Part IIA — UK Pensions liability

Scotland Bill – in the House of Commons at 3:36 pm on 15th June 2015.

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Votes in this debate

  • Division number 8
    A majority of MPs voted against requiring the consent of the Scottish Parliament and of the Scottish people in a referendum before the Scottish Parliament can be abolished; and against strengthening the constitutional status of the Scottish Parliament.

The consent of the Treasury is required before the enactment of any provision passed by the Scottish Parliament which would affect the liabilities of the National Insurance Fund in respect of old age pensions.”

(5) In Part III (general provisions) the following provisions referring to Part II of the Schedule are omitted—

(a) paragraph 3(2);

(b) paragraph 4(2)(c).’

This Amendment would allow the Scottish Parliament to make provision for the registration and funding of political parties, but would otherwise retain the Part I reserved matters covering the constitution, foreign affairs, public service, defence and treason. It would entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.

New clause 6—Constitution of Scotland

‘(1) The 1998 Scotland Act shall be cited as The Written Constitution of Scotland.

(2) A standing Scottish Constitutional Convention shall be convened jointly by the Secretary of State and the Scottish Ministers to conduct reviews and to make recommendations to the Scottish Parliament and the Parliament of the United Kingdom.’

The New Clause renames the Scotland Act 1998 and introduces a standing Scottish Constitutional Convention.

New clause 7—Application of the Parliament Acts to the Scottish Parliament and the Scottish Government

‘(1) The Parliament Act 1911 is amended as follows.

(2) In subsection 2(1), after “other than a Money Bill”, insert “or a Bill amending sections 1 or 2 of the Scotland Act 2015.’

The New Clause entrenches the permanence of the Scottish Parliament and the Scottish Government by ensuring that changing Clauses 1 and 2 of the Bill once enacted would be possible only with the consent of both Houses of Parliament.

New clause 8—Scottish Parliament nomination of members of the House of Lords

‘(1) The Scottish Parliament shall nominate members for appointment to the House of Lords, in a method to be determined wholly by the Scottish Parliament.

(2) The number of members of the House of Lords appointed in accordance with this section shall at any time be in broadly the same proportion to the total membership of the House of Lords as the population of Scotland is to the total population of the United Kingdom.’

The New Clause would require the Scottish Parliament to nominate members to sit in the House of Lords in proportion to Scotland’s share of the United Kingdom population.

New clause 9—Constitutional convention

‘(1) Within one month of the day on which this Act is passed, a constitutional convention is to be held to consider and make recommendations on the constitution of the United Kingdom.

(2) The Secretary of State must make regulations to—

(a) appoint a day on which the convention must commence its operations,

(b) make fair and transparent rules about how the convention is to operate and how evidence is to be adduced,

(c) make further provision about the terms of reference prescribed under section 2, and

(d) specify how those who are to be part of the convention are to be chosen in accordance with subsection (8).

(3) The date appointed under subsection (2)(a) must not be later than 31 December 2016.

(4) A statutory instrument containing regulations under subsection (2), if made without a draft having been approved by a resolution of each House of Parliament, is subject to annulment in pursuance of a resolution of either House of Parliament.

(5) The convention shall have the following terms of reference—

(a) the devolution of legislative and fiscal competence to and within Scotland and the rest of the UK,

(b) the devolution of legislative and fiscal competence to local authorities within the United Kingdom,

(c) electoral reform,

(d) constitutional matters to be considered in further conventions, and

(e) procedures to govern the consideration and implementation of any future constitutional reforms.

(6) The convention must publish recommendations within the period of one year beginning with the day appointed under subsection (2)(a).

(7) The Secretary of State must lay responses to each of the recommendations from the convention before each House of Parliament within six months beginning with the day on which the recommendations are published.

(8) The convention must be composed of representatives of the following—

(a) all registered political parties within the United Kingdom,

(b) civic society and local authorities of the nations and regions of the United Kingdom.’

The New Clause would require the appointment of a convention to review the operation of the Act resulting from the Scotland Bill in the wider context of the Union.

Amendment 1, in clause 63, page 67, line 24, leave out paragraph (a).

This amendment provides that section 1 will not come into force on the day on which the Act is passed, in order to link the commencement of Part 1 of the Act (Constitutional arrangements) with the work of the Constitutional Convention, outlined in New Clause NC2, which would be required to report by 31 March 2016.

Amendment 2, page 67, line 26, at end insert—

‘(1A) Part 1 comes into force within one month of the publication of the report of the Constitutional Convention appointed under section (Constitutional Convention).”

This amendment provides that Part 1 of the Act (Constitutional arrangements) comes into force after publication of the report of the Constitutional Convention, as outlined in New Clause NC2, which would be required to report by 31 March 2016.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

Amendments 16, 17 and 18 are essentially probing amendments, authored by the Law Society of Scotland. Subject to the response that we hear from Ministers and from those in other parts of the House, it is not my intention to seek to press them to a Division.

The amendments change the nature of clause 1 from one that recognises the permanence of the Scottish Parliament to one that declares it. The genesis of the clause was the Smith commission report, which required that there should be a statement in the legislation to follow it that the Scottish Parliament and the Scottish Government were permanent institutions. The form of words in clause 1 was inserted by the draft clauses published at the end of January, which recognised that permanence. The permanence of the Scottish Parliament is to be found not in any amendment or statutory enactment, but in the will of the Scottish people. It is a permanent institution because, frankly, it is unthinkable that it would be repealed at this point. For that reason, and given the comments of the Scottish Parliament’s Devolution (Further Powers) Committee, it is right that we should revisit the issue.

At the heart of this debate is the issue and the definition of sovereignty. The context is a classic Diceyan definition of sovereignty, which says that Parliament here is sovereign. Although matters have moved on somewhat over the years and although it remains the case that Parliament cannot bind its successors, it is undoubtedly the case that since the European Communities Act 1972 we have taken a different view of parliamentary sovereignty, one in which sovereignty is shared with the European Union, as it now is, in Brussels, the Scottish Parliament, the Welsh Assembly, the Northern Ireland Assembly and even the London Assembly. It was the subject of considerable debate during the constitutional convention back in the late 1980s and early 1990s.

The view that was taken then, which as I recall was contained in the claim of right, was that in Scotland the Diceyan version of sovereignty—that Parliament is sovereign—has never been the case, and that sovereignty has always been vested in and remained with the people of Scotland. From that point of view, I see considerable merit in amendment 58 in the name of Angus Robertson and his colleagues in the Scottish National party, requiring that if there were ever to be a repeal of the Scotland Act 1998, it could be done only with the consent of a majority voting in a referendum. That honours and respects the view that sovereignty lies with the people in Scotland.

However, even that clause could be got around by a simple repeal, a consequence of the doctrine that Parliament cannot bind its successors. As long as we try to do these things by way of primary legislation, we will keep tying ourselves up in knots and any solution that we bring forward will lack permanence and will be unsatisfactory.

Photo of Graham Allen Graham Allen Labour, Nottingham North

Does the right hon. Gentleman recall that the former Member for Monklands East and leader of the Labour party, John Smith, said that the British constitution, which embraces the Scottish constitution, should not be a matter of judicial archaeology—that was the phrase he used—but should be put down plainly as a written constitution for all to see? Is that where his argument is going? I hope it is.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

I have long held that view. I cannot remember a time in my conscious political being that I have held a view other than that. It is never going to be easy to get to that point, of course, and it will require a fundamental change in the way we do things. The reference to judicial archaeology is interesting, because it would render some of the things that were done in this place reviewable in the courts. As long as there is a proper separation of powers, I am quite happy with that.

Photo of Michael Weir Michael Weir SNP Chief Whip

I hear what the right hon. Gentleman says about amendment 58, and he is correct that Parliament cannot bind its successors, but if we put into the Bill that there has to be a referendum of the Scottish people before there can be a change, that is a very powerful moral argument against this place, and the strongest we can make under the current constitutional settlement.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

Indeed, and it is for that reason that I said that I saw some merit in the proposal. The hon. Gentleman would have to accept, though, that the point I have already made—that even that could be repealed by a simple vote in this Chamber and the other place—will always be a problem for any Government seeking to do that by way of primary legislation.

Photo of Frank Field Frank Field Labour, Birkenhead

Does the right hon. Gentleman share my hope that English Members here will approach this change with a view to giving Scotland stability? Some of us very much hope to be discussing the English question later in this Parliament, and we will be asking Scottish Members to give us similar stability.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland 3:45 pm, 15th June 2015

I actually agree with the right hon. Gentleman on that point. Indeed, I see the Bill as the start of a process that must continue, because we risk putting an intolerable strain on the Union if we proceed with constitutional change that relates only to Scotland and not to the rest of the United Kingdom, particularly in relation to the different parts of England. As far as the future of the English constitution is concerned, the only point on which I am clear is that there is absolutely no consensus on the shape that it ought to take. I stood at the Dispatch Box often enough during the previous Parliament, answering questions from both sides of the House, and being told, “This is what we need”, and I rarely heard the same proposition twice. It is for that reason that, if we are to have a written constitution, we must first have a constitutional convention, because we will never build the necessary consensus for this sort of constitutional change merely within Parliament. That was the experience with Scotland’s constitutional convention in the 1990s, and it was then the lesson of the Smith commission and, before it, the Calman commission.

Photo of Frank Field Frank Field Labour, Birkenhead

While the right hon. Gentleman opposes those doubts, does he not accept that, given that we are now in the process of changing our constitution and meeting the wishes of the Scottish people, we in England will probably not have to wait as long for opinion to come together on what England needs as the pioneers had to wait to get justice for Scotland?

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

I am heartened by the right hon. Gentleman’s optimism in that regard; I always think that achieving consensus in these matters is much easier to talk about than to get. Frankly, that is a debate that England now needs to have for herself. It is certainly not for us to intervene in it, any more than we would have welcomed the intervention of the English, Welsh or Northern Irish in the constitutional convention discussions of the 1990s. I wish the English every bit as much joy with it as we have had in Scotland with our constitutional debate over the years.

Ian Murray has tabled a new clause proposing a constitutional convention, and there is a great deal in it that I find worthy of support, particularly the requirement that it be convened within a month of the Bill becoming an Act, because I do not think that these matters become any easier by being left. I am also impressed by the fact that it has a reporting date, which I suggest would serve to concentrate minds.

Speaking as a Scottish Member, I think that the hon. Gentleman’s proposal has the further benefit of allowing a constitutional convention to go ahead; we would be saying today that it is something that is going to happen, but it would not in fact delay the passing of the Bill. In order to hold faith with the 55% of the people of Scotland who voted no last September, I think that we should proceed with the Bill with all due dispatch. I do not think that it would be acceptable for the passing of the Bill to be somehow contingent on constitutional arrangements being refined elsewhere in the United Kingdom.

I would have preferred—inevitably so—to see included in the remit of the proposed constitutional convention the question of electoral reform, for which I think there is now greater support in the Labour party, but I would not let that omission stand between me and supporting the Bill today.

Photo of Ian Austin Ian Austin Labour, Dudley North

I congratulate the right hon. Gentleman on the case he is making in his usual eloquent and persuasive way. Many Members on both sides of the House will welcome the fact that he is here and will want to express our support for him and tell him how much we hope that he is successful in standing up to the Scottish National party Members sitting in front of him, who clearly want to create a one-party state in Scotland and whose supporters engage in the most disreputable bullying tactics in order to silent any dissent in that country.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

I will take support anywhere I can find it, but I am not entirely sure that the hon. Gentleman’s remarks are germane to the matter that is before the House.

Amendment 89, which was tabled by the Scottish National Party, will facilitate a debate on the concept of full fiscal autonomy. I shall listen with interest to the hon. Member for Moray and others in their exposition of that, and I shall reserve my remarks on it until the end of this string of amendments, when I know I will be able to catch your eye, Mr Hoyle.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

New clause 3, which stands in my name, would deliver full fiscal autonomy, real home rule and a Scottish Parliament in control of everything save defence and foreign affairs. I am only a Back Bencher and I do not have the assistance of Government officials, so if the new clause is defective in technical detail, I apologise. If it were voted for tonight, however, it would establish a clear principle and a way forward.

The contention is clear: the new clause would deliver full fiscal autonomy. The Scottish Parliament would have full freedom to raise all taxes as it liked. It would not be restricted to fiddling around with bands; it would control all thresholds and all VAT dividends, and it would have full freedom to spend that money as it liked. That is what real Parliaments do, and that is why they are responsible.

The Scottish Parliament is constructed in a manner that is inherently conducive to the culture of grievance, and that would still be true even if the Smith commission proposals were adopted. The Scottish Parliament will raise only 50% of what it spends. Worse, under the 30-year-old, discredited Barnett formula, which even its conceiver condemned towards the end of his life, Scotland’s block grant will be based not on needs but on English levels of spending. No matter which tartan is chosen to clad the Scottish purse, the purse strings will still be controlled by England. That, I believe, has to change.

Following reports by the Office for Budget Responsibility and the Institute for Fiscal Studies, it has been said that Scotland faces a £7 billion black hole. Presumably, however, the SNP wanted independence in the next year. We cannot have an independent Parliament that does not have full fiscal autonomy, so let us have a real, informed debate about the figures.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

When the hon. Gentleman uses the term black hole, does he mean a deficit? When people talk about the UK’s deficit, they say “deficit”. When they talk about Scotland’s deficit, they say “black hole”. Why the use of pejorative language?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

It can be referred to as a deficit. We have listened to the Institute for Fiscal Studies and the Office for Budget Responsibility, so now let us have an informed debate.

I want to make it clear, by the way, that I am not in favour of cutting Scotland loose. I am in favour of United Kingdom solidarity, and I am in favour of a new grant mechanism, if the need for one is proven. My aim is not to trap the SNP, call its bluff or reveal its timidity. I genuinely want to give the Scots what they want: the freedom to run their own affairs and not to blame others if things go wrong, but all within the buttresses and safety of the United Kingdom. I am a fervent Unionist.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

Will the hon. Gentleman concede that Scotland has contributed more than the rest of the UK in tax per head of population in each of the last 34 years, and that Scotland with full economic powers would be able to deliver prosperity and social justice for the people of Scotland?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

The hon. Gentleman can vote for my new clause, if that is what he believes. That scenario is on offer tonight, and he can vote for it. As a No. 10 spokesman said helpfully over the weekend—it is not often that No. 10 spokesmen have supported my new clauses, but I am grateful to him—the new clause

“is the acid test for the SNP over whether they will back their own policy”.

A Labour party spokesman helpfully said over the weekend, “They can have full fiscal autonomy by 10 o’clock tonight if they want to vote for it.”

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

Those of us who have a Eurosceptic point of view, as my hon. Friend does, have always been very cautious about fiscal autonomy without monetary autonomy. Would his amendment also enable the Scottish Parliament to have monetary autonomy?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

As my hon. Friend made that point last week, I was waiting for it. If he will be patient for a moment, I will finish a couple of sentences and come directly to him, because this is the kernel of the matter.

Under my proposals, the Barnett formula would be scrapped and an alternative formula based on need would be created. In the modern world—in modern finance—we create formulas based on need.

Photo of John Redwood John Redwood Conservative, Wokingham

Does my hon. Friend agree that there will not now be the automatic application of the Barnett formula to solve all the many money issues between Scotland and the rest of the United Kingdom, but there has to be a fundamental renegotiation of the block grant and an attribution to Scotland of revenues by some formula? In practice, the whole financial settlement is in the melting pot anyway, so it will be very interesting to see how the SNP respond to his proposed further development.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Absolutely; we are a united kingdom. For instance, Lincolnshire gets more money in its educational grant because of the sparsity factor. All these things can be worked out in a constructive manner between the United Kingdom Government and the Scottish Government so that there is a fair support mechanism based on need and that takes account of issues such as declining oil revenues, the sparsity factor that I mentioned, declining heavy industries, or an ageing population. The grant should be determined by these matters, not by some ageing formula based on what the United Kingdom spends.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Is not the hon. Gentleman being very clever with his amendment because he is ultimately talking about an English Parliament and therefore a federal Government in future?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

My personal view, for what it is worth, is that if we are to create a sustainable Union we must, in effect, create full fiscal autonomy for Northern Ireland, for Wales, for Scotland and, ultimately, for England. This almost imperial Parliament would remain determining the support mechanisms to ensure safety. So, yes, in that sense I am a federalist.

Barnett is a gift to those who want to break up the Union. It is also incredibly expensive for the English, with £1,680 more a year spending per head in Scotland than in England because Scottish spending is inextricably linked to English spending. When that is cut, SNP Members quite understandably—I do not blame them for this; they are good politicians—can cry foul, as they did last week, and say, “The Scots people didn’t vote for austerity but it’s being imposed on us.” They can vote on every education and health measure, and say, “What you spend in England on health and education is going to determine what we spend.” We then get a crazy situation whereby if some taxes in Scotland are raised the grant will go down. This simply does not work. It is not a recipe for preserving the Union or for a sustainable future.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

The hon. Gentleman mentions the Barnett figures. He will of course point out, for completeness, that Barnett is only about two thirds of total spending. For further completeness, he will also point out, I am sure, that the Barnett figures for London and Northern Ireland are higher than for Scotland.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I do not want to get into a sterile debate about whether London subsidises Scotland or vice versa; I simply want to be fair and open. I am happy for Scotland to have all its oil. It can determine its oil policy and its level of taxation, and as the oil revenues decline, if they do decline, I am happy for the United Kingdom Government to step in and increase its grant.

Photo of Frank Field Frank Field Labour, Birkenhead

Might not the hon. Gentleman be entering into this debate a note of unpleasantness that need not be there? Is it not in the interests of those of us representing English seats that whatever settlement is made for Scotland is durable, taking into account, at some stage, that it will have repercussions for how we settle the English question. Should not we approach this subject as generously as possible because we want it to succeed, not to fail? The more it succeeds, the more we answer the question when we get on to our own requirements for an English Parliament.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I am grateful to the right hon. Gentleman, who has been a good personal friend of mine over many years, for summing up the situation. I am not trying to play party political games; I really want to be helpful. I want to create the durable settlement for which Scottish people voted: they want to stay part of the United Kingdom. They want to have that buttress if there is a catastrophic shock, as happened in 1929 and 2008, but they also want to run their own affairs.

I believe that, if we maintain the current Smith formula, combined with English votes for English laws, we will create a toxic mixture that will propel the Union towards collapse. As I said on Second Reading, we are making the same mistakes that were made on the Irish question in the 19th century: we are giving too little, too late. One thing our parliamentary forefathers did get right, however, was to not create two classes of MPs. They simply intended to reduce the number of Irish MPs with full home rule, but, sadly, the great war intervened and the rest is history.

Under the Smith commission, I think we are where we were with the Irish question in the early 20th century. I do not believe it is possible to dribble out complex tax powers such as thresholds, VAT and airport tax while also maintaining support for the Union. The Smith commission was a rapid scissors-and-tape job in response to a vow that was hastily put together by panicked Unionist politicians in the last days of the referendum campaign. Perhaps it was adequate for its time, but I have read it very carefully—it is not that long—and it has now been overtaken by events.

