We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.Donate to our crowdfunder
I beg to move, That the Bill be now read a Second time.
Over the past decade, the devolution of power and decision making from this Parliament to the Assemblies of Wales and Northern Ireland and to the Parliament in Scotland has transformed the constitutional arrangements of the United Kingdom. With this Bill, we begin a new phase of devolution in Scotland-a phase that we enter with cross-party support and the support of individuals and organisations across the country. The Scotland Bill is, of course, an important step in the coalition Government's programme to modernise and reform the United Kingdom's constitution, but its origins lie in the Scottish Parliament itself and in the support given by the previous Government, which I am happy to acknowledge. The Scotland Bill will further empower the Scottish Parliament and make it more accountable to those who elect it. In doing so, it will strengthen Scotland's position within the United Kingdom.
"There shall be a Scottish Parliament...I like that".
He was not alone. His sentiments were, and continue to be, widely shared in this House and throughout Scotland. It is important to pay tribute to Donald Dewar for his historic role in shaping modern Scotland. He was a true statesman, serving both as Secretary of State for Scotland and as Scotland's original First Minister. In the creation of the Scottish Parliament, he has a fine legacy. However, he would have been the first to insist on recognising the countless others, across different parties, and, crucially, from many different backgrounds in Scotland, who patiently built the case for devolution over many years, indeed decades. Likewise, we should acknowledge those in this place, the Scottish Parliament and beyond who supported the early years of the devolved institutions, building their capacity and establishing their credibility. Today, we build on that work.
When taking the original Scotland Bill through this place, Donald Dewar said that the creation of a Scottish Parliament was not just for Scotland. Nor was it just routine tinkering with the detail of our political system. Rather, it was a fundamental, radical reform of the UK's constitution. After more than a decade of devolution, the Scottish Parliament is firmly established as part of the fabric of Scottish life. More than that, however, devolution-not just in Scotland, but right across the United Kingdom-is now part of our national life too. The Parliament was established to bring power closer to the people of Scotland, to make government more responsive to their needs, and to put their priorities at the heart of Scottish governance. It has succeeded: decision making on education, health and the environment, among many things, is closer to the people whom those decisions affect. The experience of Scottish devolution has changed the terms of the debate. Few would seriously now argue that there should be no Scottish Parliament.
The Bill builds on the achievements of the 1998 Act and on the experience of devolution, and it further strengthens Scotland's place within the United Kingdom. Just six months after being elected, we introduced the Scotland Bill on St Andrew's day. In doing so we made good the Government's formal pledge, in our programme for government and the Queen's Speech, to implement the recommendations of the Commission on Scottish Devolution-the Calman commission, as it is more commonly known. However, this was not our commitment alone. The Labour party also pledged in its manifesto to implement the commission's recommendations, and I welcome its ongoing support without seeking to compromise Labour Members' important role in scrutinising the detail of the Bill. Once again, however, measures brought to the House on a major piece of Scottish constitutional legislation, are founded on support from across the Chamber and within Scotland.
After the first decade of devolution, it was right to review the Scotland Act, to assess how devolution was working, and to ensure that the Scottish Parliament had the right powers to deliver for people in Scotland. In December 2007, the Commission on Scottish Devolution was established by a vote in the Scottish Parliament. Chaired by Professor Sir Kenneth Calman, the commission included Conservative, Labour and Liberal Democrat representatives, but it was independent of any political party and embraced representatives from business, education, the wider public sector and across civic Scotland. It gathered evidence from a wide range of sources and engaged directly with people in Scotland and elsewhere in the United Kingdom, through detailed consultation, public engagement events, oral evidence from a spectrum of interests in Scottish public and business life and survey evidence. Let me record my thanks to Professor Sir Kenneth Calman and his commissioners for their thorough, inclusive and well-evidenced work. I would also like to acknowledge the impressive and detailed work of Professor Anton Muscatelli and the independent expert group on finance, which supported the commission.
The commission's final report was submitted jointly to the Scottish Parliament and the UK Government in June 2009, and was widely welcomed. Based firmly on the commission's findings, the Scotland Bill seeks to implement its key recommendations. The commission's first and overarching conclusion was that devolution had been a real success; that it was here to stay; and that the balance between reserved and devolved policy powers and functions was, broadly, in the right place. However, it also concluded that there was a shortcoming in how the Parliament was funded, specifically in terms of accountability. At the centre of the commission's report and the Bill, therefore, are measures to improve the financial accountability of the Scottish Parliament.
The Scottish Parliament can determine policy on a wide range of subjects and how and where money is spent, but at present it cannot be held effectively to account for raising the money it spends. The commission recognised this imbalance. The Bill addresses that imbalance by providing a package of taxation and borrowing powers that will see the Scottish Parliament become accountable for more than a third of the money it spends. In doing so, the Bill represents the largest transfer of fiscal powers from central Government since the creation of the United Kingdom. It is a radical but responsible step. Most significantly, we will create a Scottish income tax. We will create that tax by cutting 10p off the basic, higher and 50p rates for Scottish taxpayers, adjusting the block grant in proportion and allowing the Scottish Parliament-indeed, obliging it-to apply a Scottish income tax at a level of its choosing to meet its spending plans.
The hon. Gentleman makes a very fair point. Let me reassure him, first, that we have given a lot of attention to the technical issues of implementation, both in a high-level implementation group and, now, technical groups led by Her Majesty's Revenue and Customs, which are looking at all the different issues. The good news is that the software systems that were created for employees paying the Scottish variable rate under the original legislation were future-proofed and can identify Scottish taxpayers on the payrolls, wherever the company's head office is, ensuring that the identification of taxpayers is made as painless a process as possible and that the right amounts of tax are taken.
They cannot be domiciled in both places. A person's status as a Scottish taxpayer will be determined as set out in the Bill. If the hon. Gentleman looks more closely at the detail, I hope that he will be reassured.
I do not know whether the hon. Gentleman is asking what the costs of running the system will be, but if he is, the draft regulatory impact assessment-I do not know whether he has had a chance to look at it yet-sets out our provisional estimates of the marginal costs of creating this functionality in the system. They are £45 million, with annually recurring costs of around £4 million. However, I should say to him-I am grateful for the chance to emphasise this-that a lot of that will depend on the detail that the Scottish Government and other stakeholders wish to see on documentation such as P60s. That will influence where those costs fall.
Unfortunately for the hon. Gentleman, he will have to pay the Scottish rate of income tax. Parliamentarians are obliged to pay it regardless of where their main home might be.
As I was saying, the new powers will give Scottish Ministers and the Scottish Parliament a much more significant stake in the performance of the Scottish economy. The level of the Scottish rate will be Scotland's to decide, and those who set the rates will answer directly to those affected by them. Power will rest with the Scottish people. In addition to income tax, the Scotland Bill will devolve to the Scottish Parliament responsibility for stamp duty land tax and landfill tax. That will complement its policy responsibilities for housing, planning and the environment. The Bill will also allow the Scottish Parliament to propose new devolved taxes, to sit alongside the other powers. However, the fiscal powers are not limited just to tax; they extend to borrowing powers, too. The Bill will allow Scottish Ministers to borrow up to £500 million for current spending when tax receipts fall short of those forecast.
I would not characterise those discussions as negotiations per se, but people have certainly been raising possibilities in connection with what taxes might be suitable for other parts of the United Kingdom. As I have said, our proposals in the Bill are founded on careful consideration, and on impressive and important academic research that made it clear that if we wish to preserve the United Kingdom-I understand that the hon. Gentleman does not-we should ensure that, in increasing accountability in Scotland, we focus on income tax rather than corporation tax, and I am satisfied with that.
The Secretary of State says that all this is part of defending the Union. Obviously his colleague Tavish Scott would share his view, but in his submissions to the Steel commission and then the Calman commission he suggested devolving
"income tax; corporation tax; fuel duty...tobacco and alcohol duties; betting and gaming duties; air passenger duty; insurance premium tax; climate change levy and landfill tax; inheritance tax; and stamp duties".
Surely the Secretary of State does not disagree with his own colleague in the Scottish Parliament, does he?
What I absolutely agree with is the process that we went through as three different parties that came together in the Calman commission, examining the options, scrutinising them and coming forward with a balanced set of proposals. We look forward to seeing fully costed proposals from the hon. Gentleman and his colleagues. They have had months to produce them- indeed, years-but as yet we have seen nothing. That is something that the House will note and that will perhaps reduce the bluster on the part of some.
To supplement the extensive list that my hon. Friend Stewart Hosie read out, may I add the power of the Crown Estate being returned to the Scottish Parliament? Indeed, four or five years ago five Liberal highlands MPs supported that very proposal in a ten-minute rule Bill. Is that still the position of the Liberal party? If so, will the Liberals try to use the Scotland Bill to ensure that the Crown Estate is returned to Scotland?
The hon. Gentleman is tempting me to get slightly ahead of myself. He will see the proposals that we have set out in the Bill, taking account of the evidence that was supplied to the Calman commission.
Does the Secretary of State agree that those Scottish National party Members who are getting animated on this issue could easily have made a submission to the Calman commission if they so wished? Instead, they stood for self-interest, rather than Scotland's interest.
If I may say so, the hon. Gentleman makes the point very neatly. Like him, I await the SNP's detailed proposals on either fiscal autonomy or the Crown Estate, so that they might be debated. I believe that what we have in the Bill is the right balance, which will give Scotland the powers and accountability that it should have.
On taxation generally, is not the lesson that we have learned, from the original Scotland Act 1998, through many Standing Orders over two Parliaments, that we are involved in an iterative process? What can be devolved should be devolved, but at a gentle pace, so that we can assimilate what has happened. In that regard, the agreement that the three parties have come to is the correct way to proceed at this time, but does not preclude further devolution when appropriate at a later stage.
I hope that my right hon. Friend is not accusing the Scottish National party of inconsistency. Its attitude towards the Calman commission is entirely consistent with its attitude towards the Scottish Constitutional Convention, which it also declined to join.
Once again, my right hon. and learned Friend puts it very elegantly.
As I was saying before that brief diversion, the fiscal powers included in the Bill are not limited to tax; they extend to borrowing as well.
On that point, I listened to the Secretary of State on the "Today" programme this morning, when he spoke eloquently about who would foot the bill if borrowing went-shall we say?-awry. What is to prevent a Government in Scotland from borrowing £500 million just before they lost power, to ensure that the incoming Government were saddled with a bill they could not pay?
I would hate to destroy the cross-party consensus by making any inappropriate reference to a £155,000 million deficit, so I will move swiftly on. On the technical point the hon. Gentleman raises, if he looks again at the Command Paper, he will see that there are provisions to ensure that no Government will be able simply to borrow in order to stack up a capital reserve to spend in the future or to land a subsequent Administration in debt.
On a point of clarification, would the right hon. Gentleman like to see power over the Crown Estate devolved to the Scottish Parliament?
Those provisions are not in the Bill. That case has not been put forward in detail either by the Government of Scotland, of whom his colleagues are members, or by others. If such proposals were to come forward some time in the future, there could be a public debate, but as far as the Scotland Bill is concerned, it is consistent with the Calman commission and will make sure, formally, that we have a Scottish commissioner. That will ensure that Scottish interests on the Crown Estate are well represented in future.
As Secretary of State for Scotland, I am fully aware of my role in ensuring that we keep the Crown Estate focused on its interests across the whole of the United Kingdom. I have had two formal meetings so far and another is planned. That is probably as good a record as most recent Secretaries of State. I assure the hon. Gentleman and others who are concerned about the Crown Estate that we will continue to work to make it more accountable, more transparent and more focused on Scotland's and the rest of the UK's interests.
I thank the Secretary of State, who is generous with his time. He keeps on saying that the provisions were in the Calman proposals, but only 35 out of the 63 proposals are in the Bill. Issues such as immigration, benefits, aviation and aggregates are all out. Why is the right hon. Gentleman so negative about so many of the Calman proposals, and why did he not implement those important measures?
I understand that the hon. Gentleman will seek to catch your eye later, Madam Deputy Speaker. I am sure that he has studied the Command Paper along with the Bill in great detail, in which case he would have seen what we said about the aggregates levy and aviation duty. We made it clear that there is a difficulty with the aggregates levy because of issues before the courts, so it would be inappropriate to bring forward proposals at this stage. However, we make clear in the Command Paper our intention to devolve that area. Likewise on aviation duty, the Government are reviewing the position, and we still intend aspects of it to be devolved. It is the same with welfare. The Command Paper talks about the major reforms we are introducing and the fact that they will fully take account of devolution and reflect the spirit of what was in the Calman report. I hope that that goes some way towards reassuring the hon. Gentleman, although I suspect it will not.
Beyond the power to borrow up to £500 million for current spending, a Scottish cash reserve will be created so that the Government will be able bank and save money where tax receipts exceed those expected. These provisions will allow for effective financial management to deal with fluctuations in the new revenue stream of tax receipts.
We also set out in the Bill a brand new capital borrowing power of up to £2.2 billion. This will provide the Scottish Government with new means to invest in major infrastructure and other projects. It will be for Scottish Ministers and the Scottish Parliament to decide whether to borrow and, if so, for what purpose-a new Forth crossing, new hospitals, new schools or perhaps even a railway-and it will be for them to account to the Scottish people for those choices.
As a consequence of increasing the financial freedom and accountability of the Scottish Parliament to raise its own revenues, there will be a reduction to the existing block grant. The grant will continue to make up the remainder of the Scottish budget, however. That will ensure financial stability; it will ensure continuity of public service provision; and it will maintain the economic union that is so central to our United Kingdom. I know that views differ-both in this House, and further afield-on the broad issue of the block grant and, specifically, on the Barnett formula that underpins it. I do not expect those differences to be resolved today; indeed, the funding formula is not part of the Bill.
The Government have set out their position on the Barnett formula in their programme for government. While recognising the need to review the arrangements in time, our overriding priority is to tackle the deficit, and we will not consider a review until the public finances are returned to good health.
I welcome the fact that the right hon. Gentleman is dealing with the Barnett formula. Will there be anything in the new proposals to prevent a Scottish Government from receiving funding for one purpose and using it for something completely different?
I am not entirely clear what the right hon. Gentleman has in mind, but it is the essence of devolution that the Scottish Parliament be free to spend the money it receives-either through the block grant or as a consequence of its tax-raising powers-on what it wants to spend it on.
The right hon. Gentleman might have had the opportunity to look at last week's Sunday Herald, which led on the issue of disabled children in Scotland and their families and carers. It pointed out that £34 million, arising from UK Department for Education funding, had been allocated, but that the money had not been received. In the new approach to these matters, will there be more accountability than can be seen in that case?
First, I pay tribute to the right hon. Gentleman's distinguished career of campaigning on these issues and to all the hard work and effort he has put into that over many years. The fundamentals of devolution since 1999 mean that the Scottish Parliament and then the Scottish Government are able to decide how to spend all the revenue that comes to them, whether it be directly through the grant or, to use a shorthand term, as a result of the Barnett consequentials. The hon. Gentleman is, of course, entitled to draw a distinction between how the money is spent south of the border and how it is spent north of the border. On occasions, the advantage might be the other way round, but I am afraid that that is the essence of devolution-it is for them to decide. The Bill enhances those principles rather than claws anything back.
The right hon. Gentleman is right that the essence of devolution means that the Scottish Government should not have their funding ring-fenced, as some have suggested it should be. However, the point raised by my right hon. Friend Mr Clarke related to accountability. I do not think that he was suggesting that we should ring-fence the funding transferred to the Scottish Parliament. It is a question of how there can be accountability to the UK Parliament. Perhaps there could be some way of bringing to this Parliament the ability to question the way in which money is spent by the Scottish Parliament. Intergovernmental and inter-parliamentary co-operation should allow such questioning to be pursued and, although my right hon. Friend has been trying to do that, he has not always been successful in getting the Scottish Parliament to respond.
I respect the hon. Gentleman's interest in these matters and I commend the way he has followed devolution developments over the years. The primary responsibility for accountability is to the Scottish Parliament. Governments of different hues have gone before the committee system and made statements in the Scottish Parliament; there are 129 Members of the Scottish Parliament and that is their primary function. Ultimately, as in this House, all are accountable to the electorate. What we are trying to do with accountability in this Bill is enhance the financial powers so that parliamentarians in Scotland can be made accountable not just for the spending decisions, but for the tax-raising decisions that precede them.
Let me finish my point about the Barnett formula. We do not intend to alter it or review its arrangements at this time. Nothing in the Bill, however, prejudges future changes to the funding formula. Rather, the Bill's effect will be to make the Scottish Parliament more reliant on its own revenues and less reliant on the block grant to fund public spending in Scotland.
In the Secretary of State's comments on the Barnett formula-before the interventions-he said that he would not seek to change it until the economy has returned to rude health. I presume by that he means that this Government's priority is to tackle the deficit. I see him nodding on that. It worries me slightly, then, that the additional capital borrowing powers require a consent per project, so will the right hon. Gentleman confirm that when a good, sensible, costed project comes up looking for additional capital consent, this Government will not use the excuse of the deficit in order simply to say no?
I respect the thoroughness with which the hon. Gentleman usually approaches such matters, and he has clearly spotted the bit in the Command Paper that says that, as of 2013, we will introduce the new capital borrowing powers. In the first couple of years, there will be additional Treasury constraints in relation to the feasibility and appropriateness of projects, as a precursor to those capital powers being fully available, in 2015, to the Scottish Parliament and the Government formed from it.
The Secretary of State has not quite given me the assurance I seek. The Command Paper also says that the powers will be subject to Her Majesty's Government limits and controls. Will he confirm that the Government will not use their deficit consolidation plan as an excuse to say no to important new capital investment?
I hoped that I had been clear, but I am happy to refer the hon. Gentleman back to the Command Paper, which is crystal clear on the availability of those powers from 2013, on the annualised basis set out. When the right projects are brought forward-as he and I seem to agree on this occasion, such projects will be those that help growth-such consent will not unreasonably be withheld. I hope that that reassures him.
Aside from the Government's proposals, another set of financial arguments has been put forward as an alternative to the measures in the Bill. In recent months, there has been some discussion in the Scottish Parliament and the Scottish press about other approaches to fiscal devolution, and specifically about the idea of fiscal autonomy. However, its proponents have failed to come up with any credible proposals, or indeed any detailed proposals at all, while the economic arguments advanced in support of fiscal autonomy lack any firm evidence to support them.
This is ludicrous. The Scottish Government have published the document, "Fiscal Autonomy in Scotland: The case for change and options for reform". Saying that no work has been done is neither helpful nor accurate.
The essence of debates in the House is that we are allowed to have opinions. I carefully used the word "credible", and credibility is lacking from the Scottish Government's proposals. The desperate efforts to undermine the proposals in the Bill have now been exposed for what they are.
Have the Scottish Government given an indication of the share of the national debt, and the share of the underwriting of the bankrupt Scottish banks, that the Scottish Parliament would be willing to undertake under fiscal autonomy?
Implementing our new financial arrangements will require detailed work by the United Kingdom Government, the Scottish Government and a range of other stakeholders. We will approach the task in a carefully planned and phased way. The Bill provides the overall framework for the new arrangements, but more than legislation alone will be needed to give effect to the measures set out.
On fiscal autonomy, how is it that tiny places such as the Faroe Islands, with a population of 48,000, and the Isle of Man, with 100,000, have infinitely more power than the Scottish Parliament, which represents more than 5 million people? Does the Secretary of State not see an anomalous situation there? The Scottish Parliament could easily have fiscal autonomy and control our fuel price, which in the Hebrides is £1.45 a litre, but in the Faroe Islands is £1.10 and 94p for petrol and diesel respectively.
If the hon. Gentleman wishes to make his case in that way, people may or may not pay attention to him. What I am suggesting is based on Scotland's size and where it is within the United Kingdom. I respect the fact that he and I fundamentally disagree about our vision for the future of Scotland. Those of us who are committed to the United Kingdom want a sustainable new financial basis on which Scotland is part of the Union. We believe that the Bill provides that basis, unlike the proposals that his party advocates.
