2014 – it was easy to forget that children still needed to go to school, people still got sick and people still needed to travel to work every day. Politics isn’t just the grand ideas – it’s getting on with life. A life that we share with our friends, neighbours, and strangers south of the border too. The same struggles of austerity and underfunded health care that people in Liverpool, Manchester, Hull, Newcastle and Stoke face just as the people of Glasgow, Perth, Inverness, Dundee and Kincardine do. It’s this desire to fight these problems, together, that got me really involved in politics in the first place. That’s why I joined the Labour Party – part of a movement of like minded people up and down the UK aiming for a better Britain.

And – when we have been given the chance – Labour has created a better Britain. The creation of the NHS; Founding the Open University; de-criminalising homosexuality; Civil Partnerships; The National Minimum Wage; increasing Child benefit; Independence for the Bank of England; Devolution for Scotland and Wales; Peace in Northern Ireland; lifting 600,000 children out of poverty over the 10 years of the last Labour government; Health and Safety at Work; Human Rights. All achievements of Labour in Britain – only achievable and sustainable because of the UK coming together and using its strength to make positive change, because we believe that by the strength of our common endeavour we achieve more than we achieve alone.

But this, as well as Brexit, present another break from 2014 and a challeneg to those who want Scotland to Remain in the UK. Back then The SNP and Labour were virtually neck-and neck in Holyrood polls and Labour still 20/30 points ahead in Westminster polling. With a General Election just around the corner it seems possible, nae likely, that Ed Miliband could be Prime Minister and a Labour Government would always be better than a Tory one. Maybe, just maybe, it was worth giving the UK a final shot to convince us it would be that revolutionary reforming country once again. Now, just over 2 years and a 19-point Tory lead later – is it possible to see a possible future Labour government, in any form, to put our faith in again?

The Next Stage of Street Law.

This weekend, the 5th (unofficially) bi-annual Street Law training Session took place in the HQ of the Law Society of Scotland’s headquarters in Edinburgh. It’s the first one in a year-and-a-half I haven’t been involved in, which saddens me a bit.

Street Law is now firmly implanted as part of LSoS’s Legal Education programme – which is fantastic news. Street Law is not ‘teaching law’ the way the LL.B or Diploma means it. The aim of Street Law is to make those most likely to come into contact with the law (who are, by the way, the demographic groups least likely to study law) more aware of the rules and their rights in those situations.

I will never forget my first Street Law lesson in Bellahouston Academy, which looked at Stop and Search, just as the controversy of Police Scotland’s abuse of Stop and Search powers  was coming to light. I had never been stopped and searched – but the 13 year old boy in front of me had been and didn’t know what his rights were when he was. If the law is supposed to be ‘known’ and accessible, that includes the kids too.
My favourite lesson to do is the Human Rights lesson because it makes kids think about what they take for granted: privacy, freedom from torture, procedural fairness. Sometimes, they even make the connection with the news and the government and Prime Minster who keeps wanting to remove the rights. Some, some, even get angry about it. Street Law isn’t about trying to impose any particular view on the law, or any particular jurisprudencial outlook, but if that discussion comes about, then that can surely only be a good thing.