As my close personal friend and one of the most articulate Unionists, Lord Forsyth of Drumlean, said recently in the other place[Interruption.] I thought I might lose a bit of support with that, but he is a personal friend of mine; I stayed with him over the weekend. He said:

“All the unionist parties stood on a platform of bringing in the proposals of the Smith commission and we ended up with three seats out of 59. This is not a credible position; it has been rejected.”—[Hansard, House of Lords, 1 June 2015; Vol. 762, c. 194.]

I say to the Government that there is such a thing as democracy. The Smith commission has been rejected. We cannot just plough on regardless. We have to listen to what the people have said.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian 4:00 pm, 15th June 2015

May I thank the hon. Gentleman for the spirit in which he is presenting his argument? I also heard his speech on Second Reading and agreed with the analogies he drew with Ireland. If we are to move to a form of, as the hon. Gentleman describes it, benign fiscal freedom for Scotland, surely that requires a degree of transition, given the scale of the UK deficit and the unique circumstances post-2008. Therefore, the issue of division between us is the transitional arrangements, not the issue of fiscal freedom itself.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I hear what the hon. Gentleman says and nobody is suggesting that, even if my new clause 3 were passed tonight, full fiscal autonomy would start immediately. Of course there has to be a discussion and, inevitably, if oil revenues are declining, there has to be some sort of support mechanism from the United Kingdom Government. I say to SNP Members that they can have this new clause. Parliament is a democratic Assembly. I do not want to overplay my importance—I suspect the Whips might ensure that my new clause is defeated—but this is an historic opportunity to give full home rule to, and to establish that principle for, Scotland, which is what the Scottish people want.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

The hon. Gentleman is now going to tell the House that he supports my new clause.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

We seem to be very happy with the hon. Gentleman’s new clause at the moment, but he talks about support mechanisms as though they are unique to Scotland. Will he concede that the UK has itself been reliant on support mechanisms since 2001 and that it has not raised the taxes to match its expenditure since then?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I am afraid we are getting into the historic arguments of who is to blame: is it the UK Government? The Scottish Government face a fundamental problem, in that spending is 20% higher but tax revenues are, inevitably, lower. That is a fundamental problem that SNP Members have to—[Interruption.] Well, I have lost them there—fair enough.

We can have that debate, but let us not get too bogged down on that. They want independence; they can have it—[Interruption]—full fiscal autonomy.

The fact is that the SNP’s capture of all but three of the Scottish seats is an even greater victory than Sinn Féin’s in Ireland in the 1918 general election. Then the Unionists managed to secure 22 of the 105 Irish seats. We have to listen: this is actually a very serious issue.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I will make a bit more progress, because I want to get to my hon. Friend Mr Rees-Mogg. He has been very patient, and I will get to him eventually.

Like then, everything is different now. What will happen if Smith stays? Can we sustain a permanent settlement that prevents Scotland from setting the initial threshold for income tax or from changing universal credit? What will happen when the Scottish Conservative party promises in its election manifesto to cut taxation?

How credible will that be if it affects the block grant available from the United Kingdom? All these issues have to be discussed.

Under the Smith proposals, universal credit will remain a reserved matter. Holyrood will be able to vary the frequency of payments and the way it is paid, while the power to vary the remaining elements of universal credit remain reserved, but I would ask why. I have read the Smith commission. Why?

Photo of John Redwood John Redwood Conservative, Wokingham

Universal credit has been reserved because if Scotland decided to make it more generous, the issue would arise of how it would pay for that. What we find with fiscal independence is that we have to delegate both sides of the equation—the raising of the money and the spending of it—and then it can decide how much it wants to spend.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Full fiscal autonomy results in full responsibility. That is what real Parliaments do.

Responsibility for bereavement allowance, bereavement payment, child benefit, guardian’s allowance, maternity allowance, statutory maternity pay, statutory sick pay and widowed parent’s allowance will all remain reserved and administered by the Department for Work and Pensions. Why? The Smith commission further proposes a complex system for sharing responsibility for income tax. Why? That is all affected by an oscillating block grant. As I have said, how can SNP Members promise lower taxes in an election or higher spending unless they are masters of their own fate?

What are the objections to full home rule? What are the real objections to full fiscal autonomy, apart from the fact that we appointed a Lord Smith—with lots of no doubt very worthy people—to produce a report, which has been overtaken by events? We are told that full fiscal autonomy will result in tax competition within the Union. What is wrong with that? That is what keeps the American states vibrant and competitive with one another and continually innovating. Do we not insist that our taxes in Britain compete with those of Europe? We are told that tax competition would create downward pressure on taxes. Well, I am sorry about that. Why should the Scottish Parliament not be able to lower or raise air passenger duty? It can do whatever it likes. I know it has had that power and it will be allowed it under Smith, but if that power is allowed, why not powers for other things?

On Second Reading, my hon. Friend the Member for North East Somerset said that a single currency requires fiscal and monetary union, with the implication that that is proved by the Greek experience. Surely he is not suggesting that the Scots are Greeks, or that the Scottish economy is as different from England’s as Germany’s is from Greece’s. No; Scotland can thrive with full fiscal autonomy because Scotland has the will and the skills to do so. It has universities, research, manufacturing, logistics, light manufacturing, oil and gas, food and drink and a flourishing creative sector. [Hon. Members: “Hooray!”] Vote for my new clause.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

I agree with all the wonderful things my hon. Friend has been saying about Scotland, which are so clearly and self-evidently true. The point I was trying to make is that if a country has fiscal autonomy and issues debt in a currency other than its own, it may well get squeezed in the way seen not only in Greece, but in Italy and Spain, and in countries across Asia during the Asian financial crisis in the 1990s. For a country to have fiscal autonomy without its own currency is a recipe for economic failure. To go back historically, the same was true of the gold standard in the 1930s.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

That is a very fair point. I agree that that is a matter for debate. I have already made the point that Scotland’s situation is very different from that of Greece. I am actually suggesting that we remain a United Kingdom, with a sharing of the national debt. Nothing is more debilitating in this whole debate than saying, “That bit of the national debt is yours, or this bit is mine.” We are back to the same dreary arguments about who is responsible for spending and when. My hon. Friend makes a serious point. If we achieve full fiscal autonomy, which I believe is inevitable—whether it happens now or in five years time, it will happen—the Scottish Parliament and the Scottish Government will have to act responsibly and live within their means. I have confidence that they will do so.

Photo of Alex Salmond Alex Salmond Shadow SNP Westminster Group Leader (International Affairs and Europe)

I can feel the sap rising at various points in the hon. Gentleman’s speech. When he said that Scotland is where Ireland was in the early years of the last century, I felt obliged to check the record, because last week he said we were

“where Ireland was in the 1880s.”—[Hansard, 8 June 2015; Vol. 596, c. 965.]

We seem to have advanced 20 years in a week. Does that mean that in a week’s time, we will be where Ireland was in the 1920s?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

That is an amusing point, but the right hon. Gentleman knows exactly what I am trying to say. This is a very serious point; it is not just a debating point. We have a responsibility to learn from history. What I was saying last week, and what I believe, is that we were wrong to abolish the Irish Parliament, wrong to delay granting Catholic emancipation, wrong not to listen to Gladstone in the 1880s, and wrong not to implement full home rule at the outset of the great war. We were wrong, wrong, wrong and wrong again. We need to have an element of statesmanship and vision in these affairs. The right hon. Gentleman, with all his debating skills, can laugh at what I say, but I assure him that I genuinely believe in what I am trying to do.

Photo of Stephen Gethins Stephen Gethins Shadow SNP Spokesperson (Europe)

The hon. Gentleman is highlighting many wrongs. Does he think that Irish independence was wrong?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

If we had granted home rule in the 1880s or implemented the home rule Act in August 1914, it is very probable that Ireland would have remained in the Union or become a dominion. Of course I regret the fact that Ireland chose to break free. There was a tragic civil war. That will not happen in Scotland, but the history of Ireland is a history of tragedy and missed opportunities. Nobody is suggesting that we will go down that route with Scotland, but let us learn from history and try to be creative in these matters.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I am a little puzzled. Just for the record, will my hon. Friend confirm that he is not equating the subjugation of the Irish and the tragic history of Ireland from the Norman period right through to the 20th century with Scotland, which, as part of the United Kingdom, is a modern, liberal democratic country with a successful economy?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I am absolutely not. I do not want to overplay the analogy. As a fervent, almost romantic Unionist, I believe that Scotland has benefited enormously from being in the Union, which has been a Union based on trust and shared responsibility. I would not in any way suggest that the Scottish people have suffered in the same way that the Irish people suffered in the 18th century. If I gave that impression, I apologise, because that was not my aim at all. The only point I was trying to make was that we have to realise, in these debates, when there is a certain inevitability. If we know that full fiscal autonomy is going to come, it is better to have a serious discussion now on how to achieve it.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I must finish soon, because I am going to weary the Committee, but I do give way.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

An important point has been made about opportunity. It is a real sadness that Scotland has lost a net 2 million people through migration over the past 100 years. One reason why we want powers over our economy is so that we can grow Scotland and ensure that we do not see tens of thousands of our young people being educated in Scotland and then emigrating and contributing to countries abroad. We need to grow the Scottish economy. That is why we need the powers over our economy.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Most of them seem to come down here and run us, but there we go. They have done very well and we have benefited.

Photo of Danny Kinahan Danny Kinahan UUP, South Antrim

As one of the only Irish or Northern Irish people here, I am glad to hear the hon. Gentleman confirm that he sees Northern Ireland as part of the Union. I accept that many of the Scots came our way. We see ourselves very much as part of the Union. I am concerned that we are moving forward before we have thought not just about Northern Ireland, but about Wales. We need a convention so that we know where we are going. I am concerned that we are going to put ourselves into a form that we cannot come back from. In Northern Ireland today, we have very nearly got ourselves into a totally dysfunctional Government that we cannot come back from. I am nervous that we are going too far, too quickly.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough 4:15 pm, 15th June 2015

Again, that is a very fair point. I do not mind having conventions, but we, as politicians, have to decide what we want. We should decide the principles and then, once we have decided, by all means employ distinguished people such as Lord Smith, accountants, tax lawyers and so on to work out how it is done, but let us not just push this into the long grass and have a convention of the great and good lasting for years with wall to wall lawyers. Let us, in this House, decide what we want.

This is an historic opportunity to cut through the negativity of the £7 billion black hole doomsayers. Give Scotland control of its oil revenues and taxes and let it decide its own priorities on encouraging exploration and how to tax it as the oil runs out. Then we will be one Union, based on solidarity and need. The UK subsidises Northern Ireland to preserve peace. Why should we not, on the basis of need, subsidise Scotland? I am very happy with that. Are we not brothers and sisters in this Union? Should we not help each other, if needed? Our principles should not be the politics of fear, but the statesmanship of hope.

New clause 3 delivers what I think Scotland wants: power to run her own affairs, but with the consolation of knowing that there is a secure foundation stone against catastrophic shocks, such as those in 1929 and 2008. I wish for there to be solidarity on pension liability and national debt, and for it to be shared. We should not be saying “This is your bit of debt.” We should say that it is our debt. To ensure peace and security, we should share a single defence and foreign policy; not a division based on the auld alliance of the times before James I and VI rode south, but the Union that has given us 400 years of shared identity and prosperity. Those who want to slowly leak this power and that function are setting a trajectory, however slowly, towards independence.

Photo of Stewart McDonald Stewart McDonald Scottish National Party, Glasgow South

There is one part of the hon. Gentleman’s amendment, which he may well be coming on to, that did strike me as slightly curious: the part on keeping treason reserved. Is there a modern day William Wallace or Mary Queen of Scots in our midst that means he sees the need to keep that power reserved?

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I took advice from the Clerks. All right, I’ll surrender treason if they want, particularly to Alex Salmond. [Laughter.]

The Smith commission itself admits:

“A challenge facing both Parliaments is the relatively weak understanding of the current devolution settlement.”

What a glorious understatement!

“This is not surprising”— its report further concedes—

“given what is a complex balance of powers.”

A complex balance of powers has been created and I do not think there is a single Member of Parliament who actually understands what is going to happen under Smith. We need to move to a more federal arrangement whereby the four nations have broadly equal powers. Scotland, Wales and Northern Ireland should have devolved legislatures, with the English MPs at Westminster deciding the same for England, then acting as a pan-European Parliament alongside MPs elected from the devolved countries as well.

The Prime Minister promised Scotland

“the strongest devolved Government anywhere in the world” and the Scottish people rejected full independence. I suspect that they want full home rule. But will those who have argued for full fiscal autonomy now vote for it, or will they vote for further delay or deeper fudge? Will they go on blaming the United Kingdom Government for what goes wrong, or have the courage the grasp what they say they want? Full fiscal autonomy is inevitable.

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

It is a pleasure to serve under your chairmanship, Mr Hoyle. I welcome you back to your role. I wish to speak in support of amendment 58, which stands in my name and in the names of my hon. Friends.

The Scottish National party has submitted a series of amendments to the Scotland Bill based on the three-pronged commitment outlined in our manifesto for the UK general election: first, delivering on the Smith agreement in full; secondly, devolving additional powers in priority areas such as job creation and welfare protection; and thirdly, enabling the Scottish Parliament to move to a position of full fiscal autonomy. This approach was backed in record numbers by voters in Scotland in May, giving the SNP a clear mandate for change, which the UK Government must recognise and must act upon.

The UK Government must live up to the words of the Prime Minister on 10 September 2014, when he said:

“If Scotland says it does want to stay inside the United Kingdom then all the options of devolution are there and are possible”.

If all options are possible, it is the duty of the UK Government to respond to the clearly expressed desire of the Scottish people for more powers in the Scotland Bill. The SNP amendments include effectively entrenching the Scottish Parliament—that is what we are discussing now—placing the Sewell convention on a meaningful statutory basis and giving the Scottish Parliament the legislative competence to remove the reservation on taxation, borrowing and public expenditure, enabling the Scottish Parliament to legislate to deliver full fiscal autonomy. The SNP also proposes amendments for further priority powers at later stages in the Bill, including powers over tax, setting the minimum wage and taking responsibility for welfare decisions. In this first group of amendments, I will speak on issues relating to the permanence of the Scottish Parliament, and my hon. Friend Stewart Hosie will speak shortly on full fiscal autonomy.

On group 1, amendment 58 relates to the permanency of the Scottish Parliament and Government. Paragraph 21 of the Smith commission report stated:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

However, in its analysis of the draft clauses published by the UK Government, the Scottish Parliament’s Devolution (Further Powers) Committee raised two main issues. As I stressed in the previous stage, that was an all-party Committee, involving members from the Scottish National party, the Scottish Labour party, the Scottish Conservative party, the Scottish Liberal Democrats and the Scottish Green party.

Photo of David Mundell David Mundell The Secretary of State for Scotland

It is important to get it on the record that Alex Johnstone MSP has made it perfectly clear that his participation on the Committee is not to be conflated with the SNP press release issued at the time of the Committee’s report. He clearly supports the Committee’s report, but not the SNP’s attempt to distort that report.

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

It will no doubt be a relief to you, Mr Hoyle, that I will confine myself to the words agreed by all Committee members, including Mr Johnstone, when he signed up to the report.

That cross-party Committee found that the form of words on permanency proposed in the Scotland Bill was a weaker formulation than stating simply that the Scottish Parliament and the Scottish Government were permanent. We agree with the view of the Committee—and of Mr Johnstone—in paragraph 47:

The Committee is of the view that the inclusion of the words ‘is recognised’ in draft clause 1 has the potential to weaken the effect of this clause, which would be unfortunate given the all-party agreement to this recommendation as part of the Smith Commission, and the views expressed to us by the former Secretary of State for Scotland that he perceives that the permanence of the Scottish Parliament and Scottish Government is guaranteed.”

The Committee was also told by the former Secretary of State that he was open to reconsidering the wording of draft clause 1, but changes were not made in the published Bill. This suggests that the Government might be open to the amendment.

Paragraph 49 of the report agreed by Mr Johnstone and all other Committee members states:

“In evidence to the Committee, the former Secretary of State for Scotland commented that he was ‘open to thinking about different ways in which…permanence could be achieved’. The Committee welcomes the openminded approach of the former Secretary of State with regard to this issue. The Committee therefore considers that there is scope to further strengthen the permanency provisions.”

The Committee’s analysis of the published Bill, however, confirmed that there was no change between the draft and the final clause.

The Committee called for additional protection in paragraph 50 of its report, supported by Mr Johnstone and all other members:

“The Committee considers that the effect of the clause on permanency, as currently drafted, is primarily declaratory and political rather than legal in effect. The UK doctrine of Parliamentary sovereignty makes achieving permanence problematic. The Committee recommends that the Scottish electorate should be asked to vote in a referendum if the issue of permanency was in question, with majorities also being required in the Scottish Parliament and the UK Parliament.”

That is the purpose of the SNP amendments, which we will be moving.

Photo of James Cleverly James Cleverly Conservative, Braintree

Does the hon. Gentleman genuinely believe that there are circumstances in which the permanency of the Scottish Parliament could be called into question without the voice of Scottish people being heard?

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

I congratulate the hon. Gentleman on his election. I gently encourage him to remind himself of the position of the Conservative party in the run-up to the referendum on Scottish devolution. It was totally opposed to devolution, so he will perhaps understand why SNP Members, who have consistently supported home rule, wish to see that reflected in the legislation. He will have the opportunity to support the SNP amendment later.

Photo of Graham Allen Graham Allen Labour, Nottingham North

If there is absolutely no threat whatever to the Scottish Parliament, why not put that fully on the face of the Bill, as the hon. Gentleman suggests?

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

The hon. Gentleman makes an excellent point. Hopefully, the Committee does not need to divide. If there is support from Labour and from the Government, everybody will be satisfied and we can move forward.

In legal terms, there is nothing to stop the Westminster Parliament from repealing clause 1, according to the doctrine of parliamentary sovereignty and the associated norm that one Parliament cannot bind its successors. The Scottish Government produced an alternative clause that includes a double lock—it would require that the clause cannot be repealed without the prior consent of the Scottish Parliament, and without the people of Scotland voting to abolish the Scottish Parliament in a referendum conducted for that purpose. The Scottish Government clause forms the basis of our amendment.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I have no objection to what the hon. Gentleman is trying to achieve, but can he clarify the amendment? It states:

The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

The country does not have a constitution, so will he identify the legal definition and what is constitutional?

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

The hon. Gentleman knows that the UK does not have such a constitution—we are strong supporters of a constitution, whether for the UK or for Scotland—and that the constitution is based on custom and practice. Legislating on the matter would be an appropriate safeguard.

The SNP approach would strengthen the declaratory and political effect of the clause. It also acknowledges the position of the Scottish Parliament and the long-standing sovereign right of the people of Scotland to determine the form of government best suited to their needs, as recognised in paragraph 20 of the Smith commission report, which states:

“Reflecting the sovereign right of the people of Scotland to determine the form of government best suited to their needs, as expressed in the referendum on 18 September 2014, and in the context of Scotland remaining within the UK, an enhanced devolution settlement for Scotland will be durable, responsive and democratic.”