The Bill and the Command Paper are not just about finance. The Calman commission examined the whole of the devolution arrangements and found that the division of policy responsibilities in the original Scotland Act worked well. It did, however, make recommendations to improve it further, which are reflected in the Bill. On justice, we will give the Scottish Parliament the power to legislate on air weapons, and give Scottish Ministers the power to set the drink-drive limit and a Scottish national speed limit. On health, we will give Scottish Ministers the power to decide which doctors in Scotland should be able to use drugs for the treatment of addiction. We will give the Scottish Government a formal role in key appointments to the BBC Trust and the Crown Estate.
On the question of health, will the Secretary of State explain why the power to make decisions on abortion in Scotland will not be devolved?
If I may say so, that is a delicate subject, which was debated carefully in relation to the original Scotland Act. The decision of the House at the time was that the matter would not be included within that Act, and there was no such proposal brought forward by the Calman commission or in any representations that I have received subsequently.
We will give the Scottish Parliament power to administer its own elections, processes and procedures. There are also some areas where, for good and practical reasons, the Calman commission recommended re-reservation of powers to Westminster. These, too, are included in our Bill: for example, the regulation of health care professions and corporate insolvency.
Finally, we have taken the opportunity to address the question of the official title of the devolved Administration: "the Scottish Executive", as it is currently styled. The term "Scottish Government" has now become broadly recognised. We propose to make that official.
The Bill reflects the balance of the representations that we have seen and the different legal basis on which matters have been approached in Scotland to date. If the hon. Gentleman wishes to make the broader case in Committee, we look forward to hearing that.
On the Secretary of State's point about the change to the Scotland Act to allow "the Scottish Executive" to become "the Scottish Government", that term has been quite commonplace since the last Scottish general election. However, if there is no such thing as the Scottish Government in legislation, does he believe that the amendment tabled by the six separatists in the House is competent, as it refers to "the Scottish Government"?
Far be it from me to be drawn into these matters. I can only assume that the amendment is competent, as it is on our Order Paper this afternoon. However, the common parlance is now "the Scottish Government". It will help if Government Departments no longer feel that, legally, they must refer to the Scottish Executive, when nobody else does. Also, we will be able to refer to "the Scottish Government" in the House, rather than "the Scottish Executive".
The Bill does not set out every proposal from Calman. In some cases, legislation is not required. For example, the commission recommended much closer co-operation and communication between Administrations and between Parliaments. Many of the proposals require change to working practices, to which the Government are committed. I know that Mr Speaker, the Lords Speaker and the Presiding Officer will determine the appropriate basis on which to develop relationships between our Parliaments.
In fulfilling our commitment to implement the Calman recommendations, there are some cases in which we have deviated from the precise recommendations because the policy content at UK level has changed, for example in relation to air passenger duty, which the Government are reviewing. In other cases, however, we have gone further than the commission, building on and strengthening its recommendations. This is the first time since the creation of devolution that a Government have brought forward legislation with such wide-ranging effect on the current settlement. Indeed, the Bill will fundamentally change the powers and responsibilities of the Scottish Parliament. For that reason, the Government will proceed with the Bill only with the formal and explicit consent of the Scottish Parliament. It is right and proper that the Scottish Parliament should examine the measures that we set out in the Scotland Bill. I welcome the thorough way in which it is going about its business, and I look forward to returning to discuss the provisions with the Bill Committee in the Scottish Parliament next week.
Devolution breathed new life into Scottish politics and Scottish society. It brought government closer to the Scottish people, and it shaped a more confident Scotland in a more secure United Kingdom. The Bill extends that settlement for the future. The first chapter of devolution began with the Scotland Act 1998; the second chapter opened on St Andrew's day, when we published this Bill. The Bill reflects the work of many across this Chamber and in Holyrood: work that we have undertaken together with consensus, strengthening Scotland's future within the United Kingdom. I commend it to the House.
Now that we have resolved that little matter, I beg to move an amendment, to leave out from "That" to the end of the Question and add:
That this House, while recognising the need to further enhance the powers of the Scottish Parliament, nevertheless believes that the measures the Scotland Bill seeks to devolve are inadequate to meet the ambitions of the Scottish Government for the people of Scotland; considers the measures relating to air weapons, road safety and drink driving to be incomplete; regrets that the Calman Commission's recommendations to devolve the aggregates levy and air passenger duty, and to devolve responsibility for the marine environment to match the Scottish Parliament's responsibility for fisheries, as well as its proposal for a Scottish role in welfare benefits, have all been abandoned; regards the proposals for the Crown Estates Commission as inadequate; deplores the proposals in the Bill to re-reserve already devolved responsibilities; concludes that the tax varying provisions would embed a long-term deflationary bias in Scotland's budget and that the proposed borrowing powers remaining subject to HM Treasury controls and limits render them insufficiently flexible; and therefore considers the Bill as a whole to be unacceptable.
I welcome the Second Reading of this Conservative-led Government's Scotland Bill, and, like my hon. Friends, look forward to debating the further transfer of powers and responsibilities to the Scottish Government. The House will find the Scottish National party a willing and diligent partner in ensuring that the Bill is debated properly. What we have seen today, however, is remarkable. We have seen a Liberal Secretary of State for Scotland lead, on behalf of a Conservative-led Government, a debate on a Conservative-led Scotland Bill that was initiated in the Scottish Parliament by a former leader of the Scottish Labour party. This is cross-Unionist consensus in all its Conservative-led glory. I believe that, given the consequent lack of scrutiny that will be offered by Her Majesty's Opposition, along with the disappearance of what remains of independent thought on the Liberal Benches, the task of scrutinising the Bill will be left to the Scottish National party. It is we who will scrutinise the Bill in the interests of the Scottish people, and we will do so most diligently and sincerely.
If that is the attitude of the Scottish National party, why have its members taken no part in the constitutional convention or the Calman commission over the years, and then appeared at the last minute, in a grudging and curmudgeonly fashion, to take part in a debate that they have not entered into for 25 years?
It is a matter of principle. I know that the right hon. Gentleman knows very little about principle in the context of the Liberal Democrats, but we happen to believe in independence. It may have escaped his attention, but that is what our party is all about. The fact that a reference to independence was not included in-indeed, was intentionally excluded from-the wording of the Calman report meant that if we were to retain our principled position, we could not participate. That is what we call principle, and perhaps that is a little lesson for the right hon. Gentleman.
The hon. Gentleman has criticised the Calman process, which involved three parties working together. We rarely agree on much, but we did agree on Scotland's future. The SNP, however, had the "national conversation", which cost almost £1 million, asked only seven questions, received a grand total of 222 responses, and has not resulted in a single new power for Scotland. It was nothing more than a vanity project for the SNP. It was not a national conversation, but a national waste of money.
I will take interventions in a minute, but, if hon. Members do not mind, I will make a little progress first.
As I was saying, scrutiny will be left to the Scottish National party. Throughout the Bill's passage, we will support measures that will effectively transfer power from the House of Commons to the Scottish Parliament. We will offer solutions to the inconsistencies and problems that have been identified. We will strenuously oppose the parts of the Bill that suggest the re-reservation of certain matters such as the regulation of health professionals and insolvency. We will also strenuously oppose financial measures that would mean a cost to the Scottish people of £8 billion since devolution.
I want to nail this nonsense about the £8 billion. Of course it is possible to take one particular year, which happens to be the worst year in the middle of the worst recession since the war, and to make assumptions about a 20-year period on the back of it, but that is complete and utter nonsense. It is not the way the figure should be calculated. I refer the hon. Gentleman to the figures from the Scotland Office, which show a £400 million surplus.
I am grateful to the Secretary of State for that correction. He has conceded that it is possible that this could have happened. However, I heard him say on the radio this morning that the figure was not £8 billion, but £700 million. That makes it all right, does it? That is all that Scotland would have lost over the past 10 years.
The hon. Gentleman is usually fair, and I should hate him to miss the opportunity to be fair on this occasion. [Interruption.] Okay, I am being generous.
What I was doing was correcting the hon. Gentleman's colleague in the Scottish Parliament, who had suggested that the figure could be £700 million. Again, it would depend on where the line in the sand was drawn. Conveniently, in this instance the line was drawn in 2010-11. When we roll forward to 2014-15, we arrive at a £400 million surplus rather than the nonsense of the £8 billion that the hon. Gentleman is talking about.
And the Secretary of State accuses me of being selective! It is not possible to be more selective than he has just been.
We will never agree on these issues. What we have seen as a result of the work of the Scottish Government is an £8 billion loss to the Scottish budget since devolution in 1999. The Secretary of State, making the same assumption, said that £700 million would be lost to the Scottish people over the past 10 years. That is unacceptable to us, and we will have nothing to do with it.
I think that the Secretary of State is confused. He has talked of basing the figure on a single year, which was the worst year, and has said that there would not be an £8 billion shortfall. Of course he is right, but no one has ever said that. We are talking about the cumulative impact had the Bill been in operation between 1999 and 2011-12, not 2014-15. I am disappointed, because the Secretary of State is normally fair, but on this occasion he has failed even to understand the argument that has been advanced against him.
I am grateful to my hon. Friend, who knows about these issues and understands the difficulties that the Bill would create.
Why are we giving the Scottish Parliament new fiscal responsibilities that would damage it? That is one of the proposals that we will seek to correct during the Bill's passage. We will be making suggestions about how it could be dealt with. We are prepared to work with the Government, because we want to improve and strengthen the Bill. We want to make it a powerhouse Bill that will serve our nation and be a credit to the communities that we serve.
As we have heard, the Bill has already been debated in the Scottish Parliament, and has been subject to what has been described as an independent Bill scrutiny Committee. I certainly hope that the proceedings in the House of Commons will be a bit more useful and relevant than what we have seen in the Scottish Bill Committee thus far. We have seen a Labour convener haranguing and harassing independent witnesses, as a result of which several have decided not to take part in the proceedings because of what they feel is an in-built bias. The Scottish Bill Committee seems to be more interested in considering options that are not even in the Bill than in examining the dangerous tax plans that it contains. I hope that we can do a bit better than that down here, Madam Deputy Speaker. As you know, and as we are already observing, Scottish debates in the House of Commons are always characterised by their good nature and conviviality.
The hon. Gentleman cannot have it both ways. He cannot say that he wants rigorous scrutiny, and then say that we were too hard on people who provided false information in support of his case.
I do not know what the hon. Lady is referring to. I have never said anything about false information.
In a spirit of consensus and co-operation, let us start with the issues on which we all agree, for obviously there are such issues. We all agree with the Secretary of State and with our Labour colleagues that devolution is, in the words of Donald Dewar, a process and not a one-off event, and that is important. We may disagree on the conclusion of that process-we believe in independence, and my Labour colleagues believe in something else-but we all agree that devolution is a process, and that we will continue to see a transfer of powers from the House of Commons to the Scottish Parliament.
A point was made earlier about the reference to the Scottish Government in the amendment. When I first came to the House 10 years ago, Labour Members were appalled at the prospect of a Scottish Government. The Secretary of State probably remembers the debates in which they expressed their view. They helpfully said, "They can call themselves 'The White Heather Club' if they want, but they will never be a Government." We are a Government now, thank goodness, and the Labour dinosaurs, some of whom I see in their places, will never go back to having an Executive running Scotland. That is a good thing too.
An important new development is that we all agree now that some financial powers-fiscal powers-should be devolved to the Scottish Parliament. We never had that important source of agreement before. We fundamentally disagree on the measures in the Bill, but we agree that financial responsibility should be a feature of the Scottish Parliament. I look forward to that, and that is another area of agreement. We will oppose measures in the Bill, but it is good that we now all agree that financial powers are required for the Scottish Parliament.
The most important thing that everyone in this House can agree on-this ran through everything to do with Calman-is that the Scottish Parliament has been an overwhelming success. The Secretary of State is of course right to say that there is no question-only people on the fringes of politics in this House would even suggest this-of ever going back to having no Scottish Parliament again. What typifies that more than anything is the fact that a Conservative-led Government are legislating for more powers and responsibilities to be given to the Scottish Parliament, because only 12 short years ago the Tories campaigned so energetically against the Scottish Parliament. That shows the progress that we have made, and there will be areas of agreement as we go through the Committee stage in this House.
Although we agree on many things in the Bill, there are many things with which we fundamentally disagree.
The hon. Gentleman's contribution seems to contain an inherent contradiction, because he is saying that he welcomes the Government's introduction of this Bill, yet it is widely observed that they are doing this because of the work of the Calman commission and his party has criticised and refused to participate in its work. The Calman commission has led to great progress for Scotland but, yet again, the Scottish National party has opposed the Calman commission and held it back.
That was an unfortunate intervention, because I give the hon. Lady more credit than that. I was trying to think of issues on which we agreed and I thought that we would hear a more helpful intervention. It was just the Labour party resorting to type and it was unfortunate that we had to hear it.
Although we agree on much, there are a few areas where we disagree.
I will oblige the hon. Gentleman. The Bill is a massive wasted opportunity for Scotland, because so much could have been included in it and we could have done so much to improve the position of Scotland. The Bill could have included measures to help our economic performance and increase growth. The Bill seems to contain a wee modest set of proposals that lack any real ambition to propel Scotland forward; it offers few solutions to provide Scotland with what it needs to take our nation forward; and, as I have said, it offers nothing in the way of a framework to increase economic growth in Scotland.
The Calman commission was proposed by the three Unionist parties, and discussions have gone on all the time with the Scottish Government about implementing the Calman proposals. Who put two of the main Calman proposals-on airguns and speed limits-before the Scottish Parliament? We could have legislated on those last year. The SNP said that it was prepared to take forward the Calman proposals where they were useful and helpful to the people of Scotland. Who refused to allow us to take those proposals forward? It was the Labour party, so I will take no lessons about trying to ensure that the Calman proposals are taken forward.
Does the hon. Gentlemen agree that had the SNP been more engaged with Calman and taken part in the coalition building that was necessary to come forward with the Scotland Bill, it might have got more of its views reflected in the Bill? By not taking part in that process, those views were inevitably not considered.
Why was independence excluded in the setting up the Calman commission? Why could we not have included everything? Had we done so, everyone would have taken part and put forward their own proposals to move Scotland forward. But, with their legendary cunning, the oh-so-clever Unionists said, "How do we trap the Nats when it comes to looking at how devolution continues?" They resorted to type, as they did on the constitutional commission. These cunning Unionists sitting around the table said, "What we'll do is exclude independence from any discussion about the future of Scotland", and that is what they did.
The right hon. Gentleman asks a fair question, and he will find out the response in May, when a Conservative-led Government attempt to secure and save their seats in Scotland. Then we will have a debate about full powers for the Scottish Parliament and then we will see the result in his constituency and area.
I shall try to get back to what I was discussing. Believe it or not, I was still talking about areas of agreement, although I was moving on to areas of disagreement. As I said, the Bill contains modest ambition for Scotland but it also contains a range of very dangerous tax plans that could significantly hurt the Scottish economy and short-change the Scottish people. As we have seen in today's exchanges, the tax plans are the most hotly contested, keenly debated and contentious part of these proposals. As I have said to the Secretary of State, by way of figures that he keenly and hotly disputes, this approach would have cost the Scottish people some £8 billion since the establishment of Scottish devolution in 1999. I heard him on the radio saying, "It would only have been £700 million", but what we are starting with is devolving a series of measures-
I am grateful for your assistance in this matter, Mr Donohoe. I will decide whether the hon. Gentleman is in order. At the moment he still is and he is taking interventions. I am listening to all the contributions keenly, and I believe that the Secretary of State was about to give a response.
Thank you, Madam Deputy Speaker. Pete Wishart cannot keep repeating this figure of £700 million. I was pointing out how it was slightly unfortunate that his colleague in the Scottish Parliament, Fiona Hyslop, chose to use one figure and ignore the £400 million surplus, which is the more relevant figure.
I am grateful to the Secretary of State for finally clearing that up.
I was talking about a measure that is actually a Tory budget cut to the Scottish Parliament and, unfortunately, the nodding dogs of the Labour party are supporting the Conservative-led Government's cuts and assault on the Scottish budget. Why have they taken us into this measure, which is to the great detriment of the Scottish budget? The SNP will not accept a Tory cut of this magnitude.
May I try to bring the hon. Gentleman back to his amendment or even encourage him to start discussing it? Does he intend to vote against the Bill? After all, his amendment states that he
"considers the Bill as a whole to be unacceptable."
Is he going to support new powers for Scotland or rule against them?
Hon. Members seems to want to hear so much about our amendment. It states that the Bill is unacceptable; a cut of this magnitude to the Scottish budget is unacceptable. As I said, the SNP will scrutinise the Bill as it goes through Committee. I am not expecting any scrutiny of the Bill from Labour Members; I just expect them to sit there agreeing, complicit with the Conservative-led Government. We have tabled a reasoned amendment and, thankfully, Mr Speaker has accepted it. However, we will allow the Bill to proceed to Committee and seek to improve it there. Right now, the Bill is a broken Bill that needs to be fixed. There are serious difficulties with it and we will try to improve it. The challenge for the Labour party is this: will it support us in trying to improve the Bill?
We would not table a reasoned amendment if we did not intend to divide the House. Of course we are going to divide the House. The Bill is unacceptable, as we have said. If the right hon. and learned Gentleman wants to go home, he can do so, although I would suggest that he hangs around.
I am going to make a bit of progress because, to be fair, I have taken a number of interventions from the hon. Gentleman.
I will give way to the right hon. Lady later, but I now wish to get through my speech.
Parts of the Bill are unacceptable to us, but, in other ways, it is merely perplexing. We shall, thank goodness, finally get devolution on the regulation of airguns. I have campaigned on that issue, as have colleagues in the Scottish Parliament. Airguns cause such a blight to so many communities.
I want to make some progress.
Airguns blight so many communities in Scotland, but it is perplexing that we shall get devolution on all airguns except the most dangerous ones. I am sure that the less dangerous ones also have an impact on communities, but surely, by definition, the most dangerous ones must cause most of the damage. Similarly, we are going to get devolution on speed limits.
I am going to try to make a bit of progress, even though it is the Minister's good self who wishes to intervene.
Thank goodness we are getting devolution on speed limits, because we have long argued for that. Some of my colleagues in the Scottish Parliament have campaigned hard for it. However, we find that we are not going to get control over freight, heavy goods vehicles or anything that is towing a caravan. The most perplexing thing of all-you will like this one, Madam Deputy Speaker-is that the regulation of activities in Antarctica are to be reserved to this House. Just in case anyone was in any doubt, Antarctica is now listed as being reserved to the Westminster Parliament. Colonies of penguins are already pulling down the saltire and hoisting the Union Jack in joyous celebration of that fact. Thank goodness for the Scotland Bill for letting us know that fact about Antarctica!
Will the hon. Gentleman please explain what the Scottish Government would do in their relationship with Antarctica if he had his way and the matter remained devolved to Scotland?
I know that it has been a feature of the Labour party in Scotland, particularly through its leader, to upset and antagonise friendly nations around the world. If you will excuse me, Madam Deputy Speaker, I will refrain from making any more comments about Antarctica.
How has the Bill been met in Scotland? There has been a curious sort of disappointment about it, and an "Is that it?" shrug of the shoulders. There has been no bunting hung out in the streets of Edinburgh, and no images of the Secretary of State emblazoned from the flagpoles of the nation. There is a real sense of frustration that civic Scotland has effectively been excluded from any proceedings on the Bill. We have heard many people ask why they were not consulted on it and brought on board. There has been very little consultation on the Bill, and there is a great deal of frustration about that.
This Bill is what happens when a cross-Unionist consensus gets put through the wringer by a Tory Government in Westminster. It was a Labour Government who initiated the Calman proposals, and it will be a Tory-led Government who will conclude them. In that process, the stuffing has been knocked out of some very good Calman proposals. As I have said, only 35 of the 60 proposals have survived.
The Calman report proposed that air passenger duty should be included in the provisions, but it has been excluded for very good reasons. Can the hon. Gentleman give an estimate of the amounts that would be raised through air passenger duty from Scottish airports? And, just as an aside, can he tell us what the level of duty is at the moment for people travelling from Scotland to England?
