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I beg to move amendment 118, page 26, line 20, leave out from “unless” to end of line 25 and insert
“they have consulted the Secretary of State”
This amendment would remove the requirement for the Scottish Government to obtain consent from a UK Secretary of State in relation to Universal Credit and the costs of claimants who rent accommodation.
With this it will be convenient to discuss the following:
Amendment 5, page 26, line 23, leave out paragraph (b) and insert—
“(b) they have consulted the Secretary of State as to when any change made by the regulations is to start to have effect.’
Clause 24 stand part.
Amendment 119, in clause 25, page 26, line 45, leave out from “unless” to end of line 5 on page 27 and insert
“they have consulted the Secretary of State”
This amendment would remove the requirement for the Scottish Government to obtain consent from a UK Secretary of State in relation to persons to whom, and time when, Universal Credit is paid.
Amendment 7, page 27, line 1, after second “of”, insert “the delivery mechanism for”
Amendment 6, page 27, line 3, leave out paragraph (b) and insert—
“(b) they have consulted the Secretary of State as to when any change made by the regulations is to start to have effect.’
Clause 25 stand part.
New clause 28—Housing benefit—
This New Clause provides for the full devolution of Housing Benefit, allowing Scottish Ministers to abolish the Spare Room Subsidy in Scotland, and to provide £1.8 billion of investment in housing in Scotland.
New clause 39—National Insurance—
‘(1) Section F1 of Schedule 5 to the Scotland Act 1998 is amended as follows.
(2) In the illustrations, omit “National Insurance;”
(3) In the exceptions, at the beginning insert—
This new clause would devolve National Insurance to the Scottish Parliament
New clause 40—National Insurance: employers’ contributions—
‘(1) Section F1 of Schedule 5 to the Scotland Act 1998 is amended as follows.
(2) In the illustrations, omit “National Insurance;”
(3) In the Exceptions, after exception 11 (see section (Benefits relating to children)) insert—
National Insurance so far as relating to contributions payable by employers.””
This new clause would devolve employers’ National Insurance contributions to the Scottish Parliament.
New clause 44—Working age benefits—
In Section F1 of Part 2 of Schedule 5 to the Scotland Act 1998, in the Exceptions, after exception 9 (see section 23A above) insert—
Benefits entitlement to which, or the purposes of which, are the same as or similar to those of any of the following benefits—
(b) jobseeker’s allowance (whether contributions-based or income-based) under the Jobseekers Act 1995,
(c) employment and support allowance (whether contributory or income-related) under Part 1 of the Welfare Reform Act 2007,
(d) income support under section 124 of the Social Security and Benefits Act 1992,
(e) housing benefit under section 130 of that Act,
(f) child tax credit and working tax credit under the Tax Credits Act 2002.
The benefits referred to in paragraphs (a) to (f) above are—
(a) in the case of income-based jobseeker’s allowance and income-related employment support allowance, those benefits as they existed on
(b) in the case of the other benefits, those benefits as they existed on
This new clause would devolve working age benefits to the Scottish Parliament.
New clause 45—Universal credit: powers to vary other elements—
‘(1) A function of making regulations to which this section applies, so far as it is exercisable by the Secretary of State in or as regards Scotland, is exercisable by the Scottish Ministers concurrently with the Secretary of State.
(2) This section applies to—
(a) regulations under section 8(3)(a) of the Welfare Reform Act 2012 (amount in respect of earned income) so far relating to the work allowance (that is, the amount of a claimant’s earned income that is to be disregarded in calculating the amounts to be deducted from the maximum amount in accordance with section 8(3) of that Act),
(b) regulations under section 10 of that Act (amount in respect of responsibility for children and young persons),
(c) regulations under section 12 of that Act (amounts in respect of other particular needs or circumstances) so far as relating to—
(i) the needs or circumstances referred to in subsection (2)(c) of that section (caring responsibilities for a severely disabled person), or
(ii) needs or circumstances of a claimant in paid work relating to childcare costs,
(d) regulations under any of sections 14 to 22, 24 and 25 of that Act (work-related requirements), and
(e) regulations under any of sections 26 to 28 of that Act (sanctions).