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I am just trying to be helpful. The hon. Gentleman might have the wording “United Kingdom’s constitution” in an amendment, but would it have any legal force? An amendment to the American constitution, or to any other written constitution, is legally binding. What would be the status of the hon. Gentleman’s amendment?

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

I am making the point that it would be very difficult for people to go back on legislation with the express wording proposed in the amendment. It is not that difficult a concept to grasp.

The Scottish Government noted in their response to the Devolution (Further Powers) Committee interim report that both the House of Commons Political and Constitutional Reform Committee—I am looking at Mr Allen, who served with great distinction as the Chairman of that Committee—and the House of Lords Constitution Committee raised concerns with those aspects of the UK Government’s clause.

The Scottish Government’s alternative clause and the SNP amendments address more minor issues with the UK Government’s clause, using the definite article “the” instead of the indefinite “a”, as that is the language used in the Scotland Act 1998. That was picked up by Mr Carmichael.

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

I want to make some progress, if the hon. Gentleman will forgive me. I have given way to Members on both sides of the Committee.

The SNP also suggests using “constitution” rather than “constitutional arrangements”, because the former term is already straightforwardly used in the 1998 Act. “Constitutional arrangements” is a term most commonly used to refer to the governing arrangements of bodies and offices, and is therefore inappropriate for describing the governance of Scotland. That is politically important for both the Conservatives and the Labour party, given that the very first words of the vow were:

The Scottish Parliament is permanent, and extensive new powers for the Parliament will be delivered”.

In his foreword to the Smith commission report, Lord Smith made the position clear by saying:

“The Scottish Parliament will be made permanent in UK legislation”.

The main body of the report, however, had a slightly weaker formulation:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

The fact that the cross-party Scottish Parliament devolution committee—including the Scottish Conservative party, and now, as a result of amendments to this part of the Bill, the SNP, the Liberal Democrats and Labour—has sought to deliver a stronger legal protection for permanence suggests that the Westminster Conservatives are the only partners in the Smith deal who hold the softer interpretation of what Smith was proposing.

As an entirely sensible safeguard, the SNP has proposed amendment 58, securing a double lock to protect the Scottish Parliament, which one of us will move formally later. It states:

“The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

It also states:

“Subsection (1) or (1A) may be repealed only if…the Scottish Parliament has consented to the proposed repeal, and…a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”

The amendment is intended is to ensure that the Scottish Parliament can be abolished only with the consent of the Scottish Parliament and the Scottish people after a referendum, and we look forward to pressing it to a vote.

Photo of John Redwood John Redwood Conservative, Wokingham 4:30 pm, 15th June 2015

I have always been a Unionist, but my idea of my country, the United Kingdom, is that it must be a democracy at peace with itself, and can only proceed as a happy and successful democracy if it has the consent of most of the people most of the time to the Union institutions and the powers of those institutions.

I am pleased that, because we proceed democratically and understand the need for consent, this Parliament listened to Scotland and, quite recently, granted a referendum to establish whether it was the settled will of the Scottish people to leave the United Kingdom altogether and set up their own arrangements. We discovered two things as a result of that democratic exercise. We discovered that the Scottish National party itself was not arguing for full independence: it wanted to remain part of the currency union, for example. I do not see how it is conceivably possible for an independent country to be part of a currency union.

Photo of Peter Grant Peter Grant Scottish National Party, Glenrothes

Is the right hon. Gentleman seriously suggesting that Germany is not an independent nation?

Photo of John Redwood John Redwood Conservative, Wokingham

That is exactly the problem: Germany is not an independent nation. No member of the eurozone is an independent nation, and that is why those countries are experiencing such trouble. The trouble is not just for Greece, which is very visibly not independent, because it is being told how to conduct its economic policy. Germany is not independent either. Germany did not wish to lend Greece huge sums of money, but the European Central Bank, acting in the name of Germany, has advanced huge sums of money, which it will find very difficult to get back, but which Germany has to stand behind.

Photo of John Redwood John Redwood Conservative, Wokingham

If SNP Members will allow me a little time, I will say things that they will like. I am not trying to make life difficult for them.

This is my analysis. In the referendum the SNP went for something more akin to home rule than what I would regard as full independence, but at that stage the Scottish people said no even to that. They seemed to say yes to the rather larger devolution of powers that the three main Unionist parties were then offering. However, we are now experiencing new circumstances.

Like my hon. Friend Sir Edward Leigh, who has tabled a very interesting amendment, I think that this Parliament must listen to the new voice of the Scottish people. It is clear that there has been a shift of opinion towards more home rule than the Unionist parties were offering at the time of the referendum. That is why we are here today, listening very carefully to what the SNP has to say, and that is why I think it extremely important for us to have this debate on full fiscal independence, or fiscal autonomy. It would be one way for our Parliament to respond when the Scottish people have said, “We do not want to be completely independent as a separate country, but we want much more self-government—or home rule—than was envisaged by the Unionist parties at the time of the referendum, because we can see that that was not very popular.”

The Unionist parties collectively did rather badly in Scotland come the general election. [Interruption.] Well, between them, they received just under half the vote, while the Scottish nationalist party received just over half the vote. Because the Unionist vote was split, practically no Unionist Members of Parliament were elected, but it is still the case that Scottish opinion is fairly evenly balanced. The Scottish nationalists did not get 70% or 80% of the vote. If they had done, then, as far as I am concerned, they would really be in a position to tell us the answer, but, as judged by the vote, they speak for only about half the Scottish people. However, as representatives, they speak for practically all the Scottish people because they have most of the Members in this place.

I am listening very carefully and will want to hear more about what SNP Members want, but I am also very conscious that, in parallel with this exercise on powers as set out in this Bill, in some way far more important negotiations are already under way on what the new financial settlement will be, and those are not yet being reported to this House. That is crucial not just to the SNP and its representation of the Scottish people, but to the people of England. I find the more home rule that is on offer and the more we hear the Scottish voice, the more I have to be an advocate not of the Union, but of England, because someone needs to speak for England and to say that the consequences of much enhanced Scottish devolution, and some fiscal devolution as well, are serious for England. England needs to be in the discussion just as Scotland does, as this is our joint country and a major change in its arrangements will have a fundamental impact on England.

While I am very attracted to the idea of my hon. Friend the Member for Gainsborough that it would be a shrewd move to, for once, get ahead of the Scottish appetite for home rule and on this occasion to grant full fiscal devolution, we need to ask how feasible that is and what the consequences will be for Scotland and England. If Scotland wishes to be part of common welfare and pension guarantees, some limitation is already imposed on the spending side of full fiscal devolution. We have to think about the position of England if cross-guarantees are being offered for some part of that welfare package. If we are going to proceed in the way the Government currently plan and the way the negotiations are currently being undertaken—as I understand it, there is an attempt to find a way of adjusting the block grant for Scotland to take into account the new Scottish responsibilities, as some items of spending will have to be added in as a result of the devolution of new functions, and there will be a reduction in the block grant to take account of those taxes that are now Scotland’s to fix and collect—therein lies an immediate problem.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

Would not an easier solution be for Scotland to collect its own tax, as Catalonia does, and then pay into the centre, rather than the centre paying out? The taxes should be raised by the Government of the territory paying the taxes and paid into the centre rather than giving them to the centre for it to then pay out. In that way, the centre will have to stop saying it is subsidising people when it returns their own taxes.

Photo of John Redwood John Redwood Conservative, Wokingham

But if Scotland wisely decides to have lower tax rates to make itself more popular, the Union will be losing out if those lower tax rates collect less money.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

The right hon. Gentleman should realise that it is not lower taxes that have made the SNP more popular; it is better public services in Scotland—that has given us 50% of the vote versus his party’s 37%.

Photo of John Redwood John Redwood Conservative, Wokingham

If Scotland wishes to impose higher taxes, the Union has less of a problem with that—unless it chooses to impose higher tax rates which collect less revenue, because those could be a problem for the Union as a whole—but it would be a problem for Scotland if it had to collect higher tax levels and it did not get all the money back; I would have thought it would want to get all the extra money back that it was collecting. Full fiscal autonomy means it would take responsibility for both raising the money and spending it. If Scotland wishes to spend more under fiscal autonomy, she can do so if she has a magic way of getting more money off people through either higher or lower tax rates, whichever work in the particular fiscal circumstances.

We need to have working papers on how full fiscal devolution might work and whether it is truly full fiscal devolution, because if we are going to full fiscal devolution, England will want guarantees that we are no longer acting as a buffer or subsiding the Scottish settlement, just as Scotland will want guarantees that she has got a fair deal and is capturing the benefits of her fiscal independence. If we go for a mixed system, which is where we currently are with the real debate between the Smith commission, the pro-Union parties and the SNP, there is a lot to be worked out, and I hope that at some point those on the Treasury Bench will share some of their thinking with the House.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

I find myself in the unusual position of agreeing with much of what the right hon. Gentleman is saying. Do not these arguments illustrate the asymmetrical nature of the devolution settlement across the four nations of the United Kingdom? Does he agree that whichever funding model we go for in relation to Scotland, there will be implications for the finances of the other three nations? Does he not think that we need a constitutional convention to put that right?

Photo of John Redwood John Redwood Conservative, Wokingham

No, I do not think that we need a constitutional convention, because that would create endless delay and complications. I agree with previous comments that we are here to try to solve this problem for our respective constituents. I spent quite a lot of my time during the election speaking for England and saying that I wanted to ensure that England got a reasonable deal out of this. SNP representatives clearly did the same in relation to Scotland, and we both achieved similar levels of success in attracting lots of votes for what we were saying.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

The right hon. Gentleman talks about getting good deals for the various parts of the UK, but let us look at the wider British Isles. Does he think that the aggregate GDP of the British Isles would be as high as it is today without the full fiscal autonomy that the Republic of Ireland, the Isle of Man and the United Kingdom all enjoy? If the aggregate GDP of the British Isles is higher for those reasons, does he not agree that it will be higher still when Scotland achieves its full fiscal autonomy?

Photo of John Redwood John Redwood Conservative, Wokingham

I start from the point of view of democracy. A democratic state has to have the full range of powers, including fiscal autonomy and its own currency. That is different from asking: what is your state? I would still rather have the United Kingdom as my state, but I have just explained that if it is the will of the Scottish people that the UK is no longer their preferred state, they must leave—of course they must.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

The right hon. Gentleman is being very kind in enabling our dialogue to continue. I am sure he would acknowledge that the UK functioned between 1603 and 1707, when the Parliaments were independent.

Photo of John Redwood John Redwood Conservative, Wokingham

Well, it functioned after a fashion, but I would not have wanted to live through that time. The nations were clearly not nearly as rich as they are today. Labour Members sometimes try to pretend that we have gone back to an ancient age, but I am sure that none of them would willingly go back in time and live in that era, because we are obviously so much better off now.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I do not want to divert from the subject, but was not the reason for the Scots’ enthusiasm in going forward in 1707—[Interruption.] It was not an economic blockade; it was speculation in the colonies of central America.

Photo of John Redwood John Redwood Conservative, Wokingham

Yes, it was a kind of early version of the banking crash, which also reminds us that Scottish banks can sometimes get into trouble, and that the Union’s insurance can be quite helpful to them.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

May I return the discussion to the here and now? I should like to clarify something that the right hon. Gentleman said, because I think I agree with him. Is he saying that there was a clear desire in the debate that took place in Scotland post-Smith for a fuller measure of complete domestic fiscal control within the UK, but that achieving it would require serious discussions about how it would work in Scotland and how it would affect the fiscal arrangements in the rest of the UK? Does he agree that it could be done reasonably quickly, but would require transitional arrangements? It cannot be done overnight, but it is the way to go. If we do not do this, we will end up having endless piecemeal discussions, which would produce more friction than light.

Photo of John Redwood John Redwood Conservative, Wokingham

I am making an even more urgent point than that. I am saying that that discussion is going on in parallel while we are debating this Bill. I hope that its content will be shared with the House at some point, because it is a matter of great importance to the United Kingdom, to England, to Scotland and so forth. As I understand it, those taking part in the negotiations are up against these very issues. If, for example, too much independence is given to Scotland on spending patterns, would there be a Union guarantee to pay for it all? How would it be fair to other parts of the Union if Scotland could increase her spending without having to take responsibility for raising the money for it? If Scotland starts to raise more of her own money, how do we adjust the block grant? In the current negotiations, nobody is suggesting getting rid of the block grant and saying that Scotland can have all her own money and just spend her own money. I am not even sure that is what the SNP wants. Negotiation is going on about how far—[Interruption.] If the SNP genuinely wants all that, that is fine. We then have to have a serious discussion, before it could be agreed to, over the borrowing. I will call it “borrowing”; I do not think “black hole” is a terribly useful term.

It is obvious that the United Kingdom has been living well beyond its means as a state for many years and is still borrowing large sums, and that, collectively, the United Kingdom, including Scotland, has built up those debts. Some of that money has been spent in Scotland and some of it has been spent in England. If we went for so-called full fiscal autonomy, we would face the question of what do we do about the new borrowing and what do we do about the past borrowing. One thing we have surely learnt from Greece and other places in the euro currency union is that the borrowing of a state in a currency union is of great concern and interest to the rest of that union. There would therefore have to be an agreement on borrowing, with past debt levels attributed to Scotland, because it would have to pay an interest bill on those. Future build-up of Scottish debt would also have to be addressed: whether it would be separate Scottish debt or would still come with the full Union guarantee, which would probably make it a bit cheaper. That becomes the centre of the row, rather than it being over which taxes we have.

Photo of Patricia Gibson Patricia Gibson Scottish National Party, North Ayrshire and Arran 4:45 pm, 15th June 2015

Does the right hon. Gentleman not agree that successive Westminster Governments could learn much from the economic management of the Scottish Parliament, which has balanced its budget, in a fixed budget, every year, while Westminster has run up successive debts?

Photo of John Redwood John Redwood Conservative, Wokingham

That is because all the time that it is a subsidiary Parliament of the Union, and part of our public expenditure and borrowing plans, it has to abide by the remit. The hon. Lady is right in that it has been given a tougher remit than the Union gives itself, but it is not fair to say that that is of no interest or benefit to Scotland, because of course much of the Union expenditure is also being committed proportionately in Scotland and so it is Scotland’s share of the debt as well. I am making a factual statement; I am not trying to make party political points, wind up the SNP, rerun the referendum or anything like that. I am just trying to get this Committee to understand that grave and big issues are being hammered out elsewhere, we are not hearing about them and they impinge very much on this crucial debate that we are now having.

I have intervened in the debate because I want an opportunity to talk about this financial settlement, which matters to England as well as to Scotland. The proposal put forward by my hon. Friend the Member for Gainsborough brings things centre stage. If we went down his route and had full fiscal autonomy, I would want to know what that meant; how much responsibility Scotland would take, for example, for pensions as well as welfare; and what the borrowing settlement would be. The residual is the borrowing, and unless we know what the answer is on that, we still will not have a happy Union or stable expenditure.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

I thank the right hon. Gentleman for his most gracious speech and his thoughtful remarks about the future of the constitutional arrangements between Scotland and the rest of the UK. It is perhaps worth remembering that when Gordon Brown spoke on behalf of the three Unionist parties prior to the referendum, what was offered was as close to federalism as we could get. What was talked about was home rule in the spirit of Keir Hardie. It is akin to the remarks that the right hon. Gentleman is making. It is perhaps worth remembering that the manifesto commitment the SNP stood on was delivering powers for a purpose to the Scottish Parliament. He is right: that is what the Scottish people voted for in returning 56 Members of Parliament to this Chamber.

Photo of John Redwood John Redwood Conservative, Wokingham

Then I think we need to have another debate, on another day, which looks at what is going on in these important financial discussions. Although my constituents are interested in what powers Scotland gets, they are far more interested in how the money works between the different parts of the Union. We have no papers before us today to elucidate that.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

For the second time in five and a bit years, I agree with the right hon. Gentleman. On the complicated nature of the fiscal framework, which I believe he is trying to unpack, does he not agree that the Labour new clause, which will be debated at some point, to set up an independent commission on the costs and implications of full fiscal autonomy provides a much more reasonable and sensible approach?

Photo of John Redwood John Redwood Conservative, Wokingham

We are where we are. Promises were made, I thought in good faith, by the three Front-Bench teams. They were not my chosen promises; they were made on behalf of the three Unionist parties. They did the job for the referendum, but they then did not do much of a job for the Unionist parties at the general election. However, we cannot now be seen to be delaying for any great length. There needs to be proper work—and I am sure that proper work is going on in the Government at the moment as they try to work out a financial settlement in parallel to this Bill. I am just suggesting that perhaps this Parliament needs to have some of that thinking shared with it.

Today is the first opportunity, within the clear parameters of new clause 3, to try to expose a bit of the thinking on how a limited amount of fiscal autonomy will work, and on how many of these taxes Scotland will not only collect, but be responsible for and have knocked off the block grant. As I remember it, when the leaders came up with this promise, Gordon Brown was a big voice—obviously, he was not one of the leaders at the time—for rather less fiscal autonomy. He was trying to stop Scotland controlling her own income tax revenues, so I do not entirely share the interpretation of the Labour Front-Bench team of what Mr Brown was trying to do at that point.

I will bring my remarks to a close with the simple conclusion that the world has moved on because of the general election result. The debate on money is taking place elsewhere, but we currently have a short debate about money here. I hope that the Front-Bench team will share some of its thoughts on money. Fiscal devolution seems to be attractive to many people in Scotland, but we need to know where it ends and how we sort out all those crucial issues about debt and borrowing as well as about shared policies such as pensions.

Photo of Graham Allen Graham Allen Labour, Nottingham North 4:51 pm, 15th June 2015

Sir David, it is a great pleasure to see you in the Chair this afternoon. Like many colleagues, I had assumed that you would be in your green tights dancing around the maypole with many other dignitaries at Runnymede.

[Interruption.]

Yes, the thought does bring tears to the eyes. I am talking about a serious occasion, but it is, by necessity, a backward-looking, occasion. Eight hundred years ago, in what was a great leap forward in its time, the Magna Carta was sealed, if not signed. What we have been hearing about today—and this has been a really superb debate so far by all parts of the House—is the next 800 years. We are certainly looking at the foreseeable future and at our democracy. One thing we cannot do is go back to business as usual. We have a majority party in the House, and we cannot just ram stuff through the Commons. We must consider all these sorts of Bills seriously.