The Secretary of State said in response to an intervention that air passenger duty could not be considered because it is being considered by Europe just now, but it was being considered by Europe when Calman was looking at these matters as well. There is no real difference between then and where we are now.
I am not just talking about aviation duty. I am talking about the fact that only 35 of the 60 Calman proposals have survived. This is a question not so much of Calman-plus, as the Secretary of State and the Liberals like to say, as of Calman-half. Useful Calman proposals such as those on the devolution of welfare measures-including much-needed measures on immigration-on the marine environment and on taxes on aviation and aggregates have been left out of the Bill. Other Calman proposals have been significantly watered down. They include the proposals on the administration of elections, which will still effectively be reserved to this House, on appointees to the BBC and on the Crown Estate, about which we have growing concerns.
We will be constructive in trying to get this Bill through, but I really hope that the Tory-led Government will take seriously our attempts to improve it. I do not know whether Labour Members will continue to be nodding dogs as the Bill goes through, or whether they will join us in trying to improve and strengthen the Bill to ensure that we get better legislation for the people of Scotland. It most definitely needs improvement if it is to meet the aspirations and ambitions of the Scottish people.
The hon. Gentleman is making an important point about the aspirations of the Scottish people. He also made an important point about the financial position. Is he arguing that £800 million-or a similar figure, whatever it might be-was spent in Scotland over the past decade and that, had the provisions of the Bill already been in place, it would not have been spent in Scotland? If that is his argument, where did that money come from?
As my hon. Friend has just said, it came from Scottish taxpayers. I am grateful to the hon. Lady for asking that question, because that is exactly what would have happened: we would have been deprived of that budget if these proposals had been in place. That is why we are saying that they are so dangerous, and why they should be considered once again.
When the 1998 Scotland Bill went through, the then Labour Government were prepared to accept only one amendment. It related to the devolution of the regulation of stage hypnotists. I am sure that stage hypnotists were delighted that they were going to be regulated from Scotland. As we take this Bill through the House, let us try to do a bit better than that. The fact that we are having this debate at all shows that we are on a journey down the road of constitutional reform. We will be having the debate in the run-up to May this year, and I know where I want it to conclude. We have the opportunity to strengthen the Bill.
The hon. Gentleman has said repeatedly that he agrees with parts of the Bill, and he accepts that 35 new powers are being devolved to Scotland, but his amendment ends by proposing that the House
"considers the Bill as a whole to be unacceptable."
Will the hon. Gentleman, who believes in independence, be voting against new powers for Scotland?
Of course we will not be voting against new powers for Scotland. We will be raising, throughout the Committee stage of the Bill, the dangerous proposed tax powers and the £8 billion that would have been lost to the Scottish people over the past 10 years had they been in place.
Surely the big question for Labour Members is whether they want a strong Scottish Parliament to protect Scotland from any cuts that will come from the Tories and the Liberals. In the 1980s, we saw the Conservatives preferring Margaret Thatcher to independence; this time, we see Labour preferring a Tory Government to an independent Scotland. That is the reality.
Thank you very much, Madam Deputy Speaker. My hon. Friend has made his point in his typical and obligatory forthright manner.
I am not sure whether the hon. Gentleman understands the procedures of the House. Does he not realise that, if his amendment were successful, these 35 new powers would not be transferred to the Scottish Parliament? He and his colleagues are trying to prevent the Scottish Parliament from getting the new powers.
This is a reasoned amendment. We are inviting the House to look at the many difficulties in the Bill and to consider how it might be improved.
I will not give way because I am about to finish my speech.
We have the opportunity to strengthen the Bill, and I want Labour colleagues to work with us to-
I am about to conclude, if the hon. Gentleman will allow me.
This is clearly an insufficient Bill, a broken Bill, a Bill that does not serve the interests of the Scottish people. There are many things that we could do if we could work together, but we have to hear from Labour Members that they accept that the proposed tax powers are dangerous and that we have to do something about them. We cannot have this Tory-led Government bringing forward a budget cut in disguise. We need Labour's support if we are to try to prevent that.
Fortunately, it is not for the Chair to remind Members that they have not necessarily referred to every point in their amendments. Members of the House can draw their own conclusions.
I was about to conclude, Madam Deputy Speaker, and I shall conclude on the subject of the reasoned amendment. I want right hon. and hon. Members to support our amendment. We want to try to improve this Bill. It is a broken Bill; it is a Bill that does not serve the people of Scotland. The tax powers will be dangerous if they are implemented. I hope that hon. Members will support our approach as the Bill goes through. Let us strengthen it and make it a powerhouse Bill that serves the people of Scotland. As it stands, it is a broken Bill that cannot serve the people of Scotland because of the financial powers in it. I urge everybody to support our reasoned amendment.
It is always a pleasure to speak after Pete Wishart-and sometimes at the same time as him. I always admire his passion and his genuine belief that he is doing the best thing for Scotland. I hope he does not mind me saying that his heart is in the right place, but unfortunately his head and his fiscal understanding are not.
The hon. Gentleman made some important points, particularly about tax-raising powers and the effect of this Bill. I was much perplexed by his response to my intervention a few moments ago. Whether the amount is £800 million or £600 million-or whatever the very large sum is that he and his party argue was spent in Scotland over the past decade but would not have been if the Bill had been in place-his answer was that that money came from the Scottish taxpayer. That is not correct: the money came from the UK taxpayer.
With equal passion, Mr MacNeil, who has unfortunately just left the Chamber, begged a few moments ago that the people of Scotland should be protected from cuts. The people of Scotland cannot be protected any more than the people in the rest of the United Kingdom from the effects of 13 years of bad financial management of our country's economy by the Labour Government.
The hon. Gentleman seeks to disagree with me, in a mild way and from a sedentary position, but the facts speak for themselves. The country's finances are in a mess. Yes, we all want to protect people in all parts of the country, but there is no argument for protecting Scotland to a greater extent than the rest of the United Kingdom.
Does my hon. Friend agree that the operation of the Barnett formula in its strictest sense will protect the Scottish budget at times of reduction in the overall UK level of public spending? A population change is taken on the basis of a higher-than-average base line, so in times of public expenditure reductions, that will protect the Scottish block.
I entirely agree with my hon. Friend and I am grateful to him for making that point at this stage in the debate. I am glad to say that he is something of an expert on this subject, having been steeped in it for many years. He is absolutely right; it is also very important, for the reasons he has just stated, that we keep the Barnett formula. That is the way to protect the people of Scotland not from the effects of the Conservative-led coalition but from the effects of 13 years of Labour mismanagement of the economy.
I am grateful to the hon. Lady, who is sadly wrong, as is her hon. Friend Iain Stewart. Barnett is of course a convergence formula and, far from protecting in the way that the hon. Gentleman suggests, it squeezes. More importantly, the hon. Lady was making the case that we should not do things differently, but of course that is the nature of devolution. If the Scottish Government had proper fiscal and economic control, they could well take steps different from those taken throughout the UK to protect and grow the economy. What would be so wrong with that?
That is exactly why the provisions of this Bill, which give more accountability and power to the Scottish Parliament, are absolutely right. The hon. Gentleman makes a good argument in favour of the Bill.
Until a few moments ago, I was going to say that it is good to see such cross-party consensus on the Bill. Of course, we have cross-most-party consensus, but not consensus with those in the Scottish National party. We understand that however much they seem to be stepping back from their long-held belief that we ought to move towards an independent Scotland-I do not understand why they do not have the courage of their convictions and go ahead and ask the people of Scotland-they want to go on a different path from the rest of us on protecting and helping Scotland, and giving it the best chance for the future.
I want to pay tribute to Donald Dewar, who did a wonderful job in setting up the Scottish Parliament. That was not what I said in 1997 and 1998 as we debated the original Scotland Bill for hour after hour, day after day and week after week. It was strange that the hon. Member for Perth and North Perthshire said at the beginning of his speech that this Bill would not be properly scrutinised. I can assure him that those of us who spent weeks and months scrutinising the Bill that became the Scotland Act 1998 will find this nice little Bill a piece of cake in comparison. Of course it will receive proper scrutiny.
Back in 1997 and 1998, we properly scrutinised the Scotland Bill. Many of us said over and over again that the devolution settlement that was being created would not work in the long term and would have to be amended and improved. I am very pleased to see this Bill make the improvements that some of us have thought necessary for a long time.
It was; the right hon. Lady is right. As I said when I paid tribute to Donald Dewar a moment ago, that was not what I said in 1997 and 1998. The position of the Conservative party at that point was to oppose devolution. Of course it was; it is no secret. I for one thought that that was the best settlement for Scotland. I appreciate, however, that the Scottish Parliament has grown in stature and become an important part of the lives of the people of Scotland. It is there, it performs an important duty and it defends the law of Scotland-the right hon. Lady will agree that I always defend that. The Scottish Parliament performs an important function in our new constitutional settlement in the United Kingdom.
Although I would originally have preferred to have seen an enormous amount of taxpayers' money saved by our not setting up the Scottish Parliament, I now appreciate-I speak only for myself, not for my party-that it performs an important duty. As I have said for more than 12 years, however, it is essential that the constitutional settlement be improved. Donald Dewar, to whom I am still in the middle of paying tribute, worked for decades to achieve the Parliament and I am sure that all hon. Members will agree how sad it is that he did not live to see the complete fruition of his labours. Had he done so and remained the First Minister for a longer term, I believe the standing and status of the Scottish Parliament would have grown more quickly. However, it is where it is now.
I might not agree with the hon. Lady's view of the economic situation, but does she share my view that the difference between the parties in this House that back the Union and those on the nationalist Benches is that we want to finesse the devolution settlement to make it better, while they see this as a foot in the door to move further towards independence?
I am very pleased to agree entirely with the hon. Gentleman-this is an unusual debate.
During the passage of the original Scotland Act, many of us argued that it would work in that form only if one made the assumption, as the then Government understandably wanted to, that there would always be a Labour Government in Westminster and a Labour majority in the Scottish Parliament. That is how the settlement was set up. Now that the situation has, happily, changed, it is important that the whole constitutional settlement should be updated to take account of that.
I respectfully suggest to the hon. Lady that that was not how the settlement was established. I do not think that any Labour or Liberal Democrat Member at that time would have expected that, for ever and a day, there would always be a convergence of the same political parties in both Westminster and Scotland. I would have hoped that the hon. Lady would give us credit for having established a far more robust devolutionary settlement than that. I think the past few months have vindicated the work that was done at that time.
It would be wrong to go back over arguments that we had more than a decade ago, but I stick to my point: it is necessary to make updates because of assumptions that were made then.
The hon. Lady's memory has been clouded through the years because at no point was the Scotland Act set up for a time when there would be solely Labour government at Westminster and Holyrood.
We are going back over old arguments now. I merely make the point that we always said that the devolution settlement would have to be improved and I strongly welcome the Bill, which does improve it.
The Calman commission is to be praised for the many years of work that were undertaken and for the careful and studied way in which its proposals were brought forward. This has not been a rushed job; I pay tribute to the previous Labour Government for setting the commission up and to the current Government for taking its recommendations forward. It has produced the right answers. By giving greater power to the Scottish Parliament, the Bill also gives a greater say to the Scottish people about how our democracy works. That is the most important point. It is right that greater power should require greater accountability and responsibility, as the Secretary of State has eloquently explained. If democracy is to work properly and if the people who vote and choose a Government are to be treated responsibly and have their opinions properly translated into action, it is very important that a Parliament such as the Scottish Parliament should not only be responsible for spending taxpayers' money, but be held responsible, at least to some extent, for raising it.
I welcome the better clarification of the balance between devolved and reserved policy matters-those which ought to be taken at Holyrood and those which ought to be taken in this House. If we do not have that clarity, the whole constitutional settlement will lack the gravity I would like it to acquire, so the new clarity that comes from the Bill is very welcome.
I promise that when we scrutinise the Bill in Committee, it will, contrary to the assertions of the hon. Member for Perth and North Perthshire, be properly scrutinised, and I look forward to our scrutinising it in great detail. The best thing about the Bill and the changes it will make to the constitutional settlement is that it strengthens and entrenches Scotland's position within the United Kingdom, which most people in the House and, I fervently believe, in Scotland want to see entrenched, protected and encouraged. Although this is
I entirely take the hon. Gentleman's point-I was being far too familiar and colloquial. Let me be more formal. This week, we celebrate the anniversary of the birth of our great Scottish national poet Mr Robert Burns, and one of his best poems makes the point that he was a true Unionist. "The Dumfries Volunteers" says clearly, at the end of its second verse:
"Be Britain still to Britain true,
Amang oursels united;
For never but by British hands
Maun British wrangs be righted!"
Long may it continue, Madam Deputy Speaker. We welcome the Scotland Bill because it totally strengthens Scotland's position within the United Kingdom.
It is now more than 12 years since the then Labour Government guided the pioneering Scotland Act 1998 through this House. I was proud to join thousands of fellow Scots of different political persuasions and of none in campaigning for its creation. It was undoubtedly one of Labour's most important achievements. It has strengthened our democracy and brought government closer to the people and it works well in practice.
However, we recognised the need to review the challenges that the Scottish Parliament had faced in almost 10 years in operation-first, in how it could meet people's desire to strengthen its functions, and secondly, in how to increase its financial accountability to the people of Scotland. The resulting Calman commission report was a serious, balanced and thorough analysis of Scotland's constitutional arrangements. I would like to take this opportunity to commend Sir Ken Calman and his fellow commissioners for their work and the manner in which it was conducted. Despite the fact that the call for the establishment of the commission was initiated by a clear majority at Holyrood, it was rejected by the SNP Government, who preferred instead to engage in a costly, unpopular and one-sided so-called "national conversation" on a wholly independent Scotland.
The hon. Gentleman will no doubt remind us how much his national conversation cost, which resulted in not one piece of legislation and no change for the betterment of Scotland, whereas the Bill, we recognise, will strengthen our democracy and will be to the benefit of the people of Scotland.
The Calman commission cost £614,000, which is an extraordinary amount of money. It is what David McLetchie called "unionists talking to unionists".
Sadly, the hon. Gentleman has not informed the House that his national conversation-the big blether with Alex-cost more than £1 million, and we have not had one single benefit as a result. That is a test that the very sensible people of Scotland will apply. They deserve better.
The Caiman commission agreed with our fundamental view, set out in our 2009 White Paper "Scotland's Future in the United Kingdom", that together the nations of the United Kingdom are stronger and that together we share resources and pool risks. Nowhere was that more apparent than in 2008 with the vital bail-out of our major banks by the Labour Government, which included two major Scottish institutions. The cash injected to salvage our Scottish banks was the equivalent of £10,000 for every man, woman and child in Scotland. Without the Union and the intervention of the UK Labour Government, Scotland would have been plunged into the depths of economic despair that smaller countries such as Iceland and Ireland, the previous poster boys of independence for the SNP, are sadly still suffering from.
SNP Members have made no mention today of an analysis of what would have happened under fiscal independence during the period from 2007 to 2009. In fact, the SNP has produced no governmental analysis for that period. Recent estimates by experts indicated that Scottish tax income would have dropped by nearly £2.5 billion-and that includes a per capita share of North sea oil, before the Secretary of State and his colleagues on the Front Bench ask about that. The SNP Government have continually failed to produce detailed modelling of their case for separation. The analysis has to be done not only in the good times but in the bad times as well.
Indeed, the SNP's case for fiscal autonomy is so weak and unconvincing that its Ministers in Holyrood are now accused of having had to resort to playing fast and loose with the facts of economic research to substantiate any case at all. We are firmly of the view, based on sound, independent evidence, that the economic union is Scotland's greatest economic opportunity and that together we are stronger.
Let us be clear that the Scotland Bill was born of consensus and consultation and is a model example that Government should always follow, whether here in Westminster or at Holyrood, before laying legislation of such fundamental constitutional reform. While in government, we sought political consensus from the start. We initiated independent commissions and reports, embarked on a robust consultation with the public, civic society and experts, and we listened carefully when those people spoke. There is no such consensus and there was no such consultation prior to the Parliamentary Voting System and Constituencies Bill or, indeed, the Fixed-term Parliaments Bill, and the result has been rushed and biased legislation, which insults our democracy. The Tory-led Government have steamrolled those Bills through this House of Commons and into the House of Lords, showing scant regard for proper scrutiny and completely disregarding the opportunity to engage with interested parties and experts or the electorate whom they serve.
However, the Bill we are debating today is the antithesis of the Government's other shoddy constitutional efforts. On the whole, it reflects most of the Calman commission's recommendations, and accordingly there is much that we agree on. As the official Opposition, however, we will rigorously scrutinise the Bill to ensure that it represents the best deal for the people of Scotland. There are some areas of concern and issues that will require further clarification and amendment as we continue into the Committee stage, although I can assure the Secretary of State that we will not press the Antarctica clause to a vote. I am astonished that the dogma of the SNP is such that this one simple clause, which was clearly a mistake in the original legislation and has now, I understand, been corrected, will enable one of our finest universities to mount an expedition to Antarctica. Instead, Pete Wishart seems to be more concerned about where the First Minister might spend his summer holidays.
I am relieved that we will see no Labour amendments on Antarctica. I am grateful that the hon. Lady said that the Labour party will be engaged in scrutinising the Bill, which is good news. What sort of amendments can we expect to see tabled in Committee?
Unlike the hon. Gentleman, who wants to stop this process in its tracks this evening, I believe that the Bill requires a proper period of thorough examination. There will be amendments that we believe are appropriate on technical issues and on the substance of the Bill.
Will my hon. Friend confirm that any amendments that we table in Committee will have more bearing and substance than the amendment that has been spoken about by SNP Members today?
I am happy to provide my hon. Friend with that assurance. Unlike some other parties, we are already listening carefully to and speaking with people and bodies in Scotland, as we have done throughout this process, which has already lasted three years.
There has been much discussion, both in the Scotland Bill Committee in Holyrood and beyond, of the effect of the proposed devolution of the fiscal powers set out in the Bill to the Scottish Parliament. We urge the Secretary of State to set out and make transparent at the earliest opportunity the precise plans that the Government intend to introduce to ensure operational stability during the transition and the measures he intends to put in place to control the costs incurred during those changes. In particular, it is imperative that the Scotland Office, the Scottish Government and Her Majesty's Revenue and Customs are in full and frank consultation and that operational systems are put in place to ensure that changes are fully effective so that Scottish taxpayers do not see public moneys wasted during a period of difficult financial constraint. What discussions has the Secretary of State held with HMRC and the Scottish Government on the initial planning required to implement those substantial changes, and will he undertake to report regularly to the House on progress during the preparation period leading up to the next general election?
We also seek clarity on the definition of "Scottish taxpayer", which experts have already highlighted could lead to a series of what we suspect are unintended anomalies. According to the Institute of Chartered Accountants of Scotland, a worker who spends 101 days in Scotland, 99 days in England and 165 days working overseas, for example, will still be deemed to be a UK resident and a Scottish taxpayer, despite spending less than half the calendar year in Scotland. A person who lives in Scotland but works in England would derive all their income from their activities in England but still be classified as a Scottish taxpayer because that is where they end their day. As the Secretary of State and his No. 2, the Under-Secretary of State, David Mundell, both represent border constituencies, that issue might be of direct relevance to their constituents. We understand that HMRC currently has no intention of introducing a concession to split the tax fiscal year to deal with the movement of workers across the border. None of those consequences seems particularly sensible, so we urge the Government to look carefully at the definition.
We are disappointed that the Government have not taken the opportunity to tackle the problems caused by the different approaches to the definition of "charitable purposes" and "charity" in the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Act 2006, which applies to England and Wales. They have failed to use this opportunity to introduce measures to reduce the regulatory burdens on UK charities that operate in both Scotland and other parts of the UK -particularly in difficult times when charities are already affected by the spending review cuts and bearing the brunt of the economic downturn. The Bill is the ideal place to address the issue, and to quote the Secretary of State's right hon. Friend the Prime Minister, "If not now, then when?"