(3) The Scottish Ministers may not exercise the function of making regulations to which this section applies unless they have consulted the Secretary of State.
(4) The Secretary of State may not exercise the function of making regulations to which this section applies in or as regards Scotland unless he or she has consulted the Scottish Ministers.
(5) Where regulations are made by the Scottish Ministers by virtue of subsection (1)—
(a) section 43 of the Welfare Reform Act 2012 (regulations: procedure) does not apply, and
(b) the regulations are subject to the negative procedure (see Part 2 of the Interpretation and Legislative Reform (Scotland) Act 2010).”
This new clause would give the Scottish Parliament greater flexibility to make changes in Universal Credit.
New clause 46—Benefits relating to children—
In Section F1 of Part 2 of Schedule 5 to the Scotland Act 1998, in the Exceptions, after exception 10 (see section (Working age benefits) above) insert—
Benefits entitlement to which, or the purposes of which, are the same as or similar to those of any of the following benefits—
(a) guardian’s allowance under section 77 of the Social Security Contributions and Benefits Act 1992,
(b) child benefit under Part 9 of that Act.
The benefits referred to in paragraphs (a) and (b) are those benefits as they existed on
This new clause would devolve benefits relating to children to the Scottish Parliament.
New clause 53—Childcare element of universal credit—
In Section F1 of Part 2 of Schedule 5 to the Scotland Act 1998, in Exceptions, after exception 6 (see section 22 above) insert—
The subject-matter of regulations 31 to 34 of the Universal Credit Regulations 2013.””
This will allow the Scottish Government to help parents and families in Scotland by devolving to the Scottish Parliament control over, and the power to vary, the childcare element of Universal Credit.
New clause 55—Social security—
In Part 2 of Schedule 5 to the Scotland Act 1998, leave out Head F (Social security).”
This new Clause would remove from the list of reserved matters in the 1998 Act (and so transfer to the Scottish Parliament) all social security schemes, including National Insurance and housing benefit, as well as child support, occupational and personal pensions and war pensions.
I am pleased to move amendment 118 and to speak to our amendment 119 and new clauses 40, 44, 45 and 46, all of which relate to universal credit and further powers over social security.
Throughout the debate on the Scotland Bill, its failure to enact properly the recommendations of the Smith commission has been the key point of contention, and I am conscious that theses shortcomings are nowhere more acutely evident than in this part of the Bill. The Smith agreement was crystal clear in paragraphs 43 to 48 that, although universal credit was to remain a reserved benefit, the Scotland Parliament should have specific powers and responsibilities, most notably the
“power to change the frequency of UC payments, vary the existing plans for single household payments, and pay landlords direct for housing costs in Scotland.”
It also states:
“The Scottish Parliament will have the power to vary the housing cost elements of UC, including varying the under-occupancy charge and local housing allowance rates, eligible rent, and deductions for non-dependants.”
The dispute over whether the Bill delivers on the Smith agreement was well aired on Second Reading. Amendment 118, which I intend to push to a vote, and amendment 119 would put the issue to bed. They would remove from the Bill the requirement for the Scottish Government to obtain consent from a UK Secretary of State in relation to universal credit before exercising the new powers. New clause 44 would devolve all working-age benefits to the Scottish Parliament. New clause 45 would broaden the Scottish Parliament’s administrative flexibilities over universal credit. New clause 46 would devolve child benefit and responsibility for the conditionality and sanctions regime.
It is important that the House understands how the dispute is perceived in Scotland by elected parliamentarians and wider civil society. The Scottish Parliament’s cross-party Devolution (Further Powers) Committee, which considered the Bill, did not mince its words. In paragraph 318 of its interim report, it expressed concerns about a number of the welfare provisions. It states that
“the relevant clauses do not yet meet the spirit and substance of the Smith Commission‘s recommendations and potentially pose challenges in any attempt to implement them.”