I mean no offence when I say that the Scotland Bill is not the property of the people of Scotland let alone of the political parties of Scotland. The Scotland Bill is about the Union. Whether we are in a transitional period or whether we have another 800 years of happy family relationships is still to be decided. As we discuss this Bill, the local government devolution Bill, and the European referendum Bill, those colleagues who are new to the House—to all parts of the House—should be excited that they have come here at this moment. It is a time of immense potential. People from all parts of this House have expressed the view that we need to look at this matter seriously. The word “statesmanlike” has been thrown around quite a bit, but it is pertinent to this debate. What we do today and over the next four Mondays will be of great importance to all of us in the Union.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

As usual, the hon. Gentleman is making a thoughtful contribution. He said that the Scotland Bill is the property of the House, but he will recognise that the House has been forced, kicking and screaming to reach the point it is at the moment. In the previous Scotland Bill, an amendment was moved to devolve Crown estate control to Scotland, and the House would not agree to it. It has now conceded on that point because of the weight and the power of the votes from the people of Scotland and it has done so easily. Is it not a huge mistake for this place to give away too little too late and not to listen to Sir Edward Leigh?

Photo of Graham Allen Graham Allen Labour, Nottingham North

I am probably one of the worst in this House for blaming Westminster. Westminster and, above all, Whitehall—that is a distinction that we can educate each other in over the next five years—deserve to have that blame attached to them, but the hon. Gentleman and his colleagues are now part of Westminster. They will need to use the Westminster system and to be a part of it, if only because they wish to get such Bills passed. The Bills that have been passed to free Scotland in the way that it needs to be freed up, that Nottingham, Leicester and Derby need to be freed up and that England, Wales and Northern Ireland need to be freed up have been passed by this place because of the efforts of people such as Donald Dewar and those who got the Scotland Act 2012 through and because of the efforts of all the parties in this House, who will, I hope, pass the Scotland Bill effectively through this Committee.

Photo of Philippa Whitford Philippa Whitford Shadow SNP Westminster Group Leader (Health)

The hon. Gentleman mentions Donald Dewar and I pay tribute to what Donald Dewar did. In the establishment of the Scottish Parliament, sections were given entire—such as health or education—so that the Parliament could make its own policies without controlling the budget. The problem with Smith is that it is made up of little bits and pieces that mean that the two Parliaments will be forever at each other’s throats. That cannot be sustainable.

Photo of Graham Allen Graham Allen Labour, Nottingham North

The problem with Smith, with 2012 and with Donald Dewar’s devolution is that none of them were perfect. To seek perfection is to be the enemy of good. This is a progress, a process and a way forward, and it might not turn out how any of us first imagined. One key point is for those who represent England—in my case, my city of Nottingham, of which I am very proud—is that nothing in this Bill should be unable to apply to the liberation and progress of such cities. Nothing in my city should restrain or inhibit the progress I would love to see my friends in Scotland achieving, too.

This is all about devolving power. I do not wish to sour the atmosphere, but sometimes separatism and devolution are sworn enemies. I hope that this is not one of those occasions. I hope that we can all see devolution as part of a process.

Photo of Graham Allen Graham Allen Labour, Nottingham North

If I may just make this point while I am thinking about it, I will then give way. If we continue that process, we might end up in a place that is better for everybody and we might end up with the sort of liberation of our localities and communities that we all want, whichever nation of the Union we represent.

Photo of Peter Grant Peter Grant Scottish National Party, Glenrothes

Does the hon. Gentleman agree that the only real separatists in this House are those on the Government Benches, who would quite happily see Scotland dragged out of the European Union against the express wishes of its people?

Photo of Graham Allen Graham Allen Labour, Nottingham North

We all have a stronger common interest than we sometimes dare admit, and we certainly all have an interest in making devolution work. The bigger issues that I want to come on to concern some of the structures through which we might all work together to do some of that. Some were raised by my Select Committee, which was an all-party Committee of this House and proved that we can do other things and move forward on devolution.

Let us imagine where we might be in 20 years’ time with the federal Parliament, which this is. Even the strongest small c conservative—they can be found throughout the House—would not say that we will be in exactly the same place in 20 years as we are today. That would be inaccurate. We will definitely be in a different place. What will it look like? I suspect the position will unfold. It may not be devised at 10 o’clock tonight, as the amendments envisage, but there will be progress over those 20 years. What does it look like? For some it looks like separation or independence. For others, it looks like a Union refreshed and renewed. For me, it looks like my people in my area being allowed to make more decisions of their own as of right, not because people feel they are giving them a little play out of Westminster.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I give way to Mr MacNeil, who has been waiting a little while.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar 5:00 pm, 15th June 2015

I see that my patience has paid off and I am grateful to the hon. Gentleman. Is not one of the problems, in yet another Scotland Bill three years after the previous one, that Westminster may give away a little bit here and a little bit there? Would it not be better to turn the telescope around and have the relationship that the Faroe Islands have with Denmark? They can take the powers that they want to take and it is not a big deal for Copenhagen to give Tórshavn those powers. In Westminster it seems a massive deal to give people control over the minimum wage in Scotland—a power that Labour blocked, for goodness sake. It should not be like that. If Scotland wants it, let Scotland take it and let this place be gracious about it.

Photo of Graham Allen Graham Allen Labour, Nottingham North

It is always good to knock off a quick anti-Westminster point, so I will join the hon. Gentleman and say that everything that he resents about Whitehall, I resent at least as much in so far as it impacts badly on one of the 10 poorest constituencies in the United Kingdom, so—I mean this in a friendly way—he does not need to lecture me about how inadequate Westminster and Whitehall are at freeing up and liberating people to get better jobs, improve skills and improve their schooling, all the things that all of us hold in common as we move forward.

What I am saying is that we need to figure out how progress that has been made in Scotland—massive progress, which I fully support—can be replicated, not just in a narrow sense of “This is good for us”, but if it is so good, how it can be good also for Wales, Northern Ireland and England.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

I commend the work that my hon. Friend and his Select Committee did in the previous parliamentary Session. Although we are talking today specifically about the Scotland Bill, is this not also about how we re-engage the debate across the whole of the United Kingdom about how we bring powers down to the very local level so that what happens in Scotland today is valid for Nottingham, Manchester, Durham and other parts of the Union tomorrow?

Photo of Graham Allen Graham Allen Labour, Nottingham North

If we have now breached the principle and the wonderful idea of devolution—giving power away, not decentralisation, where Westminster and Whitehall can suck it back—let us look at devolution that is entrenched and can stand the test of time. I agree very much with getting the words right. My Select Committee was clear about the words reflecting the permanency of the Scottish Parliament.

The question is how we achieve permanency in an unwritten constitutional environment. We do it in two or three possible ways. One suggestion in one of my amendments—I tabled new clauses 6 to 9—is that the Scottish Parliament is protected behind the ingenious mechanism of the Parliament Act, which requires both Chambers to agree to any change in the status of those things that are protected. The other idea is related to the Magna Carta, which is being celebrated today, and calls for a new Magna Carta—a written constitution. I commend the Scottish Executive for the work that they have already done on that.

[Interruption.]

If any hon. Member has something to say, please stand up and correct me. I am happy to take a correction.

Photo of Stewart McDonald Stewart McDonald Scottish National Party, Glasgow South

The legislation was changed from Scottish Executive to Scottish Government. It is not a briefcase.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I am sorry for once that I gave way to an hon. Member because this is a serious debate. There is a precedent and if we can build on the precedent, however we name it, and make a broader constitutional settlement for the United Kingdom, there will be fewer occasions on which any of us need doubt when progress is made. If it is clear for every schoolboy and schoolgirl that the structure of their Government is there in writing, there is less likelihood that those powers can be sucked back into Westminster and Whitehall.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I declare an interest as an adjunct associate professor of British politics. I pay tribute to the fantastic work that the hon. Gentleman did in the previous Parliament. The point that SNP Members are missing is that the progress that has been made since the Scotland Act 1998 was as a result of the sovereignty of this Parliament. May I also respectfully correct the hon. Gentleman? We are not a federal Parliament, because that presupposes a codified written constitution setting out the powers, duties and responsibilities of the centre and the constituent parts of a sovereign nation.

Photo of Graham Allen Graham Allen Labour, Nottingham North

We might not yet be a federal Parliament officially, and we might not yet have the right words for it, but there is absolutely no question but that our Union is moving towards a federal basis, rather than the alleged parliamentary sovereignty referred to earlier. I hope that I live long enough to see parliamentary sovereignty in this House, because I have not seen much of it over the couple of decades I have been here.

The other thing that I think is really important to have clarified—this is also in the interests of my friends in the SNP—is the role of local government. If we have an overarching, federal structure in the United Kingdom, there are certain things that that structure needs to define. Human rights is a classic example, and I would argue strongly that so too are the rights of the sub-national tiers of government. Otherwise, all we would be doing is transferring state power from Whitehall to Holyrood. Some people say that that is precisely what has happened in Scotland, but I am sure that is a false accusation. However, in order to ensure the freedom of those who work at the grassroots, in our communities and neighbourhoods, defining the rights of local government, which is commonplace in every other western democracy, and to do that in our Union while it exists and is flourishing, would ensure that no such accusation could be levelled at my newly elected friends in the SNP.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

My hon. Friend will remember that in the early 1990s there was a word that was in vogue in what was then the European Community: subsidiarity. Although it is a horrible word, it has a very serious meaning, which is that decisions should be taken as closely to the people as appropriate. Is not that just as relevant to the devolution debate? We should be talking about handing powers from this place not only to Holyrood, Cardiff Bay and Stormont, but even to places such as Manchester city region, and to local communities beyond.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I think that devolution is so good that it should apply to everybody in the Union. I welcome the breakthrough that has been made in Scotland and hope to see a similar settlement for England, Wales and Northern Ireland. I often say—my hon. Friend will have heard this before—that subsidiarity is the ugliest word in the political lexicon to describe the most beautiful concept.

Photo of John Redwood John Redwood Conservative, Wokingham

An important part of our Union is that it has been a transfer as well as a fiscal Union, so the richer parts pay in more, relatively, and the poorer parts draw out more. Does the hon. Gentleman feel that that could be sustained with full fiscal autonomy, or is that a problem?

Photo of Graham Allen Graham Allen Labour, Nottingham North

As far as I am concerned, the idea of income tax assignment was applied in the Scotland Act 2012. I think that it is the basis on which devolution can move further forward in Scotland, and certainly on which it can start to move forward more seriously in England so that we have not just piecemeal breakthroughs, as we are having at the moment, but something that can apply to every local authority throughout the whole of England and Wales and, if it wishes, Northern Ireland.

Photo of Michael Weir Michael Weir SNP Chief Whip

I have listened carefully to what the hon. Gentleman has been saying, particularly about local government. Does he accept that it is not up to this place to determine the form of local government in Scotland, Wales and Northern Ireland? Decisions about local government are already devolved to the Scottish Parliament and the Assemblies of Wales and Northern Ireland. England may determine its own local government through this place, but questions about local government in Scotland, Wales and Northern Ireland are not to be decided here.

Photo of Graham Allen Graham Allen Labour, Nottingham North

We need to think carefully about whether the rights that we would like to enjoy in our constitution should be placed at a federal level or at a national level. Let us fantasise about what would happen if, for example, the European convention on human rights was abolished and the right to torture people was established in part of the United Kingdom—[Interruption.] I know it is a silly example, but let me continue for a moment. I cannot imagine that we in the federal Parliament would not object to that ridiculous state of affairs. In some written constitutions, transcending values—concerning, for example, human rights, structures and democracy—may be in the federal constitution rather than in national constitutions. We need to debate that, and I hope that the hon. Member for Glasgow South will join in that debate rather than simply shaking his head, as he is doing.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I will give way to the hon. Member for West Dunbartonshire. I am sure, since his Front-Bench colleague is telling him not to take too much time, that he will be brief.

Photo of Martin Docherty Martin Docherty Scottish National Party, West Dunbartonshire

I am grateful to the hon. Gentleman for participating in this resolute debate about the future of Scotland and the British Parliament. I come back to the Statute of Westminster of 1931. Is the hon. Gentleman suggesting that Scotland should be a dominion?

Photo of Graham Allen Graham Allen Labour, Nottingham North

That was before even my time. I will allow the hon. Gentleman to educate me about that in the Tea Room.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. I listened carefully to what Ian Paisley said, and it was a point of argument, not a point of order.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

Mr Allen seems to be advocating a written constitution, but the problem with that, as we have seen clearly with the Government of Wales Act 2006, is that it invites judge-made law. Recent Supreme Court decisions on the 2006 Act have led, in effect, to judicial decision making on a reserved powers model, which is not contained in the Act.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I am sure that I would be called to order if I went into too much detail on the pros and cons of a written constitution. Suffice it to say that reams and reams of judge-made law exist, but our citizens are not allowed to see the basis on which that framework is put into place.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

Further to the point of order made by Ian Paisley, France knows that it is France, but the UK does not seem to know that it is the UK. That is an extraordinary state of affairs.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. Again I say to the House that that is a point of argument, not a point of order.

Photo of Graham Allen Graham Allen Labour, Nottingham North

Perhaps I can turn to a subject that will help the hon. Member for Na h-Eileanan an Iar, who has intervened several times, in his future career: the House of Lords. I have tabled a new clause that would enable the nations of the Union to decide how they would like their representatives in the second Chamber to be chosen, elected or balloted for. Should the SNP have reached its zenith, and should it suffer a catastrophe after the next general election, I suggest that the hon. Gentleman may wish to have his name added to a list of such representatives put forward by the Scottish Parliament.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I think the hon. Gentleman has made more than his fair share of interventions. There may of course be others in the Scottish National party who wish to take his place.

As we now have a five-year Parliament, one of the answers to this—with Government consent, I hope—is to convene a constitutional convention so that all the parties of good will can come together. I strongly hope that we could benefit from the views of Conservative Members who have spoken today. We could pull together a constitutional convention that did not at all delay Bills coming to this House. The problem is not that we take Bills through too slowly but that we take them through too quickly—although there are cast-iron reasons why this Bill should move forward quickly. We could have a constitutional convention that looks at all the issues—subsidiarity, local government, a written constitution, English devolution, and the human rights that we cherish so much in this country—and takes as long as it likes alongside the ongoing legislative process.

We have had a very good debate that has been good-natured but statesmanlike. People in this House of all parties are looking to how we progress the inevitable movement towards devolution and personal and community liberation that will, I hope, be the hallmark of this five-year Parliament. I hope that we will continue these discussions and come up with answers, very much in the vein of what we have tried to do in this debate.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party 5:15 pm, 15th June 2015

It is a pleasure to serve under your chairmanship, Sir David, and to speak to amendment 89, tabled in my name and the names of my hon. Friends.

If amendment 89 is passed, it will deliver full fiscal autonomy for Scotland. That means that Scotland will collect all her own taxes, fund all her own spending—all the spending that is the responsibility of the Scottish Parliament—and pay a subvention for shared spending on Scotland’s behalf, primarily on defence and foreign affairs, by the UK Government. This is not simply about responsibility for taxation; it is about responsibility for all spending outwith limited and agreed areas.

On the question of why we need this, the answer is clear. We need and deserve important decisions to be taken as close to the people as possible and, more importantly, we need those decisions to be taken in line with the aspirations and democratic choices of the Scottish people.

The next question is what we would do with the powers. The answer depends very much on the view of the Scottish Government of the day, the prevailing economic conditions, and the most up-to-date economic forecasts. I will describe what an SNP Government might do with the powers of full fiscal autonomy to grow the economy, improve conditions for business investment and job creation, and start to make society fairer—all of which are vital for Scotland’s economy and future.

We believe in the transfer of more powers to Scotland not as an end in itself but because through it the Scottish Government can exercise those powers to the benefit of Scotland’s economy and society. For example, we would not merely have control over income tax rates and bands for earned income but have responsibility for all tax on income, including definition, the basic rate starting threshold, and tax rates on dividend and investment income. That would allow for every possible policy choice, delivering to future Scottish Governments the flexibility to craft an income tax system. Likewise, the devolution of corporation tax would allow for a comprehensive tax regime, including an intelligent use of allowances to assist business in investing for the future.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

Does the hon. Gentleman desire air passenger duty to be included in the remit of the amendment? Does he accept that to be fair to all the component parts of the United Kingdom, any change to APD should affect Northern Ireland as well as the north of England?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

Air passenger duty is to be devolved to Scotland, as it has been to Northern Ireland, albeit in a limited way. I very much welcome that. It is for each of the component parts that have responsibility for a tax to use it wisely in the interests of the people. I think we would agree that serious, proper and justifiable tax competition to grow our economy and attract investment would be a good thing, and I hope the hon. Gentleman agrees that it is always odd to hear Government Members purport to support tax competition except, of course, when it begins to affect them.

Photo of Wayne David Wayne David Labour, Caerphilly

It is interesting to hear the hon. Gentleman setting out some of the economic and fiscal priorities of a future SNP Government. Would they increase or reduce corporation tax?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

Yes, a future SNP Government would increase it, decrease it, keep it the same and use the amount raised in an intelligent way. I know the hon. Gentleman thinks he has asked a really clever question, but we have just had the 2015 election and I am not going to write the 2016 manifesto today.

To answer a little more clearly, we have argued for targeted reductions in corporation tax in order to promote investment in key industries. We have highlighted for many years the relatively low private sector research and development spend in Scotland. However, given that R and D tax credits can be claimed only by companies liable for corporation tax, in order to develop a comprehensive, joined-up approach to encourage more innovation, we need to move to full fiscal autonomy, including the devolution of corporation tax and all related allowances, in order to be able to use that lever.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

The hon. Gentleman said that Government Members are not in favour of tax competition, but I am thoroughly in favour of tax competition. It would be an excellent idea for both Scotland and Northern Ireland to have control of their corporation tax, because I think they would suddenly discover the virtues of the Laffer curve and reduce taxes quite sharply.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The Laffer curve is something about which our friends in the Labour party have criticised us for understanding just a little too well.

We also want to see continued downward pressure on the cost of employing people. That is one of the reasons the SNP proposed in our manifesto to increase the employment allowance from £2,000 to £6,000 per business a year. We cannot do that at present, but we would be able to do so with the devolution of national insurance as part of a package delivering full fiscal autonomy.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I will give way in a moment, if the hon. Gentleman keeps calm.

Finally, as I have said, the issue of specific powers and what we might do with them is not all about tax: it is about other decision making, such as the minimum wage. We support a rise in the minimum wage to £8.70 by the end of this Parliament: that is the right thing to do. We do not currently have the power in Scotland to do that. Although we will table amendments to transfer that specific power, the last two examples demonstrate why we need full fiscal autonomy—to deliver a comprehensive, joined-up approach, which would allow us to increase the minimum wage to help those in employment who earn the least, while increasing the employment allowance to help support businesses to pay it.

Photo of Alberto Costa Alberto Costa Conservative, South Leicestershire

How many times in the past eight years have the SNP Scottish Government exercised their powers to increase or decrease income tax? The hon. Gentleman keeps complaining that this place is restricting them from using powers, so could he please remind Scottish people and this House how many times they have used their existing powers?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I welcome the hon. Gentleman to Parliament, but he does not need to jab his finger and point. The small business bonus has cut or reduced business rates for 80,000 people. At £640 million, the Scottish Government are delivering the most effective business rate tax relief across the whole of the UK. One could make a very strong case that we have ended a tax on ill health by removing prescription charges. The hon. Gentleman’s failure to know what he is talking about was why he was defeated in Angus by my hon. Friend Mike Weir.

