In the first of three articles about the Calman Commission’s final report Brian Monteith considers the background to its existence what and whether it is worth supporting.

Its recommendations may in the end gather dust like so many parliamentary reports before it – but we can be certain that until the next general election is over the Scottish Parliament’s ‘Commission on Scottish Devolution’ - commonly known as the Calman Commission – will help define the terms of Scotland’s political debate.

The commission was originally conceived in the days when Wendy Alexander led the Scottish Labour MSPs and, being more clever than many of her colleagues who display all the symptoms of being sectarian or Pavlovian attack dogs, she thought it was necessary for Labour to offer an alternative vision to the SNP’s Valhalla of sovereign independence.

My sources in Labour’s leadership team told me that their expectation was that a referendum on independence would eventually be held and so it was better to offer the prospect of improvements to devolution rather than the status quo. The thinking was that the question on offer would be devolution-plus versus independence and that the Scottish public would prefer the less risky proposal that Unionists could coalesce behind.

Alexander had no difficulty finding a parliamentary Holyrood majority as a commission dovetailed neatly with Liberal Democrat policy and offered the Tories a way of postponing the day when they must face up to their obvious divisions over making the parliament more accountable financially.

The commission went to work, took evidence from the great and the good (although, strangely not Tory MSPs) and after producing some initial papers published its final report on 15 June with sixty-three recommendations.

There is, as one might expect of such a comprehensive review of parliamentary governance in Scotland as this report delivers, something for everyone – even nationalists would find much to agree to. There is consideration of the working of Holyrood committees, the relationship between Holyrood and European institutions as well as between Westminster and Holyrood the gaining of new powers in Edinburgh and the relinquishing of others to London. Nevertheless, the central issue that must cause serious political reverberations is without doubt making Holyrood more accountable financially – for to achieve greater accountability Holyrood must first have greater responsibility - and that takes it closer to full sovereign independence.

Accountability is inextricably linked with the Parliament’s long-term success as a political institution. If the parliament remains unaccountable for the spending decisions it takes then it must be a threat to the Union.

The question for Unionists must be “will the funding arrangements that the Calman proposes strengthen or weaken accountability of the Scottish parliament?”

It should be remembered that devolution was introduced to bring about greater and more local accountability for the actions of the Scottish Office – and to head off at the pass the threat from the SNP.

Already it can be seen to have failed in the latter. Whether or not the SNP is re-elected for a second term (and the odds must be that Salmond will be returned with an enhanced majority) the fact that we have a minority SNP government now means that there is every chance we will have another one in the future, be it in 2011, 2015 or 2019. The SNP has been given succour; for the next twenty years it will now be able to call upon MSPs that can talk from the experience of being a Minister and point to some achievements irrespective of their merit.

That is a massive boost to self-confidence, an important component of successful politicking, and a seminal shift in the SNP’s credibility with the electorate that helps to explain the party’s continued popularity.

For devolution to work in Unionist terms it must therefore show that the Parliament has matured and is able to take the hard decisions on spending restraint because it believes it to be necessary – rather than because Westminster has told it to. Unfortunately Holyrood’s parliamentarians have no incentive to act prudently for the institution was designed to spend, spend, spend and spend again – without any concern about where the money was coming from.

While the ruling parties in Edinburgh and London were of the same brand name and philosophy the degree of antagonism between the administrations was always likely to be minimal, but once the brand changed – as it did in 2007 - it was not long before pretexts for disharmony, real or manufactured, would surface. Nevertheless, both Labour and the SNP are spendthrifts at heart, both for instance want to spend their way out of recession by mortgaging our children and grandchildren’s future, so the disagreements are often artificial and can at the stroke of a Treasury pen be repaired by agreeing to a defence contract in the Clyde or a financial bail-out in Fife.

When the philosophies of the two administrations change – as they must do at some point and are likely to do next year with the probable election of a fiscally austere Tory government – then devolution risks being torn apart by two political chariots riding in opposite directions.

The underlying reason that this can happen is the poor design of a devolved parliament that raises all but five percent of its spending, the test by which Calman succeeds or fails is if the central proposal on financial accountability will heal or exacerbate this open sore.

By proposing that the Scottish Parliament should have the ability to vary the standard rate of tax by as much as ten pence and correspondingly would lose about £9bn of direct funding (through the Barnett Formula or whatever replaces it in future) the Calman Commission has recommended Holyrood be accountable for thirty percent of its spending.

But if accountability is good in principle then why is only thirty per cent accountability being proposed? The fear for unionists must be that raising the nine billion might cause more problems than currently exists and give the SNP more grounds to complain about grant funding and tax revenues. As Calman was established to get the Unionist parties out of a whole of their own digging (by not facing up to a referendum in 2007) it was always likely to disappoint - offering some change, but not enough to bring full accountability.  Modifications that Gordon Brown might sign up to, something that Goldie and Cameron might swallow - but far short of independence - until the next political crisis comes along.

There is also a fundamental flaw in the economics of the report that suggests either ignorance, or more likely, a neo-Keynesian corporatism, for it assumed that any tax cut must result in a fall in government revenues rather than an increase. One does not require a higher Grade in economics to find the evidence that shows marginal cuts in taxation often result in greater economic activity that in turn generates greater government revenues in both direct and indirect taxation.

The fact that the Commission’s report suggests that any cut in taxation must be met with a pro-rata reduction in central grant funding – means that any economic benefit would accrue to the Treasury in Westminster rather than the new Treasury that must be established in Leith.

The Calman Commission has been a worthy endeavour – but its final report has all the look of a fudge, for which Edinburgh’s Royal Mile already has a surfeit of.

In the next article I shall consider what the report means for the Conservatives in Scotland.

Brian Monteith is policy director of ThinkScotland.org