The LSoS’s purpose for Street Law is raising awareness of the law for those who are most affected by it. But success – and it must now be seen as a success – leads to more questions. Now that Street Law is established as an option by LSoS, what are the next steps? It is tempting, and I feel this may be lawyer instincts for formalisation kicking in, to say that the next stage of this should be the creation of a subject of “Law” at Higher or Advance Higher stage – but there are so many practical questions in there that require detailed answers before that is possible. Who teaches it? What does it include? How do you limit it? How do you not bore them to death with delict?
The most immediate question, in my mind, is “How do we increase uptake in the Street law programme? Street Law is provided by LSoS, but as an option. It is presented to councils and Head teachers as something they may want to take up (and it’s very ‘Curriculum for Excellence’ friendly) but some do and some don’t. Those that do offer universal praise – so how do we convince those who don’t take up the offer? And, while the offer is open to all, does it mean something that schools like Jordanhill (who the programme isn’t particularly aimed at) still jump at it?
Street Law is, at the moment, scarcely funded. The Law Society can’t do much more and are doing more than they can to support it (with Rob Marrs and Lyndsey Thompson going above and beyond to support the programme) and convince Head Teachers to take up the offer, but can more be done?  Could more funding lead to more growth across the country?The programme now has sponsorship from large Law firms (including CM and Pincent Masons) – might this allow clearer resources and support to follow?
Even though just over 30 schools across Scotland have taken Street Law into their classrooms, how can this be expanded? Could it be that some teachers see it as separate and distracting from, and not part of, a Modern Studies syllabus? Could it be that teachers aren’t confident enough to trust Law students without teaching diplomas loose in their classrooms? Does the fact that it doesn’t free up a teacher (since Street Law should still be supervised by the class teacher) remove a potential benefit? These are all questions that, as the programme enters its 3rd year, LSoS can begin to form answers to and address.

Street Law’s success is a testament to the support it has received from LSoS, the officers organising it, the students leading it, the schools arranging it and the pupils receiving it. If the benefits of it can be clearly demonstrated, I am in no doubt that, over the next 3 years it will become a normal part of Secondary School Social Sciences and, as a consequence, school pupils will have an increased (and accurate) knowledge of the law as it affects them. Particularly those from lower-income backgrounds might come to see law  as something accessible and maybe even achievable for them.

A Love Letter to the European Right…

              With Europe taking beating after beating, and Theresa May seemingly wanting to make #GE2020 a fight over the ECHR and the scrapping of its partner, Human Rights are in need of some love. I am and will always be, one of the many giving it to them. We, as whatever nation, should be hearing EHCR protects the our fundamental individual rights, but also helps us ensure our government works as it should.

Anti-ECHR arguments come into two flavours; the “Human rights aren’t British values” kind (overlooking the part the UK played in drafting the ECHR), and those of the “GAH EUROPE!/UKIP” kind. The latter group often equates the ECHR with the omnipresent terror of the European Union (I’m looking at you “The Sun”), but, in the words of my public law professor (and now MSP) Adam Tomkins, “There are two legal Europes! TWO!” The European Union – for the most part – doesn’t care about human rights, so here it is as unimportant as the Scottish Christian Party, but I do want to address the idea that Human Rights are European, not British, values. Winston Churchill helped form the Council of Europe, the ECHR’s body, in the aftermath of WW2. The Document protected people from torture and defended their right to free speech and thought. How can these not be British values?

The former argument is worth addressing more fully. The EHCR has, over its nearly 50 year history, raised some uncomfortable questions for successive British governments and has seen the UK go to the Strasbourg court (The European COURT of Human Rights) many times. What is rarely reported, however, is that the UK has lost just 0.5% of Strasbourg Cases!

But 99.5% successes are, perhaps, not as contentious as that losing 0.5%. One of the longest running spats is the issue of prisoners’ voting rights. The Court agreed that depriving all prisoners of the vote runs contrary to the ECHR and therefore the UK must lift its ban. This has irked many on all sides, so successive governments have attempted to kick the issue into the long grass. But, contrary to some reports (I haven’t looked away “The Sun”), saying “not all prisoners should lose the vote” is not the same as saying “all prisoners should have the vote”.  The court has repeatedly said that it is only the universal ban is illegal. For many, this tension is a reason to scrap the ECHR, but for me it shows it’s working, by forcing parliament, government, ministers, and most of all the public to ask difficult questions and, sometimes, give difficult answers.

Even though the success of certain human rights arguments has sometimes been bitter, the ECHR has helped the UK modernise and become a 21st century nation. It was human rights that led to the scrapping of the ban on gay and lesbian people in the army. Despite warnings at the time that it would disrupt troop morale and was a prime example of a European attack on British sovereignty – does such a decision seem controversial now? It has also forced the question on women’s rights and equal marriage – concepts now not so un-British or Anti-Scottish as they perhaps once were. The UK generally, and Scotland in particular, now has some of the highest LGBT+-friendliness rating in Europe. Human Rights helped get us there.