So far, we have not heard a single speech as to why we should not have full fiscal autonomy. I am sure that one will come, but let me focus on that matter now. The objections that we have so far heard are rather odd and almost entirely without principle. In essence, in order to say no, our opponents fall back on one or two flawed analyses of the Scottish economy, which are basically snapshots of one particular point in time.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

Was that not an extraordinary intervention from Alberto Costa? The Conservative party wants to handcuff itself and not use any of its tax powers at all, as we heard from the Chancellor only last week. Does that not show the deep malaise of understanding? When we have tax powers, they are not used all the time. For instance, in the last Parliament, VAT was changed only once. Let us hope that the Conservatives do not use that power again. The point about having tax powers is to use the power that is necessary or important to use at a particular time. Tax powers are not used willy-nilly, as the hon. Gentleman’s own Chancellor has conceded.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I fear that my hon. Friend was intervening less on me than on Conservative Members, but he is absolutely right. There is no argument too odd for them to deploy.

On the opposition to full fiscal autonomy, basing an argument on one or two flawed analyses is using a snapshot in time in order to say no. It is less a case of analysing all the facts to come to a considered view, and more one of finding any reason to oppose for opposition’s sake.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I have tremendous respect for the hon. Gentleman, but he is letting himself down by how he is conducting this debate. If he is saying that the Institute for Fiscal Studies is wrong, why has the same figure come out of the Scottish Government’s own accounts?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The chief of the snapshot analyses I have just described is the one from the IFS that our opponents pray in aid. They claimed in April that Scotland would face a relative deficit of £7.6 billion, which may rise to £10 billion by 2019-20, and that in itself is enough for them to say no. I also like and respect the hon. Gentleman—I will not finish the rest of that sentence. I would tell him that his argument is fundamentally flawed. In essence, our opponents’ argument is that even if the IFS figures were true, UK Government economic policy has failed Scotland and we should therefore keep economic policy in the hands of a UK Government who have failed. That simply is not credible.

It is of course true that Scotland has a deficit, and so does the UK—borrowing £75 billion this year, almost four times what the Chancellor promised borrowing would be. The majority of advanced economies run deficits, particularly in difficult times. The UK deficit in 2013-14 was £98 billion. Over the five years to 2013-14, the cumulative deficit was £600 billion. The UK was been in deficit for 43 of the past 50 years, and 28 of the 34 members of the OECD were in deficit in 2013. If the deficit alone was a reason for a country to surrender its financial independence, the UK economy would be run from Berlin.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

The hon. Gentleman’s desire for independence of taxation seems to be to lower taxation, while he contemplates raising expenditure and he is fairly indifferent to deficits. Does he contemplate any kind of fiscal discipline? Our neighbours across the channel started a single currency, and they—as we would—have a single currency and a single central bank. Had they stuck to their rules on fiscal discipline, the Maastricht criteria, and to their no bail-out clause, they might have done rather better. What fiscal discipline does he propose, or does he think the English will pick up the bill whatever decisions the Scottish Government make?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

We were very clear in our manifesto that there would be increased tax yield, perhaps from a 50p rate of tax at a UK level, from a bank bonus tax, from the bankers’ levy and from a mansion tax. We supported a number of policies in our manifesto that clearly would have increased yield. We were also very clear on what we wanted to do about borrowing. We laid out explicitly that borrowing would rise, but that it would fund £140 billion of extra investment across the

UK throughout this Parliament, as opposed to the cuts in the order of £146 billion that have been proposed by the Chancellor.

That package was fiscally sustainable, workable and disciplined because the deficit and the debt would have continued to fall in every year of this Parliament. It was a cogent, coherent package that would have brought in revenue yield, spent and invested wisely, and still seen the deficit and the debt fall. That was the right approach. That anti-austerity position, which we took strongly to the Scottish people, was self-evidently supported by the majority of those who voted.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

In a moment.

If all the IFS and Treasury analyses do is project forward “Government Expenditure and Revenue Scotland” figures, they do not provide a meaningful description of the fiscal position in a fiscally autonomous Scotland. Whether Scotland’s budget deficit—or surplus—would be larger or smaller under full fiscal autonomy depends on a huge number of factors, not least the transition process that my hon. Friends referred to earlier; the negotiated fiscal framework between Scotland and the rest of the UK; Scotland’s contribution to UK-wide public services, such as defence, debt interest and international aid; the interaction with the UK macroeconomic framework; and, most importantly, the decisions made by the Scottish Government about borrowing, economic policy and public spending.

There would have to be agreement on the past contributions and tax receipts from Scottish taxpayers and corporates, and the shared liabilities that have accrued in terms of entitlements for individuals—for example, pensions that people have paid into through the national insurance system—to maintain the free movement of labour and an integrated single market. On liabilities, it is worth pointing out, in case anybody thinks I have forgotten about this, that we think there would have to be an adjustment to reflect UK-wide costs, such as the decommissioning costs in the North sea, because the UK Government have received the full benefit of all the tax revenue associated with that economic activity so far.

In short, the current economic situation is not a reason to say no to full fiscal autonomy; rather, it is vital, in tackling the deficit, to avoid further cuts by giving Scotland the economic levers that it needs to boost growth and increase revenues.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

Does my hon. Friend agree that the key reason the UK deficit is sitting at close to £1.5 trillion is the failure to deliver sustainable economic growth over the past few years? The clear agenda behind our attempt to deliver fiscal autonomy to Scotland is that the Scottish Government are focused on innovation and skills, on driving investment into the Scottish economy, on driving productivity growth, on driving up tax receipts and on driving prosperity for the Scottish people. That is why we need these powers.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

That is absolutely right. Trend growth in the UK over decades has not been sufficient, and private sector investment and innovation have been lamentable. My hon. Friend is absolutely right that we need these powers for a reason.

Notwithstanding what has been said, it is important to remember that Scotland is a prosperous economy. It is about far more than oil, although to listen to some of our political opponents, one would think that that was all the Scottish economy consisted of.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

Will the hon. Gentleman enlighten the Committee about what level of economic growth he thinks Scotland would require to balance the budget?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

We need to get trend growth up and we need to operate within a framework that will see the deficit begin to come down. I do not remember the previous Labour Opposition ever coming up with a cast-iron figure—2.75%, 3%, 3.25%, 4% or 5%—for trend growth. No one would be so silly as to put a figure on it, when it is dependent on so many external criteria.

Our political opponents dismiss the Scottish economy, saying that it is all about oil. They seem to forget that in two of the past four years our deficit was smaller than that of the UK. In the past 34 years, tax revenue per person has been higher than in the UK. Indeed, in the last full year, including our geographic share of the North sea, it was more than £10,000 per head compared with £9,700 in the UK. Even without North sea oil, output per head is almost identical to the UK. We remain the third most prosperous and productive of the 12 so-called regions of the UK, and, including a geographic share of oil and gas, our output per head is higher than the UK average, even today.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

I am listening carefully to the hon. Gentleman’s argument. It is clear that amendment 89, which is in his name and the names of his colleagues, would enable the Scottish Parliament, at some stage, to legislate to allow for those powers to be drawn down, either in part or whole. What timescale does he envisage for the Scottish Parliament to move to full fiscal autonomy, rather than, perhaps, partial fiscal autonomy? What does he envisage being the interim arrangements were it to draw down only some of those powers?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I would like the Scottish Government to be in a position to draw down the powers as quickly as possible. Obviously, to draw them all down and use them would require transitional arrangements to be in place.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I will come back to that in a moment.

It would require the tax system to be fully functioning and for there to be an agreed macroeconomic fiscal framework across the whole of the UK. That would require agreement between the Scottish Government and the UK Government—that is to say, there would be other people at the table who had to say yes to things—so it is not possible to put a hard and fast timetable on the powers. If, however, we can agree on full fiscal autonomy tonight, and the Scottish Government’s ability to draw down the powers at the right time, then with good will we can get agreement on the fiscal agreement and the overarching framework, and we can all get to work.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

The hon. Gentleman is being incredibly generous with his time. Will he tell the House why, if full fiscal autonomy is so good for the Scottish budget, he will not support new clause 3, tabled by Sir Edward Leigh?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I want maximum power for Scotland. I want it as quickly as possible. I am not like the British Labour party, which keeps saying no and, in the absence of no, says delay with yet another commission. If Sir Edward Leigh presses new clause 3 to a vote, we will support it. Here is the thing: I hope Ian Murray, who is grinning like a Cheshire cat, will now get to his feet and tell us whether he intends to back the Government tonight in opposing powers for Scotland. The silence is deafening.

Let me continue with more of the arguments our opponents deploy against full fiscal autonomy. When they argue against more powers they say that they would require further cuts, but that argument is completely flawed. It would suggest that the Scottish Government are protected from Westminster cuts at present, which simply is not true. Cuts in the previous Parliament actually took place at a time of rising North sea revenues.

Photo of Alberto Costa Alberto Costa Conservative, South Leicestershire

I thank the hon. Gentleman for his generosity in giving way to me a second time. In the lead-up to the Scottish referendum, he very articulately and eloquently put all those points to the Scottish electorate, yet the Scottish electorate resoundingly rejected them. Had the referendum gone his way and there was a yes vote, he would have had to have been in a position today to set a timescale for everything he is arguing for.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The hon. Gentleman is right about one thing: we did not win the referendum. There was, however, an election that we did win, so we are not bringing forward another mandate for independence; we are bringing forward provisions for full fiscal autonomy. I hear Tories pontificate right, left and centre about responsibility, but when it comes to full fiscal responsibility for Scotland, all of a sudden there is silence. They just sit on their hands and say no.

Photo of David Mundell David Mundell The Secretary of State for Scotland

Why then did the SNP not table the new clause in the name of my hon. Friend Sir Edward Leigh? If the hon. Gentleman wants that full-blooded proposal, why did he leave it to the Tory Benches to propose what he claims is an SNP policy?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I can almost hear Professor Adam Tomkins, the Tory adviser to this Tory Minister, coming up with that daft question. I say this to the Minister: our amendment 89 would deliver full fiscal autonomy in a way that makes sense.

Our opponents argue that full fiscal autonomy would lead to more cuts to the Scottish budget, which is ridiculous when one considers that between 2009-10 and 2013-14, at a time when the North sea was generating £32 billion in oil revenues, the Scottish Government’s budget was cut by about 9%. According to the Institute for Fiscal Studies, prayed in aid by Tories and Labour alike, the cuts of more than 5% implied in 2016-17 and 2017-18—in this Parliament—will be twice the size of any cuts over the last Parliament. The UK Budget showed that implied cumulative cuts to day-to-day spending on public services in Scotland over this Parliament could amount to £12 billion in real terms compared with 2014-15. In the absence of full fiscal autonomy, therefore, we are not protected from cuts. Rather, we suffer a double blow: continued austerity and an inability to grow the economy and increase tax yields in the way that Scotland requires.

Photo of Chris Philp Chris Philp Conservative, Croydon South

The hon. Gentleman mentioned that tax receipts in Scotland are on average 3% higher per head than in the rest of the UK. Public spending in Scotland, however, is more than 10% higher. The reason, of course, is the Barnett formula. Will he confirm that under his proposals the Barnett formula would be done away with, and will he explain where the extra money would be found? Would it be tax increases or spending cuts? If so, where from?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

It is extraordinary! UK debt is £1.5 trillion and the Government are borrowing £75 billion more this year than UK tax revenue would allow, and they have the audacity to question whether the Scottish Government, who have balanced the books every year, could do so in the future. If we have the right tools and levers, of course we can do the job. The hon. Gentleman’s argument is fundamentally that there would be a cost to Scotland of full fiscal autonomy. As we have seen, our opponents tend to quote figures for this financial year, whereas we would only move to full fiscal autonomy over the medium term.

The second key issue, as the IFS has said on many occasions, is that our opponents fail to take account of the potential positive impact on Scotland’s economy of full fiscal responsibility. The entire point of FFA is to empower our Parliament to take decisions for the benefit of Scotland’s economy to deliver full tax and investment powers and to enable Holyrood to make better spending decisions.

Photo of Wayne David Wayne David Labour, Caerphilly

This is an important point. The hon. Gentleman says he is in favour of moving towards fiscal autonomy, but only in the medium term. How long is the medium term?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

I support moving to full fiscal autonomy because, as the N-56 think-tank said, it produces an opportunity, not a threat. There was a time when there were 40 Scottish Labour MPs sitting behind the Opposition Front Bench shouting their heads off, but now there is barely a whimper, barely a squeak—not a cogent, credible argument from a party about to get into bed with the Tories to say no to Scotland.

The N-56 report that said that full fiscal autonomy was an opportunity and not a threat. It also said that Scottish GDP could increase by 86% from a baseline of £153 billion in 2012 to £282 billion over 25 years, elevating Scotland to become one of the top five wealthiest countries in the world. [Interruption.] The four Labour Front Benchers are having a wee quiet giggle while SNP Members want Scotland to be one of the top five wealthiest countries in the world.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Conservative, The Cotswolds 5:45 pm, 15th June 2015

The hon. Gentleman said that he will increase the deficit to spend to invest—where have I heard that phrase before?—but while Scotland is a member of the sterling area, would he expect the Bank of England to guarantee whatever sterling debt his party incurs?

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

First things first: the central bank does not guarantee debt. It sets the base rate, but the gilts are issued by the UK Government. It would be UK debt, which is precisely why we need an agreed fiscal framework within which we operate. I would have thought that that is just common sense.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

No. I have been very generous. I think I will stop being generous now.

In order to deliver full fiscal autonomy, amendment 89 would allow the Scottish Government to remove the reserved status of certain key areas, and allow that Government to have legislative competence over them. It would do so at an appropriate time, ensuring that the systems and the framework under which full fiscal autonomy would operate are fully in place.

We know we need full fiscal autonomy. We know how full fiscal autonomy will work. The Scottish people have voted for maximum powers, and we are here representing that view. Amendment 89 is the way forward to deliver the fairness, the justice and the economic levers that the Scottish Government need. I hope there will be huge support for it tonight. I commend the amendment to the Committee.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

It is a privilege to serve under your chairmanship, Sir David.

We have seen a remarkable event tonight—I never thought I would see such an event. The Scottish National party is having a love-in with Sir Edward Leigh and John Redwood. Love does not come to mind very often when we think of the right hon. Gentleman, but tonight he is the darling of the SNP. Stewart Hosie has just lectured the Labour party about voting with the Conservatives. If he supports new clause 3, tabled by the hon. Member for Gainsborough, he will vote with them.

The hon. Member for Dundee East should cut the general election rhetoric and get down to the details. The debate is a serious one, as my hon. Friend Mr Allen has said. It is not just about Scotland, but about the devolution of powers and how we settle them for the rest of the United Kingdom. The hon. Member for Gainsborough put the SNP behind the eight ball. His is a clear proposal for moving to full fiscal autonomy or responsibility. I notice that the hon. Member for Dundee East changes things—he goes from “autonomy” to “responsibility” whenever he wants—but the hon. Member for Gainsborough is very clear that he is proposing full fiscal autonomy.

The argument being put forward is that that is what the Scottish people said at the general election. I do not accept that. In the referendum, the Scottish people said that they wanted to be part of the United Kingdom.

A responsibility of being part of the United Kingdom is that certain things will be done across the four nations of this great nation of ours.

It is difficult for Scottish National party Members. If something is said by Scottish nationalists, it has to be true, and no one dare ever say that something they are saying is not true. The hon. Member for Dundee East argues that amendment 89 is a movement to full fiscal autonomy or responsibility, but it is not. It would give the power to the Scottish Government to draw down those powers. Why is amendment 89 not framed as clearly as the proposal of the hon. Member for Gainsborough? His proposal would give the powers straight away, with the consequences for the Barnett formula and the support that that gives to the Scottish Government.

It is nothing new for the Scottish nationalists to want to have their cake and eat it, but many of my constituents—and, I am sure, those of other Members—will not accept an arrangement that would allow the Scottish Government to legislate for full fiscal autonomy for which they were expected to pay. That would be not only wrong, but totally unfair on the rest of the United Kingdom.

Photo of Philippa Whitford Philippa Whitford Shadow SNP Westminster Group Leader (Health)

We await the granting, in 2016, of the powers that were recommended by the Calman commission in 2009. The devolution of small amounts of power will have taken seven years. It is not as if, having voted for full fiscal autonomy, we would get it next week—it is simply a matter of common sense that the process takes time—but we want it as quickly as possible. The delay following the Calman report happened here.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

What the hon. Lady has said is not unusual. It is part of the blame culture. Apparently, if things do not happen in Scotland, it is because wicked Westminster—meaning parliamentarians, among others—is somehow preventing them from happening. At the time of the independence referendum, the SNP stood on its platform arguing that Scotland could be a separate, independent nation in 18 months. What has changed?

Amendment 89 is rather mealy-mouthed. As I have said, the Scottish Government will draw down the powers when they want them. There will be what the hon. Member for Dundee East described as a transitional period, and we all know what that means. It means a period during which the Scottish Government could draw down powers that would enable them to make changes in Scotland, while retaining elements such as the Barnett formula. Well, I am sorry, but that will not happen—and the hon. Member for Dundee East, and the rest of the SNP, will blame big bad Westminster because it has prevented them, or the Scottish people, from being given those powers. The proposal from the hon. Member for Gainsborough is very simple. It means full fiscal autonomy along with all its consequences, rather than a “drip, drip, drip” process over a period during which the rest of the United Kingdom would be expected to fill any gap resulting from the Bill.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

I suspect that my hon. Friend is right in his analysis of where amendment 89 would lead us. To be fair to Stewart Hosie, he was very candid about the transitional arrangements that he envisaged, which would involve the Westminster Government, the Scottish Government and, perhaps, others sitting around a table with the aim of agreeing on a framework for the drawing down of partial powers. But would we not expect the framework to be specified in the Bill, so that people in all four parts of the United Kingdom could be certain about what those transitional arrangements would be?

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I entirely agree. If we are to give the Scottish Government more powers over entire areas of taxation, including the raising of money that they will actually spend, we cannot do that twice. They cannot have the ability to raise revenue and, in addition, a top-up power allowing them to make some of the difficult decisions that they will have to make. The hon. Member for Dundee East seems to think that, overnight, Scotland will be turned into some beautiful paradise on a par with Switzerland—[Hon. Members: “Hear, hear.”] I must say that, in terms of beauty, it already is.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

The SNP won the majority of the vote on 7 May on the basis of a clear commitment to go beyond the proposals of the Smith commission. What we are trying to decide now is how far beyond Smith we should go. The hon. Gentleman seems to be rejecting that, while not coming up with a positive argument about what we should be doing.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I am not, actually. I agree with the hon. Gentleman. I doubt that most people were thinking about the Smith proposals when they voted. That is not the way in which the debate in Scotland has been portrayed over the last few years. Romanticism has taken over, obscuring the practical issues that will face the Scottish economy whether we like it or not.