I hope Conservative Members realise that this was the view shared by their Conservative colleagues in the Scottish Parliament, who were properly represented on that committee.
The committee suggested that this issue and the form of words should be resolved between the two Governments before the Bill’s introduction, but that has not happened. The Scottish Government made proposals to the UK Government for alternative approaches to ensure effective intergovernmental working, but there has been no progress, and consequently this aspect of the Bill has not changed. It is therefore very important that we address the matter today, and that is what our amendments seek to do.
A number of key stakeholder organisations in Scotland have been outspoken in setting out their concerns about the current wording of the Bill and have helped to highlight exactly why we need those powers in Scotland and what we could do with them. The Wise Group, for example, has argued:
“The power to split Universal Credit payments within households, to increase the frequency of payments and to make housing element payments direct to landlords will allow the flexibility in benefit payments to fit with the needs of some of the most vulnerable groups in society.”
The Poverty Alliance has expressed disappointment over what it says is
“ultimately a veto given to the Secretary of State over any future changes to the devolved elements of Universal Credit by the Scottish Government.”
Inclusion Scotland has pointed out that the Bill, as it stands, could result in delays to the implementation of mitigation policies agreed by the Scottish Parliament. It also says that that
“may not be consistent with the spirit of the Smith Commission which implies that the devolved welfare powers can be exercised without the need to obtain prior permission from the DWP.”
Citizens Advice Scotland has also concluded
“that the clauses do require the Scottish Government to consult the UK Government and to gain their agreement to the timing of any variance”.
It argues that
“enabling the UK Secretary of State to make regulations in an area which is devolved to the Scottish Parliament without its consent does not appear to be consistent with the Smith Commission agreement that the Sewel Convention should be put on a statutory footing.”
It also says:
“whilst the intention appears that the timing of any changes needs to be subject to negotiation on what it is practically possible to do, there is scope for wide interpretation of the circumstances it might be considered ‘reasonable’ for the Secretary of State to withhold their agreement to the Scottish Government utilising their devolved power to make regulations in this area.”
When I spoke earlier, I highlighted the letter in this morning’s Herald from 12 of Scotland’s leading third sector organisations timed to coincide with today’s debate and ahead of the emergency Budget a week on Wednesday. It expresses grave concerns about the severe detrimental impact that the Government’s austerity measures are having on low and middle-income households and highlights the threat to tax credits and other support that would fall within universal credit.
In Scotland, two thirds of the people in receipt of tax credits are in work, while most of the children living in poverty in Scotland have in-work parents, so our biggest challenge is tackling low pay. The powers in the Bill, without the veto, would enable us to tackle these long-term problems that hold back our economic growth and the development of our economy.
I am paying close attention to the hon. Lady’s remarks. If, as the previous Government did, we start to rein back tax credits, which were effectively a sop to employers allowing them to pay lower wages and thereby depressed the wage market, employers would be forced in the court of public opinion to pay more. In that way, could we not solve the problem, but on the employers’ side of the argument rather than the taxpayers’?
If the hon. Gentleman is proposing that we start paying people a living wage and ensuring that people can actually live on the minimum wage, I could not agree with him more. Fundamentally, until we have living wages, those in low and middle-income families will always live below the breadline and struggle to make ends meet.
Those 12 organisations posed a fundamental challenge. As we begin defining the shape of Scotland’s social security system, we need to understand how high the stakes are for people who have been struggling for years and seeing their incomes reduce in real terms.
I am impressed by the hon. Lady’s speech and am obviously listening to it intently, but is it true that the SNP five times voted against making the living wage a requirement in public procurement legislation?