Let me conclude by reminding the House that the Bill is intended to preserve the political and economic union that has benefited both great countries over the past three centuries. The case for fiscal autonomy has disintegrated around the SNP, and its vision for Scotland is small, isolated and weak. Conversely, the Bill is designed to ensure that Scotland's future in the United Kingdom is strong, enabling the Scottish Parliament to flourish further and to carry on improving the lives of people in Scotland.
A large number of charities are headquartered in my constituency, and they regret the fact that the opportunity has not been taken to deal with this anomaly. Does my hon. Friend agree that, to allow the point to be dealt with, the Government could well consider tabling amendments in Committee? I myself am a director of a Scottish charity, but it is a local one that is unlikely to be affected by the provisions.
I am grateful to my hon. Friend. On that point, I agree that it would be helpful if the Government reconsidered their response to that recommendation by the Calman commission, because there is an additional burden on many very good charities that operate not only in Scotland but in other parts of the UK. They face two licensing processes and two sets of regulatory burdens, and, for a Government who always lecture people on reducing the regulatory burden, this is a good opportunity, working with the consensus among charities, to try to alleviate the amount of time they have to spend on paperwork and to increase the amount of time they have to spend on charitable purposes.
We will support the Bill's Second Reading, not the Scottish National party's amendment, if it is put to a vote. That does not mean we will not scrutinise the Bill carefully and closely, but, after almost three years of study and engagement with the Scottish public and with experts, and given the express will of the Holyrood Parliament, whose Committees are currently considering the matter in close detail, it is now important to get on with business and to put the Calman commission into legislation.
I am very happy to follow Ann McKechin, who made a fair analysis of the co-operation and consensus that have characterised the process over many years. She presented a constructive role for the Opposition, as is right and proper, in scrutinising and trying to improve the legislation, and in addressing some of the issues. I certainly hope that matters are proceeded with in that spirit.
I am very happy also to welcome the Bill, as someone who has been involved in the process since its very early days-indeed, for 25 or more years. Frankly, however, I see it as a further step along the way to home rule within the United Kingdom. I never thought, any more than others did, that the Scotland Act 1998 was the end of the process; most of us recognise that the constitution is evolving. The first Act, which established the Scottish Parliament, was seminal legislation, but it was always work in progress, and this Bill falls into the same category.
I hope that my right hon. Friend the Secretary of State for Scotland does not find any discomfort in that, but I completely understand that his role in government, operating on an agreed cross-party consensus, is to put forward a Bill that commands the support of the House and the Government and does not prevent any of us from arguing the case for further reform and development. That puts the SNP in a difficult position, but that is precisely where it wants to be.
For many of us who have been through this debate a few times, my previous point might sound ponderous, but we are making history because we are shaping the evolution of the United Kingdom's constitution, and this stage will be monitored for many years to come as one of the stages along the route. It will represent the foundation of a much more radical and decentralised United Kingdom over time.
I respect the right hon. Gentleman's view that this is a process, and that he wants to reach what he calls home rule within the UK. I suspect that that probably means, in his mind and those of his honourable colleagues, effectively a federal position with full fiscal autonomy. I respect that position, but we do not have that before us, so why is he prepared to settle for a Bill that, while devolving speed limits for cars, will not allow the devolution of speed limits for cars drawing caravans? Why is he prepared to accept something so weak?
If the hon. Gentleman will let me proceed with my speech, he will receive the answer, precisely because I took part in the constitutional convention when it was set up in the 1980s. At that time, we and the Labour party were in opposition, but the Conservative party largely ignored the convention and the SNP boycotted it. Yet that constitutional convention carried out detailed and thoughtful work that laid the foundations for the first Scotland Bill and, in my view, for this Bill and probably the next one. The difference between my party's approach and that of the SNP is that we, as a single party with an ambition, recognise that we cannot achieve on our own everything that we want; we have to work with others who do not necessarily share all our views. By working with them, however, we can progress towards what we want to achieve; if we refuse to co-operate, we cannot.
I shall make a little progress, if the hon. Gentleman will allow me.
At the time when the constitutional convention was established, there was a minimalist position. Many people in the Labour party were prepared to consider an assembly. I accept that many were passionately in favour, but others had reservations, and the minimalist position involved an assembly, elected by first past the post, funded by a block grant and operating with even fewer powers than the then Scotland Office.
The process-this is the real point that the SNP should take on board-of the constitutional convention meant that we finished up with a Parliament, with all the powers of the Scotland Office at that time, with a proportional voting system to make it much more nationally acceptable and, in fact, with non-defined reserved powers attached to the Parliament. That was a much more radical outcome than the original agenda, and one that would not have been achieved if my party and others had not engaged. At the time, I challenged the SNP to take part, because I wanted it to be there, knowing that it wanted independence but accepting that the party probably would not get it. The SNP's involvement, however, might have helped us to gain more powers than we did. That is why I continually regard its all-or-nothing approach as damaging to Scotland and, ultimately, to the party's own interests.
We got quite a lot of agreement, and that is relevant to this debate. Indeed, I think we got agreement in the convention on tax-raising powers, but they did not follow through into the original Scotland Bill. I remember that Donald Dewar even renewed his passport to travel to Germany, and Jim Wallace, Ray Michie and I went to Spain to look at that country's arrangements. On our return, we more or less agreed on the proposal to assign half of all income tax revenues, and VAT and excise duties, to the Scottish Parliament. The fact that those proposals did not carry through into the first Scotland Bill-I think; I suspect-owes a lot to the resistance of Mr Brown. The convention largely agreed to them, however, so I am particularly pleased that the Bill before us moves in that direction and will allow them to be introduced.
I also firmly believe-the Scottish National party ought to give thought to this-that those of us who have brought forward and will take forward this legislation are working with the grain of majority opinion in Scotland, in terms of wanting both more power and a step-by-step approach. Those of my constituents who are sympathetic to the SNP cause are puzzled as to why it cannot work with other people and take a step-by-step approach. We could all decide at what point we wish to get off, but that does not happen because the SNP knows that the majority of people in Scotland would get off long before it did.
The right hon. Gentleman makes the interesting assertion-it is only an assertion-that he believes he is working with the grain of Scottish public opinion. I doubt that a single person has said to him, "That's right Malcolm, we want 50% of the basic rate of income tax, 25% of the 40p rate and 20% of the 50p rate-that's the grain in my street." I do not think he is right when he says that.
No, but people have said to me, "I want independence, as long as I can still be a British citizen." There is confusion in the minds of many people about what independence is. Two facts are clear: the majority of people vote for Unionist parties, and the majority of people say repeatedly that they want more power, but that they want to take it in an orderly and measured fashion. It is up to the politicians, to some extent, to work through what the priorities are and how they should be worked up. That is precisely what this legislation does.
In the end, the SNP's position is anti-democratic, because it does not represent the majority. More to the point, it is unproductive. Frankly, it is downright lazy, because many of us have done an awful lot of work to bring these proposals forward. Having done nothing to create the Scottish Parliament, the SNP is happy to use it and abuse it. It takes a similarly curmudgeonly approach to this legislation. Of course it will not provide fiscal autonomy, which is, of course, a technical term for separation from the UK, as was pointed out by the Steel commission, of which I was a member. There is no mandate for that. The proposals do not go as far as I want them to go, but I have no hesitation in welcoming them as a constructive step forward that will allow us to test how greater responsibility and accountability will work. In my view, as and when that does work, it will justify future extension.
The Bill will give Scotland control over about 35% of its budget, which I hope will increase over time. It will ensure that Scotland has the capacity to demonstrate responsibility and accountability to justify more devolution. In an ideal world, I would like each tier of government to have access to part of the taxes that broadly finance its operations. In other words, each tier should be able to get more or less all its revenue from its own tax base, subject to the recognition that the UK Government have fiscal transfer responsibilities. Perhaps on a smaller scale, the Scottish Government should have some internal fiscal transfer responsibilities. That would be my ideal in the long run, but one has to take these things a step at a time and by negotiation.
I want to pick up on the point on which the Secretary of State has intervened two or three times. On a few occasions, I have heard the assertion-stated as a matter of absolute fact-that had this arrangement already been in place, Scotland would have lost £8 billion. As has been pointed out, if that were true-which it is not-it would be a clear demonstration of the benefit of being part of the United Kingdom, because that £8 billion would have been a transfer from the UK taxpayer to Scotland. Of course, the assertion is perverse and a nonsense. It is also retrospective, at a time when the balance is changing. It showed that, at a time of rising public spending, the Barnett formula delivered for Scotland at a faster rate than the rate at which incomes rose. Of course, at a time of public spending constraint, the reverse will be the case-the income tax take will rise faster than the Barnett formula consequentials. Over time, that can be averaged out-that is what the cash borrowing is for. That is the way that we should look at it.
The proposals give the Scottish Government the capacity to benefit from economic success, which grows the tax base and can potentially grow the revenue base. If they use their powers well, they will benefit from the buoyancy of the revenues. Of course, if they mismanage the economy, the reverse will be the case. The advantage of the Bill is that the transitional arrangements and the cash borrowing adjustments will provide a cushion to minimise the extremes of that effect. However, they will not deny a bit of pain if it goes wrong and a bit of benefit if it goes right. Over time, one hopes that that will become a more substantial amount.
The right hon. Gentleman is simply wrong about this matter. Although the Scottish Government will control 15% of the taxes raised in Scotland, if GDP rises and the tax take rises, the rise in the income tax take will be lower than the average. That will have a deflationary effect on the Scottish budget and will not allow the Scottish Government to benefit in the way that he describes.
On the models that I have seen, the reverse is the case, particularly at a time of public spending constraint. The point is that it will depend on changes over time-some years it will be up and some years it will be down. However, the proposals provide the potential for successful economic management to provide genuine benefit.
I would give more credibility to the SNP claims that the measures are inadequate to grow the Scottish economy if its record in government showed that it was using the powers it currently has in ways that will grow the Scottish economy, but it has not done that. We have seen a succession of populist consumer gimmicks; almost a complete collapse in public investment; and the slow strangulation of local autonomy. Local councils have less and less control and more and more centralised management through the freezing of council tax. There is effectively less flexibility across Scotland to gear responses to meet local needs.
Will the right hon. Gentleman comment on the Scottish Futures Trust? Does he see that as a model for using the levers appropriately to grow the Scottish economy?
My next paragraph relates to my constituency, and I am sure the hon. Lady can predict the answer to that question. I did not have a problem with the SNP saying that there were weaknesses in the public-private partnership method of financing, and that it wanted to look for a better method. I had a big problem with it abandoning all those projects and failing to come up with a better method, leaving us in total limbo. That has been catastrophic for investment in Scotland-catastrophic, not just seriously bad.
I am fortunate, privileged and honoured to represent the dynamic economy of the north-east of Scotland, which is probably the most dynamic economy in the whole of the United Kingdom at the moment. I and my hon. Friend Sir Robert Smith represent the constituencies with the lowest unemployment rates in the United Kingdom. I appreciate that other hon. Members face serious problems of unemployment in their constituencies, so I am not boasting about this; I am simply acknowledging it. The point is that Scotland has a region with the capacity to deliver economic growth, yet the Scottish Government have conspicuously failed to deliver what they should have been doing to facilitate that growth.
There is no Aberdeen bypass. The Scottish Government today announced the go-ahead for an upgrade of the A90 north of Aberdeen. I am glad about that, but all they have done is to announce, a year after the public inquiry, that they intend to go ahead with it. There is no date, and it is dependent on the resolution of the western peripheral route, which is still subject to legal argument. When the SNP loses office in May, not one stretch of tarmac will have been laid and not one ditch will have been dug-nothing will have happened on the ground.
What did the right hon. Gentleman's colleagues in the previous Scottish Administration do to progress the Aberdeen western peripheral route? When did they make a decision to go ahead with it?
They published the line of route for both that and for the A90. It took the SNP four years to make no progress at all. It has not indicated how it will find the money or when the scheme will ever start.
I do not know what it is about the SNP, but it has a total hostility to railways. It either scraps, delays or fails to take forward every rail project. Part of the transport needs of Aberdeen, and part of the proposal for our bypass, was a commuter rail service to restrict the growth of road traffic and give people choices. Progress was being made with that, but not even the provision of one additional station has progressed under the SNP in spite of cross-party support from all other quarters. We have had an SNP Government for four years, and they have had the powers to do things to grow the Scottish economy-limited those powers may be, but they have had them-and they have not done so. They should prove that they can do that before they demand more powers that they do not appear competent to use.
The right hon. Gentleman has just made an outrageous attack on the subject of rail. He should ask Sir Robert Smith about the reopening of Laurencekirk station, for example. What about the Bathgate rail line? What about the Alloa-Stirling line stations? All those things happened under the SNP Government. What he said is simply incorrect.
I acknowledge that some of those things have happened, but the SNP has been very good at cutting the ribbons on projects that were announced, organised and set in motion by previous local or national Administrations.
Order. Many speakers have gone very wide of the subject in illustrating the points that they wish to make. Mr Bruce, I would be grateful if you came back to the subject of the Bill in responding to the intervention.
I will of course observe your strictures, Madam Deputy Speaker, but when we are talking about powers, it is important that we also discuss our capacity to use those powers effectively. My contention is that the points I have made show why we need to take a step-by-step approach and demonstrate how well we can use our powers, and then hopefully take more of them.
Those who want to go faster have to acknowledge that Scotland's capacity to take on the full responsibility for its own financial affairs is beyond credibility in the present circumstances. The UK is struggling to tackle a massive financial problem, and Scotland has a disproportionate share of that problem in its needs, its share of the national debt and its share in the underwriting of the banks, which has brought us to this pass. The reality is that Scotland's future lies absolutely within the UK, but it is important that we have the power to take appropriate decisions, accountable to the people of Scotland, in ways that can help us make our own contribution to solving those problems in our own way.
As one or two Members have mentioned-it was alluded to by Calman-the transfer of benefits policy to Scotland has been suggested. That might happen in the longer term, but most people would acknowledge that the administration of certain aspects of benefits could be devolved or shared. At the moment, however, Scotland's benefits bill is disproportionate, so the matter is much better shared across the UK, especially during these particularly difficult times.
We have embarked on a fundamental and radical welfare reform, which, leaving aside any controversial aspects, many people recognise has merit if it can deliver responsive benefits, value for work and so on. In the longer term it might be possible for Scotland to take a role in administering welfare, but now would hardly be the right moment to do so, as we are in the middle of a major funding deficit and a major reform programme. We must make common-sense decisions, taking on board what can practically be done now and acknowledging that further transfers could happen in the short term, when we are good and ready. Consideration at a later date can take us further forward.
I should like clarification on two questions that have been raised with me. One relates to the progressive commitment that the coalition Government have made on the threshold level of tax. As a former Treasury spokesman for my party, our commitment to raising the level at which people pay tax to £10,000, starting with £1,000 in the current year and progressing during this Parliament, is dear to my heart. I wonder whether the Under-Secretary in his reply can explain how that will be accommodated in calculating the tax revenues that would accrue to Scotland, or compensated for so that it does not create a disadvantage out of a good and progressive reform.
My second question relates to some aspects of charity law, which are not just peculiar to Scotland. When public authorities are looking to charities and the voluntary sector to take on more responsibilities for delivering public services, it raises questions about their status, and particularly their VAT liabilities. If a local authority or a health board provides services, there is no VAT, whereas if such services are provided by a voluntary organisation, there may be VAT liabilities. That may inhibit the transfer arrangements, which might otherwise be welcome. I acknowledge that that probably involves the Treasury and the Scotland Office, but I would appreciate some clarification if possible.
In the past 20 years, we have embarked on a process of restructuring the UK in a radical and decentralised way. As has been said in the past, devolution is a process, not an end product. No piece of legislation ends it. The Scottish National party wants the end to be independence. That is a perfectly respectable position, but for that, it has to win the support of the people of Scotland, which it is conspicuously failing to do. In the meantime, for those of us who want a stronger Scotland, with more control over its affairs and playing its full part in the United Kingdom, the Bill represents a major and significant step forward. It will, in my view, strengthen the United Kingdom, strengthen Scotland's role and accountability, and perhaps enable the people of Scotland to look to their destiny and say, "We cannot always blame London and other people, we have to use the instruments that we have to help ourselves, and co-operate with others to ensure that we tackle the bigger problems together." That is what the United Kingdom is about, and also what the devolution home rule settlement is about. They are not incompatible; both are essential. The Bill is a positive step forward, and will be beneficial to Scotland and the United Kingdom.
I pay tribute to Malcolm Bruce for an illuminating and useful contribution to today's debate. I am afraid that mine will not be as lengthy, but I humbly hope that it will also illuminate the debate.
I am sorry that the love of Scotland of Mrs Laing could not hold her in the Chamber longer because she expressed disappointment that today's debate is not taking place on the birthday of Mr Robert Burns. However, I can confirm that it takes place on my birthday, and I can think of no better way to celebrate than to speak in support of the Scotland Bill.
I expect that it is a reflection of what has happened to my life since coming to this place.
I begin, rather unusually, by apologising to Pete Wishart for my rather bad-tempered intervention. It makes me angry when I hear the SNP, given its record, complaining about the process that has brought us here today, and the Calman commission. It also makes me angry when the hon. Gentleman questions whether the Bill will receive due scrutiny. I hope that, now he has heard the comments of my hon. Friend Ann McKechin, he realises that Labour will give the Bill due scrutiny, and that he will also welcome the inquiry by the Scottish Affairs Committee, on which Dr Whiteford serves. That will give us further opportunities to examine the Bill.
I remind the hon. Member for Perth and North Perthshire that the Calman commission consulted the public, experts and interested groups at 12 local engagement events all over Scotland. It received 300 written submissions, and held 50 public and 27 private evidence sessions. That compares more than favourably with the national conversation. The hon. Gentleman asked my hon. Friend the Member for Glasgow North how much it had cost. A conversation among Unionists is a far bigger conversation than one just among nationalists.
I am particularly pleased to be speaking in today's debate because I follow in the footsteps of John P. Mackintosh. His approach was one of integrity and commitment, and he wanted genuine constitutional reform and the flourishing of the democratic expression of the Scottish people. I should like to remind Members who have visited the Scottish Parliament, and to inform those who have not, that the Donald Dewar room at Holyrood carries this quote from John P. Mackintosh:
"People in Scotland want a degree of government for themselves. It is not beyond the wit of man to devise the institutions to meet these demands."
Labour finally devised the institution to meet those demands and delivered on Keir Hardie's original aim of home rule. Another of my predecessors, John Hume Robertson, not only believed in home rule, but lived and breathed it as he served East Lothian in both the House of Commons and the Scottish Parliament.
Constitutional reform should rise above party politics. The SNP has shown throughout today's debate not only that its politics are separatist, but that its approach to politics-the way it does politics-is separatist. The Labour way is to work with other parties to achieve consensus, which is what it has done through the Scottish Constitutional Convention and the Calman commission. SNP representatives were absent from both, which must make theirs the longest political huff in history. They are less outside the tent than squatting on a different campsite altogether. Indeed, they have not been happy campers, although there have been an unusual number of references to caravans.
We today take Scotland forward to a new era. It is right and it is time that the Scottish Parliament takes greater responsibility for its expenditure and matches that with accountability. Of course, the Bill goes further than that in giving substantial borrowing powers to Scotland. I hope that we can now move away from a time when the SNP Government used every capital building programme as an opportunity to fight at Westminster, rather than as an opportunity to fight for Scotland.
SNP Members have still to tell us whether they will vote for the Bill or seek to wreck it today. They have an opportunity to see Scotland move forward, but they appear to be unwilling even now to rise to give us clarity on that question- [ Interruption . ]
If the hon. Gentleman is bored, he could make the debate more interesting by intervening to answer that question, but he remains silent.
The SNP has argued for full fiscal autonomy for Scotland, but that is not what Scotland needs. Scotland needs the security that is offered by remaining part of the Union, which is what the Bill gives it.