The hon. Gentleman cannot have it both ways. He cannot argue that he wants Smith-plus without making clear what that means. As my hon. Friend Andrew Gwynne pointed out, what the hon. Member for Dundee East has proposed in his “trickle-down” amendment cannot be done in a vacuum by people who have no idea what the transitional framework is.

Whether we like it or not, the Scottish economy faces issues that have nothing to do with who is in either Holyrood or in this place. Those issues are an ageing population and the decline in the working population, which is expected to drop by 3% over the next 15 years in Scotland while rising by 5% in the rest of the United Kingdom. If that does happen, the tax base in Scotland will contract when it has full fiscal autonomy, and if there is no backdrop of Barnett money, or some other pool of money on which to draw, hard decisions will have to be made. When working people in Scotland wake up to the fact that what is being proposed is not Barnett plus full fiscal autonomy, but full fiscal autonomy or independence on its own without the existing safety net, and when they become aware of some of the tough decisions that the Scottish Government will have to start making, they may think differently about what is being recommended tonight by the Scottish nationalist party. [Hon. Members: “Scottish National party.”]I am sorry. I am not known for my delicacy when it comes to not wanting to offend people, but the over-victimised mentality that some Members bring to the Chamber, and to this debate in particular, is irritating, to say the least.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

My hon. Friend is making an important point. We must focus on the nature of the transitional arrangements that would lead to full fiscal autonomy, and I am none the wiser about what the SNP is proposing. Is it proposing a proportionate change in the Barnett formula, aligned with the amount of tax that they will draw down in their move to full fiscal autonomy?

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I agree with my hon. Friend that the position is not clear, but I think that the SNP wants to move to full fiscal autonomy while retaining the majority of Barnett, and I am afraid that that is not going to happen. Of course, when a United Kingdom Government say no to it, we will hear what we usually hear from the Scottish nationalists: wicked Westminster is preventing Scotland from getting what it needs. That is the nub of the problem. That, I think, is why the SNP has retreated from its 18-month target for full independence, and now wants a fudge that will get them through the next few years.

The real issue, for me, is this. I support the people of Scotland in their wish for more devolution, but I do not support a system that is not good for individual members of the Scottish public, and is also unfair on my constituents and others.

My hon. Friend the Member for Nottingham North raised the broader issue of whether we need to have a debate about devolution in this country. I think that we do. I do not take his dewy-eyed approach; I think that there are times when, in any type of organisation, responsibility must stop at a certain level. If we did not take that approach, we would be devolving power to something like a French commune, and creating a system of street-level decision-making. However, it could be argued that in a country such as ours, which has a very centralised system, there is a need for a movement towards the devolution of powers.

What we saw in the north-east in 2005 was a clear decision by the people that they did not want another tier of government when they rejected the regional assembly approach, and I have to say I think most places do not want more politicians. The Chancellor’s proposal is to devolve certain things to the north-east of England only if it has an elected mayor whose jurisdiction stretches from Berwick all the way down to the Tees. Again, that is looking at the structure of things, rather than asking people. The Conservative party machine in the north-east has gone into overdrive this weekend with Mr Jeremy Middleton, a failed Conservative parliamentary candidate who cannot get elected anywhere in the north-east under the Conservative banner, now leading 60 business leaders saying the north-east’s elected councillors and others need to sit up and listen to the Chancellor and get on with having an elected mayor for that huge region. Well, I am sorry but we in the region need to have a debate about how we devolve those powers and I gently say to business, “Do not be used by someone like Mr Jeremy Middleton who clearly has a political agenda of his own. Get involved and work with local councillor and others to determine and support the future.” [Interruption.] There is a cynical side to the Government’s approach to the devolution debate, which is—[Interruption.]

Photo of Sir David Amess Sir David Amess Conservative, Southend West 6:00 pm, 15th June 2015

Order. A mobile phone is going off. I hope the hon. Member responsible will adjust it. I call Mr Graham Allen.[Interruption.] No, Mr Kevan Jones.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I would not want to insult my hon. Friend the Member for Nottingham North in that way.

There is a cynical side to the Government’s approach to devolution and it goes like this: “You devolve powers because you devolve responsibilities, but you don’t devolve the funds to actually undertake them.” The Government want to contract Whitehall but they are not going to devolve the money to the English regions; they are going to devolve the responsibilities and then say to the various local bodies concerned that they are responsible for the failure to deliver at the local level.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

We are here today primarily to debate the Scotland Bill, which we support, but my hon. Friend is right to point out that it has far-reaching consequences for every part of the UK, including his constituency and, indeed, mine as the Government are proposing quite extensive devolution powers to Greater Manchester. Is that not precisely why we need to have a proper debate within the framework of the constitutional convention to decide what the English answer to the English question is, as well as deciding what this place is going to do on the UK-wide question?

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I agree, and we need to get away from the cynical approach of this Government who talk about devolution and about devolving decision-making but with no funds attached to that.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

Getting back to the Scotland Bill, I agree with the thrust of what the hon. Gentleman is saying in that we should know what this costs. We have a proposal tonight to devolve all these fiscal powers, but we do not know what the cost will be for the ordinary Scot or indeed for the rest of us. When corporation tax powers were devolved to Northern Ireland, we were shown the bill of fare, and it is going to cost us £250 million a year to do that. What is it going to cost the ordinary Scot if there is devolution of all these fiscal powers?

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

The hon. Gentleman raises an interesting point, which illustrates why the later amendment seeking to quantify the cost is needed. If we are going to take these decisions in the long-term interests of the Scottish economy and its people, they need to know that. I am a former trade union official and I never went into negotiations without knowing what the costs of the outcome would be. The problem with the Scottish Nationalists’ proposals is that they do not know what the ultimate costs will be.

Amendment 58 in the name of Angus Robertson proposes that the phrase that the Scottish Parliament is recognised as

“a permanent part of the United Kingdom’s constitution” replace the current wording in clause 1, which states:

“A Scottish Parliament is recognised as a permanent part of the United Kingdom’s constitutional arrangements.”

We have a problem with that, as I tried to tease out in my interventions on the hon. Gentleman: what is the definition of the United Kingdom’s constitution, because we do not have anything called that? If that amendment passes, there would be a feast day for lawyers in trying to identify what the constitution is. If we had a written constitution, the Scottish Parliament could be a permanent part of it, but we do not have a written constitution and I am at a loss to know how this would be interpreted as things currently stand. The amendment has been tabled so it is in order, but I am not sure of its practicality and uses, and I am not sure that the hon. Gentleman understands how this would be interpreted and whether it will be left to a court to decide how the UK constitution is to be defined.

Photo of Patricia Gibson Patricia Gibson Scottish National Party, North Ayrshire and Arran

Does the hon. Gentleman agree that the best time to raise any concerns and questions about costs and the definition of the word “constitution” would have been when Gordon Brown was going around Scotland making a vow about creating a powerhouse Parliament?

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I am not sure what the point of that intervention was. I am talking about an amendment proposed by the hon. Lady’s party, and I think it is deficient. The onus is on the hon. Gentleman who moved it to explain to the Committee what its reference to the United Kingdom’s constitution actually means. He clearly does not have a clue what that means, and the danger is that there could be a challenge and that would lead to lots of work for lawyers—and as Members know from me of old in this place, I am not one for feeding lawyers.

This Bill is a major move forward.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

No, as I am about to finish.

My hon. Friend made the point about the rest of the United Kingdom and there is a need for that convention. If we do not get that, we will have this patchwork quilt of so-called devolution which will not be in the interests not only of all of our constituents but of the UK as a whole.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

The last two and a half hours have been fascinating, and show what this Chamber should be about. The Government and the Opposition Front Benches have come in with their own ideas and during the course of the debate it has become apparent that the new clause of my hon. Friend Sir Edward Leigh has captured the imagination of the Committee and has superseded amendment 89 proposed by the Scottish nationalist party, and I say to Stewart Hosie[Interruption.] I say to the hon. Member for Dundee East that I think he has made a very wise decision in saying he is going to bring the full weight of his party in Parliament behind my hon. Friend’s new clause. It is much clearer than his party’s amendment. The hon. Gentleman should get credit for that. Governments and official Oppositions are often reluctant to change the line they have taken when faced with strong arguments against it.

In the course of this debate, my hon. Friend has shown that new clause 3 finds favour with a large number of Members across this Committee. I support it because it would do what is stated in the explanatory statement:

“entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.”

So, by giving full fiscal autonomy to the Scottish Parliament, we would also be giving it full fiscal responsibility. As my right hon. and learned Friend Mr Clarke, the former Chancellor of the Exchequer, said in an intervention, that is an important and worthwhile matter.

My constituents are worried about the mix and match approach, however. When I had the privilege of being a member of the Political and Constitutional Reform Committee, we took evidence in Scotland. One of the most telling pieces of evidence came from an academic—I cannot remember which university he came from—who said that shared responsibility would be a recipe for conflict. That has been the problem: for too long, we have been sharing these responsibilities between one part of the United Kingdom and another, with one part being played off against the other. That has meant that those wanting to promote a particular agenda have been given ammunition, because they have been able to argue that the sharing of the responsibility has been ill defined. It is almost invariably ill defined and open to interpretation. Indeed, some of the evidence we heard suggested that such disputes would ultimately have to be determined by the courts. It was suggested that the courts in the United Kingdom would determine what Parliament had decided on a particular split or shared responsibility. What a recipe for conflict and division!

The new clause tabled by my hon. Friend the Member for Gainsborough has great clarity and takes the debate forward by leapfrogging other proposals. Obviously it could not be implemented instantly, but it would not leave the matter of when to introduce full fiscal autonomy to the discretion of the Scottish Parliament, as amendment 89 proposes. Instead, new clause 3 would ensure that this Parliament would agree now on full fiscal autonomy for the Scottish Parliament. That would be a good way for this Parliament to say to the Scottish people that we respect their decision in the recent general election and that we respect the decision of their elected representatives, as enunciated by the hon. Member for Dundee East, to support this new clause.

I hope that new clause 3 will also find favour with the Secretary of State for Scotland, who I am delighted to see sitting on the Front Bench preparing to respond to the debate. He gave evidence to the Political and Constitutional Reform Committee on several occasions during the last Parliament. At that stage, only some members of the Committee—I included myself among the optimists—thought that it would not be long before he became a fully fledged Secretary of State for Scotland. It is wonderful that that has come to pass.

This is an important debate, not least because it will sort out the problem of the Barnett formula by effectively abolishing the need for it. The formula is very unpopular with my constituents because, whenever they argue for free prescriptions, free long-term care for the elderly or free university tuition, they are told that these things cannot be afforded in England, yet they somehow can be afforded in Scotland. At the same time, however, they point out that they are paying £1,600 a head to Scotland, so it cannot be a matter of those things being unaffordable in England; rather, it is something to do with the Barnett formula. The new clause would resolve that issue and help to bring the United Kingdom back together with less conflict than there would be if we allowed the “too little, too late” agenda to be perpetuated.

It has been some time since I had the privilege of being an undergraduate at a Scottish university, but even then there were early stirrings of dissatisfaction among the Scottish people about the constitutional arrangements affecting them and the rest of the United Kingdom. Since then, this Parliament and the majority of my English colleagues have embarked on a process of continuous appeasement, which has not provided a satisfactory solution. My hon. Friend the Member for Gainsborough’s new clause gives us the opportunity to do away with all that little-by-little continuous appeasement, whereby we feel forced to do this or that. The new clause allows us to take the initiative and to give the Scottish people what they want. It also allows us to give them the responsibility that will go with that power. That is why I am an enthusiast for new clause 3.

Hon. Members:

Hear, hear!

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

I thank you, Sir David, for calling me to speak, and I thank my Back-Bench colleagues. Have not we been blessed on this first Committee day of the Scotland Bill? We have had contributions from Mr Chope, from Mr Allen—who unfortunately is no longer in his place—and from Mr Jones. What have we done to deserve such good fortune today? We have all very much enjoyed their speeches. This just goes to show how different these debates are now. My hon. Friend Angus Robertson and I are veterans of Committee debates on Scotland Bills, and we remember the braying, the aggressive shouting down and the interventions by 40 Scottish Labour Members of Parliament. They are no longer here. This is the salutary lesson of today’s Committee debate. We are now in the new Scotland, which has made certain critical decisions about how it wants to be governed and how it wants to progress with its constitutional agenda. The challenge for this Government, and for those on the Labour Front Bench, is to respond to that. They can ignore my hon. Friends who are sitting on these Benches in such great numbers—we represent 56 of the 59 seats in Scotland—and they can ignore the fact that the SNP secured more than 50% of the vote. They can pretend that we do not exist and hope that we go away, but we are going nowhere. We are going to be here on Committee days, demanding that the Scottish people secure what they voted for in overwhelming numbers.

I support my hon. Friend the Member for Moray in setting out the three key principles that we are advocating. The critical one—the one that we have to secure—is that the Scottish people get what they voted for and what they expect from this House, which is to have the Smith commission proposals delivered in full, alongside everything that was promised to the Scottish people in what Gordon Brown, the former right hon. Member for Kirkcaldy and Cowdenbeath, called the “vow plus”, including federalism and home rule.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

My hon. Friend mentions the vow plus and the promises made to the Scottish people. In reality, these powers are wanted not only by the yes voters but by the no voters as well. The fact is that 100% of the people of Scotland voted for these powers. Whether they voted yes or no, they voted for this.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

My hon. Friend always gets right to the heart of the matter. We know that everything in this Bill that we have been trying to secure is supported by the Scottish people. It is also supported by the massed ranks of SNP Members here, and by the 60% of the Scottish people who want everything devolved to the Scottish Parliament other than foreign affairs, defence and treason. Sir Edward Leigh forgot to mention treason in his list of powers that would remain reserved. An opinion poll last week showed not only that we won more than 50% of the vote but that we are now on course to win 60% of the Holyrood vote next year. It showed that there is a clear desire to ensure that we move forward progressively.

I shall turn to the central issues in the Bill, starting with the permanence of the Scottish Parliament. That was about the most useful thing to emerge from the Smith commission’s report. It followed the vow that was reported in the Daily Record as stating that the permanence of the Parliament should be a predominant issue. We were disappointed that the draft Scotland Bill could not find an appropriate form of words to encapsulate that proposal. The thing that has struck me is the Scottish people’s surprise that this House could actually do away with the Scottish Parliament. I do not think that people really believed that that was the case. We have to resolve this issue.

The Scottish Parliament is now the key focus of the national debate on our nation and our political culture in Scotland. As we have continued to secure more and new powers for the Scottish Parliament, it has become an intrinsic feature of what we are about as a nation. The fact that this House can simply decide, perhaps on a whim, to abolish the Scottish Parliament is totally unacceptable to the Scottish people and has now to be put right. We have this one opportunity to address it by getting our amendment through this evening—we could sort this out.

I pay tribute to Mr Carmichael because he recognised that situation when he was Secretary of State for Scotland. He said—I paraphrase him and I will let him intervene if I have this wrong—that something must be done about it. It was then thrown over to the new Secretary of State to pick up; it now falls in his lap, and he has to address it and ensure that we get what we want, which is the permanence—

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat, Orkney and Shetland

Does the hon. Gentleman accept, however, that by doing this through primary legislation any solution—any form of words—is always going to be imperfect, and that the only way we will genuinely recognise the political reality that is the permanence of the Scottish Parliament is through a written constitution and for that we need a constitutional convention?

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

There is very little I would disagree with the right hon. Gentleman about on about these things, and I agree that there is a real requirement for a written constitution in this country. But let me suggest another way we can get the permanence for the Scottish Parliament, as set out in our amendment 59: by putting this to the Scottish people in a referendum. The only way then that the Scottish Parliament would ever be abolished or done away with would be on the say-so of the Scottish people, as a directly expressed desire through a referendum. I hope the right hon. Gentleman supports us in that amendment this evening, because it is the way to go forward.

That deals with the permanence issue. We have not heard much about another matter, despite several of my friends from south of the border having spoken in this debate. I refer to new clause 2 on the constitutional convention, which I believe Ian Murray is still to speak to. That has been a long-standing policy of the Labour party and it was central to its manifesto at the last election—I have say to say that Labour did not have a great deal of success when it was put to the people of England. My problem with this idea that Scottish devolution and our constitutional journey should be mashed together with a UK-wide look at the constitution is that it would slow down our very clear progress and our clear statement of where we want to go. The cause of English devolution moves at an almost glacial pace, and any suggestion that we have to be slowed down, as England rightly works out what it wants to do, has to be rejected this evening. Just piggy-backing Labour’s concerns about a constitutional convention and about English devolution on to a Bill about Scotland, and the things we were promised in the vow and that were progressed with the Smith commission is totally unacceptable. I say to the Labour party: do the work yourselves. There is no need to bring it to a Scotland Bill in order to progress this agenda. Bring in your own piece of legislation. Bring it in however you like and we will play a part in that. There are interesting things to be discussed on the further progress of constitutional change all over the UK.

Photo of Stewart McDonald Stewart McDonald Scottish National Party, Glasgow South

One phrase used earlier by a Labour Member was that this Bill is the property of the Union. Is not part of the problem that this is viewed through the prism of the Union? What is needed is a radical vision, which was once the territory of the Labour party but which we are now offering tonight.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

My hon. Friend is, again, spot on. We always seem to get here in Scotland Bills: there is a debate in Scotland where we think we have managed to reach some sort of agreement about a way forward, but when it comes to this House all of a sudden we get caught up in “English votes for English laws” and with English devolution. Those are important things that have to be debated, but somehow they find their way into a debate we are having in Scotland about what we think we are entitled to and what the Scottish people have decided they want by sending so many of my hon. Friends here.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

I have some sympathy with what the hon. Gentleman is saying but surely he accepts that this is a debate for all of the peoples of all of the United Kingdom and that all these issues counterbalance each other? That is why these other issues get brought into the debate. Surely the hon. Gentleman recognises that—have some generosity on that point.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

I am not disagreeing with the hon. Gentleman; he probably heard me say that these issues are important and have to be looked at and considered, because they are the things that make all the rest of it work. What we are debating tonight is a Scotland Bill that is the end part of a proposal by the former Prime Minister, the previous leader of the Labour party, the previous leader of the Liberal Democrats and the leader of the Conservatives—it was promised in the vow.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

I am not going to give way again, because I know a lot of people want to get in and I want to make some progress. These issues are all important, but tonight is Scotland Bill night and these are the sorts of things we are considering.

Unfortunately, the hon. Member for Nottingham North is not in his place—[Interruption.] He is here—well, perhaps he wants to take his place. We are always very grateful for the concise way in which he puts his wide range of views. He is always interesting to listen to and is always innovative and creative. Again, we give him a lot of congratulation on the way he so rapidly went through his constitutional tour de force. The hon. Gentleman talked about his new clause 8, and I was particularly attracted when he invited the Scottish Parliament to take a proportional share of Members of the House of Lords as part of his long-term constitutional reform. With a deal of candour may I say to him that the House of Lords is perhaps the most absurd, ridiculous legislature in the world? It is bloated beyond redemption and the last thing that place needs is more Members. What it needs is total abolition, and that cannot come soon enough.