The hon. Lady is mistaken. The procurement legislation was hampered by EU legislation. In recent public sector contracts, however, the Scottish Government have started to integrate living wage requirements from the outset. In fact, all the people for whom the Scottish Government are now responsible are on a living wage. There remain many challenges with contracted-out services, particularly at local authority level, but we are trying hard to move towards a living wage in all parts of the public sector. In recent months, we have also made real progress in making sure that private sector employers move towards a living wage. After all, most low-paid jobs are found in the private sector. We need the power to raise the minimum wage to a living wage. When people on low incomes have money in their pockets, they spend it, thereby boosting and strengthening the economy and creating jobs. We saw that when the minimum wage was introduced.
It is incumbent on everyone in the House to listen to the voices of people in Scotland who have put their heads above the parapet on this issue, because they are some of Scotland’s largest and most influential civil society organisations: Citizens Advice Scotland, Barnardo’s Scotland, the Child Poverty Action Group Scotland, the Church of Scotland, Inclusion Scotland, One Parent Families Scotland, Oxfam Scotland, the Poverty Alliance, the Scottish Council for Voluntary Organisations, Shelter Scotland, the Scottish Federation of Housing Associations, the Trussell Trust and last, but by no means least, the Scottish Trades Union Congress. The veto in the Scotland Bill is a barrier to responsive and responsible governance in Scotland.
If the Scottish Government did have wider-ranging powers on welfare, as the hon. Lady would like, by how much would they need to put up benefits compared with UK levels to tackle the problems she has identified?
The right hon. Gentleman raises an interesting point. It is worth pointing out that, over the past five years, Scotland has spent a lower proportion of its GDP on pensions and benefits than the UK as a whole. The question of what a social security system can afford is dependent on the success of the economy. That is why our amendments are all designed to bring into the ambit of the Scottish Government and the Scottish Parliament those powers that would enable us to grow our economy, run it more effectively and join up the existing devolved powers with the new powers that we propose. Frankly, getting powers over work and powers over benefits covered by universal credit is extremely important. The other really important point is that we protect the most disadvantaged people in our society from the onslaught of Tory cuts. Again and again, the people of Scotland have made it clear that they want an alternative to this austerity regime—and that is what we want to be in a position to deliver.
The Deputy First Minister, John Swinney has pointed out that it is not difficult to foresee that what might appear to be pretty innocuous requirements to consult the Secretary of State and secure his or her agreement could be translated into what is essentially a blocking power. All sorts of excuses could be used to prevent something from happening. As the Deputy First Minister put it, if the Secretary of State has a “reasonable explanation” for why he is acting in such a way, that passes the test as it currently exists in clause 24. In practice, the Bill gives the UK Government the ability to veto decisions made by the Scottish Government and Scottish Parliament. This is not a hypothetical scenario. The Deputy First Minister has pointed out how he spent two years trying to make progress on the block grant adjustment, and was stalled and delayed with more analysis at every turn by the UK Government.
For me, no issue illustrates the shortcomings of the Scotland Bill better than the restrictions it would place on the power of the Scottish Parliament to abolish the bedroom tax. As the Secretary of State knows only too well, this has been an issue close to my heart over the last few years, because of its punitive impact on disabled people in Scotland, its gross unfairness and the enormous pressure it puts on councils and other social housing providers. In Scotland, 80% of people affected by the bedroom tax are in homes with a disabled adult, and there is a chronic mismatch between the house size requirements of tenants and the available housing stock.
Back in April 2013, I led one of the SNP’s very few Opposition day debates here in this Chamber during the previous Parliament on that very topic, and the Secretary of State knows that I questioned him on several occasions about the failure of the policy and its deep unpopularity right across the country.
The Scottish Government have mitigated the impact of the bedroom tax by providing discretionary housing payments to everyone affected, but it is important to recognise that we still cannot abolish that legislation, which remains on the statute book. Moreover, the money to mitigate its worst side-effects has had to be found from other devolved policy budgets—and, crucially, the legal liability remains with tenants. It is far from an ideal solution. In order to mitigate the bedroom tax by lifting the cap on discretionary housing payments, the Scottish Government first had to secure the permission of the UK Government, and the protracted and frustrating process they encountered in attempting to secure that permission illustrates, I think perfectly, why we need to lift this veto. It shows how a need for permission can be drawn out for months at a time.