What would the SNP have done with the banks in an independent Scotland? [ Interruption. ] Yes. I am afraid that it is all fantasy and Brigadoon on the SNP side. I urge SNP Members to think again-in the words of another Scottish poet-and to consider giving their support to the Bill. I also I urge them not press to a Division an amendment that seeks to deprive Scotland of an opportunity to move forward.
I thank the House for the short time that it has indulged me, and urge hon. Members to support the Bill.
I am grateful for the opportunity to participate in this debate. My contribution will be modest, given that I am not versed in the intricacies of the politics of Scotland, although I am learning quite a lot this afternoon. As a Scot who has family in Scotland, I have a great interest in what happens there and I would like to see Scotland succeed. I am also interested in the continuing relationship between the devolved Government and the national Government. Most importantly, I represent a constituency on the border, so I want to be aware of the implications of the Bill for my constituents.
I appreciate that the Bill is primarily relevant to Scotland, but it does have a potential impact in England, and that impact will be most pronounced in the border area, affecting seats such as Berwick-upon-Tweed, Hexham, Penrith and the Border, Workington and, of course, Carlisle. Indeed, in my part of the country, we have an unusual relationship with Scotland in that we were not part of the Domesday book because we were part of Scotland at the time. Subsequently, we had the "Debatable Lands", the reivers, and the movement of the border to Hadrian's wall and so on. Indeed, that continues to this very day with the invasion of Carlisle every Saturday by people coming over the border to shop and for entertainment. I therefore have a slightly different perspective on this debate to many hon. Members north of the border.
There will no doubt be some concern in my area about the Bill and the impact, in particular, of the tax-raising powers. In reality, many of the issues already exist: there are separate laws on housing, inheritance and planning. In some ways, the planning laws have been beneficial to parts of Scotland, with Gretna being an example. Traditionally, licensing laws were different. I remember when I moved to Chester from Scotland, I got a shock when the pub closed at 10.30 rather than 12, but England has since progressed. Scotland was also ahead of the curve on the smoking ban, to its credit. At times, Scotland can be more progressive and innovative. Indeed, those who live on the border are often more aware of the differences between the two countries and the various laws that affect them.
I welcome the Bill and its proposals. They are very much in line with the recommendations of the Calman report, which has broad support in this Chamber. It is also in line with my own philosophical viewpoint and that of the Conservative party-and of the Liberal Democrats-including a belief in localism, decentralisation and financial accountability. Devolution is now an accepted part of our political culture and is generally accepted by most people. Therefore, the issues that we now have to debate are the workings of devolution, how to make it better, how to achieve the right balance and the powers that we give to the devolved Assembly. Giving powers away is very much in line with the localism agenda, including the need for responsibility and the link between spending and taxation. Indeed, in many respects, that link has been missing in the English local government debate as well as in the Scottish one, but I am delighted that the Government are starting to address that issue for English councils just as they are for Scotland in this Bill.
The aim of the Calman commission was to recommend changes to the present constitutional arrangements in three ways-to serve the people of Scotland better, to improve the financial accountability of the Scottish Parliament and to continue to secure the position of Scotland in the UK. It is in terms of those three key points that we must consider the Bill.
As Calman said, the devolution settlement is a "real success" and "works well in practice". In many respects, that outcome is supported by the Bill, which does not dramatically rewrite the devolution settlement, but fine-tunes and adds to it. As hon. Members have said, the key aspect of the Bill is the changes on tax, but it also includes drink-driving limits, speed limits and other measures. I suspect the drink-driving limits and speed limits will be of more interest to those of my constituents who travel over the border.
One omission from the Bill is welfare and social security. It will be interesting to see how the Government approach that in due course, but I appreciate that a national debate on that subject is going on. The reforms that the Government are proposing nationally must have priority.
Income tax is the obvious area that could have an impact on cross-border relationships. There are people who live in Scotland and work in England and vice versa. However, I believe that there is nothing wrong in having different tax rates between different places-we see it at local government level with domestic rates-and allowing the Scottish Parliament to be able to set its own income tax rate creates accountability, responsibility and transparency.
The tax that I am probably most interested in, and the one that gives Scotland a real opportunity to be innovative, relates to old-fashioned stamp duty land tax and how it could be applied to commercial and residential property. If the Scottish Parliament is innovative, that will give it the opportunity to gain a commercial advantage, which could be beneficial to the local economy. However, the Bill is not just about transferring powers; it is also about providing the tools for Scotland to improve itself. The really exciting part of the Bill is that the Scottish Government and Parliament will receive incentives and control over their own economic destiny.
In my view, the Scottish economy needs to have a smaller public sector and a much larger private sector. Scotland needs to grow its private sector, and by doing that it needs to increase its population, build more houses and create more businesses. It will now have some of the tools to achieve that, via business rates, SDLT and income tax. This is a real opportunity for Scotland. If it can grow its tax base, it can reap the benefits. So I welcome the Bill. It achieves the key objectives of the Calman commission. It gives Scotland a greater opportunity to do things differently and, perhaps, better, and interestingly enough, the 2015 election will give the political parties an opportunity to offer different visions of a future Scotland. That is healthy for Scottish democracy and the Scottish Parliament, and will help to strengthen the Union.
I congratulate my hon. Friend Fiona O'Donnell on her excellent and entertaining contribution. I would also like to congratulate her-on behalf of the whole House, I am sure-on it being her birthday. She tells me that she is 21. That is 21 plus VAT at a rate of 30%-do the math! [Interruption.] She is the same age as me-well, slightly younger.
I am grateful for the opportunity to speak in this debate. There can be no matter of greater importance to Scotland than the question of how we strengthen the devolution that has helped to improve the lives of our constituents over the past 11 years. Nor should we forget that it was a Labour Government who brought devolution to Scotland, through the creation of a Scottish Parliament with a significant and comprehensive range of statutory powers. Now, after more than a decade of devolution, the time is right to take the next steps in developing Scotland's democracy and its relationship with the other nations of the United Kingdom.
That opportunity was provided, of course, only through the establishment by the previous Labour Government of the Calman commission. The proposals in the Bill, which are rooted in Calman's cross-party work, reflect the overwhelming desire of the Scottish people to anchor Scotland's future firmly in the United Kingdom. On that basis, I support the principles in the Bill. There are differences of detail, of course, between Labour's approach and the plans in the Bill. For instance, the aggregates levy, food labelling and charity registration have been omitted from the Bill. Matters of considerable detail will need to be thrashed out, but the principles are the right ones. Greater magnitude of fiscal autonomy and improved accountability and transparency will ensure that Scotland's stability and her place in the United Kingdom remain strong.
There are those who say that the Bill is part of the slippery slope to independence. There are those who said the same thing about creating a Scottish Parliament, but 10 years on, support for independence is at an all-time low. Strengthening devolution does not undermine the United Kingdom; it makes it stronger. The importance of that strength could not have been demonstrated more acutely than by the economic events of the past three years, yet the SNP still preaches separation. Rescuing the Scottish banks could never have transpired under independence, and the turmoil in the Irish economy demonstrates how vulnerable independence would have left the Scottish people.
The question of devolution is settled; how we make it work better for Scotland is the challenge that the vast majority of Scottish people want us to address. It is perverse that the SNP, which stands on a platform of autonomy, has refused to engage with the Calman commission to create and shape new powers for Scotland. There is an incredible irony at the heart of the SNP position. It rejects the Calman commission because it exposes Scotland to falling tax receipts. The SNP talks about full fiscal autonomy as an answer to Calman, but exposure to falling tax receipts would apply to Scotland's budget whatever the degree of financial powers it acquired. Far from improving, the position under independence would be considerably worse.
The hon. Gentleman is wrong. Any country will see its tax revenues fall or rise with the economic cycle-the one that Mr Brown said he had ended. The difficulty with the proposals in the Bill is not that tax revenues may go up or down, but that they embed a deflationary bias in the Scottish budget.
I am obviously aware of the objection to the Bill from the SNP-it is an objection that we often hear-which is that it would mean less money for the Scottish Parliament. Indeed, the First Minister claims that the Scottish budget would have been considerably worse under Calman, compared with the current regime, yet Alex Salmond refuses to publish the numbers setting out what his plans for fiscal autonomy would have meant for the Scottish budget in the last 10 years.
It is not just the First Minister who has said that there is a fiscal drag with the current plans- £7 billion is what we argue-but the Secretary of State, who said that the figure would be £700 million, so we are in pretty good company. If that was the loss to the Scottish budget, would the hon. Gentleman object to these tax proposals?
The reality is that Government expenditure in Scotland is considerably greater than the sums raised in taxes. In fact, in 2008-09, the last year for which figures are available, total public sector revenue in Scotland was £43.5 billion, whereas total public sector expenditure was £56.5 billion. Under the separation that Mr Salmond wants, that would lead to a fiscal deficit of £13 billion. Let us turn to the fallacy peddled by the SNP that only under a system of full fiscal autonomy would Scotland's economy be able to generate growth. There is little evidence to suggest that this is the case. Professor Lars Feld, one of the world's leading authorities on decentralisation, has concluded:
"We do not find any robust significant effect of decentralisation on economic growth".
Professor Anton Muscatelli of Glasgow university has said that
"there is absolutely no statistical relationship between fiscal autonomy and growth, nor can there be."
The Scottish Parliament's competencies are already substantial, but we need to do more to increase accountability. Unlike the funding of most devolved regions by national Governments around the world, Scotland's block grant is unconditional and can be spent in whichever way chosen. Voters in Scotland and Members of the Scottish Parliament are therefore not exposed to the choice between public expenditure and additional taxation. The Bill ensures that those choices are made. More shared taxes; new devolved taxes; greater borrowing; greater transparency; a fair balance of shared risk across the United Kingdom-that is a fair balance of new powers to create the accountability that the Scottish Parliament needs. The Scottish Parliament will be answerable to the Scottish people for the money that it raises and spends. That is what the vast majority of Scottish people want. They do not want separation, but they do want a Scottish Parliament that is responsible for the decisions that it takes, and that is why I am supporting this Bill.
I welcome the opportunity to speak in this debate. Although I represent a seat south of the border, I have a long-standing interest in devolution matters. I not only spent my formative years in Hamilton, but when the original Scotland Bill passed through the House in 1998, I acted as an adviser to the then shadow Front-Bench team, which included my hon. Friend Mrs Laing. I have thus gained a probably unhealthy level of detailed knowledge of the Scotland Act 1998, and I hope to draw on it a little in my contribution.
I trust that the House will not object if I draw on a book on the Barnett formula and fiscal autonomy, which I co-authored in 2003 with the eminent Scottish lawyer, Professor Ross Harper. For the avoidance of doubt, let me say that I am not seeking to advertise the book: it is no longer for sale and I received no royalties for it at the time. Let me just say that it was not troubling "Harry Potter" for the No. 1 spot on the best-seller list. Nevertheless, I hope that the research we did for the book will help our deliberations today.
I want to put on record the fact that I was sceptical about devolution at the time of the referendum in 1997. I campaigned and voted against the devolution measures. I am happy to say that many of the doubts I had at that time have not been borne out by events. I believe that the Scottish Parliament reflects the settled will of the Scottish people and that, on the whole, it has been a success. Our job today is to improve and strengthen it, thereby strengthening the Union. The Scottish Parliament is not perfect, however, as there are some deficiencies, but I believe that the Bill goes a long way towards improving them.
I want to focus, as much of the debate has, on the transfer of fiscal powers. It is right that the Scottish Parliament is more accountable for the money it spends-a flip of the old adage, "No taxation without representation". It is right for the Scottish Parliament to be held accountable to its electors for its own spending decisions. Going back to the 1997 referendum, I was intrigued by the option that did not get much coverage at the time, when the debate centred on the "yes/yes" or the "no/no" campaign. Some people believed in the "no/yes" option-they did not want a Scottish Parliament, but thought that if there was to be one, it should have proper fiscal powers and be held accountable.
I hope that the Bill will improve participation in Scottish Parliament elections. Although the turnout is higher than for local government, it is lower than for elections to this place, in which turnout is in no way at a particularly high level. Part of the reason for that lower turnout is that Members of the Scottish Parliament can make spending decisions without being directly accountable to their taxpayers and electors for them. I strongly support the Bill's principles in addressing that point.
Speaking as an English Member, I want to put on record the fact that I often hear representations from constituents about why Scotland has free tuition, free prescriptions and so forth, which people do not have in England. I explain that the financial relationship between Scotland and England is much more complicated than the Barnett formula, which people often use as a shorthand to explain the whole fiscal relationship between Scotland and the United Kingdom. The point is nevertheless an important one, because if that concern is left unchecked, the Union will suffer. If people in England think that Scotland is getting an unfair advantage from the financial arrangements, the Union will suffer. As a Unionist, I make no apology for saying that; as a Unionist, I say that the Union suffering is the last thing I want to see. If Scotland wants to increase spending in a particular area, or introduce free care, tuition fees or whatever, the Scottish Parliament will now have to find more of that money, and that is an important point for strengthening the Union.
I am listening carefully to the hon. Gentleman. He talks about the financial responsibility of the Scottish Parliament, but why does he feel that that should be confined to income tax? Does he not agree with Lord Forsyth, a former Tory Secretary of State for Scotland, who said:
"The SNP quite rightly argues that you can't just limit it to income tax and stamp duty if you want to manage the economy. You can't play golf with just one club"?
The point is that if the Scottish Parliament is to have responsibility, it must have responsibility not just for varying income tax, but for managing the economy.
My hon. Friend makes a powerful point about the threat to the Union posed by a perception of unfairness in relative funding, and giving Scotland control over its tax revenue raising will partially address that. However, it is widely accepted that the baseline, under the Barnett allocation, is 15% to 20% higher than it would be in equivalent places in England, and that is an issue for the Union.
I am grateful to my hon. Friend. I am not sure whether his birthday is coming up, but I will happily send him a copy of my book, which goes into the matter in some detail. The baseline funding for Scotland is an important point, but whether to have a needs-based assessment is not part of the Bill, although the Bill opens up the possibility that that will be reviewed in future.
No one can deny that these are legitimate issues for debate, but does my hon. Friend not acknowledge that when we look at the matter detail by detail-my right hon. Friend Mr Laws, when he was adviser to my party, did some work on this-we see that a high proportion of the spending differential is justified by remoteness, the different balances, benefits and so forth? A part of it is not accounted for, but the gap is nothing like as big as my hon. Friend David Mowat suggests.
My right hon. Friend makes an important point. The whole subject is difficult and complex, given the shorthand of Barnett and the vast difference between public spending in Scotland and England. In some areas, however, for the reasons that he has set out, there is a big difference, and those reasons will also be found in England. For instance, in remote parts of Cumbria or Devon, spending per head will be higher than in central London or Manchester.
If the hon. Gentleman looks at the study by Oxford Economics, he will find that London secures more public spending than any region or nation in the UK. If he and David Mowat are concerned about grant formula and Scotland's spending relative to England's, I have good news for them: they can vote to change that in the next few weeks and allow Scotland to have full fiscal responsibility. That would allow all the Barnett issues to disappear. If we were allowed to have the economic levers to grow our economy, we would be self-reliant on taxation.
As I said to Mr Weir, if the hon. Gentleman allows me to make a little progress, I will come to the issue of full fiscal autonomy in a moment.
Clearly, the existing Scotland Act contains some fiscal powers for the Scottish Parliament: principally, the ability to vary the basic rate of income tax by 3p higher or lower than the UK rate. That has never been used, partly because the SNP Administration in Edinburgh has allowed the levy required each year for the mechanism to stay in place not to be paid. There is a more fundamental point, however: the administrative and set-up costs for making that small change in the income tax rate are disproportionate to the revenue that would be raised.
When the House was considering the Bill that became the Scotland Act 1998, it was calculated that it would raise, at the most, an additional £450 million. Given a total Scottish Office budget of over £22 billion, it was a tiny measure and would involve considerable start-up and administrative costs and not generate enough revenue. I can understand why it has not been introduced so far.
The hon. Gentleman talks of the amount that might be raised if the tax rate were put up. There is, however, a built-in perverse disincentive to lower the tax rate. If the income tax rate, for example, were lowered and that stimulated economic growth, and if the benefit were paid from higher corporation tax receipts, the Scottish Parliament would take the hit of reduced income tax, while the United Kingdom Government would gain the advantage of enhanced corporation tax.
I am explaining why I do not think the provisions in the current Scotland Act are sufficient, and why I welcome the measures to increase substantially the power of the Scottish Parliament to raise a significant chunk of its own revenue. There are still concerns about how they will be implemented, and I raised that point during Scottish questions yesterday. I have been reassured that proper consultation is taking place with members of the business community in Scotland, who will have to administer many of the new arrangements, but I urge my colleagues on the Front Bench to keep a close watch on the increased regulatory burden on businesses at a time when they can ill afford much additional bureaucracy.
I think the HMRC bodies should consider the possibility of certain unintended consequences. There is, for instance, the question of how payments into personal pension plans which attract the adding back on of basic or higher-rate tax contributions should be treated. If in the past contributions have been made at the United Kingdom rate and added back on, a different Scottish rate will create potential anomalies when it comes to how that income is treated. I suspect that a fairly small amount is involved overall, but it is an important detail that ought to be clarified before the Bill is implemented.
I welcome the move to devolve some taxes, and I hope that more can be devolved in time. I hope that, for instance, the issues surrounding the aggregates levy and air passenger duty issues will be resolved. I do not believe that this is the end of the story; I trust that those two taxes will eventually be devolved, and that the Scottish Parliament will be given greater fiscal autonomy.
I referred earlier to the book that I co-authored. Part of our research involved international comparisons.
I hesitate to interrupt my hon. Friend, but he has just demonstrated that he is one of the few people who understand, and have carried out an in-depth study of, the relationship between United Kingdom and Scottish finance. He is being modest about his book, but I need not be modest on his behalf. It is an excellent publication, which I have consulted on many occasions. May I ask him to show the House his book and tell us its title, so that every Member in the Chamber- [Interruption.] I do not think he will make any money from it. However, some Members might be better educated in future if they knew more about it. I believe that it is called "It's Our Money! Who Spends It?"
Order. That was a very long intervention. I think that the hon. Lady has given the hon. Gentleman his advertisement; perhaps we can now return to the debate.
Thank you, Madam Deputy Speaker. I sense a rising demand for my book. Next Christmas is a little way off, but I have a couple of boxes of back copies which I will happily distribute.
As I was saying, part of our research involved examining the way in which other countries-Australia, Germany and Canada-operated financial relationships between state Governments and federal Governments, or provincial Governments, or whatever the term was in those countries. What struck us was that each of those countries has a system that comes close to what the Scotland Bill is proposing to introduce. Certain taxes are levied at the federal level. The example in each country varies, but some taxes are levied at the provincial level-the state level-and sometimes the state level has the power to introduce specific taxes of its own. That is balanced by a form of fiscal transfers between the federal level and the state level. There are perpetual arguments in all those countries about what the right level of spending, taxes, transfers and so on is-we will never get away from those-but on the whole the arrangements are stable. We can draw some comfort from the fact that the lessons from abroad point to the sort of system that the Bill is trying to introduce.
Conversely, there are few examples of a federal or devolved system of government where the lower level has full fiscal autonomy. Our research encountered only one example that came quite close to such an arrangement, which was in the Basque part of Spain. Since we did our work Catalonia has also adopted such an arrangement, but it is still fraught with difficulties. I do not believe that there is sufficient evidence from abroad to warrant the type of policy that the Scottish nationalists wish to introduce.
The hon. Gentleman says that the approach of the Basque country and others may be fraught with difficulties, but that country's gross domestic product growth is now 30% higher than that of Spain as a whole and its credit rating is stronger than that of Spain as a whole. Although that sort of model may need to overcome obstacles, it clearly has had some success.
The hon. Gentleman has a more detailed knowledge of the current state of the Basque economy than I do, but our research showed that there were specific problems there. I shall discuss them in a moment, as they are directly relevant to the example in Scotland.
Does my hon. Friend acknowledge that joining the inland revenue contribution club is not a popular sport in Spain? The Spanish have found that devolving this responsibility results in the tax collection rate increasing substantially. No comparison can be made with the situation in this country, because one cannot escape the Inland Revenue.