The hon. Member for Gainsborough has put forward his helpful new clause 3. As the hon. Member for Christchurch rightly identified, it has got quite a bit of attention, and not only today—we have done nothing other than debate this for the past few weeks and months. If we swapped the three words “full fiscal autonomy” with the word “independence”, we would see that we have been having this debate for the past four, eight, 15 or 20 years. The same themes seem to be revisited when we talk about full fiscal autonomy or independence, and it is the same adversaries: the Scottish National party, and the old amigos of Labour and Conservatives getting together to tell us once again how we are too poor, too wee, too unimaginative, not just to have independence, but to run ourselves fiscally within the United Kingdom. What next? Where do we go to? Can we not run local authorities properly without being too wee, too poor or too unimaginative? [Interruption.] I see that the hon. Member for Edinburgh South does not want to intervene but I give way to the hon. Member for Gainsborough.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

Sorry, I was expecting a bit more of a substantial contribution from the hon. Gentleman, and I am almost disappointed we did not get some more fulsome prose from him. I thought he made quite a good case for his new clause, but I say ever so gently to him that we favour our amendment, because it is the way we should be doing this. It seeks to give time for the Scottish Parliament to progress towards full fiscal autonomy. If we suppose Government Members are right that there is this huge deficit that we keep hearing about again and again, surely they should be working with us, through a fiscal framework, to work towards full fiscal autonomy. Surely what should happen is a process that starts by giving us the important early new powers—powers over the minimum wage, national insurance contributions and welfare. There is a process of moving towards this. If they are right about that, what is wrong with working with us to try to achieve and secure it? Surely that is how we should be doing this. As I have said, the themes are the same; oil and gas is a burden and a curse with independence, as it is with full fiscal autonomy. It is as though they have learned absolutely nothing, because these were the very themes put to the Scottish people during the general election campaign. I am not trying to speak for the Scottish people, but on the doorstep I was hearing that there is a tiredness and a deep despondency among the Scottish people at being told that they cannot do something, that they are in such a diminished position that we cannot take responsibility. That argument does not work any more. We have been through a process of national self-definition, of finding ourselves and of ensuring that we try to do something different.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

That despondency and disbelief among the Scottish people becomes even stronger when we look at those islands close to Scotland. The Faroe Islands, for example, have 50,000 people and full control of their taxes. The Isle of Man has 80,000 people and full control of its taxes. Scotland, which is the size of Denmark, cannot have full control of its taxes, because the Government say so. That time is now over.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons)

I am grateful to my hon. Friend for his intervention. He is a great champion and passionate advocate of the island nations. This evening, we invite this House to support us in the next stage of Scotland’s constitutional journey, which is about securing more powers, making our Parliament permanent, and granting full fiscal autonomy to our nation so that decisions about how we run our country are made in Scotland by the elected Members who represent the people of Scotland. Tonight, I invite the House to support us in that effort.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office) 6:30 pm, 15th June 2015

We are talking here about the government of Scotland, so I hope it is not contentious to say that what should be uppermost in all our minds are the views of the people who live there. I am very much in favour of evidence-based policy, by which I mean that we should try to make things right according to the facts of the situation. We are in a fortunate position in this debate because we do not have to guess what the people of Scotland think, as they have been consulted quite extensively over the past year.

We are having this debate today because of the referendum that took place on 18 September, when the people of Scotland voted on whether they wanted to be an independent country. They decided by 55% to 45% that they did not want to be an independent country and leave the United Kingdom, and I respect that result and that opinion. But no one can deny that one thing that swung that vote in favour of the no campaign was the intervention by the leaders of all three Unionist parties who promised substantial new powers for Scotland should it decide to stay within the United Kingdom. The vow that was published and signed in

The

Daily Record and promoted the length and breadth of the country was definitely a major factor on which the outcome of that result depended.

The response was to set up the Smith commission, and Lord Smith has now reported and given his view. We took part in that commission and we signed up to it, but we made it very clear that the Smith commission is a floor, not a ceiling, on the ambition of Scotland for additional powers. We made that clear from the word go. We argued for that in the run-up to the election. There was a raging debate during the election campaign about whether the Smith commission was an adequate response to the wishes expressed by the people of Scotland in the referendum. We said that it was not, but that it was a start and that we needed to go further to satisfy the aspirations and hopes that were given to us by the Prime Minister, Gordon Brown and others who said that we would get substantial new powers. They said that we would have home rule and that it would be as near to federalism as possible. That is what the people of Scotland were promised, and the Smith commission does not add up to that. We took that argument and put it before the Scottish people in a general election, and we asked them to say whether they agreed with our analysis that we should go beyond the current Smith commission. What happened? They voted for us. They voted for us not just by a little bit but by a lot. More than 50% of the people who turned out at that election voted for members of the Scottish National party—I ask Members to try to get the name of our party right.

The question now is: does the Bill before us respond to what happened at the general election. I must say—the Secretary of State can correct me if I am wrong—that the Bill looks as though it was drafted before the election; its clauses are very similar to those that were published in January. The speed with which the Bill was published makes me think that there has been very little reflection over what happened at the election, and over the views of the Scottish people. Very little has been included in the Bill in response to those things.

I ask the Secretary of State and the Government to consider making changes to the Bill so that it reflects the views of the people of Scotland, delivers the promises of the Smith commission and, where possible, goes beyond the commission to do things on which Smith is silent—I am talking about the administrative changes that the third sector and specialist organisations in Scotland are asking for and that could easily be granted—and responds to our argument for granting substantial new powers that would be tantamount to the vow that was made.

One thing the Secretary of State could do quite easily is say, “We will accept the amendments about the permanence of the Scottish Parliament, albeit within our flawed and unwritten constitution.” The Government could make a statement that “This Chamber agrees that the Scottish Parliament will never ever be taken away without a referendum of the people who live in Scotland.” It would cost the Government nothing to accede to that amendment, so why do they not do it? They would be demonstrating some respect towards the people who have sent us to this Chamber to argue these points.

Let me turn now to the issue of full financial autonomy. Last week, I was in the strange position of finding myself misquoted by the Prime Minister, the Secretary of State, shadow Ministers and—just to complete the pack—the leader of the Scottish Liberal Democrats in the Scottish Parliament. I did not know whether to feel victimised or honoured. I am delighted, both in recent press articles and in this Chamber today, to be able to put the record straight. I am absolutely committed to the idea that the Scottish Government should be responsible for raising the revenues that they spend. To be honest, that should be a non-contentious point. In any structure in the world where there is a federal relationship and a federal-type Government, or even a devolved Assembly, those arrangements are commonplace. I have yet to hear the argument against that view.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

I thank the hon. Gentleman for giving way. Indeed, he is my hon. Friend, as he is both a canny Ulster man and a County Antrim man. Of course he will know in his heart—the heart of a County Antrim man—that before a person can say that they want to spend money on something, they should know the price. Does he agree that, before we vote on his party’s amendments tonight, it is important that we know the price, especially for corporation tax? What will it mean for the ordinary Scot?

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

I am a Derry man as it happens. If the hon. Gentleman wants to make a point of such substance, perhaps he should indicate to the Chair and take part in the debate. What we are talking about is a matter of political principle. It is about the direction in which we want to go forward. It is entirely possible, with good will, to put in place proper fiscal arrangements.

I wish to turn to the amendment of Sir Edward Leigh. I have not been in this job long—

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

May I deal with this point, and then take an intervention? I have not been in this job long, but I am surprised—I expect I will be surprised by various things over the next five years—to find such a passionate and eloquent exposition from the Conservative Back Benches of a position with which I agree. I suspect that there is little else on which the hon. Gentleman and I would agree. On this point, he makes his case very well. However, I wonder whether there is an element of mischief at the back of his mind. Perhaps he believed the propaganda from his own Front Bench several weeks ago that we were weakening in our commitment to full financial autonomy, and he thought that he might embarrass us in this debate today. I must reassure him that we are not lukewarm and our commitment is not weakening. In fact, we like the idea so much we have brought our own amendment before the Committee. I am intrigued at the suggestion that all we need to do is vote for it—

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I am completely sincere. I believe that the case for full fiscal autonomy is unanswerable in logic.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

I am pleased to hear it. I therefore expect the hon. Gentleman to vote for our amendment later.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

Why do we not do a deal? I will try to ensure that all my colleagues vote for the hon. Gentleman’s amendment, if he makes sure that all of his party do as well. Perhaps we can have it sewn up by 10 o’clock this evening. The strange thing about this debate so far—

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

This is very important. Stewart Hosie made an absolute commitment that he would vote for my new clause. I will press it to a Division and at 10 o’clock I expect to see Tommy Sheppard in the Lobby.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

If the new clause is moved, the hon. Gentleman will see me there, for sure. I hope that I will see him in the Lobby to vote on our amendment.

The interesting thing about the debate so far is that the case has not been made against full fiscal—

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

Is this perhaps on the subject of the hon. Gentleman’s misrepresentation of my views?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I am grateful to the hon. Gentleman, who has just confirmed that he will walk through the Lobby with Sir Edward Leigh. He said on the radio—I was on with him—that the delivery of full fiscal autonomy for Scotland would be utterly devastating. Does he stand by those comments?

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

The hon. Gentleman must apologise for misquoting me. I said—[Interruption.] Yes, I have the transcript as well as the hon. Gentleman. I said in the context of a debate that if this was done wrongly it would be possible to get it wrong. To my mind, that is a tautology: if we do not do something right, we get it wrong. The hon. Gentleman then decided that that somehow meant that I was against the whole principle of full financial autonomy and took to the Twittersphere to promote that. It does not, I am not and the fact that he had to do that shows the paucity of the arguments against our proposals.

We have yet to hear the argument against full financial autonomy for the Scottish Government, and I hope that we shall before the debate concludes. We have heard talk of a black hole, which other people will regard as a deficit when in fact it something that pertains to all economies at this point in time. We have heard that a policy of principle should be based on a snapshot from one point of time in an academic survey of what might happen in a year that will not even be covered by the process. That has somehow been extrapolated into an argument of principle against the proposal. It is not. If it was, would that mean that if there was not a deficit but a surplus in the Scottish budget, as there has been on many occasions, the policy would be flipped again and autonomy would suddenly become okay? We need to hear the arguments of principle against the proposal.

The difference between us is that, although there is a deficit in the Scottish budget, the SNP believes that it is possible for Scotland to prosper if it has control of its own resources, if it can manage its own economy, if it can grow its own revenue base and if it can steward its own budgets properly. Full financial autonomy would mean that the people of Scotland could get the benefits of that economic growth. That seems a laudable objective.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

I am sorry, but I am just coming to the end of my speech.

My hon. Friend Stewart Hosie has given some clear examples of how economic powers could be deployed. If Members, many of whom are on the Labour Benches although some might be on the Government Benches, are against that in principle, they need to tell us. If they are against it just because of the economics that might pertain to it, it is entirely possible to make an argument about equalisation measures and other mechanisms that could be introduced if we wanted it to happen. They need to tell us why on principle they do not want it to happen. I hope that we will hear that before the night is out, but in the meantime I commend the amendments to the Committee.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

May I personally congratulate Tommy Sheppard on his stunning victory at the general election? I miss my colleague, Sheila Gilmore, whom I wish well, but I congratulate him.

It is a great pleasure to speak in support of our amendments. I could not help noticing that Lionel Richie was in the Gallery earlier, and I hope he enjoyed the first part of our debate as much as we enjoy his music. These days in Committee are important in ensuring that the Smith agreement is delivered in full in both spirit and substance, as we said consistently on Second Reading. It is also essential to ensure that we go further than the Smith agreement, as Labour has said time after time, and we have set out a number of clear improvements.

Scotland has had an in-depth and passionate debate about its future and concluded that a fair and more prosperous Scotland is best delivered by shared tax and spending across the UK, with Scotland taking more control over the levels of tax and spending alongside greater accountability. I agree with Pete Wishart that if anyone is under any illusion that the centre of political gravity in Scotland is not at Holyrood, they have not grasped the modern political landscape in Scotland. That is why the clauses and amendments recognise the Scottish Parliament as the seat of political power and the catalyst for change in Scotland. Our amendments attempt to deliver that change. This is a great responsibility on us all, but in the end it is much more important that we debate how powers are used than where they lie. We have tried to tease out some of those issues in interventions today, but without much success.

Clause 1 conveys the permanency of the Scottish Parliament as an institution. We agree that that is a critical part of ensuring its permanence as an integral part of Scottish life, but our amendments would improve the Bill beyond the proposals of the Smith commission. As I said last week on Second Reading, this Bill is the latest staging post in a long and sometimes arduous, but always exciting, devolution journey. As a passionate believer in the principle of devolution in delivering a strong and vibrant Scottish Parliament, I hope that this staging post delivers the most powerful devolved Parliament in the world.

Our journey began with the Scotland Act 1998, drafted and delivered by a Labour Government and crowned by Donald Dewar’s now infamous pronouncement:

“There shall be a Scottish Parliament.”

Further steps that we have taken along our devolution journey have served only to enhance the Scottish Parliament’s potential. The Calman commission on further devolution, the recommendations of which were codified in the Scotland Act 2012, transferred further powers and placed the Parliament on a firmer footing. Then came last year’s referendum, in which the people of Scotland voted decisively to remain part of the United Kingdom.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar 6:45 pm, 15th June 2015

At the time of the referendum, the yes side included full fiscal autonomy in its proposals. After the vow, the no side also included full fiscal autonomy. What has changed since the referendum that has made the no side resile from that? The vow was as near to federalism as possible, and it would have included full fiscal autonomy. Why does the hon. Gentleman now want to leave those powers in the hands of the Tories at Westminster rather than with the Parliament of the Scots in Edinburgh?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

There is a very simple answer to that question. We all want what is best for Scotland. The latter part of my speech sets out how full fiscal autonomy would be bad for Scotland according to all the information we have. We can either have a sensible debate in this Chamber about our fundamental principles on people’s lives and livelihoods in Scotland, or we can have a political knockabout on who will vote with who, who prefers who and who said what to whom during the referendum debate. The Bill is critical to future livelihoods in Scotland, and if all we can get from those on the SNP Benches is simple party point scoring we will get no further forward in improving the Bill.

To answer the question asked by Mr MacNeil, we are here today because the vow put together the Smith agreement. The five political parties, including the SNP, which was represented on the commission, have come forward with proposals that are now in the Bill. Labour wants to take the Bill a little further. I keep emphasising that and I emphasised it consistently on Second Reading.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I am going to make a little progress, but I will come back to the hon. Gentleman if he wants to intervene a little later.

As Labour said at the time of the referendum, and as we have said many times since, the no vote was not a vote for no change. Labour played an active part in the Smith commission, the recommendations of which bring us to where we stand today, considering the Bill. It was a compromise position and with all good compromises there will be some gains and some losses. I hope and believe that the Bill will strike the right balance, affording the Scottish Parliament the power to make a real difference to people’s lives while ensuring that Scotland remains part of and secure in the United Kingdom.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I will give way to Ian Blackford, who got in before the hon. Member for Na h-Eileanan an Iar.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

Will the hon. Gentleman not accept that the Scottish people voted overwhelmingly for the Scottish National party in the general election on 7 May? Fifty-six Members of Parliament were sent to this Chamber with the express view of the Scottish people that we want home rule—the home rule that Gordon Brown talked about before the referendum. Why does the hon. Gentleman not accept that Labour lost the general election in Scotland because it was out of tune with the Scottish people? It is about time it started to listen to what the people of Scotland want and to deliver it.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

It seems to me that the SNP, in its fantastic victory, on which I have congratulated and complimented its Members on a number of occasions from this Dispatch Box, does not want any scrutiny at all. Just because the SNP has made a proposal for full fiscal autonomy does not mean that we should not scrutinise that proposal. In fact, if it was not for Sir Edward Leigh, we probably would not even be discussing full fiscal autonomy today. He forced the hand of the Scottish National party so that it brought forward its manifesto commitment, which it was rowing back on incredibly quickly.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

Let me make a little progress and then I will give way, as the hon. Gentleman was generous in giving way to me.

In the past couple of years it has become increasingly apparent that devolution is a matter not just for Scotland, Wales and Northern Ireland, but for England and the United Kingdom as a whole. The Labour movement has always been an engine of reform and the party of devolution. People want to see power devolved and exercised at local level, affording greater decision making and enhanced accountability.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I will give way, but let me make a little progress first as people want to speak on other amendments.

If those ambitions are to be realised, we need to depart from the divisive rhetoric employed during the general election campaign, which set Scots against the English and against one another and risks tearing the UK apart at the seams. Labour believes in the historic Union of the UK nations working together for the common good. However, it is clear that the Union now needs to evolve, and that evolution means dispersing power from the centre, from Whitehall and from this Parliament. With devolution to Scotland, Wales and Northern Ireland continuing apace, this evolutionary process is in danger of becoming lopsided.

That is why, had Labour won in May, we would immediately have started to devolve power away from Whitehall not just to Scotland, Wales and Northern Ireland, but to the regions and localities across the

United Kingdom. That is because we recognise that regions can and must be given more of a voice in our political process, and that we must find new ways to give further voice to regional and national culture and identity, and crucially without the strings that this Government have attached.

Photo of Stewart McDonald Stewart McDonald Scottish National Party, Glasgow South

I am grateful to the hon. Gentleman for giving way and I apologise to my hon. Friend Patricia Gibson for intervening first. The hon. Gentleman makes an important point about taking power out of the hands of this place and of the Scottish Parliament and giving it to local communities. Others on the Labour Benches have made the same point. Why then did Labour-controlled Glasgow city council continue to act as a roadblock against our legislation in the Scottish Parliament? I see him rolling his eyes and chuntering to his mate beside him. Why is Labour against our Bill in the Scottish Parliament to give power to local communities through the Scottish Parliament? Why is Labour such a roadblock in Glasgow?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I am not sure of the entire detail of the proposal that the hon. Gentleman refers to, but there is a general consensus across Scotland that the Scottish Parliament has been one of the most centralist Parliaments in the world by grappling power away from local government. What we are trying to do as part of this Bill, which I think is a major positive, and I hope the Government—

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

Will the hon. Gentleman allow me to answer the previous intervention first? He is a seasoned professional in this Chamber, so he should allow me to get at least halfway through the response to his hon. Friend’s intervention.

One of the key questions—I hope the Secretary of State and those on the Treasury Bench look at some of these principles in the context of the Bill—is whether those principles go further towards double devolution. There is no point in sending powers from one Parliament to another. [Hon. Members: “Give way!”] Those powers also have to be spread across Scotland from Holyrood to local authorities. Without that process, hon. Members cannot take power closer to the people they seek to represent.

