‘(1) The Secretary of State shall appoint a commission of between four and eleven members to conduct an analysis of the impact of full fiscal autonomy on the Scottish economy, labour market and public finances and to report by
(2) No Member of the House of Commons or of the Scottish Parliament may be a member of the commission.
(3) No employee of the Scottish Government or of any government Department or agency anywhere in the United Kingdom may be a member of the commission.
(4) The Secretary of State shall appoint as members of the commission only persons who appear to the Secretary of State to hold a relevant qualification or to have relevant experience.
(5) The Secretary of State shall not appoint as a member of the commission any person who is a member of a political party.
(6) Before appointing any member of the commission, the Secretary of State must consult—
(a) the Chair of any select committee appointed by the House of Commons to consider Scottish affairs, and
(b) the Chair of any select committee appointed by the House of Commons to examine the expenditure, administration and policy of Her Majesty’s Treasury and its associated public bodies.
(7) The Secretary of State may by regulations issue the commission with terms of reference and guidelines for the commission’s working methods, including an outline definition of the policy of full fiscal autonomy for the commission to analyse.
(8) The Secretary of State must lay copies of the report of the commission before both Houses of Parliament, and must transmit a copy of the report of the commission to the presiding officer of the Scottish Parliament.
(9) Regulations under this section must be made by statutory instrument, subject to annulment in pursuance of a resolution of either House of Parliament.” —(Ian Murray.)
This New Clause requires the Secretary of State for Scotland to establish an independent commission of external experts, appointed in consultation with the Treasury Select Committee and Scottish Affairs Select Committee, to publish a report by
Brought up, and read the First time.
With this it will be convenient to discuss the following:
(2) In Section A1 (fiscal, economic and monetary policy)—
(a) For the heading “Exception” substitute “Exceptions”—
(b) After that heading, insert—
“The creation of a body corporate, called The Scottish Office for Budget Responsibility, for the independent scrutiny of Scotland‘s public finances, including all tax and spending in areas for which the Scottish Government has legislative competence.””
This New Clause would provide for the creation of a Scottish Office for Budget Responsibility to exercise fiscal and budgetary oversight over Scottish Government competencies. The Smith Commission recommended that the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.
New clause 23—Local Discretionary Taxation—
Individual local authorities in Scotland shall have the discretion to raise additional income by levying a tax, in addition to Council Tax and Non-Domestic Rates, on either residents, occupiers, property owners or visitors in the local authority or within a discrete area of the local authority.”
The power will enable local authorities to introduce tax(es) without the need to seek approval from Scottish Government, with the rates and reliefs being determined locally and the local authority being both granted powers to ensure that those on which the tax is levied have a legal obligation to pay and the local authority having the discretion to determine how the additional revenue is expended.
New clause 24—Tax and Economy Forum—
‘(1) The Secretary of State shall appoint a Tax and Economy Forum to conduct an analysis of the impact of the changes in legislative and executive competence resulting from this Act on the economy, labour market and public finances in Scotland and in the other parts of the United Kingdom.
(2) The Tax and Economy Forum may make recommendations for fiscal reforms within Scotland, to be considered by the Secretary of State.”
The new Clause would require the appointment of a Tax and Economy Forum to assess the impacts of fiscal devolution proposed within this Bill on Scotland and on the rest of the United Kingdom.
New clause 25—UK Commission on fiscal powers—
‘(1) Within 6 months of the day on which this Act is passed, the Secretary of State shall appoint a commission to examine the deployment of fiscal powers at local, devolved and United Kingdom levels.
(2) The commission shall comprise between 4 and 6 representatives of any of—
(a) the Scottish Parliament,
(b) the National Assembly for Wales,
(c) the Northern Ireland Assembly,
(d) local government,
(e) the House of Commons, and
(f) the House of Lords.
(3) The bodies mentioned in subsection (2) shall select their representatives in any way they see fit and the chief executive or presiding officer of each of those bodies shall inform the Secretary of State of the names of the representatives of those bodies, which may replace their representatives whenever the body concerned has determined to do so.
(4) Subject to subsection (5), the commission may determine its own quorum and methods of working and must publish a protocol setting out its own terms of reference.
(5) The commission shall keep the operation of fiscal powers under review, making reports and recommendations as it deems appropriate.
The purpose of this New Clause is to ensure that there is proper consultation between the different parts of the United Kingdom to ensure that new Scottish fiscal powers are deployed in a way that does not undermine the cohesion of the UK. The proposed Commission could also make recommendation regarding the future of devolved fiscal powers.