Perhaps I should add that the Basque country and Catalonia have always had higher gross national product rates than the rest of Spain, so I do not think that the point made by Stewart Hosie has much weight.
I am grateful for that intervention. I think it is unhelpful to make an exact analogy with a particular model. Spain has a very curious multi-speed system of devolution between its different constituent parts.
I promised to discuss why I do not believe, certainly at this point, that fiscal autonomy is feasible or desirable for the Scottish Parliament. There are huge unknowns in the fiscal relationship between Scotland and England, for the simple reason that we have never assigned tax revenues or allocated public spending on a straight territorial basis-that just has not happened. As part of our research for the book, I spent many hours enjoying and analysing the various forecasts and documents that the Scottish National party had published over the years giving its view on what Scotland's net contribution to or net borrowing from the United Kingdom had been.
Part of the SNP's criticism was that the official Government figures, as published in the annual Government Expenditure and Revenue Scotland survey, were based on assumptions about what Scotland's share of corporation tax or income tax should be. However, the SNP's own figures are based on assumptions and projections. They disagree with the assumptions made, but they could not analyse particularly and exactly what the Scottish revenues were.
Before the hon. Gentleman intervenes, I wish to illustrate that point by discussing two SNP publications that examined the period between 1979 and 1997. In one document, published in October 1996, the SNP estimated that Scotland had contributed £91 billion to the UK over that period. Three months later, however, it published a separate report covering the same period which calculated that the figure had been £27 billion. Well, what is £60 billion between friends? The point is that anyone wanting to analyse this has to do it on the basis of assumptions, not hard facts.
I certainly agree that the Government Expenditure and Revenue Scotland-GERS-survey is based on certain assumptions and calculations. Most of the documents, certainly over the past decade, have effectively taken the GERS assumptions and, if they have differed from them, have always explained why. Those differences tended to be marginal. The key question here is not SNP figures versus those of another party; it is the work done by organisations such as Oxford Economics or, about a year ago, Reform Scotland, which calculated a broadly balanced budget of about £50 billion out and £50 billion in. Those seem to be generally accepted pre-recession figures.
But surely the point is that, if we want to set up new fiscal arrangements between the constituent parts of the United Kingdom, we should not do it on the basis of assumptions. We should do it on the basis of hard facts, and one of the conclusions of the book is that we need to do more hard research and assign revenues and spending on a territorial basis. Such proposals are not in the Bill, but I hope that the Government will take those matters forward.
I shall give the House an example to illustrate why there would be a huge debate about the revenue. Let us take Standard Life, which is headquartered in Edinburgh. If corporation tax were devolved, the company would be domiciled as Scottish, yet it trades throughout the United Kingdom and has many policyholders in England who contribute to its profits. How would we determine which profits were Scottish and which were English? These are huge issues and they would have to be resolved before a full system of fiscal autonomy could be introduced.
Surely that is a problem that affects all companies that operate across national borders, of which, in this globalised world, there are many thousands. Why would that present a particular difficulty for Scotland?
I believe that it would be a difficulty, and I have seen no evidence from the Scottish National party that properly costs this or assesses what the split would be.
Are not the economies of England, Scotland and the rest of the UK so closely integrated and dependent on each other that the consequences would not be the same as might be the case for, say, Germany and France? On the hon. Gentleman's point about Standard Life, I am not normally someone who tries to air scare tactics about what might happen to the financial services sector under independence, but would there not be a danger that some companies, faced with the choices and difficulties that he has outlined, might choose to move their headquarters out of Scotland precisely because of the consequences of a differential in corporation tax rates?
That is exactly the point. The relationship between Scotland and England is so interwoven that to start to unpick it now would be hugely complicated and difficult. On the point about pensions, I have mentioned the potential difficulties under the current proposals that would need to be clarified. If there were full fiscal autonomy, those problems would be magnified many times over. People might have made national insurance contributions all through their lives. How would all that be untangled to sort out the different rights and contributions? The process would be enormously complicated. I am not saying that it would be impossible, but I do not believe that it is practical at this point in time. I hope that my right hon. Friends on the Front Bench will take up my point that we should move towards assigning revenues and spending on a straight territorial basis, so that in time we might be able to move to a system involving much greater devolution of fiscal power down to the Scottish Parliament.
The hon. Gentleman's speech is throwing up practical issues that would have to be resolved in any circumstances. On his first concern, would the broad principle not be accepted that the tax liability would follow the economic activity? On his second concern about corporation tax rising, I would prefer to see corporation tax falling. Is it not odd that we have a party that is very keen on tax competition until it comes to Scotland's competing? Is that not slightly contradictory?
It is not a contradictory at all and I am not saying that I rule out that possibility. My book does not rule it out. All I am saying is that at this point in time it would be an enormous leap in the dark that would throw up so many unintended consequences that it would be a foolhardy move. I welcome the sensible incremental step that the Bill is taking.
I have probably been indulged by the House rather longer than I intended. I want to move briefly to one other point before I resume my seat. It concerns another part of the Bill about which I have a specific concern, and that is the proposal to devolve down to the Scottish Parliament the power to set the drink-driving limit. I am a member of the Select Committee on Transport and we have just concluded an investigation into the drink-driving limit. Part of the evidence we received was a strong representation from the police that we should not have a different drink-driving limit in different parts of the United Kingdom. I am not against the power's being devolved, but want to put it on the record that I would not wish the consequence of that devolution of power to be a marked difference in the Scottish and English drink-driving limits. That might cause some practical problems in border constituencies such as that represented by my hon. Friend John Stevenson, who is no longer in his place.
In conclusion, I welcome the Bill. It is a huge step forward, even for people like me who were devolution sceptics to begin with. It will do an enormous amount to strengthen the Scottish Parliament and the Union. I look forward to supporting it in the Lobby tonight.
It is a great pleasure to follow Iain Stewart. I listened carefully to his analysis and, 13 years on, I now realise why Mrs Laing was so well briefed in some of the intricacies of the Barnett formula. The hon. Gentleman has posed some fascinating and interesting questions this afternoon.
I made my maiden speech in 1997 on the Referendums (Scotland and Wales) Bill, which paved the way for the Scottish Parliament. It is fair to say that both the hon. Gentleman and the hon. Lady recognised that, collectively, we have travelled a long way in this House-at least, most of us have. I shall come on to those who are still stuck at the station a wee bit later.
We have travelled a long way and in many ways the Members who are participating in today's debate reflect that. We have a former Member of the Scottish Parliament, who, as the Under-Secretary, will be helping to drive this Bill through along with most of us. Of course, we have two current Members of the Scottish Parliament, my hon. Friends the Members for Kilmarnock and Loudoun (Cathy Jamieson) and for Glasgow East (Margaret Curran), both of whom have extensive experience not only of the workings of the Scottish Parliament but of the workings of government in Scotland, as they are both former Ministers.
Collectively, in the Chamber today we have a unique opportunity to discuss the importance of the Scotland Bill. I recognise its importance and identify with the statement made by Donald Dewar-devolution was
"a process and not an event".
We are all part of that process. In my opinion, there is no doubt that the relationship between the UK and Scotland and their governmental institutions has matured to a point where there is widespread recognition that the devolved approach has strengthened the United Kingdom and its four nations, working together. There are still some cynics among us-the ultra-Unionists, who perhaps do not see this as a way forward for the United Kingdom, and their uneasy bedfellows, the nationalists, who have a fundamental view. I fully accept their right to hold that view. I do not have any problem with their ultimate aim of independence; I just thank God every day for the sanity of the Scottish people, who have never accepted that analysis, but that analysis is obviously still there. The majority of people in Scotland want good government that brings decisions closer to them, so I welcome the principle of the Bill. I particularly welcome the strengthening of the Scottish Parliament's fiscal powers.
I do not wish to interpret the SNP's tactics, but it is certainly bizarre that their amendment says that the "Bill as a whole" is "unacceptable", given that the mover of the amendment, Pete Wishart, tried to appear consensual on some of the areas on which there is agreement. I do not know which part of the brain was not working when the amendment was tabled, but it definitely calls on the House to vote against something that SNP Members agree with in some way. That is a question for them to answer, but I am delighted that my hon. Friend Anas Sarwar has raised it.
The Bill, like the Scotland Act 1998, was developed as a result of consensus, as Malcolm Bruce has highlighted. The engagement of civic society, communities and individuals, as well as of political parties, is the hallmark of the legislation-as it was of its 1998 predecessor. In terms of political party consensus, there have been positive developments over the years. As the hon. Member for Epping Forest has clearly shown, the Conservative party in Scotland and across the UK boycotted the Scottish Constitutional Convention in the early 1990s, campaigned for a no vote in the 1997 referendum and voted against the first Bill when it came through Parliament. However, it is now working in partnership with other political parties that see the strength of the Union as key to the future of our country. I always welcome the sinners that repenteth.
Some things never change, though. The SNP stood apart from the consensus-building up to 1998 and boycotted the Calman commission for reasons that I cannot understand and have not heard properly explained. I think the SNP amendment is somewhat churlish and flies in the face of all the views that have been expressed by the Scottish people through elections and consensus. If the SNP wants an independent Scotland, its first aim must be to prove its case to the Scottish people.
I gave up many years ago trying to get into the political mind of the SNP and I do not know if I want to revisit some of those early nightmares I had in trying to understand it.
I want to concentrate on the additional fiscal powers. Some of us in the House are old enough to remember the 1978 proposals of the then Labour Government, one weakness of which was that they contained no taxation powers-no variation to what was then called the Scottish Assembly was to be allowed. To an extent, that lesson was learned when the 1998 legislation was introduced. The plus or minus 3% provision was intended to deal with the flaw in the earlier legislation, which of course failed the somewhat artificial 40% referendum test. The discussion around Calman recognised that the time was right to build on the 1998 Act and devolve more responsibility for revenue raising to the Scottish Parliament.
In addition, the Bill gives us a package of other changes that will enhance the Scottish Parliament's fiscal responsibility, including new borrowing powers, a stamp duty land tax, a landfill tax and, of course, the power to create new taxes, subject to the approval of both the Scottish and UK Parliaments, which I think is a responsible way forward. The assessment of those new taxes, however, must be open and transparent so that it does not feed into the arguments of the conspiracy theorists who will interpret anything less as an attempt to undermine Scotland. However, the Scottish Parliament should recognise, as I am sure it will, that any proposed new tax must be assessed according to its potential impact on economic incentives in Scotland.
I want to raise one area of concern on the new Scottish rate proposals. The implementation and impact of that power must be thoroughly tested and developed, and not only with Her Majesty's Revenue and Customs, important though that is. I know that the qualification for liability of the Scottish rate will be the same as or similar to those already set out in the Scotland Act 1998. Although we can easily see the implications for the basic and higher rate taxes, people in Scotland must also have clear information on the impact on their tax liability of pension contributions, to which the hon. Member for Milton Keynes South referred, and any unearned income, such as dividend receipts and bank interest. That sounds as though it concerns only a small group of people, but many people in Scotland earn interest through bank accounts and from dividends. I ask the Minister, both today and throughout the Bill's scrutiny, to consider how the current regime of tax credits on dividends, for example, will be managed if there are different tax rates in different parts of the UK.
What discussions have there been about the implications of variable tax? What will happen if someone uses an address for their unearned income, such as a bank based in London, Cardiff, Halifax or wherever, that is different from that used for their individual taxation north of the border? I know that those problems are not insurmountable. There might be issues of detail, but frankly, we want the system to be robust and watertight from the beginning, otherwise the Bill will be nothing other than a job creation scheme for accountants-having been married to an accountant for 39 years, I have no problem with that in principle. The Secretary of State, given his previous career as an accountant, will have some knowledge of how accountants can take a piece of legislation, dissect it and then work their way around it. I hope that those issues can be solved properly so that we can ensure a robust system.
The Bill certainly has some common-sense adjustments to the devolution settlement, such as the licensing of controlled substances and appointments to the BBC Trust, and there are other changes that are welcome in principle. However, greater discussion and clarification will be needed as the Bill goes through the House. For example, the power to set drink-driving limits, which has been mentioned by several hon. Members, should be considered. Different limits north and south of the border could cause confusion. Again, that is an issue not of principle, but of clarity. If we are to devolve power on the licensing system for air weapons, we will undoubtedly need a clearer definition of what constitutes an air weapon than that currently specified in the Firearms Act 1968. I assume that the Secretary of State will be having discussions with ministerial colleagues in the Home Office to ensure that the power that is being handed over will take account of how technology has changed in the intervening years in the manufacture of air weapons.
Let me deal briefly with some of the attacks that have been made on the Bill, which are crystallised in the SNP amendment. It has been criticised for not giving meaningful economic powers, and yet the Scottish Parliament will now be able to raise significantly more income as a result. In addition, there will be additional borrowing powers of up to £3 billion. When there is a cyclical fall in tax receipts, which we might see during a recession, there are powers to manage that problem.
I know that Stewart Hosie is, or appears to be, an expert on all things fiscal, but, although he might be able to identify some of the problems, his analysis and conclusions are sometimes questionable. I advise him that not all of us agree with his suggested outcomes. Of course, we know that all that is code for fiscal autonomy, which in turn is camouflage for independence. I have no problem engaging with that argument, but we have to be realistic and admit that that is what the debate is all about: it is a debate for those who want to see the United Kingdom broken up and those of us who want to see it strengthened through the greater devolution of powers.
I am delighted to support the Bill, and I resent the almost trivialisation of some of its elements. The Scotland Act 1998 was one of the most complicated pieces of legislation ever to go through this House. It had to unpick legislation dating back over 300 years, since the union of Parliaments, so it was not straightforward. Stage hypnotists might not have been at the top of the political agenda, but legislation on stage hypnotists had to be dealt with as part of the Act. Indeed, given the number of hours we spent on it, I wonder how we did not realise that we had given Scotland power over Antarctica. I do not quite know how that slipped through in all those hours, but we should not trivialise the detailed work that had to be done to present that Act and to deliver a Scottish Parliament, or suggest that it somehow undermines the Scottish people's right to autonomy through devolution.
Issues of detail and clarification will undoubtedly need to be debated in the Chamber over the next few weeks, but the Bill is a natural progression along the road that we set down in 1998, and if Donald is up there on his cloud, he will definitely see that it is part of the process, and that 1998 was not just an event.
Before I get into my remarks, may I apologise to the House for three things? First, it is not my birthday; secondly, I have not written a book; and thirdly, I think I am the first speaker in the debate not to have a Scottish accent. I do have a Scottish name, however, so I shall do my best with that.
I really have only one point to make about the Bill to those on the Government Front Bench. Overall, however, it is a good Bill that takes what Calman recommended and implements it sensibly. Indeed, a whole set of well-made recommendations will be introduced. The principal part of the Bill, as others have said, relates to fiscal autonomy, the change in the level of the block grant and the compensatory change to income tax. The theory behind it is absolutely spot on, because it is right that Scotland is given an incentive to nurture its own tax base and to become accountable for how it spends that money. The important issue, which is not directly in the Bill but an unintended consequence of it, however, is the baseline for that allocation, the current Barnett settlement. The Barnett formula is not a subject for today's debate, but others have spoken about it, and I shall put in my tuppence-worth.
The formula has been going for 35 years, and the most recent review of it was last year by the Lords Barnett Formula Committee, which produced an excellent report that received a poor response from the then Government. People accept that the formula no longer represents a needs basis for the allocation of moneys. The Calman report accepted that point, too, but the reason why we persevere with the formula is inertia. In the response to the Lords Committee, it was accepted that the formula was straightforward, but there are two reasons why it provides the wrong result. First, there has been no attempt to make any changes based on relative population movement over the past 35 years between the three countries in the Union which are most affected, Wales, England and Scotland. The result, as Holtham stated, is that the settlement for Scotland is about £4 billion more than it would be if it was worked out on a needs basis.
How does that relate to the Bill? The baseline will use that higher amount to set income tax, and to flex it up and down. In consequence, it will be harder to change the Barnett formula in future, because it will be linked directly to the level of income tax in Scotland in a way that it is not at the moment. From a political point of view, it would be hard for people to accept that the UK Government, while making a fairer allocation, were forcing up income tax in Scotland.
A second unintended consequence of the current baseline is that Scotland will for ever have a larger public sector in its economy than in England. I say to colleagues on the Government Benches, of whom there are not many, that it is wrong for us to go on about Scotland having to rebalance its economy towards the private sector and away from the public sector if we approve a formula that makes it arithmetically impossible for that to happen.
Does my hon. Friend accept the point made by my hon. Friend Iain Stewart that the Barnett formula works in the way it does not just because Scotland is Scotland, but because Scotland has certain features, such as areas of deprivation in its inner cities and very rural areas where transport costs are enormous, that mean that it deserves greater spending in certain areas? Such areas are also found in certain parts of England and Wales.
I thank my hon. Friend for that intervention. She made two points, the first of which was about sparsity. Scotland is more spread out than the rest of the UK. Page 18 of the Holtham report takes that sparsity into account. The Scottish national health service has to take sparsity into account in the allocation of money. Parts of Scotland are very spread out, such as the highlands and islands, Orkney and the Hebrides. The Scottish NHS adjustment in respect of that, which was validated by the Holtham formula, was 1.5%. We are dealing with a figure of 20%.
The second point that my hon. Friend made was about deprivation. There are areas of deprivation all over the country. That is why it is so important that the formula is based on need. There can be no argument about that.
When discussing the rights and wrongs of the Barnett formula, would it not be sensible to compare the averages for Scotland and Wales to different regions of England, because the north of England receives almost the same amount per head as Scotland?
The hon. Gentleman said that London secures the most identified public spending-that is before we get into unidentified public spending. I am grateful to him because he has been very consistent in his view, which is a valid view held by Conservative Back Benchers, that Scotland's budget should just be cut. Those on the Government Front Bench, with Labour support, want to cut Scotland's budget through the financial measures in the Bill. The hon. Gentleman and I can surely agree that the way to resolve this is to give Scotland full financial autonomy on these issues-he would benefit and I would benefit. Surely that is the right way forward.
What I think we would agree about-I think this has been the consensus-is that we should have a needs-based formula. What possible objection could anybody have to a formula based on need? Members have mentioned adjustment for deprivation, and fine, let us go with that, but the difficulty that we have got into is that we have never adjusted the Barnett formula for population change.
I must correct my hon. Friend. The Barnett formula has been adjusted in the past to take account of population changes. He is quite correct to suggest that it was not adjusted for the first 15 or 16 years, which led to a more generous settlement year on year than a strict population count would have allowed, but I believe that it was Michael Portillo, when he was Chief Secretary to the Treasury, who introduced a mechanism by which the percentage by which Barnett changes each year would be directly related to Scotland's share of the UK population.
My hon. Friend is right to say that the Barnett consequentials each year take the correct, current relative population into account. However, the formula does not do that to the body of spending that is adjusted by those consequentials. He will find that very clearly in the reports of the House of Lords Select Committee and the Holtham commission.
One of my bugbears in this debate is that when we talk about the Barnett formula, we forget that Barnett does not change the baseline lock, it aggregates the annual changes in UK Departments' spending and then adds on a population share percentage and a relevance factor percentage. My hon. Friend's point is about changing the baseline. I believe that the Government have opened up the possibility of that in future, but we must be careful to point out that the Barnett formula deals only with year-on-year changes.
I thank my hon. Friend, but I have two points in response. First, the Government have said that they will not review the formula in the lifetime of this Parliament. Secondly, the outcome allocation that is consequent on what we call the Barnett formula takes into account two things-the spending brought forward and the Barnett consequentials. The first of those is not adjusted for population, and the second is.
Since I have nearly got to the end of my remarks, I will not take any more interventions on this subject, but-
I am very grateful. Is the hon. Gentleman aware that the proposals to which he refers, which he seems to support, could actually lead to a £4.5 billion cut in the amount of money spent on Scotland? Is that what he proposes, and does he want to see it happen?