I will give way to Stewart Hosie and then to Patricia Gibson. [Interruption.] The hon. Lady can blame her boss if she likes; he wants to come in first.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The hon. Gentleman suggested about 10 minutes ago that the Scottish National party was not going to table an amendment to deliver full fiscal autonomy, and he suggested that it happened only because of the amendment tabled by Sir Edward Leigh. That is completely false. Amendment 89 is on the amendment paper to deliver full fiscal autonomy. Will the hon. Gentleman withdraw that daft allegation from the Labour Front Bench and, more importantly, confirm that Labour Members intend to go through the Lobby with members of the Tory Front-Bench team to stop power coming to Scotland?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

It is wonderful. We are now being accused of voting not with the Tories, but with the Tory Front Bench, while SNP Members troop through the Lobby with the most right-wing Conservatives. It is incredible. The hon. Gentleman is not listening to the answer, although he insisted on the intervention. If he was so keen on full fiscal autonomy before he tabled amendment 89, he could have just signed new clause 3, tabled by the hon. Member for Gainsborough.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

My amendment gives what SNP Members say they want straight away, whereas their amendment is a bit of a fudge and slightly kicks the matter into the long grass. It is a bit like St Augustine saying, “Let me stop sinning, but not quite yet.”

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

The SNP position can be summed up with the words, “What do we want? Full fiscal autonomy. When do we want it? We’re not quite sure.”

Photo of Patricia Gibson Patricia Gibson Scottish National Party, North Ayrshire and Arran

Does the hon. Gentleman agree that the powers proposed in the Smith commission report and in the Bill are utterly inadequate? By way of illustration, the powers of the Scottish Parliament are so feeble that it cannot even ban parking on pavements, such is its lack of teeth. Further, does the hon. Gentleman agree that all power should be devolved to Scotland unless there is a compelling reason to reserve that power at Westminster?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

The hon. Lady is right: there is a deficiency in respect of parking on pavements and all hon. Members have been lobbied about trying to change that in the Bill. We will table amendments, which she is welcome to sign.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

Let me give this commitment: if the hon. Lady brings forward an amendment on parking on pavements, we will sign it.

Let me explain why we tabled new clause 2 in terms of the constitutional convention and the practical steps we need to take so that, where appropriate and desirable, decisions are taken as close to communities as possible. Our new clause proposes that members of the constitutional convention must include members of the public, which is the key part of any constitutional convention, elected representatives across all levels of government, including this place and local government, representatives of civic society organisations and, in an advisory role, academia. What we cannot have is a Prime Minister and Government cooking up a devolution settlement in a back room of the Cabinet Office without proper recourse to the public. As I said on Second Reading, the Prime Minister’s cack-handed approach to the way he dealt with the post-Scottish referendum landscape has in itself threatened the very viability of the UK that Scots voted to maintain.

Let us have a wide-ranging discussion on the constitutional settlement of the whole of the UK. The review undertaken and the recommendations by the constitutional committee would include, but not be restricted to, matters that we have already discussed today—the role and voting rights of Members in this Chamber, democratic reform of the House of Lords, further sub-national devolution to England, Wales,

Northern Ireland and Scotland, votes at 16 and codification of the constitution, the absence of a proper written constitution being one of the problems we have when discussing the Bill.

Our amendment 37 and 38 are very similar in substance to those tabled by Mr Carmichael. The opening lines of the vow declared that

“The Scottish parliament is permanent and extensive new powers of the Parliament will be delivered”.

Equally, the Smith commission agreement said that

“UK legislation will state that the Scottish Parliament and the Scottish Government are permanent institutions”.

As I have said, the centre of political power in Scotland is the Scottish Parliament. It has powers over most things that affect the day-to-day lives of most Scots, but as things stand and as was noted by the Political and Constitutional Reform Committee, the Scotland Act 1998 stated:

“There shall be a Scottish Parliament”,

but did not provide that it be permanent, nor does it set out any special procedures or grounds on which it could be dissolved. Would there be a simple repeal of the Scotland Act 1998?

There has been agreement among legal experts that the clause could be made clearer, more concise and more in keeping with the overall spirit and tenor of the Smith recommendations. For example, the Law Society of Scotland—I thank it and particularly Michael Clancy for all his advice on the legalities of these clauses—stated:

“The phrasing in the draft clause does not literally implement the terms of Paragraph 21 of the Smith Report. The use of the phrase ‘recognised as’ permanent has a different nuance from a statement that the Scottish Parliament and the Scottish Government are permanent institutions.”

Photo of Patrick Grady Patrick Grady Shadow SNP Spokesperson (International Development)

Given that the Scottish Parliament, at the insistence of the Labour party, was founded through the process of a referendum, will the hon. Gentleman support our clause to ensure that it cannot be abolished without a referendum?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I am delighted that the hon. Gentleman has raised that point. That is exactly what our amendment does as well. We are very happy for SNP Members to sign our amendment, given that ours were tabled before theirs. We agree on this; there is no division on this. We need a robust devolution architecture. That means making sure that the legal restrictions in the Bill are removed so that we have a permanent Scottish Parliament in statute as well as in spirit.

Amendment 16 would alter clause 1 by exchanging the indefinite article for the definite article in reference to the Scottish Parliament. There is only one Scottish Parliament, after all, so there is no need for a double reference. Amendment 38 would add to clause 1 the stipulation that the Scottish Parliament and the Act on which it is predicated can be abrogated only with the consent of the Scottish people given effect by an Act of the Scottish Parliament. That is the referendum section of our amendment. I believe that amounts to what is known in constitutional law as contingent entrenchment. Given the limited time available, I will not go through the other issues relating to contingent entrenchment, but I am sure that the Secretary of State realises the desire of all three opposition parties to strengthen clause 1 and include a referendum requirement so that permanency is determined by the Scottish people. Amendments 58 and 59 make similar proposals.

Let me touch on some of the other amendments we have debated in this group. My hon. Friend Mr Allen, who brings great knowledge to constitutional debates, promoted his amendment expertly, as he always does. We have also considered new clause 3, tabled by the hon. Member for Gainsborough, and amendment 89, tabled by SNP Members. As the hon. Member for Gainsborough has said time and again, new clause 3 would effectively deliver full fiscal autonomy now, not later. Amendment 89 effectively says, “Perhaps we should have full fiscal autonomy, but we are not sure and we don’t know when, so we reserve the right to do so at some unidentified point in the future.”

Let me be clear that we will support neither amendment, because they are not in the interests of the Scottish people. New clause 3 does what it says on the tin; it would deliver the key SNP manifesto promise of full fiscal autonomy at the commencement of this Bill. The Labour party and others have always said that the worst-case scenario for Scotland’s future would be an SNP group here in Westminster that pushes that promise of full fiscal autonomy and a Conservative majority Government who deliver it for them.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport) 7:00 pm, 15th June 2015

At the end of this debate, has the shadow Secretary of State any inkling whatsoever of when the Barnett formula calculations for Scotland would cease and what impact that would have on the rest of the United Kingdom?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

The Barnett formula would cease as soon as the powers for full fiscal autonomy were transferred. That is something everyone should be aware of. The hon. Gentleman has consistently challenged SNP Members to say what the cost of full fiscal autonomy would be for the ordinary Scottish person in the street, and we are yet to have an answer. We have been told, “Let’s get the principle of full fiscal autonomy together and then work out the consequences later.”

Several hon. Members:

rose—

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I will give way again, but first let me make some progress.

It is simple: the pooling and sharing of resources across the UK, and the maintenance of the Barnett formula, benefits Scotland. The much-quoted Institute for Fiscal Studies, which the SNP continually rubbishes, has demonstrated beyond argument that full fiscal autonomy would result in Scotland having a deficit of some £7.6 billion. Before SNP Members jump up to challenge those expert figures, I want to put it on the record that that is over and above any current UK deficit and UK spending projections.

Photo of Joanna Cherry Joanna Cherry Shadow SNP Westminster Group Leader (Justice and Home Affairs)

Does the hon. Gentleman agree that all this talk of black holes with full fiscal autonomy fails to recognise that a black hole exists already as a result of the policies of successive Westminster Governments, both Tory and Labour, and for which the Tories are now making the poorest and most vulnerable in our society pay? [Hon. Members: “Speech.”] The case that Labour is making in attacking full fiscal autonomy is that things are so bad that letting the Tories fix the deficit their way is better—

[

Interruption.

]

I am going to keep going—

[

Interruption

.

]

Photo of David Crausby David Crausby Labour, Bolton North East

Order. Interventions should be short, and the Committee should be tolerant of that. Joanna Cherry.

Photo of Joanna Cherry Joanna Cherry Shadow SNP Westminster Group Leader (Justice and Home Affairs)

Does the hon. Gentleman agree that his party should have more ambition for Scotland?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

This is the nub of the matter: if we try to scrutinise what would be a devastating policy for Scotland, we are accused of not being ambitious for Scotland. For the avoidance of doubt, that £7.6 billion is over and above the UK deficit. I agree with the hon. Lady that the Conservative Government made a complete shambles of getting rid of the deficit in the previous Parliament, breaking all their promises and only halving it. But the actual deficit—I have the IFS paper here—is not just £7.6 billion, but £7.6 billion over and above the current UK deficit, which is £14.2 billion. That is not a lack of ambition for Scotland, but a warning against a fiscal policy that would be folly for families up and down Scotland.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

I will give way to the hon. Gentleman, before he bursts a blood vessel.

Photo of Angus MacNeil Angus MacNeil Scottish National Party, Na h-Eileanan an Iar

It is now clear that the policy of Labour’s Front Benchers is to leave Scotland’s tax powers in the hands of this Tory Government. The vow did not say that; the vow included full fiscal autonomy. Will the hon. Gentleman tell us when he changed his mind?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

The Bill before us will transfer nearly 50% of tax and 60% of spending to the Scottish Parliament. We promised to make it the most powerful devolved Parliament in the world, and that is a promise we will keep. As I have always said, we will ensure that the Bill is delivered in full, both in spirit and in substance. We will go further, as we will debate in Committee in due course.

Let me return to the £7.6 billion deficit—[Interruption.] I know that SNP Members do not like to talk about the £7.6 billion deficit, but it is important to get it on the record. It is unfortunate that they have consistently misquoted the figures from the Institute for Fiscal Studies, and indeed it has had to ask them to retract what they have said about its figures.

We have also heard no mention of the Office for Budget Responsibility’s oil report, which was published last week. It showed that the reliance on oil as an underpinning of the Scottish economy is no longer a viable projection. The collapse of revenues from oil will see the tax take from that source drop from £37 billion to just £2 billion over the 20-year period to 2040. That would be catastrophic for Scottish public finances. The question, then, is this: will SNP Members vote with the Tories to deliver what they want, as they have said they will do, or will they finally admit in this House that their flagship policy of full fiscal autonomy is economically illiterate?

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

And there is no better time to go to the hon. Member for Dundee East.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The hon. Gentleman is extremely generous. He mentioned the OBR. He will want to confirm, for the sake of completeness, that the OBR itself has said that the forecasts were very uncertain, even over the short term. It implies 8 billion barrels of oil extracted, rather than the normal industry 14 billion to 24 billion, and of course the figures it uses are contradicted by other expert groups that have higher prices and higher forecast extraction figures.

Photo of Ian Murray Ian Murray Shadow Secretary of State for Scotland

Well, the hon. Gentleman is wasted in this House; he should be in the City, buying and selling futures in oil price shares. I think that is the best way for him to go. The three points that fall from the OBR report are the unpredictability of the oil price, the difficulty of extraction in the North sea and the fact that, whatever way we look at it, oil revenues will be declining sharply over the next 20-year period. It would appear that the hon. Gentleman—[Interruption.] I am happy to take other interventions, but it is quite clear that SNP Members cannot defend their policy for full fiscal autonomy. Indeed, they should listen to their hon. Friend, George Kerevan, who said that it would be economic suicide. He is an experienced journalist and economist, so they would do well to listen to him.

In conclusion, we will push amendment 38 to the vote because we feel that the permanency of the Scottish Parliament should have the underpinning of the Scottish people by any means that would be appropriate, including a referendum. We will push to a vote new clause 2, which proposes a constitutional convention to resolve some of the larger issues on a constitutional settlement across the country. We will oppose full fiscal autonomy in all its forms, because it would be bad for the Scottish people, bad for the Scottish economy and bad for the future of Scotland.

Photo of David Mundell David Mundell The Secretary of State for Scotland

Today is the first of four days in Committee on the Scotland Bill. I assure Tommy Sheppard, whose contribution I enjoyed, that I will be listening and reflecting. Contrary to the suggestion made by Pete Wishart, this is not the only opportunity for changes to be made to the Bill. I will be meeting the Devolution (Further Powers) Committee of the Scottish Parliament next week to discuss points that it has raised in its report.

I would not normally begin a contribution by suggesting that anyone read one of Gordon Brown’s books, but tonight I will do so. Gordon Brown has been misquoted a number of times in the Chamber today, and it is important to put on the record the fact that in his book “My Scotland, Our Britain: A Future Worth Sharing”, he states that neither his proposals nor those of any of the pro-UK parties involved a federal solution. Although they came close to the idea of home rule, they were not home rule. Therefore, it is a myth, which has been perpetuated this evening, that Gordon Brown has called for either federalism or home rule.

Photo of David Mundell David Mundell The Secretary of State for Scotland

The hon. Gentleman has already spoken a great deal on the subject this evening. I would also like to see empirical evidence to back up the suggestion made by the hon. Member for Edinburgh East that the vow and the offer of additional powers made a significant change to the referendum result, because I do not believe that such empirical evidence exists.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office)

Is the Secretary of State suggesting that they had no effect at all? In that case, what was the point of them?

Photo of David Mundell David Mundell The Secretary of State for Scotland

What I am suggesting is that the hon. Gentleman cannot bring forward a shred of evidence to suggest that those proposals changed the referendum result and that somehow the people of Scotland have been defrauded. The people of Scotland voted decisively no in the referendum. They voted for a strong Scottish Parliament within the United Kingdom. The vow, which was set out in the Daily Record and other outlets, was taken forward on the basis of the Smith commission, of which the Scottish National Party was a part and to which it was a signatory. I received an interesting letter today from John Swinney, the Deputy First Minister of Scotland, who was a signatory to the Smith commission recommendations. He now tells me that the Smith commission recommendations, which he signed, were incoherent. I do not understand how he came to sign those recommendations if he genuinely believed that they were incoherent. If that was the case, he should have been making some of the arguments that we have heard this evening and during the general election campaign.

Photo of David Mundell David Mundell The Secretary of State for Scotland

Not at this stage. The result of the general election represented a call from the people of Scotland for the delivery of the powers in the Smith commission recommendations. The Scottish National Party set itself up as the voice of the people of Scotland to ensure that those powers were delivered, and they will be delivered in the Scotland Bill.

Photo of David Mundell David Mundell The Secretary of State for Scotland

Not at the moment. I have heard a number of small speeches from the hon. Gentleman, and I know the point that he wants to make.

I disagree with some of my right hon. and hon. Friends on the idea that conflict and division are inevitable when Governments work together. Despite what we regularly read in the media, see on television or hear in this Chamber, the Government work very closely with the Scottish Government on a range of important matters for the benefit of the people of Scotland. The Government remain committed to working continually for the benefit of the people of Scotland.

A good example of such work last week was the very constructive meeting between the Deputy First Minister and the Chancellor of the Exchequer, at which they discussed the roll-out of the fiscal framework that will support the Bill. I assure my right hon. Friend John Redwood that details of that full fiscal arrangement will be brought to the House, as that agreement must proceed in parallel to the Bill. We are keen to put that fiscal framework into place.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe 7:15 pm, 15th June 2015

When pressed on the possible difficulties of fiscal autonomy, the reaction of Scottish National Party Members is to point to the tremendous new levels of growth that will be achieved by the Scottish economy, and the added GDP that will flow from their enlightened measures. They are not the first politicians I have heard attribute those kinds of consequences to their economic policy. If their policy fails, they imply that any deficit would be the liability of the UK Government and the British taxpayer. Will my right hon. Friend assure me that a fiscal framework, which is still to be achieved, will include some real fiscal discipline? We cannot have an unsuccessful devolved Government running up enormous additions to the United Kingdom’s debt and deficit.

Photo of David Mundell David Mundell The Secretary of State for Scotland

I can give that assurance. If it is to meet the various spending commitments that we hear sprayed around not only in the Chamber, but across Scotland, the Scottish National Party will eventually have to tell the people of Scotland how much tax will rise to pay for all its proposed measures. Stewart Hosie carefully avoided any detail about tax when he set out the case for full fiscal autonomy. He criticised the proposals in the Bill for the devolution of income tax bands and rates, and he criticised the provision for a 0% rate. In fact, all he argued for was to enable the Scottish Government to reduce the personal allowance. I do not quite understand how that would benefit the less well-off in Scotland or the Scottish economy. The full range of other income tax powers worth £11 billion are coming to Scotland as part of the Bill.

Photo of John Redwood John Redwood Conservative, Wokingham

When will the Secretary of State be able to share with the House the proposals to adjust the grant formula? Scotland will have higher spending and it will have tax revenues of its own, and my constituents in England are very interested in what the grant formula will look like.

Photo of David Mundell David Mundell The Secretary of State for Scotland

I made it clear earlier that we would, in early course, bring forward details of the full fiscal framework as it is being negotiated.

I was not convinced by the arguments for full fiscal autonomy advanced by the hon. Member for Edinburgh East and others. I was not convinced by the red-blooded version that my hon. Friend Sir Edward Leigh set out for delivering the Scottish National party’s manifesto commitments, and I was not convinced by the SNP full fiscal-lite proposals—sometime, somewhere, somehow.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions)

Sir Edward Leigh gave an eloquent speech, in which he explained how the debate in Scotland had moved on.

We won the election in Scotland, and the people of Scotland have demonstrated their desire for powers, for a purpose and for a Parliament. Is it not the case, as the hon. Gentleman said, that the Government are playing with the future of their own Union, which they want to defend? It really is about time that they listened to the Scottish people and delivered what the people of this country have asked for.

Photo of David Mundell David Mundell The Secretary of State for Scotland

I said at the start of my remarks that I was listening to the Scottish people. The only people who are playing games are those who threaten another referendum in Scotland every time they do not get what they say they want.

The principal issue raised in relation to full fiscal autonomy is that it would mean Scotland having almost £10 billion less to spend by the last year of this Parliament. That is not good for Scotland, and that is why this Government will not support it. I am afraid that the only argument we have heard in support of these proposals was that heard during the referendum campaign—basically, “It will be all right on the night: trust us.” The people of Scotland decided on 18 September last year that they did not trust that argument, and I still do not trust it. Full fiscal autonomy would mean an end to the Barnett formula. It would mean that the Scottish Government would need to fund all public spending in Scotland from their own resources. The Scottish Government would therefore be fully responsible for raising all the tax from Scottish taxpayers required to fund all spending in Scotland on public services, benefits and pensions.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

Can the Secretary of State confirm that in terms of the principles underlying Smith, we have no detriment and no advantage simply because of devolution itself, and that there will be a negotiated financial framework between the Scottish and UK Governments for the devolution in this Bill? Of course, we already have limited borrowing consent under the Scotland Act 2012 to fill holes in revenue, notwithstanding that the repayment terms were too short. Can he confirm that under the “no detriment, no advantage” principles there will be a negotiated financial framework for this Bill, and that there are already revenue-borrowing powers in statute?