I am familiar with the hon. Lady’s point on this issue, but even the First Minister acknowledges that the point from which a request was made to increase the cap, to the legislation reaching the Privy Council, was achieved at a record rate—and it was achieved by the two Governments working very closely together, which can be done on so many occasions.
The Secretary of State and I have a different perception of time frames and what they mean to people living on limited incomes. When the Scottish Government sought permission to raise the cap on DHPs, the UK Government used exactly the kind of blocking and delaying tactics that will be left open under the Scotland Bill. These are not theoretical, worst-case scenarios. I would like to refresh the Secretary of State’s memory, as it was early in 2014 when the Scottish Government first sought the UK Government’s permission to lift the cap on DHPs, and I raised the issue on more than one occasion in this Chamber subsequently. In fact, it took until May last year for the Government to grant permission—for something that could have been done overnight. Most of the public organisations I deal with in my capacity as an MP have a 21-day turnaround, yet the Government take months at a time. That is an awful long time for someone living on their uppers and struggling with their income.
My hon. Friend is making a fantastic speech. Is it not amazing to hear the nanny-esque statements coming from the Conservative Front-Bench team about the Government giving the Parliament permission? That is the sort of thing that they would not tolerate themselves if the European Commission, the French or the German Government were involved, but they expect the Scottish Government to come cap in hand to Westminster when all they want is to do the decent thing for people. It is ridiculous.
My hon. Friend makes a very pertinent point.
During the intervening months between the simple request and getting the permission we needed, some of our most disadvantaged citizens continued to accrue rent arrears or had to do without essentials in order to meet their liabilities. That is just one concrete example of how restrictions of this type currently act as a stalling mechanism and a barrier to progressive change, and they demonstrate why we need to get rid of the veto.
Other examples of things we could do with these provisions include the power to maintain direct payments of housing benefit to social landlords—something that I think is in everybody’s interests—and the power to ensure that under universal credit claimants can receive individual payments, which potentially benefits women and children and protects their interests. Then there is the power to equalise the earnings disregard between the first and second earners in a household. Again, given the persistent pay gap in Scotland between women and men, that measure could predominantly benefit up to 70,000 women by up to £1,200 a year. By contrast, if we leave the Bill unamended, we curtail the powers of the Scottish Parliament to enact policies that are overwhelmingly in the interests of our citizens and are supported by them. We risk seeing such measures batted off into the long grass.
We also store up trouble down the line. It is fair to say that the Secretary of State got himself in a richt kirn earlier this month on the “Scotland 2015” programme when he was asked directly about the veto. When the presenter put it to him that
“it could be used to block if there was a political will to do that because who would decide if the Secretary of State was unreasonably withholding consent?”, the Secretary of State said:
“Well, I would hope that it would never come to that, but because it’s on the face of the legislation ultimately it might be the courts that would decide.”
I fear that the Secretary of State has let the cat out of the bag; I suspect he was a lot more candid than he intended to be. I think we can infer from that very revealing remark that he knows that, in practice, this Bill’s measures will act as a veto on the Scottish Parliament—pure and simple. I put it to the Committee that if the Scottish Parliament has to go to court to enforce the powers devolved in the Bill, it is not worth the paper it is written on.
Does the hon. Lady accept that there is a potential constitutional point, too, in that what is being suggested is, in effect, a breach of the Sewel convention, whereby power is given with one hand, but is possibly taken away with the other?
That is an astute point. It shows that if we get ourselves into a muddle with the legislation and it is just a kirn, we are storing up trouble down the line. The legislation has to be future-proof as well as present-proof. We must prepare for every eventuality.