New clause 33—Full fiscal autonomy for Scotland—
(a) setting out a plan for implementation of full fiscal autonomy for Scotland, and
(b) establishing a framework within which the two Governments are to coordinate their economic and fiscal policies in the context of full fiscal autonomy for Scotland.
(2) Full fiscal autonomy for Scotland means that—
(a) the Scottish Parliament and Scottish Government have competence for determining revenues raised in or as regards Scotland through taxation and borrowing,
(b) the Scottish Parliament and Scottish Government have competence for determining levels of public expenditure in or as regards Scotland, in accordance with the amendments made by this Act.
(3) The framework mentioned in subsection (1)(b) must in particular include arrangements for—
(a) facilitating fiscal coordination,
(b) overseeing economic cooperation,
(c) joint responsibilities in areas of mutual interest,
(d) safeguarding fiscal sustainability.
(4) In determining the terms of the Economic Agreement the two governments must seek to ensure—
(a) the maintenance of monetary stability throughout the United Kingdom,
(b) the maintenance and promotion of the single markets in the United Kingdom and the European Union,
(c) that they cooperate in the exercise of their respective functions relating to the administration and collection of taxes,
(d) an equitable and transparent approach to consequences, resources and rewards,
(e) that the Scottish Parliament and the Scottish Government retain the benefits of increased tax revenues delivered by successful policies pursued by them,
(f) that the Scottish Parliament and the Scottish Government have the powers necessary to manage the consequences of full fiscal autonomy for Scotland,
(g) that full fiscal autonomy for Scotland is implemented over a period of time, as the Scottish Parliament and the Scottish Government acquire capacity to carry out their additional competences.
(5) The Economic Agreement is to be entered into as soon as possible and the two governments must cooperate in good faith with a view to achieving that.
(6) As soon as possible after the Economic Agreement is entered into—
(a) the Scottish Ministers must lay a copy of it before the Scottish Parliament, and
(b) the Secretary of State must lay a copy of it before both Houses of Parliament.
(7) The two governments must from time to time review the Economic Agreement and make such amendments to its terms as they may agree with a view to ensuring that it continues to meet the requirements of this section.
(8) Subsection (6) applies to the Economic Agreement as amended as it applies to the Agreement as entered into.
(9) The Secretary of State may, with the agreement of the Scottish Ministers, by regulations modify this section.
(10) A statutory instrument containing regulations under subsection (9) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause would require the Scottish and UK governments to reach agreement on the delivery of full fiscal autonomy for Scotland.
Amendment 3, in clause 63, page 67, line 30, leave out subsection (3) and insert—
‘(3) Part 2 of the Bill comes into force at the end of 2 months beginning with the publication of the report of the Independent Commission on Full Fiscal Autonomy appointed under section (Independent Commission on Full Fiscal Autonomy).”
This amendment provides that Part 2 (Tax) will not come into force at the end of two months beginning with the day on which the Act is passed, in order to link the commencement of the tax provisions of the Act with the work of the Independent Commission on Full Fiscal Autonomy, appointed under New Clause NC1, which would be required to report by
It is great to see you in the Chair, Ms Engel. Congratulations on your elevation to Deputy Speaker. It appears that in tonight’s debate there is a sense of déjà vu, as we debated full fiscal autonomy a few weeks ago. Given that the Committee stage of this Bill has been dominated by the SNP manifesto commitment to deliver full fiscal autonomy and bringing forward its watered down promise to deliver it this year, it is good that we have the opportunity to try to put it into this Bill. In fact, as we witnessed last week, the SNP’s hand had to be forced by its arch Thatcherite colleagues, when its Members went into the Lobby with Sir Edward Leigh. I said at the time that the worst possible scenario for Scotland would be the SNP demanding full fiscal autonomy and its being delivered by a majority Conservative Government. Those words were echoed—
Let me just finish off this point. Those words were echoed by Dave Watson, the head of campaigns at Unison Scotland, who said:
“An incoming Tory government faced with a big number of SNP MPs, saying, ‘OK, if that’s what Scotland voted for, let’s give them Full Fiscal Autonomy.’ The Treasury would be able to dump £7.5bn of the deficit on the Scottish Government and just walk away.”
The fact that the SNP has another fudged amendment this evening shows that it does not believe that full fiscal autonomy would be good for Scotland.
Before the hon. Gentleman pops up to say, “Too wee, too stupid and too poor,” as he always does, may I remind the House that that was a phrase coined by the SNP Finance Secretary and no one else? It is worth putting that on the record, given that he always pops up to say that.
