Taxation and Spending

Oral Answers to Questions — Scotland – in the House of Commons at 2:12 pm on 22nd February 1995.

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Photo of Mr Ian Bruce Mr Ian Bruce , South Dorset 2:12 pm, 22nd February 1995

To ask the Secretary of State for Scotland what is the proportion of United Kingdom local and national taxation raised in Scotland; and what is the proportion of local and national Government spending in Scotland.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

To ask the Secretary of State for Scotland what is the current annual value of net transfer payments made to Scotland from the rest of the United Kingdom.

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

The Government collect revenue on a United Kingdom basis. In 1992–93, the latest year for which data are available, the revenue raised in Scotland through the four main sources of income tax, national insurance contributions, VAT and local government revenues formed approximately 8.3 per cent. of the United Kingdom total. The Government estimate that in the same year Scotland's share of identifiable Government expenditure was 10 per cent. of the United Kingdom total. That figure excludes expenditure incurred on behalf of the United Kingdom as a whole, or which cannot readily be identified as incurred on behalf of particular countries.

Photo of Mr Ian Bruce Mr Ian Bruce , South Dorset

Has my hon. Friend considered the idea of establishing a separate Scottish Parliament with revenue-raising powers? Has his Department calculated the extent to which the balance would shift as a result of both the additional costs of such a Parliament and a possible reduction of the positivity with which costs are currently dealt with by the United Kingdom Parliament?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

My hon. Friend is right to identify the potential danger to Scotland if a tax-raising Scottish Parliament were established. With 8.8 per cent. of the United Kingdom's population, Scotland generates less in revenue than her population share and receives more from the United Kingdom Treasury. Consequently, if any tax-raising powers were taken by a Scottish Parliament—as threatened by the Labour party—Scotland's existing funding arrangements would inevitably come under closer scrutiny, and might well lead to the reduction referred to by m hon. Friend.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

Given my right hon. Friend's answer, if those net transfer payments to Scotland were removed would not Scotland have far fewer resources to spend on its needs? Is it not also a grave deceit to pretend to the people of Scotland that any shortfall would be made up by payments from the European Union? Is it not abundantly clear that any proposal to devolve tax-raising powers to Scotland would ensure that the people of Scotland ended up poorer?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

My hon. Friend is absolutely right. In this country, we seek to ensure the delivery of comparable standards of public services in all parts of the United Kingdom. That necessarily and properly leads to higher expenditure in some parts of the United Kingdom—such as Northern Ireland, Scotland and Wales—that have greater needs. Such expenditure would, however, be put at risk if a tax-raising Parliament were set up in Scotland.

Photo of Dennis Canavan Dennis Canavan , Falkirk West

Will the Secretary of State be honest, and confirm that, if it were not for the oil revenues from the Scottish sector of the North sea and the benefit to the Treasury from the privatisation of Scotland's public assets, the Government's economic policy would he down the plughole?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

The hon. Gentleman is quite wrong. In the last year for which North sea figures are available—1993–94—revenue amounted to some £1.2 billion. That would not begin to bridge the funding gap that Scotland would experience in the circumstances threatened by the Labour party.

Photo of Thomas McAvoy Thomas McAvoy , Glasgow Rutherglen

Does the Secretary of State accept that many factors must be taken into account when forming a judgment on the disposal of national assets, especially by the Treasury, and that mortgage tax relief subsidy is one of the most important factors? Does he agree that, in that regard, south-east England receives far more from the national Exchequer than Scotland?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

The hon. Gentleman is right on that point, but if he considers income tax revenue, VAT revenue, local government revenue and national insurance contributions, he will find that the equation tilts heavily in the other direction.