Scottish Consolidated Fund and Loans Fund

Part of Orders of the Day — Scotland Bill – in the House of Commons at 12:00 am on 10 January 1978.

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Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland 12:00, 10 January 1978

I am sure that the Committee will be grateful to you, Mr. Murton, for having made it possible to discuss an amendment about the method of taxation in Scotland, which is a matter of the greatest importance and which exercises a great many members of the Committee. I reinforce the plea for some additional time to do that.

I confess that I do not feel happy about the results of the guillotine. It may be true that many Second Reading arguments have been repeated constantly, but it is also true that many clauses and amendments have gone through without any discussion. If it were possible to look at the matter again, I believe that that, too, would improve our examination of the Bill.

The clause and the amendment relate to the source of Scottish revenue and its control. As the Bill stands, for better or worse, the source is quite clear: Scottish revenue will be obtained by payments from the United Kingdom Treasury. I might say in parentheses that, as I understand it, even if it were decided to hand over to Scotland certain sources of revenue, that would still be done by the United Kingdom Parliament, and the Scottish Assembly could go only as far as the United Kingdom Parliament had agreed. As the Bill stands, these payments will be made on the authority of the Secretary of State, with the consent of the Treasury, and the Secretary of State will remain a member of the United Kingdom Government responsible to the United Kingdom Parliament, and his activities can be questioned in the House of Commons.

4.30 p.m.

My constituents have some anxiety lest the Scottish Parliament should raid its oil funds, either directly or indirectly, by attempting to cut down other allocations because of the existence of these funds. It is reasonable to argue that it is not beyond the bounds of possibility that even the United Kingdom Parliament might be tempted to raid oil funds. I remember the days when over-centralisation in London was much complained of in the North of Scotland, but the present anxiety concerns the Assembly.

These oil funds will be needed to restore the economy of Orkney and Shetland as the oil runs down. Again, I must emphasise that oil is by no means an unmitigated blessing—rather the reverse. It has faced my constituents with grave problems. They have had to meet high expenditure; prices have risen to the point at which we now virtually have two economies in Shetland—the normal one and the very expensive oil economy. We find ourselves involved in various disputes, and ultimately, unless it is well handled, oil could permanently damage the basic industries of agriculture, fishing and knitwear.

The oil revenues by themselves will not be sufficient to put our economy back on a sound course when the boom is over. For instance, they will not make good mistakes over transport, fishing or agriculture policies, but they will help. They must be safeguarded, and I think that the House agrees that they should be safeguarded. I believe that the Government themselves believe that they should be properly used for the purpose of restoring the economy of Shetland and Orkney. They are exceptional revenues to be put aside for exceptional purposes. They must not be shunted towards ordinary annual expenditure. I am sure that no one in this Committee wants to repeat the mistakes of the past century, which resulted in whole areas being left derelict when some industry or coal mining had finished.

The United Kingdom Parliament will retain some supervision over the Scottish revenues, but I think that it would be unwise of it to attempt to supervise in detail how they were expended. However, I take it—and doubtless the Government will confirm this—that the fact that the Secretary of State is responsible, the fact that they come out of the United Kingdom Treasury, and the fact that they are voted from Parliament must give Parliament some right generally to question how they are supplied. Furthermore, it would be impossible for the Assembly to raise revenue from other sources unless the House of Commons approved it. The Assembly's sources of revenue, whether they be as they are at present under the terms of the Bill, or whether new sources are added, can be granted only by the United Kingdom Parliament. Even if this amendment were rejected the House of Commons would certainly be able to examine the supply of these revenues.

I do not know whether this amendment is necessary in the event. I have no objection to it as it stands. But it seems to me that the House of Commons has its ordinary powers to examine the activities of the Treasury, and in this case the activities of the Secretary of State. I should be grateful if the Minister would indicate whether he thinks the amendment is necessary to ensure that the House has sufficient powers.

I emphasise that, as I understand the present proceedings, all the financial powers, whether we like it or not, derive from the House of Commons. This is not the time to debate whether they should or should not—that will come later—but the financial power derives from the House of Commons, and the House therefore retains its right of control. Therefore, although I think it unwise to go into detail as to how the finances are expended, no doubt this power gives the United Kingdom House of Commons some right to question the Secretary of State and the other financial authorities, and to ensure that the Scottish Assembly does not go outside its powers in an attempt to raise revenue from other sources.