But, irrespective of all these achievements – the spectre of terrorists having rights will always fan the anti-ECHR flames. The idea that a suspected terrorist, like the former bane of Theresa May’s life, Abu Qatada, can use these ‘European’ human rights arguments to stave off deportation to Jordan is ghastly to many. But how radical a suggestion is it that a man should not be convicted using evidence that stands a high chance of being obtained under torture? Would we accept that in the British justice system? It was, after all, a UK body that accepted the human Rights argument, not some “Mickey Mouse court” (Tony Bone MP). When it was suggested that planes used in US extradition flights landed on UK soil, there were immediate massive outcries. So why is this decision so controversial?

One final example. The “BA Crucifix” case – where British Airways employee Nadia Eweida went to the European Court of Human Rights to confirm her right to wear a cross on a chain . British Employment tribunals had, on two occasions, held that there was no breach of UK law (and by extension her convention rights), but when she went to Strasbourg she got the confirmation she was looking for. Surely this was met with outrage by the right as European judges over-ruling British judges? Quite the opposite. One Tory MP even tweeted that he was “[d]elighted that principle of wearing religious symbols at work has been upheld – people shouldn’t suffer discrimination due to religious beliefs.” The MP was David Cameron.


This was first written back in 2012 for an old site called scotspolitics.com – which has since closed. It has been minimally amended to fit 2016’s new political circumstances.

Successful Sexy Succession

…or giving un-sexy law some much needed attention.


At the start of the 5th Scottish Parliament, there is an air of a new start for the 9-year-old SNP administration. Reforming the Scottish Education system (with an increase in the school age being suggested by some) and re-shaping the NHS in Scotland with mental health provision becoming a more integral part of the service. These are big, important policy areas. They graces pages and pages of the various parties’ manifestos over the Spring. They are sexy law.

New nurses are sexy. More teachers is sexy. You can have big debates about class sizes and waiting times and what they are or should be. Police numbers and how big thir guns are are sexy. People know what these areas are. We have all, more-or-less, come into contact with them all at some point. They have grand theories about them. There are entire professions dedicated to the School, Police and Health services across the world. They educate people; they protect people; the make people better. The people are sexy – so the system is sexy – so the political and legal debate is sexy.

Dead People are not sexy. Succession is not sexy at all.

If you were to die tomorrow…what would happen. This isn’t some spiritual examination, I talk much more materially. Your money, your house, your stuff…where does it go? It as been a constant source of worry and amazement to me just how few people know the answer to this question. But then I think about it – and I understand why.

Say, Mr Person, you died tomorrow with the convenient (post-IHT) sum of £250,000 in your Bank Account, a house worth £500,000 and £29,000 of furniture in that house. Quite a specific value of furniture you may think, but bear with me. Who gets it, furniture et al? Your spouse? Your kids? If only you’d gotten round to writing that will…but you never did.

Well, it depends. If you are married (or civilly-partnered) then your spouse automatically allows let us consider from the simplest to the most complex:

If you only have kids, then its simple. Your kids (equally among them) will divide the value of the estate between them and that’s that. How they divide it is up to them – but so long as it’s evenly split, then there are no issues.

But, if you have a spouse it’s not as straight forward. You see, ask the ‘reasonable man’ on the street who gets your stuff when you die – 99% of people would say, “your wife/husband”. However, this is not automatically true. There is a list, in the Succession (Scotland) Act 1964 s.2, that tells you the people who get your stuff when you die. You start at the top of your list and, if no-one in that ‘class’ of people exists, you move down. The list is this:

  1. Children
  2. Parents and Siblings
  3. Siblings
  4. Parents
  5. Spouse
  6. Aunts and Uncles
  7. Grandparents
  8. Siblings of Grandparents
  9. Great-Grandparents
  10. Siblings of Great-Grandparents
  11. Great-Great Grandparents
  12. Siblings of Great-Grea…etc etc…turtles all the way up.