Lord Smith of Kelvin said in his report that one of the primary aims of the Smith agreement was to provide the Scottish Parliament with accountability—
I said that I would give way, and I will do so when I have made a little progress, given the late hour.
Lord Smith said that the Scottish Parliament was a Parliament that spends resources but does not raise any, so there is no accountability or responsibility. The Scotland Act 2012 resolved that position a little with the devolution of the most immovable taxes and 10p of income tax—
I am very grateful to the hon. Gentleman for giving way. This rewriting of history is great and it is fantastic to find out the position of the Scottish National party, but perhaps he can explain the position of Scottish Labour. He abstained on full fiscal autonomy. Is that because he is uncertain, or is he perhaps now unsure about full fiscal autonomy?
I am delighted by that intervention. What I did not want to do last week was rain on the parade of the Scottish National party as its Members went through the Lobby with the Thatcherite Conservatives to deliver full fiscal autonomy for Scotland. That is what seems to be wrong. The SNP is in full agreement with Sir Edward Leigh again tonight on the subject of the devolution of the entirety of income tax. Perhaps the party has a right-wing agenda after all.
As we know, the Bill provides full control of nearly 50% of revenues and more than 60% of spending. According to the Library, that will be 65% if the devolution of housing benefit is agreed tomorrow, making it one of the most powerful devolved Parliaments in the world. The OECD ranked the Smith proposals and came to the same conclusion.
With that accountability and responsibility must come transparency and honesty. During the general election campaign, the First Minister and SNP candidates repeatedly said that they would vote for full fiscal autonomy this year. That was reaffirmed in the television debates. All the impartial and independent expert analysis of full fiscal autonomy shows clearly that that would devastate Scotland’s financial position. That is the genesis of our new clause 1. If the Scottish Government want to dismiss all the independent experts simply because they do not agree with them, let us set up an independent commission to consider the consequences on Scotland’s finances of full fiscal autonomy.
Subsection (2) states:
“No Member of the House of Commons or of the Scottish Parliament may be a member of the commission.”
Is the hon. Gentleman saying that the Members of the unelected and unaccountable Chamber at the other end of this building could be members, such as the possible future chair, Baroness Goldie of Bishopton?
The new clause is quite clear. I do not think it would be appropriate for Members of the House of Lords to serve on the commission—[Interruption.] Will SNP Members let me finish the sentence before they start braying from the Back Benches again?
The commission would specifically be designed to have no politicians on it from either Parliament, as well as no employees of the Scottish Government or the UK Government or of any agency related to them. It should be a commission of impartial experts in the field and if the Secretary of State wants to agree to the new clause, I am happy to take on board the suggestion that “no Member of the House of Lords” should appear in it, too.
The problem with Alex Salmond is that he does not want to debate full fiscal autonomy, as he knows that it is a bad policy. Let me emphasise that if the Secretary of State wants to accept the new clause, I would be more than happy to ensure that Members of the House of Lords were not on the commission. Let us be transparent and accountable in this place, rather than nitpicking about parts of the clause. The SNP do not want the scrutiny and that is the key to this argument.
Let us consider some of that scrutiny. The much-quoted IFS analysed full fiscal autonomy in Scotland and said that it would cost £7.6 billion next year and up to £10 billion by 2020. It has made it clear that that is over and above the deficit of the UK at the moment and the spending profile of the current Conservative Government. Let me emphasise again, as this has been misquoted by
Angus Robertson on a number of occasions, that that figure is in addition to the current UK deficit.
The impartial analysis has been dismissed by the Scottish Government, so let us turn to another source of information, Her Majesty’s Treasury, which analysed these figures with results broadly in line with the analysis of the IFS. According to Treasury costings that I obtained through a freedom of information request, full fiscal autonomy would leave Scotland with an additional cash terms deficit of £7.7 billion in 2015-16, rising to £8.4 billion in 2019-20.
Again, this will no doubt be dismissed, so let us look at the Office for Budget Responsibility oil and gas report published just 10 days ago. It shows that revenue from the North sea is projected to fall from £36.7 billion to just £2 billion in the period 2020-40. [Interruption.] That is dismissed not just by the SNP, but at this moment by Pete Wishart, so let us try the Scottish Government’s own annual accounts in the form of the Government Expenditure and Revenue Scotland report published in March this year. The Scottish Government’s annual accounts show an annual deficit over and above the UK deficit of some £4 billion, and projections are due to worsen with the lower oil price.
