Taxation

Oral Answers to Questions — Scotland – in the House of Commons at 2:30 pm on 28th June 1995.

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Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South 2:30 pm, 28th June 1995

To ask the Secretary of State for Scotland what proportion of the total grant of Government expenditure in Scotland was raised by taxation in Scotland in the last year for which figures are available. [293831

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

In 1992–93, it is estimated that taxes raised in Scotland—excluding North sea oil revenues—accounted for some 72 per cent. of total general Government expenditure, excluding privatisation proceeds, in Scotland. Even if all oil revenues were allocated to Scotland in that year, the percentage would increase only to 77 per cent.

Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South

Can my hon. Friend confirm that, to keep services at their current levels, an independent Scotland would face a budget deficit of anything between £6 billion and £8 billion? Can he confirm that that would mean £6 billion to £8 billion of tax increases or of spending cuts?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

My hon. Friend is absolutely right. The policies of the Scottish National party would cause significant problems for Scotland and for Scottish business. My hon. Friend may have seen in today's newspapers that not only are the nationalist policies damaging for Scotland, but, according to the leader of the Institute of Directors, devolution is also damaging and would force firms out of Scotland.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

The Minister will be aware that in Inverclyde we recently faced a terrible blow in that one enterprise zone site is no longer applicable. The folk of Inverclyde are desperate to see a new site on which we can build factories. Will the Minister ensure that some of the money paid into the coffers in taxes by the people of Scotland is put to good use to rectify that problem created by the Government?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

Perhaps the hon. Gentleman has not been listening to all the success stories that we have had throughout Scotland. Enterprise zones are not always the answer to problems. They take a long time to set up and have a limited life. What is important is that we have given sufficient powers to Scottish Enterprise and the local enterprise network to work in partnership with local authorities to try to ensure that local businesses thrive and have every chance of expanding.

Photo of Mr Nigel Forman Mr Nigel Forman , Carshalton and Wallington

In view of the figures given by my hon. Friend in his original answer, and bearing in mind the unusually high public expenditure per head in Scotland when compared with the rest of the United Kingdom, is it not clear to anybody in this Parliament of the United Kingdom that the Scottish people are relatively undertaxed and over-represented within the United Kingdom context?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

My hon. Friend interprets the situation in one way, but another interpretation is that the situation is like that because we justify it. However, my hon. Friend is right to say that, should a devolved Parliament with tax-raising powers be introduced in Scotland, it is almost inevitable that a significant increase in taxation would occur in Scotland. What the Labour party has failed to say is where that tax would be raised. Income tax increases of 3p in the pound would raise only £150 million per 1p against the £3 billion of extra public expenditure that is spent by the Scottish Office compared with the United Kingdom average.

Photo of Rt Hon David Trimble Rt Hon David Trimble , Upper Bann

Is it not unrealistic to compare taxation and expenditure while we are all in the state of the United Kingdom? Is not the principle that individuals, whether resident in Scotland, Merseyside or wherever, who are paying the same tax rates as others, are entitled to the same levels of benefit and public services so long as the principle of parity is maintained? Is it not also the case that, if the principle of parity is departed from through having different tax rates in part of the kingdom, it calls into question the other side of the coin of parity?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

The hon. Gentleman makes a point about differences in taxation. It is clear that, should a tax-raising Parliament be introduced in Scotland, it could well be the slippery slope towards separation within the United Kingdom. That is why the SNP has stated clearly that it supports the Labour party's devolution proposals.

Photo of John McFall John McFall , Dumbarton

Is not the crucial question how the Government spend that money? Official figures show that, on a conservative estimate, local government reorganisation alone has cost more than £250 million—an unwanted cost in what is now a Tory-free area. According to official figures, the poll tax in Scotland alone cost more than £1.5 billion. Then we had the scandal of Health Care International—a scandal that will follow the Secretary of State to his political grave—which cost £45 million. Is not the conclusion to be drawn from that brief, random sample that Scotland cannot afford to be governed by the Tories at any cost, irrespective of whether that means Redwood or deadwood?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

As usual, the hon. Gentleman misquotes the figures. Each of those figures is erroneous, although I shall not go into detail about them now, other than to point out that, if he had listened to the Public Accounts Committee hearing on HCI, he would know that the real figure is about £15 million. Clearly, what is of interest is trying to ensure that we get the best possible services in Scotland and the best possible chance for business to succeed there. I believe that the Government's policies have delivered, and are delivering, just that.