So really – your Spouse isn’t even a factor in this list until you have no children, siblings or parents. Would you have guessed that? Chances are, probably not. Children, maybe, but parents? Siblings? Parents and siblings? But even then IT’S STILL NOT OVER!

Because your spouse does rights to your estate, prior rights. Literally, they are called Prior Rights. Before we get to the List of Succession, your spouse is entitled – but by no means compelled – to a certain value of your estate. They are entitled to:

  • your interest (usually ownership) in your dwelling house (if they lived in it with you) if it is worth £473,000 or less. If it is worth more, the financial equivalent of £473,000.
  • £29,000 worth of furniture and plenishings in one house – and only that house.

They also have a further financial claim on the estate, but that  depends on whether you have children or not:

  • If there are children, they can claim £50,000.
  • If there are no children £89,000.

So…where are we now:

  • Your house is worth more than £473,000, so that means it doesn’t automatically pass to your spouse. Instead, they would gather a financial claim instead.
  • Even though they can’t get the house, they can still get the £29,000 furniture – so that’s that simple.
  • Finally, they get the £89,000 since you have no kids.
  • So, in the end, there’s a £562,000 financial claim and £29,000 furniture to the spouse and a £89,000 financial claim. Simple right…

…NO! Because see that Financial claim at the end…that’s not just cold hard cash. that claim is divided, proportionately, between the heritable (houses and land) and moveable (everything else) property in the Estate. So – in this case – that means 53.8% (£47,901) comes form the house and 46.2% (£41,099) from the bank account.
So when you add all that together, your wife can claim a total of £520,901 against the movable estate (so can take the house after all) and then can claim a total of £41,099 cash – and that all important £29,000 furniture.

So with the house spoken for – what about the remaining moveables, money and furniture. We finally get to the list above right. If you have children they get it…but you don’t, so your parents get it…but they’re dead, so your siblings would get it…yes, that means that sister you never loved and haven’t spoken to for years and ruined your wedding. It’s not pleasant, certainly, but it’s at least a conclusion…right…

NO! There is another set of rights that come into play before we get to the list…Legal Rights. They come after Prior Rights – but before the list.

Under Legal rights, your spouse has a further claim to your estate (the jus relicti for your husband and jus relictae for your wife), as do your children (the legitum) if there are any. If you are married, but have no children; or if you have children, but no spouse, then all your children may share in one-half of your moveable Estate. If you have both a surviving spouse and surviving children, then each is entitled to share in 1/3rd of the estate (1/3 to the spouse and 1/3rd among the children)[1]. So where does that leave us:

  • Well, after the Spouses prior rights have been dealt with, you have £359,001 of moveables (money) left. We’ve said you have no kids. That means we divide that into 2 halves of £179,500.50 each.
  • 1/2 goes to the spouse.
  • And you have 1/2 left over…

…Which THEN (and only then follows the list)…and ends up in the pocket of that sister that thought your Engagement Party was the best time to announce her divorce.

So…in the end of it all:

  • Spouse: The House, The furniture, and £220,599.50 of the cash.
  • The Sister who decided your son’s birth wasn’t as important as her dog’s pedicure: £179,500.50.

Isn’t that wonderful…and it only took us 1,200odd words to get there.

This isn’t an outliner case. This is completely possible. And this scenario could throw up real problems. What if you had 2 kids? That would mean your Spouse could only claim £499,000 against the house – £1,000 short? The rest would pass to the kids, which is fine if you live in a happy family that loves each other. But what if the kids of your first marriage loathe the souse from your second and they don’t play ball…that can lead to difficult and unsavoury conversations.

If only you had written a will. That would solve all the problems…right?