I very much respect what my hon. Friend says. He took part in a Westminster Hall debate on the issue, and I am sure the Chancellor and other colleagues are listening to him. We need to be clear, though, about whether he is arguing for a needs-based assessment across the whole UK. Anas Sarwar drew attention to the fact that there are significant differentials within England. The difference between the highest and lowest per capita public spending in England is £2,537, which is much greater than the difference between the Scottish and English average. We need to be clear about whether my hon. Friend and those who make the same argument want a change in spending within England, or just between the constituent parts of the UK.
The difference that we are really talking about today is the one between the constituent parts of the UK, but I have no difficulty with also applying that to the constituent parts of England. As I said, a needs-based formula is fair.
If my constituency of Warrington South, which has areas of great deprivation and some better-off areas, were in Scotland, the average constituent would receive £900 more. That is not fair-I get a considerable postbag about it. Today's debate is not on the Barnett formula, but unless we address the matter at some point, it will become a tension in the Union from the other direction. We need to be cognisant of that, and we need to be careful.
The hon. Gentleman mentions basing the determination on needs. In last Wednesday's Adjournment debate, to which the Under-Secretary referred, there was some discussion about the system in Australia. It is based on needs, and there is a commission that makes a judgment. There is frequent argument between the federal states about the definition of needs, and some commentators are now saying that they want to move back to a per capita formula, just like the Barnett formula. Does the hon. Gentleman agree that stability might be a better prize?
I do not agree that stability is a better prize if it is based on something that is wrong. I agree that it is difficult to compute need, but that is no reason not to try. We have let the matter drift. One of the determinants is relative population movement-I repeat that, notwithstanding the comments of my hon. Friend Iain Stewart; I guess we can discuss that later in the bar.
I ask the Under-Secretary to table a simple amendment to the Bill to provide for revising the block grant allocation to take account of relative need, in the way that the House of Lords Committee on the Barnett formula and the Holtham commission recommended last year and in previous years.
It is a pleasure to follow David Mowat. I also enjoyed the contribution of Iain Stewart. I have not read his book and, having listened to his speech, I do not think that I will buy it. [Hon. Members: "Oh!"] Let us face it, anyone who campaigned on a no/yes vote in the referendum for a Scottish Parliament meant, "I don't want a Scottish Parliament, but give us the money anyway." I have some problems with the economics of that position and wonder what the hon. Gentleman was thinking of at the time.
I am a unionist-with a small "u". I am also a member of the Labour party. In the past 10 years, the Labour party has been the Unionist party in the House. We have supported the United Kingdom more than other party. Around 2005 to 2010, the then Opposition, who now lead the coalition, had an anti-Scottish slant. I found it sad that we were treated in such a manner, but I have noticed that, since they came to power, we do not seem to have the same anti-Scottishness from them. I am pleased about that, if nothing else.
Many hon. Members know that I followed Donald Dewar into the House. I had the pleasure of being his election agent in the 1997 and 1999 elections and of representing him in his constituency while he was away campaigning in 1998. Those of us who fought hard for a Scottish Parliament and an excellent vote, particularly in Donald Dewar's constituency, had the reward of getting the Parliament. That is not to say that I agree with everything that has happened. I do not agree with hon. Members who said that this is the first time that we have revisited the Scotland Act 1998, because we have done that a couple of times. Yet Donald Dewar said to me that the Act was not to be played about with. Devolution might be a process and a project that will develop, but the Act should not have been tweaked as often as it has. I hope that, if we tweak it this time, we will leave it to settle in properly. Ten years is not a long time for a political institution.
We still have to grow up when it comes to Scottish politics, as can be seen by some of the bunfights between the party that will remain nameless-I know that its Members count the number of the times that it is named-and Labour. It should not be a bunfight; we should think of the people of Scotland and try to do what is best for the nation.
The Bill goes a way along that road. Everything in it is not necessarily right, and some things that are not in it should be. Let me concentrate on those for a moment. The voting system for the Scottish Parliament is wrong. I particularly dislike the top-up of Members, and the votes of the people of Glasgow, part of which I have the honour of representing, are not proportionately counted.
There was a great deal of talk in debates on other Bills-they were not consulted on, just like this Bill was not consulted on-about how one person's vote in one constituency is worth more than someone else's vote in another. However, the second votes of 45,000 people in Glasgow area do not count for the top-up list. Not one Member is elected by those 45,000 votes, which I believe is inherently wrong. It is not right to conduct a parliamentary election on first past the post and then, just because a party is so successful in gaining seats, for 45,000 votes to be discounted. I expect that 45,000 to be a lot more come the next election.
The hon. Gentleman is the epitome of reason, and his speech differs greatly from some of the incoherent rants from his colleagues-we are likely to hear more such rants from the next few speakers. Is he really suggesting that we get rid of proportional representation for the Scottish Parliament? Surely we cannot go back to the old days of Glasgow council, when Labour members gained majorities on vast minorities of support.
Order. Before John Robertson resumes his speech, I should say that he is now going through things that are not in the Bill. If he goes on at length on those matters, he is clearly going to make a lengthy speech before he even gets on to measures that are in the Bill. Will he now direct his comments towards what is in the Bill?
Thank you for your guidance, Mr Deputy Speaker; I am hoping to speak to amendments in Committee that might deal with those matters, and to develop that argument and discussion in greater detail. To answer Pete Wishart, I have never been spoken to so nicely. He called me reasonable. I have always thought I am a reasonable, but sometimes people say that I rant.
It is important for people to have representation. I do not believe that voting for a loser to represent me is right. I want to vote for a winner, and I believe the person who wins the vote should look after me. That is how I was elected. I like to think that I have done a good job. Admittedly, when someone gets over 50% of the vote, they would say that, but they might not if things were a bit closer. I still believe that people would like to vote for a winner and not a loser to be their elected representative; sometimes even somebody who comes in third place will be elected. I hope to put set out that position in Committee.
Consensus is important. The SNP has tabled a reasoned amendment, but at the end of the day, SNP Members want the same thing that I want: the best for the people whom they represent. However, you have to listen to the other side. Malcolm Bruce made a very good point when he said that the fact of the matter is that the Scottish people do not agree with the SNP. If 70% or 80% of the Scottish people do not agree with you, you might be wrong. You should actually listen to that 80% and find out why they disagree with you. You might want to persuade them in the years to come, but we are not at that stage. To go back to my initial point, we are developing and broadening out what the Scottish Parliament does and trying to make it better. That will not be achieved in one go.
The hon. Gentleman is being unreasonably reasonable. The amendment is not only reasoned, but reasonable, and it specifically fails to seek to decline to give the Bill a Second Reading. If he reads the amendment carefully, he will quickly appreciate that we seek to improve those areas in the Bill that we believe are weak, and that we are criticising the exclusion of recommendations by the Calman commission, which was the genesis of the Bill.
Order. I have not put forward any amendment to the Bill. The hon. Gentleman has used the word "you" several times and I would be grateful if he could speak through the Chair.
Thank you, Mr Deputy Speaker. The "you" is, of course, a Scottish phrase that you have misunderstood- [ Laughter. ]
Stewart Hosie has put forward an argument that is wrong, because it would wreck what we are trying to do today. It would be much better to table amendments to improve the Bill. I hope that the amendment will not be accepted so that we can carry on-and that is probably what will happen. The amendment tabled by the hon. Member for Perth and North Perthshire is ill conceived. It is a mistake and he should not have tabled it.
My hon. Friend is making a powerful argument about the amendment tabled by the Scottish nationalists. The amendment concludes that the Bill is considered
"as a whole to be unacceptable."
The amendment therefore suggests that the Scottish nationalists do not want the Bill to go forward.
My hon. Friend makes my point. That is why the amendment was a mistake, and I think that the Scottish nationalists did not really mean to go down that road. If they put that in deliberately, I am wrong and will admit as much. We have to fight them on that point.
Another aspect of the Bill that needs amendment is the provisions on energy. It is a reserved matter, but if we wished to build a nuclear power station in Scotland, the present Administration say that they would use the planning rules to stop it. By the middle of this decade, we might be short of electricity, so we have to make decisions now. In fact, we should have decided years ago-my party must take much of the responsibility for failing to do so-what we should do in relation to energy, and we cannot have a devolved Administration with the power to stop developments that are happening everywhere else. Each power station that is built is the result of billions of pounds of investment in jobs and future jobs after the station has been built. Some 9,000 jobs are created when a new nuclear power station is built. We should consider having legislation to make such planning issues a reserved matter, with the Secretary of State having the power to put forward reasons why such issues should go ahead.
I wonder whether the hon. Gentleman's constituents would like a nuclear power station in their backyard.
The hon. Lady has obviously not consulted people in areas where nuclear power stations have been built. They want new stations built, because of the investment that that brings for local infrastructure. If the lights were about to go out, people in Anniesland probably would want a new power station. They would like any power station allowing us to keep the lights on. We are digressing on to a subject that has nothing to do with the Bill, and I know that you would stop me talking about it if I continued, Mr Deputy Speaker. However, I hope that the hon. Lady gets my point.
Overall, I welcome the Bill. It has some good points. Fiscal powers have always been a wee bit of a problem. Why is that? Let us have a look: in the mid-1990s, the Conservative party did away with the two-tier system north of the border-we had local government in local and regional areas. Cities such as Glasgow did very well under the old Strathclyde regional council, but once we did away with it, the money started to drift away from the centre of where the work was being done. Under the present incumbent north of the border, business rates for Glasgow were taken into a central pool and spread over the rest of Scotland, so that, in effect, the business rates in a city that created wealth and employment for people living outside Glasgow did not pay for anything. Those people came into Glasgow and used all the facilities, roads and everything else that the city council now had to pay for. I cannot remember the exact figures for now, but of £180 million collected in business rates, Glasgow used to get back £100 million.
In effect, Glasgow-the biggest area for employment-was taking £80 million out of its city centre and giving it to the rest of Scotland. I believe that that was done out of political expediency. It was agreed before the last election that the money would be returned to Glasgow, but we have since seen even more attacks on the city from the Scottish Government. If we are to go down the fiscal road, we have to consider very carefully the political stance, the areas where the money should go and the areas of high deprivation. For deprivation, Glasgow rates higher than any other city in the United Kingdom. Six of Glasgow's constituencies-in those days, it had nine-used to be among the top 10 worst in the UK, and certainly plenty of its now seven constituencies are still among them.
Yes, we do need help, and we do need money. What we do not need is money disappearing. The fiscal powers must be used very carefully to ensure that the money taken in goes to the areas that need it. Iain Stewart talked about how we could do that. If the Scottish Government are to have such powers, however, I want to be able to know where the money is going. Why am I saying this? There has to be an audit trail if the UK Government are to give to the Scottish Parliament money and the means to collect taxes. For example, if this Parliament is to give the Scottish Parliament Barnett formula increases-my right hon. Friend Mr Clarke mentioned this earlier-of about £34 million for disabled children, but that money does not go there, I want the ability to ask where it went. If I were told, "It just went into the budget, and we do not know exactly how it was spent," that would be fine, as I could use it for political purposes. However, I want to know where the money is, and I want the House to be able to audit every penny that comes from the UK taxpayer.
Is the hon. Gentleman seriously suggesting that the Scottish Government can only spend money coming from the block grant on whatever this place determines? In effect, does he want to export changes in this place, for example in the NHS, into the Scottish system? That is ridiculous.
Well, I think that the money went to trying to support a Scottish Parliament and a Scottish Government who were trying to keep council payments down, and that people were getting bought off with it. I do not believe that one thought was given about a disabled child going short or a home not getting the money it needs. I take that view, and I am entitled to my opinion. I believe that we have to go ahead with this.
I have ranted on long enough. I support the Bill. I believe that scrutiny has to happen, and that there are areas where we can make it better. I also believe that there are probably areas where we are thinking about making things better where we may have to reign in, but the most important thing is that the Bill proceeds and that the Committee looks at it even more closely.
It is a pleasure to follow my near parliamentary neighbour, my hon. Friend John Robertson. Before I address the substance of the Bill, let me place on record my thanks for the great work done by the previous Government. In particular, I thank my hon. Friends the Members for Rutherglen and Hamilton West (Tom Greatrex)-I thank him in the capacity in which he assisted that Government- and for Glasgow North (Ann McKechin), and my right hon. Friend Mr Murphy, along with those Members from other parties who took part in the Calman process and the leaders of the parties in Scotland. A great deal of thanks for the impetus behind the Bill, as for the original Scotland Bill, should go to Wendy Alexander. It is important that we should thank her from the Labour Benches in this debate for her great efforts on devolution.
The key principle of the constitutional reforms that were adopted by the previous Government was cross-party support. As my hon. Friend the Member for Glasgow North stated, there is a real contrast between the great cross-party consensus that has been achieved in the preparation and discussion of this Bill, and some of the frankly gerrymandered changes that we have seen in the Parliamentary Voting System and Constituencies Bill and the Fixed-term Parliaments Bill. I hope that right hon. and hon. Members on the Government Benches will recognise that when they bring forward further constitutional legislation in this Session, such as the House of Lords Reform Bill.
This Bill is good for Scotland, and that is why Labour Members will support it. As paragraph 2.34 of the Calman report states:
"the Scottish Parliament controls 60% of identifiable public spending in Scotland," but is directly responsible for
"only 10% of the taxation levied in Scotland."
If the Bill is passed, thankfully that will change. The Bill will increase the level of taxes levied in Scotland to 35%, which is comparable to the level in devolved legislatures in Belgium, Italy, Spain and Australia. Added to that, the Bill provides for welcome revenue and capital borrowing powers, which will extend borrowing from £500 million a year, under the Scotland Act 1998, to £2.2 billion. That will release proceeds for much needed capital projects in Scotland, such as a Glasgow airport rail link-a matter on which I have spoken a great deal in the past and on which I will continue to speak-and will raise the opportunity for investment in high-speed rail track between the major cities of Scotland and the Scottish border. That will be a helpful economic lever for Scotland. Added to that, the detail of the tax powers will see a variation of plus or minus 10% from 2016, and the welcome devolution of stamp duty land tax and landfill tax.
I welcome the fact that income tax is the principal lever being used to give the Scottish Parliament extra fiscal powers. Giving evidence to the Scottish Parliament on
"If you change the financial levers, that in itself will not change anything; what you...need is to have in place the right policies."
That is right. Speaking about those levers, Professor François Vaillancourt of Montreal university, also giving evidence on
"I believe that the instrument that has been chosen, personal income tax, is the best one for the purpose. Corporate income tax is difficult to administer at a personal level, because of tax shifting between various jurisdictions...Personal income tax allows people to see a relationship between what they pay and what they get, and it is linked to the responsibilities of the Scottish Parliament, such as education, social services, health, long-term care and so forth. It is, therefore, an appropriate tool."
What we have also seen in the last two weeks is a real weakening of the argument for fiscal independence as propounded by some Scottish National party Members. Professor Muscatelli, whom I believe my hon. Friend Graeme Morrice has already referred to, makes it clear that the Bill does not seek to adopt some of the more volatile taxes, such as corporation tax and other taxes that would inject more risk into the Parliament's revenues. He expressed the view at Holyrood on
"Income tax has less impact in terms of tax spillover or tax competition, so it is the obvious place to start."
Again, this is someone who speaks with real expertise, so the House would do well to take note of his views.
Some issues will have to be scrutinised closely as the Bill progresses, particularly if it receives Second Reading and proceeds into Committee. It will be important to probe the precise detail of the definition of "a Scottish taxpayer" and to deal with some issues that my hon. Friends and Government Members raised earlier.
It is important to emphasise the issue of having proper economic forecasting in Scotland. Given the frankly lamentable performance we have seen from the Scottish Government and their ill-starred cast of economic advisers put together by the First Minister, we need a proper and robust system for forecasting growth and the impact of increases or reductions in income tax that the Bill, if enacted, will permit. I was impressed by the idea set out by the Scottish Council for Development and Industry when I went to meet it in central Glasgow last week. It recommended the establishment of a Scottish office for budget responsibility-a devolved office that would examine the effect of devolved Government policies on growth and would be able properly to forecast and stress test the impact of varying income tax, up or down, which I think is an idea with many attractions. I hope the House will be able to explore it further in Committee.
As my hon. Friend the Member for Glasgow North West mentioned, it is important for the Scottish Parliament to make the most of the totality of powers it has from the Scotland Act 1998, which it will still have if the Bill is passed. That must mean a real emphasis on growth. It is true that the income tax-varying power in itself will not necessarily produce additional growth, but it will be a tool, allied with investment in capital projects and skills and with diversifying the Scottish economy by providing more manufacturing and more help for construction, which the stamp duty tax might afford. All these are important if we are to avoid seeing the gap in employment and growth in Scotland widen in comparison with the UK as a whole over the last couple of years.
This is a good Bill, but by no means a perfect Bill. We shall scrutinise it closely if it reaches Committee, but it has the support of my constituents and it will have the support of all the key political parties that are in favour of a decent and decentralised system of government within the United Kingdom.
I apologise for not being able to stay to hear the concluding remarks today. This is explained by the fact that, along with my hon. Friend Cathy Jamieson, I have current responsibilities as a Member of the Scottish Parliament. We are still trying to juggle some of those responsibilities, so I hope I can be forgiven by my colleagues, friends and opponents on these Benches. I obviously do not have to apologise to too many of my hon. Friends-we have only a valiant crowd left.
I am in a privileged position as I have the honour of representing the people of Glasgow East in this august institution that has such great traditions, but I can also participate in this debate with the benefit of my experience as a Member of the Scottish Parliament for 12 years, since its inception. This is a significant debate, on which we will all look back in years to come, as we are at a key stage in the devolutionary process. The Scottish Parliament is firmly established in the governance of Scotland and has addressed the fundamental democratic deficit that generations of Scots felt. Many of us campaigned long and hard for the establishment of a Scottish Parliament, and are proud of many of its achievements, as it empowered us to address problems and galvanise responses to meet challenges, within the framework and partnership of the United Kingdom. Perhaps we are in a position where we get the best of both worlds.
My experience is that the Scottish Parliament has, as Malcolm Bruce said, acted within the mainstream of Scottish opinion. The Scottish people have strongly supported the Scottish Parliament, which has kept their faith as it has developed. In some ways, its operation is in the character of Scotland. We criticise the Parliament and keep it on its toes, and many of its Members have faced criticism, but the Scottish people would never tolerate its abolition and would wish to protect it.
The Scottish Parliament has not been without its controversies and weaknesses, which we hope to address through the Bill, but it has had notable successes. I am pleased that this august Chamber has also learned from the Scottish Parliament, which led the way on the smoking ban and on free public transport. Scotland has what is called the most progressive legislation on homelessness. With the housing stock transfer, in which I was particularly involved, we managed to develop the means to have perhaps the highest level of housing investment, in the needier parts of Scotland, that has ever been achieved. That speaks to one of the great successes of the Parliament, which is the focus on the experience of Scottish people: to be hard-nosed and hard-edged; to focus always on the Scottish people's interests; not to allow ourselves to be diverted into eccentric political debate; and always to keep the mainstream of Scottish interests at the forefront of our minds. I hope that the Scotland Bill will allow that to continue.
I am sure that my hon. Friend the Member for Kilmarnock and Loudoun, who shares my privileged position, has also often been asked to draw parallels between the experience at Westminster and in the Scottish Parliament. Although I would not want to digress, I make two comments about that. In the early days of the Scottish Parliament, the worst thing that we could do, and that we would be chastised for-I am sure that the Under-Secretary, David Mundell, would agree-was to emulate Westminster. If we behaved in any way that was comparable to Westminster, we were criticised enormously. We saw ourselves as a more consensual, transparent and accessible Parliament. I would argue that the high number of women in the Parliament helped to establish that, although I am less on the consensual end of the spectrum than some others, such as perhaps my hon. Friend the Member for Kilmarnock and Loudoun.
I am struck by my experience in this place, however, and I think that the Scottish Parliament now does need to learn from Westminster's much more sophisticated mechanisms for ensuring that Government, as opposed to Parliament, are held to account. The Bill begins to address that. This Parliament's treatment of its authority and reach is also much more thorough than that of the Scottish Parliament. That might be explained to some extent by the Scottish Parliament's youth, but the time is right to consider those big issues. The Scotland Bill allows us to do some of that.
