Scotland Bill

Part of the debate – in the House of Commons at 2:59 pm on 27th January 2011.

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Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South 2:59 pm, 27th January 2011

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.