Why was it introduced?
The historical and political context to the Scotland Act may be seen within the context of a rising Scottish nationalist sentiment in the 1990’s. As a result of this, and as a result of political pressure to allow the public to have a say on the issue, a referendum on the possible establishment of a Scottish Parliament was held in 1997. It resulted in a vote of 74% in favour for the establishment of a Scottish Parliament, and 63% of the vote in favour of that Parliament to have the power to vary the basic rate of income tax within Scotland. Some members of Tony Blair’s Labour Government considered that, the devolution of some powers to Scotland and the establishment of a Scottish Parliament would result in this growing sentiment being satisfied, and the case for complete independence and withdrawal from the Union ended. This was attempted and required to be completed within the UK’s accepted constitutional settlement, based on the supremacy of the Westminster Parliament.
What was the aim of the Act?
The aims of the Scotland Act were to further the process of devolution by the establishment of the Scottish Government, and the devolved Scottish Parliament, with the power to vary tax rates. This required the establishment of general elections within Scotland, and the delegation of powers and competencies to the new Scottish Government. The devolution of powers from Westminster to Scotland raised questions and concerns over whether the concept of Parliamentary supremacy was being undermined, and whether or not devolved power would ultimately lead to the Scottish Parliament being less willing to accept the doctrine of Westminster supremacy in the future. As a means of practically managing the transfer of devolved powers, all powers are deemed to be devolved and within the competency of the Scottish Parliament except for those “reserved” to Westminster which are included in Schedule 5 of the Act.
What main changes did it make to the law?
In summary, the main features of the Act are as follows. The Scottish Parliament is established by s1 of the Scotland Act 1998. s1(1) provides that “There shall be a Scottish Parliament”, and so establishes the devolved Scottish Parliament, whilst s2 of the Act provides for the establishment of general elections. Another key provision is s28 of the Act, which grants the Scottish Parliament the power to make laws which are to be known as Acts of the Scottish Parliament. The Scottish Parliament’s capability to set or vary the basic rate of income tax for Scottish ratepayers was included in s73 of the Act and now amended by the Scotland Act 2012. As a result of amendment made by the Scotland Act 2012, further devolved powers with regards taxation have been granted to the Scottish Parliament, and are now included in s80A of the Scotland Act 1998. This allows the Scottish Parliament to set a rate of income tax to be paid by Scottish taxpayers, and also to specify the taxes which the Scottish Parliament may make provision for in the exercise of their powers in s28.
It is important to note in s28(7) that this section however does not affect the power of the Parliament of the United Kingdom to make laws for, and affecting Scotland. This in essence ensures that the concept of Westminster supremacy remains intact. This is supported by the provisions of s29, which set out the legislative competence of the devolved Scottish Parliament, and which provides that matters outside of the competence will be “reserved matters” as provided for in Schedule 5 of the Act, any act that would form part of the law of a country or territory other than Scotland, is in breach of restrictions set out in Schedule 4 of the Act, or which are incompatible with convention rights or EU law. All other matters are therefore to be regarded as being within the competency of the Scottish Parliament. Schedule 4 ensures that the Act of Union 1707 remains a “reserved matter” thus ensuring the continued existence of the United Kingdom, and ensuring the Supremacy of the Parliament of the United Kingdom.
With regards the specific powers that are “reserved” to Westminster, these are set out in Part 1 of Schedule 5 as being; Constitutional matters, the foundation, registration and funding of political parties, foreign affairs, public service (the Civil Service), defence, and treason. Part 2 also specifically reserves fiscal matters, such as economic and monetary policy, coinage and legal tender, money laundering and listing rules. It is also clear from s30 of the Act that the Prerogative power remains with the Crown to make any Orders in Council to modify the list of reserved matters in Schedules 4 and 5.
2026 update
The Scotland Act 1998 remains the constitutional foundation of devolved government in Scotland, but its operation has been significantly expanded and modified by later legislation.
In particular, the Scotland Act 2012 and the Scotland Act 2016 transferred additional powers to the Scottish Parliament, including greater authority over taxation, borrowing powers and certain areas of welfare policy. These reforms considerably expanded the scope of devolution beyond what was originally established in 1998.
The constitutional status of the Scottish Parliament has also been clarified in later legislation and case law. The Scotland Act 2016 recognised that the Scottish Parliament and Scottish Government are intended to be permanent institutions of the UK’s constitutional arrangements, although Parliament at Westminster legally retains the power to legislate for Scotland.
The operation of the Act has also changed following the United Kingdom’s withdrawal from the European Union. Originally, legislation passed by the Scottish Parliament had to be compatible with EU law, but this restriction was removed after Brexit and replaced by new frameworks governing the relationship between devolved and UK-wide regulation.
As a result, while the Scotland Act 1998 continues to form the core legal framework for devolution, the modern system of Scottish self-government now reflects substantial developments introduced by later legislation and constitutional practice.