According to international research and assessment, one of the strongest features of the Scottish Parliament is its Committee system. That system allows people to be interrogated about legislation and research to be consulted. It is based on the principles of evidence, engagement and analysis, and serves as a model in that regard. The Calman commission could be said to have copied that system, and to have done so very effectively. Evidence-led policy development must be centre stage.
Like others, I thank and congratulate those who served on the commission. They devoted time to taking stock of where we are in Scotland, and to outline an agenda for taking Scotland forward. I hope that, as we examine their conclusions and the extent to which they have been incorporated in the Bill, we will learn from a process that managed to bring the broader body politic into the detail of some of the commission's discussions, because I think it can enhance democracy considerably.
One of the principles of such a process is that it is cross-party. As those who are familiar with Scottish debate will know, that is not easy to achieve in Scotland, as the current operations of the Scottish Parliament illustrate. The Scottish Government rarely command a majority vote in the Parliament: education motions, for example, are regularly defeated, and the Government pay no attention. I think that that is very serious, but it contrasts starkly with the majority support for Calman's work, which is highly significant.
I recognise the work that the Government have done in the Bill in relation to borrowing powers and financial accountability, which will advance the Scotland debate significantly. However, I want to draw attention to a very important issue that is particularly relevant to my constituency. As many Members will know, it was the death of a very young child that triggered-if the House will forgive the expression-the debate in Scotland about the use of airguns. A young boy, Andrew Morton, who was only two years old, was shot dead in my constituency with an airgun. I pay tribute to the Morton family, who have campaigned for many years. They have lived with terrible tragedy, but ,with great dignity, have managed to pull themselves together and argue the case for the banning of airguns.
I have listened carefully to what many people have said about the difficulties of legislating on such matters. Let me take this opportunity to thank my hon. Friend the Member for Kilmarnock and Loudoun, who at the time of that terrible death was Minister for Justice in Scotland. She met the Morton family, and worked closely with them to see what could be done. We appreciate that there is no easy solution, and that simply banning ban something does not mean that the problem will go away. I do not necessarily want to cause difficulties to any sporting communities in Scotland, and I realise that we must test the legislation as we go through it in order to ensure that it is proportionate. However, I plead with the Minister to bear in mind the experience of the Morton family, to bear in mind the fact that 11,000 people signed the petition they delivered, and to understand the basic, essential, human emotion involved.
That airgun was not the most dangerous kind available, and it was a kind that is easily available. However, although it was not particularly dangerous in itself, in the wrong hands it caused terrible tragedy. We must do all that we can to protect people from the worst excesses caused by the use of such guns.
The other key aspect of the Mortons' experience was that they saw the Scottish Parliament as the place to go to protect their family. That was right and understandable, because at the time crime and justice were the subject of a huge debate in Scotland, led by my hon. Friend the Member for Kilmarnock and Loudoun. I think that we too should have that debate, and I plead with the Minister to allow it to take place.
In conclusion, the Bill is a key stage in the development of devolution in Scotland, and I believe that it speaks to the majority view of Scottish opinion. We perhaps need to test some of the powers more thoroughly to ensure that they properly address the economic interests of Scotland, but I emphasise again that on some of the more significant human experiences we have within our grasp the powers to act to address things that matter fundamentally to Scots. I hope that we take the opportunity to do so.
I am particularly pleased to have the opportunity to speak in this debate. As Mrs Laing said, this is Burns week, which is a week when people across the world celebrate their Scottish roots. I always enjoy this time of year because people are asking me for advice on how to pronounce particular Scots words, rather than gently-or perhaps not so gently-mocking my native Ayrshire accent. Some of my Scottish Parliament staff have found the transition to Westminster slightly more difficult. At one point, my diary secretary had to explain what was meant by the fact that my diary was "stappit" and I was therefore unable to make a particular event. For the benefit of the Hansard reporters and any translators, I should say that "stappit" simply means very full.
In the past week, the new Burns museum opened in Alloway, in the constituency of my hon. Friend Sandra Osborne, and that superb new venue hosted the Burns humanitarian award ceremony, with Linda Norgrove being a very worthy posthumous winner. With due deference to my hon. Friends the Members for Ayr, Carrick and Cumnock and for Dumfries and Galloway (Mr Brown), we Mauchline residents are fond of saying that although Robert Burns was born in Alloway and died in Dumfries, he lived in our village. It was therefore a pleasure to join the Mauchline Burns club to lay a wreath at the Burns national memorial in Mauchline on Burns day this week.
I reassure you that I am not about to continue a treatise on Robert Burns, Mr Deputy Speaker, as there will be other opportunities for that. However, the references to him are relevant, because Burns was intensely concerned about Scotland and the Scottish people and, despite what some SNP Members might claim, not from a narrow nationalist perspective. Burns was an internationalist who looked beyond geographical boundaries and got to the heart of humanity, and that is very much the spirit of Scotland today. We are all proud to be Scots and we will be passionately patriotic at football and on the full range of other areas, but we all know that Scots have made a much wider contribution to the world than simply looking after our own backyard. The vast majority of working-class Scots certainly know that we have more in common with our neighbours who live south of the border in similar communities than divides us.
So when we take forward the debate on the Scotland Bill we must focus on what we can deliver for people in Scotland; this cannot simply be an academic exercise that bears no relation to the lives of the people who send us here to represent their views. I am proud to have represented the Scottish Parliament constituency of Carrick, Cumnock and Doon Valley for more than 10 years, and I will continue to represent it for the next 54 days as I count them down. I hope that, rather than that simply being a matter for the public record, it might help to offer a distinct perspective to the matter in hand, as was the case with my hon. Friend Margaret Curran.
As a number of hon. Members have said, the Bill is broadly based on the Calman commission report, and I, too, wish to put on record my appreciation for what was a thorough and robust process involving a broad section of Scottish civil society. Sir Kenneth Calman has produced a significant body of work in which all those associated with it can take pride. I am in broad agreement with the aims of the Bill-perhaps people will say that that is no surprise-and I will be supporting it. However, as I shall set out, I believe that some aspects of it should be thoroughly and robustly examined, not least by the Select Committee on Scottish Affairs, and scrutinised in this Chamber.
"The Government's aim is a fair and just settlement for Scotland within the framework of the United Kingdom-a settlement which will be good both for Scotland and the United Kingdom. The Scottish Parliament will strengthen democratic control and make government more accountable to the people of Scotland."
That was the basis of the Bill that fundamentally altered the structure of power in the United Kingdom.
Notwithstanding the controversy over the Parliament building, my right hon. Friend the Under-Secretary-I will call him my right hon. Friend in recognition of the days that we spent in the Scottish Parliament-will recall that some of the other debates in those early days were passionate and had a real energy and enthusiasm for the change that was taking place. That was due in no small part to the work of the Scottish Constitutional Convention over almost two decades, as was acknowledged by Malcolm Bruce. The convention was established in 1989 and consisted of representatives of civic Scotland and of most of the political parties. It drew up a detailed blueprint for devolution and outlined the proposals for the directly elected Scottish Parliament, crucially with the legislative powers that were finally achieved. That also formed the basis for the further proposals that were introduced by the UK Government in 1997.
I am proud to associate myself with the achievements of the Scottish Parliament over the past decade. As a Parliament, we set out to change Scotland for the better. A substantial body of work was undertaken, starting with the abolition of a millennium of feudal tenure, with communities being given the right to buy and manage the land on which they lived and worked. This was symbolic as well as practical. We also ensured that our elderly people could live with dignity and respect by introducing free personal care. We led on public well-being in the UK by introducing the smoking ban in public places, which represented a step change in the way we dealt with health issues in Scotland.
The Scottish Parliament also introduced an unprecedented programme of school and hospital building, ensuring that our children no longer had to be taught in substandard buildings and that our sick would no longer be abandoned to Victorian conditions in hospitals. We abolished up-front tuition fees and introduced bursaries for the less well-off students, which resulted in more young people going on to further education in Scotland than ever before. We also introduced a ban on fox hunting. I was particularly pleased with the establishment of a Children's Commissioner for Scotland, for which I had campaigned for about 10 years before I even thought of becoming a full-time politician. The repeal of section 28 was controversial at the time, but now it is completely accepted as having been the right thing to do in the pursuit of equality. It was a Parliament that challenged Scotland to think about its future. It tried to engage every Scot in the challenges that we faced, and it led public debate in civil society. It is a Parliament that continues to ensure that there is a focus on protecting the most vulnerable, and it has made a real difference to the lives of everyone in Scotland.
The Calman commission came along at the right time, however. It published its findings after just a decade of the devolution settlement, and that seems an appropriate length of time after which to offer an initial assessment of how the Parliament has worked, as well as how we need to move on. Since 1999, the devolution settlement has remained relatively static, but I think that that was right at the time, as it allowed things to bed in and allowed the Parliament to take shape. Some minor changes were made. The Scottish Parliament (Constituencies) Act 2004 retained the current level of representation at 129 MSPs. That was done in recognition of the youth of the Parliament as well as the range of work that it was undertaking at the time. We have heard other examples of minor tweaks, not least the Railways Act 2005-perhaps not so minor a tweak-which allowed Scottish Ministers to prepare a strategy for carrying out their functions in relation to railways and railway services. That was another practical and sensible change.
It is now time, of course, to consider the future. The task that the Calman commission was set was:
"To review the provisions of the Scotland Act 1998 in the light of experience and to recommend any changes to the present constitutional arrangements that would enable the Scottish Parliament to serve the people of Scotland better"- for me, that is the critical point-as well as to
"improve the financial accountability of the Scottish Parliament".
That is what I want to talk about now.
The Calman analysis of the current settlement, notwithstanding some of the criticisms we have heard in the Chamber today, is persuasive. England and Scotland have been part of the Union for three centuries but Scotland maintains its own identity and now has its own devolved political institutions. Overall, people would say the devolution settlement has been shown to work pretty well. It has not led to the convoluted or confused relationship with other partners in the United Kingdom that some people thought it might; nor has it led down a one-way street towards independence, as others feared. There are changes that we can and must make in order to take forward this work in the future.
There is cross-party understanding that the financial arrangements lack the financial accountability we will want to see as the Parliament progresses. By depending wholly on the Westminster grant, the budget bears no relation to economic performance in Scotland. As we have seen in recent years with differing strands of opinion in power at Holyrood and Westminster, that can result in friction between Governments. The premise of the Calman commission was that election to the Scottish Parliament should be accompanied not just by being there to divide up the block grant but by having fiscal accountability, too. Under the proposed arrangements, Scotland will become more dependent on and more accountable for the tax revenue it raises.
As we have heard, the Bill replaces the Scottish variable rate of income tax with a new Scottish rate of income tax that will be decided by the Scottish Parliament annually and applied consistently to the basic, higher and additional rates of income tax. The grant from the UK Government will automatically be reduced by 10p in the pound and the Scottish rate will be added to it. In principle, I support the proposed measures, but we must ensure that there is proper and thorough scrutiny of what they will mean as the Bill goes through Parliament.
Under the proposals, the UK will retain control of exemptions and reliefs and Scottish tax revenues will be subject to Westminster control. One concern that has been raised is that when the UK takes decisions such as increasing the personal allowance to £9,000 or eliminating the 50% top rate, that will affect Scottish revenues. We have heard criticisms of that today as well as some attempted reassurances. A critical point that we must reach in Committee will involve ensuring that we receive reassurances about how that will work as well as assurances that it will not cause further problems or lead to unintended consequences, as has been suggested in Scotland.
Borrowing powers will also be introduced, another move that I broadly support. We have heard that from 2015, Ministers will be allowed to borrow up to 10% of the Scottish budget in any one year subject to an overall limit on capital borrowing of £2.2 billion. In principle, that will be a positive step that should allow key infrastructure projects to proceed as and when the Parliament believes they are necessary. The Bill also provides, however, that the Scottish Parliament will be able to borrow £500 million through new revenue borrowing powers when tax receipts fall short of those anticipated. At first glance, that offers limited flexibility and would mean that Scotland could be under pressure to make spending cuts should a significant shortfall arise. I am sure that that will be considered further as the Bill makes progress.
As scrutiny takes place, we must ensure that we consider the financial calculations and the financial implications of Calman in light of our present economic circumstances. That is the right and responsible approach as we continue to scrutinise the Bill. It is not enough simply to say, as SNP Members appear to be saying, that the Bill does not go far enough, so they are going to vote against the extra powers it will give. That is a rather odd stance for them to take. I might have misunderstood them, and no doubt they will correct that misapprehension if I have, but it certainly sounded like that to me.
I hope that one option we will consider during our scrutiny of the Bill is whether the proposal regarding the Scottish Parliament's borrowing powers can be brought forward slightly quicker than the Bill proposes. That is up for debate and would be useful to allow the planning of key infrastructure. It would also have the benefit of assisting what is currently a pretty beleaguered construction sector in Scotland.
Several issues have not been mentioned and I shall mention them briefly before concluding. The measures on licensing the prescription of controlled substances to deal with certain addiction problems make sense and I am sure we will want to consider that issue in more detail in Committee.
As my hon. Friend the Member for Glasgow East has highlighted, the devolution of the competency over air weapons to the Scottish Parliament will potentially allow the introduction of a different approach and licensing system there. She mentioned my time as Scotland's Justice Minister. In that role, I had discussions with different Home Secretaries-four at the last count-to decide how best to ensure that people in Scotland were protected from those who would use air weapons irresponsibly. We agreed that our approach should not be taken forward in an ad hoc way and should not simply be a soundbite solution that would please a few people but would not actually deliver. That is why I am pleased that we will have the opportunity to scrutinise that issue properly and come up with a workable solution.
As I have said, the financial relationship between the Scottish Parliament, the people of Scotland and the rest of the UK is vital. Let me respond to some of the comments from SNP Members about our scrutiny of the Bill. I do not recall being given much quarter by Labour Back Benchers when I was a Labour Minister in the Scottish Government-I have no problem calling it that although it is technically called the Scottish Executive-and I am sure that during our debates on this Bill, Labour Members will properly seek to scrutinise every clause and line of the Bill to ensure that we are doing the right thing.
We should keep at the forefront of our minds the reason why we are doing all this. It is not a dry, academic exercise only for text books and discussion in learned tomes. It is about making a difference for the people of Scotland whom we represent. We must make the Bill relevant to people because nothing will drive them away faster from engaging in the process than if they believe it is not a Bill for them-that it is only for politicians and will not affect their lives. If that happened, we would lose a considerable amount because we would be moving away from the intention of the late Donald Dewar, which was to make the Government more accountable to the people of Scotland.
There is plenty of public opinion and evidence in Scotland that people want a stronger form of devolution than at present, and they look to us to find the way forward. They might not know exactly the chapter and verse-where they want the t's crossed and the i's dotted in the legislation-but they look to us to take forward the principles and spirit of devolution and to come up with solutions. We have a unique opportunity in this Parliament to reshape how devolution works with a more comprehensive approach, so I welcome the Bill and look forward to our continued scrutiny of it as it goes through Parliament.
It is a genuine pleasure to follow Cathy Jamieson, who said a number of things with which I agree entirely. Twice she said that this should not be a dry, academic exercise, the first time stating that it was not about the powers, but the policies that they are used for.
On the Bill's proposals for enhanced financial powers, with which we agree, I wish to set out in a little detail precisely what we would do with them and why we back them. I would also like to clear up a slight misunderstanding: we will absolutely not stand in the way of the Bill. The SNP will never stand in the way of additional powers coming to Scotland. The reason for the reasoned amendment, and for the amendments that we will table in Committee and beyond, is to strengthen the Bill by ironing out some of the flaws and making it better. That is what we should all be doing. Notwithstanding the fact that we are only 100 days away from the Scottish election, at heart we all want the Bill to be as good as it can be.
I am afraid that I do not understand the logic of the hon. Gentleman's argument, because his so-called reasoned amendment suggests that the Bill is "unacceptable". The logic of his argument is that if he does not succeed in making the amendment-and he must accept that he is unlikely to do so-he will be unable to support the Bill in an unamended form.
It is rather obvious that we are seeking to make the Bill better. In its current form it will not work, and I will explain why in a moment. I do not believe that it will meet even the honourable objectives that the Government have set out.
I think that the House deserves some clarification from the hon. Gentleman. If the amendment that he is promoting does not prevail and the Bill progresses in essentially the same form, perhaps with only some minor amendments, is he saying that his party will not accept it?
I now see what the Minister is asking. I have every confidence that, when we coalesce in Committee, the common sense of Members from all parties will lead to a number of successful amendments that will improve the Bill, perhaps by addressing the weaknesses in the financial powers, for example, to which the hon. Member for Kilmarnock and Loudoun alluded. We will wait until the subsequent stages before deciding on the Bill, which might have been changed substantially by then.
My understanding was that the hon. Gentleman indicated earlier that he would divide the House on the amendment, the last line of which states that the House
"considers the Bill as a whole to be unacceptable."
Given the spirit of consensus that appears to be breaking out, will he now consider withdrawing the amendment so that we can move forward on the basis of consensus?
The arguments in favour of the reasoned amendment will be made and they will explain, I hope with some support, why there are flaws in the Bill.
The Bill contains two fundamental fiscal measures: first, the reduction in the basic higher and additional rates of income tax by 10p, and the setting of a Scottish rate to compensate for that; and secondly, the availability of limited revenue and capital borrowing powers. Revenue borrowing will fill a part of the gap left when revenue decreases and a limited increase in capital borrowing will enhance direct capital investment.
However, the income tax powers are inadequate and include an in-built, long-term deflationary bias in the Scottish budget. The borrowing powers, particularly the revenue powers, are so tightly controlled that they are unlikely to be effective in delivering the sensible outcomes that many of us want. It is also worth noting that even the devolution of the income tax, the small stamp duty land tax and the landfill tax means that the Scottish Parliament will still have direct control of only 15% of the taxes raised in Scotland, with the remaining 85% accruing directly to London. I do not intend to talk about full fiscal autonomy, which there has been some talk of, but as a comparator we can look to the Basque country, which has been mentioned. It controls around 86% of its revenue.
I want to concentrate on the specific problems with income tax provisions. Receipts are sensitive to changes in economic circumstances and might fall dramatically in a downturn, as I will explain later. That presents an instability to the budget in Scotland, because we are talking mainly about income tax and the shortfall that would not be matched by the Bill's provision of very limited borrowing powers. Growth in income tax revenue is low when compared with that of total tax revenue, and that is obviously deflationary, because only the modest growth in income tax will accrue to the Scottish Parliament, with the higher growth in total tax accruing still to London.
The figures between 2004-05 and 2008-09, for example, show that total tax revenue increased by £13.7 billion, but under the proposed plan the Scottish Government, although they control 15% of the tax, will receive only 9% of the increase. That automatically begins to squeeze the Scottish budget. Even within income tax, the most significant growth comes from the higher rates, and most of that growth will not be available to Scotland.
Historically, higher rate taxpayers account for a larger share of the growth in tax receipts, and therefore the majority of the growth in income tax receipts will accrue directly to Westminster, not to Scotland. We might, in fact, receive a declining share of Scotland's income tax yields, because we are assigned half the basic rate, one quarter of the 40% rate and only 20% of the 50% rate. The impact of that deflationary bias can best be demonstrated by assuming that the powers had been in place since 1999-2000. Since then, the impact of the shortfall against forecast departmental expenditure limits would have represented an accumulative cut of about £8 billion.
I understand the hon. Gentleman's point about a deflationary bias vis-à-vis the total tax take, but, in comparing the proposal before us with the status quo, what is relevant is the increase in income tax versus the increase in public spending. That is the basis on which the current Barnett allocation works, and on that basis Scotland is likely to do better in the short term.
That is not necessarily true, and we need to look at both these measures: the growth in income tax versus the growth in total tax, and the percentage of the share of growth that we receive from income tax alone, owing to how it will be assigned to Scotland, with most of the higher parts being accrued still by the UK, where growth is likely to be higher.