Well, dear reader, as you may have come to expect, the answer is no! Prior Rights wouldn’t apply any more – meaning that your house is yours to deal with as you please – but Legal Rights would still apply, so your kids if you had had any (who, for all I now, might have prompted you to write a will purely to write them out of it) could still share 1/3rd the £500,000 cash and, to make bad news worse, £29,000 worth of furniture.

What I’ve tried to show here is that Succession Law, particularly when someone dies and hasn’t left a will, is messy and confusing. But, more than that, people don’t know what will happen to their belongings after they die. How many people would have guessed that the goldfish-murdering sister would have got any of our stuff when you died? Who would have thought that kids from your first marriage could theoretically own part of your house you and your new beloved bought together. Who actually has a clue what is going on.

Succession Law is not sexy…but it is important and it is a mess. It needs to be reformed and simplified.[2] Lets start at the beginning of this Parliament, so that, maybe, we can figure out what we want by the end.


 

[1] This fact, that kids who you specifically wrote out of your will could still inherit something anyway prompted him to come up with a scenario in which he would have kids, write them out his will, fall out with them, then, in his later years, re-connect with them and have a few good years together and convince them, when he was on his death-bed, to help him commit suicide so it satisfied the definition of murder – so would then make them dishonourable heirs so they could not inherit – purely so he could find a way to get round this rule.

[2] I am not one of those “something must be done but do not ask me what” types. I once, as a side-project in my 1st Year of my LL.B attempted to re-write the Succession (Scotland) Act. Unfortunately, my efforts have been lost to a corrupted, un-backed-up hard drive.

 

#DefendLegalAid

I have spoken a few times before about how important I know Legal Aid is to people. I have no intention, at the moment, to retread that ground.

I have spoken also, about the cuts made to tLegal Aid and how much more difficult it will make Access to Justice for those mos tin need of it.

That’s why today, I’m very proud that the Law Society of Scotland has launched its #DefendLegalAid campaign.

I hope that Lawyers form all across Scotland, and politicians from all parties, can get behind this campaign, work to fix the Legal Aid System in Scotland, and ensure that we protect Access to Justice for those in the country who need it most.

 

Tax can be Taxing…

…or an empirical study in the use of tax as a behaviour modifier.


I work in a high street law firm and, like most high street law firms, it does the classic ‘little bit of everything’. Criminal Law, Kids, divorce, executry (dead people), civil law, leases – we do it all. We also do a fair amount of conveyancing. {1}

Conveyancing is the buying and selling of houses. In Scotland, only Solicitors can do that. Estate Agents can market houses, and you can arrange your own private sale, but at some point, a solicitors is involved in the missives, the settlement, the mortgage and the Registration of the new Title. They have to be. it’s the law. In my own experience at the firm, I can do the odd thing, but when it comes to the key points – the solicitor steps in a signs their name on the line.

But, being heavily involved in my firm’s conveyancing department – I’ve developed a strange enjoyment of it and, if I may, I’m pretty good at it. I know what needs to be done during the process. But it doesn’t end for me when it ends for the client. You may get the keys, but there is still work to do behind the scenes.
Your new title needs to be registered to give it effect. Your Mortgage (which is an English Law work we’ve imported into Scotland) needs to be registered for the bank. And, whether you know it or not, you have to pay your tax.
Up until April 2015, when a house was bought in the UK, you had to complete a Stamp Duty Land Tax (SDLT) return. Most people paid no or little tax, but a return had to be done. After April 2015, Land Tax in Scotland was devolved (under the Scotland Act 2012) and the Scottish Government decided to change the regime completely and created the Land & Building Transaction Tax (LBTT) to replace the old Stamp Duty Scheme.

Most people will buy or sell a house. Most people, however, don’t pay this tax. Houses under £145,000 are taxed at 0%. Most people don’t even notice. But a return still has to be done. However, in two weeks’ time, there will be a small but significant change made to the regime – the 3% LBTT Surcharge.
While it has been discussed since the end of last year, the law was only changed last week to bring in this change. Now, if you buy a house and, thanks to that purchase, you own two houses, you have to pay a 3% addition tax on the property. {2}
The thing is though, this only applies to purchases on or after the 1st April 2016…and, as I mentioned, these tax changes have been known about (more or less) since December. So, the savvy buyer spotted, as I’m sure you have, a way round this…buy before the 1st of April. This is the issue.