The hon. Gentleman will be aware that between 2007 and 2009 the UK’s deficit quadrupled. Given the significance that he attaches to deficits and to one year, what significance does he attach to the quadrupling of the debt of a state in a two-year period?
I am not sure I understand the intervention. We are debating a deficit in Scotland being £7.6 billion over and above any UK deficit, rising to £10 billion by 2020. If we are defending Scottish jobs and livelihoods, that seems not just economically incredible, but economic illiteracy. Hon. Members need not take my word for it. The Scottish Trades Union Congress general secretary, Grahame Smith, commented that the Scottish Government’s own accounts were
“a sobering reminder of some of the risks of full fiscal autonomy”.
That is from the trade unions in Scotland.
The Scottish Government sneaked out their own oil and gas bulletin, their first since May 2014, last week on the last day of the Scottish Parliament. It would be good to look at that alongside the independence White Paper. The bulletin was very much in accord with the Office for Budget Responsibility that was rubbished just a few days before. It showed that North sea oil revenues and projections have fallen drastically in recent times, so let us have a look at those figures. The Scottish Government’s own oil and gas bulletin of June 2015 estimated North sea tax receipts for the period 2016-20 to be £5.8 billion. The same scenario from the same bulletin 13 months earlier estimated the receipts to be well in excess of £26 billion. Even if we compare one year—say, 2016-17—revenues had fallen from a projected £6.9 billion to £1.1 billion, and the lower estimates are as low as £500 million.
These are the Scottish Government’s own figures—all in all, an 85% drop. That tells us two things. First, it blows apart the financial basis for full fiscal autonomy.
Secondly, like my new clauses 1 and 21, it calls for a more robust and impartial analysis of the Scottish economy and public finances. That is why we tabled new clauses 1 and 21. New clause 21, alongside new clause 1, would provide for the creation of a Scottish office for budget responsibility to exercise independent and impartial fiscal and budget oversight over Scottish Government devolved competencies.
The Smith commission recommended that
“the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.”
The new clauses would do just that and take away the politicisation of one of the fundamental underpinnings of the Scottish economy, the financing of Scottish public services and, crucially, though it tends to be forgotten in this debate, the livelihoods of everyone living and working in Scotland.
I would go further and ensure that the Scottish office for budget responsibility assesses and reports on individual party manifestos, so that the public can be confident that what they are being sold is both credible and desirable. This is about simple transparency and accountability. That transparency and accountability, as I have said, has not been forthcoming on the current manifesto commitment on full fiscal autonomy. If we had had a Scottish office for budget responsibility at the last election, it would have reported that FFA would be hugely disadvantageous to Scotland. It would have backed up the IFS analysis that showed that FFA did not work and that Scotland would need a real-terms growth rate of 4.5% per year at least between 2013-14 and 2019-20. The assistant general secretary of the STUC, Mr Stephen Boyd, commented exactly on this and said:
“The implication across the board is that taxes would be cut. There are a number of examples where the Scottish Government would be trading a real and immediate cut in revenue for benefits that may not be great in the long run.”
That shows that it would not be achievable in the figures from the IFS. The IFS’s conclusion is that FFA would incur deep, deep cuts in spending or huge tax rises.
It is easy to talk about figures, percentages and statistics, but this has to be about the everyday lives of ordinary, hard-working Scottish families. Inflicting a policy on Scotland that would leave a deficit larger than the entire education budget, or more than three quarters the size of the NHS budget, will not assist Scotland. We all reject the Conservative Government’s misguided austerity, which we know is ideologically driven, rather than an attempt to balance the country’s finances, but we must also reject any policy that would inflict harsher and deeper austerity in Scotland. [Interruption.] This is not, as some would claim—they are claiming it as I speak—about being anti-Scottish, anti-aspiration or anti-hope for the ingenuity, passion and entrepreneurial spirit of Scotland; it is a sobering response to a key manifesto commitment from the Scottish National party.
SNP Members dismiss the views of the IFS, the OBR and even their own GERS reports, but even Jonathan Portes, the director of the National Institute of Economic and Social Research, has said on FFA:
“If the SNP plan for full fiscal autonomy were to go ahead, then, as a number of commentators have said, that would lead to very, very severe austerity in Scotland.”
That is why Labour is against full fiscal autonomy; that is why we believe in the pooling and sharing of resources across the United Kingdom; and that is why the public voted to remain part of the United Kingdom.
Does the hon. Gentleman not see that there is a contradiction in standing up and telling us repeatedly that full fiscal freedom would be bad for Scotland and asking for an independent budget review, which he clearly does not want to take account of? He wants an independent budget office, but he is telling us what it is going to say.
That is a rather strange intervention. If Members read new clause 1 and new clause 21, they will see very clearly that what we are asking for is an independent commission to analyse the consequences for Scotland of full fiscal autonomy. If the SNP is so confident about its figures, it should back that proposal and then we will have the transparency, impartiality and independence of those policies. If it is so confident that it was not fiddling the figures, it should help us to set up a Scottish office for budget responsibility and let that body analyse its figures. However, it is clear once again that, when we shine the light of scrutiny on SNP policies, its Members want to talk about the process but not look at the impartial and independent evidence before us. If they are so confident, they will back new clause 1 and new clause 21 and bring much needed transparency, credibility and accountability back to the Scottish Parliament’s finances.
We have just listened to one of the worst speeches I have heard in 10 years. The Labour party now has one argument: we have gone from being too small, too poor and too stupid for independence to being too small, too poor and too stupid for any powers at all. Ian Murray spoke about something that was “credible”. Credible? The Scottish people decided what was credible at the election in May, and they did not say it was his party. He spoke about right-wing, Thatcherite Tories, but it sounds to me like the core vote of the only Labour MP left in Scotland.
New clause 33, which stands in my name and those of my hon. Friends, would require the Scottish and UK Governments to enter into an economic agreement setting out a plan for implementation of full fiscal autonomy for Scotland and establishing a framework within which the two Governments co-ordinate their economic and fiscal policies in the context of full fiscal autonomy for Scotland. The Scottish Parliament and Government would have competence for revenue raised in Scotland through taxation and borrowing and for determining levels of public expenditure in or as regards Scotland.
We see the framework including arrangements for facilitating fiscal co-ordination, overseeing economic co-operation, safeguarding fiscal sustainability, and setting out the joint responsibilities in certain areas. In the agreement, the two Governments must seek to ensure the maintenance of monetary stability throughout the UK and the single market of the UK and the EU. They must also ensure co-operation in the exercise of all the respective functions relating to the administration and collection of taxes and an equitable and transparent approach to the consequences, resources and rewards.
The Scottish Parliament and Government would retain the benefits of increased tax revenues as a result of positive policy impacts and would have the powers they need to manage the consequences of full fiscal autonomy.
I turn briefly to new clauses 1 and 21. New clause 1 would require that a Tory Secretary of State appoint a commission of between four and 11 members, none of whom can be Members of Parliament, Members of the Scottish Parliament or employees thereof. It is backed by Labour and United Kingdom Independence party Members, so we have a Labour amendment backed by UKIP asking a Tory Secretary of State—
So we have confirmation—Labour and UKIP hand in hand, empowering the Tories to run the rule over Scotland again.
As for new clause 21 on a Scottish OBR, we already have one—it is called the Scottish Fiscal Commission. The consultation on its expanded power closed on Friday. One would have thought that Scotland’s sole Labour MP might actually have known what was going on.
New clause 33 would have the Scottish and UK Governments enter into an economic agreement that set up a plan for the implementation of full fiscal autonomy and establish a framework within which the two Governments would co-ordinate their economic and fiscal policies in the context of full fiscal autonomy. That would mean the Scottish Parliament and the Scottish Government having competence for determining revenues raised in Scotland through taxation and borrowing, and for all of the spending, paying compensation to the UK for shared services. This is the right approach to take. I am just disappointed that we did not have proper time to debate it rather than being subject to the nonsensical rant and talking Scotland down by the so-called shadow Secretary of State. By taking responsibility for key areas of Scottish life, we can improve the Scottish Parliament’s ability to deliver real progress for the Scottish people. New clause 33 does that. It rejects the miserablist approach of the Labour party, and I commend it to the Committee.
I do not need a commission to tell me what a disaster full fiscal autonomy would be for Scotland. Stewart Hosie set out the facts, and the facts are clear—a £10 billion black hole for Scottish taxpayers to fill. We do not need a commission to tell us that.
I do not accept the new clause on a Scottish OBR, because one thing that the hon. Gentleman said is correct—it is for the Scottish Government to determine for the people of Scotland how they will ensure independent oversight of fiscal policy. The UK Government would like legislation brought forward by the Scottish Government to be consistent with OECD principles for best practice in independent fiscal institutions. We therefore look to have those discussions during the negotiation of the fiscal framework.
I therefore reject the new clauses and propose that we pass the clauses as stated.