In the next 2 weeks, my firm has 13 settlements. For a relatively small high street firm – that’s a lot. A lot of reports and mortgages and deeds and letters and phone calls and factors and post. In the mad rush trying to beat the 3% Tax, people who know their way about the system, are getting in quick. Those who maybe have a 2nd house on the side for rental income, but don’t make a living off of it, are most likely to lose out.
This has led to a log-jam of sales happening on the 24th, 29th, 30th and 31st March. because there are so many sales, services conveyancers need ready access to have been busy too. It’s created a more stressful situation (and messier desks) for conveyancers than usual – and the sector is not a stress free one to begin with. You are more likely to complain about your house sale than your prison sentence.
It seems odd, I know, to ask for pity for lawyers, but every conveyancer on the other end of the phone I have spoken to has said similar things. It’s become a “top trumps” kind of thing. {3}

What then, is the solution?

When the Chancellor of the Exchequer gives the UK Budget speech, there are always a few minutes of business before the Leader of the Opposition responds. During this time when (inevitable) Andrew Neil chats to John Curtice about something-or-other, a series of votes are taken on raises on alcohol and tobacco duties that will take effect from 6pm that evening. Most people work 9am until 5pm – so there’s very little chance of stockpiling to avoid the rises and, therefore, fewer long queues at the supermarkets.
Could this work for future LBTT changes? Instead of having a 2/3 month long “you know it’s coming” period, could we change to a “too late! It’s already here, manoeuvre”? I picture it working something like this:

  • During the Scottish Budget, the Finance Secretary announces the LBTT increase.
  • Immediately after the speech, there are votes on that increase, laid before the Scottish Parliament by Scottish Statutory Instrument.
  • Any missives entered into prior to 5pm on that day avoid the increase in tax.
  • Any missives entered into after 5pm that day are subject to the increased tax.
  • You pay the lowest rate of tax that applied during the time while missives were being negotiated. {4}

This means that, at most, the “in between times” last for 5 hours and actually allows more transactions to, potentially, be caught by the increase in tax. Winners all round. There are no last minute rushes to pull everything together and it makes for happy buyers, sellers, and (most of all) lawyers!
Infrastructure-wise, most LBTT returns are made on-line, and the system asks when missives were concluded (for a reason I have still not ascertained). It would not be difficult to amend the data entry (while, hopefully, improving the usability of the system overall) to take account of the reduced cross-over period where the date the offer was submitted is a factor.

This proposal suggests a small improvement. A slight one  – but one that would make a real difference to the Legal profession and to buyers and sellers of property in Scotland too. It would need a legal framework to allow the changes to be passed quickly, and also changes to the on-line LBTT system, but there is no reason why with careful planning, this mad rush at the end of the month couldn’t be avoided, and we could have a better system in place.


{1} It continues to come as a surprise to me, and this may be the effect of 5 years studying Law, the number of people I have to say, “I do a lot of conveyancing…[blank face]…buying and selling houses”. Is the term not widely known outside the legal profession?

{2} This is a very potted version of the tax. There are  number of other consideration, but in most circumstances, this rule can be applied and the outcome is correct. If you’re really interested, you can read the Revenue Scotland Guidance to get the full picture.

{3} One solicitor told me he has 21 transactions settling on the 30th and 31st March!

{4} This rule needs to apply for a technical reason. Say you put an offer in the day before Scottish Budget Day and the rate of tax was decreased as opposed to increased. There would be an incentive to withdraw from the sale/purchase, then resubmit the offer again to benefit from the lower rate of tax. At the start of the transaction this isn’t such a big problem – but if it was the week, or even the day, before the transaction (and the tax gain was large enough) there are a whole new bunch of problems this could create, particularly for those getting mortgages.