We can dance around the semantics of the current wording of the Bill all afternoon, but if Scottish Ministers have to obtain the agreement from UK Ministers on when their measures are to take effect, that is, in effect, handing the UK the ability to block or delay the implementation of policy, frustrating the legitimate democratic process and contravening both the letter and the spirit of the Smith agreement. If the Government have to go to court to enforce these measures, it should be obvious that they are less than adequate. If the Secretary of State still maintains there is no veto, I challenge him to accept amendments 118 and 119, which make that explicit and beyond all doubt.
I am not giving way, as I am about to wind up my remarks.
This group of amendments comes down to respect—respect for the promises made to the people of Scotland; respect for our Parliament; respect for the democratic process; and, above all, respect for our citizens and our ability to make decisions in our own interests. That is, after all, what meaningful devolution is really all about.
I think that the Committee wants to implement the spirit and the letter of Smith, and I look forward to hearing the Secretary of State’s response to the detailed arguments advanced by Dr Whiteford. I think, however, that when we are dealing with a matter as potentially wide-ranging as universal credit, we also need to think about the money, and about how far it is possible to operate a very different welfare system in different parts of a country such as the United Kingdom. What we have seen in the unfolding and dreadful Greek crisis is that, if a country belongs to a currency union but has not brought its benefits system into line, and if there is no proper system of sharing revenues and expenditures throughout the eurozone, that becomes extremely damaging, as it has for the poor Greeks.
I am sure the right hon. Gentleman is not suggesting that there is an in-line benefits system across Europe. The real problem is austerity. The Greeks were told five years ago that, if they followed austerity measures, their problems would end, but their problems have not ended. They have become worse, because austerity makes things worse. It is nothing to do with welfare; it is to do with austerity.
I think that welfare has quite a lot to do with austerity, and I think that we agree. I think that the policies that have been forced on Greece have been too austere. It is quite wrong to make the Greeks cut public spending when they cannot expand their money supply, expand credit or expand the private sector to create the jobs that they clearly need to create in order to make some success out of the cuts imposed on the public sector.
When, after 2010, we conducted policy as a coalition to bring about recovery in Britain—including Scotland—it worked very well, and it was private sector led. We were able to do that because we had a full range of powers over interest rates, money creation, credit and banking, which a nation that has joined a currency union does not have. That is the Greek tragedy. The Greeks are able to carry out only the public sector part of the EU fix, which is the bit that is austere. They are not able to carry out the private sector-led recovery.
Of course, we are not here to talk about Greece; we are here to talk about our currency union. However, I wanted to make that point because, whereas Greece is having to move away from a position in which it shared only currency and is now discovering that it needs to share a great many other policies with the European Union in order to achieve success, in Scotland things are going in the opposite direction.
We have a currency union—a perfectly good currency union, which is supported on all sides. I believe that Members of the SNP are great fans of the currency union and do not wish Scotland to have an independent currency, but they need to consider this: if they do not want proper independence in the sense of having their own currency, and if the currency is to work in the way in which it has worked in the past, there will have to be some basic standards of welfare that are common across the country, and there will have to be agreed systems of transferring money from rich areas to poor ones. There are rich towns and cities in both Scotland and in England. The rule of our system is that those in areas of high income or relative success pay more tax, and those in, say, towns or counties with a lot of poverty benefit from big transfers.
I almost feel sorry for interrupting the right hon. Gentleman when he is advancing a good argument for the redistribution of wealth through taxation, and has also admitted that austerity is not a good idea. However, I think that the mention of Greece is erroneous. If we are talking about an optimal currency zone, a better parallel would be Germany and the Netherlands. The independence that those countries have from each other is welcomed by SNP Members. I hope that the right hon. Gentleman will go a little further than the enlightened remarks that he has made so far, and will agree with us that Scotland and England should be as independent from each other as Germany and the Netherlands.
I am not prepared to go that far. I think that there can be problems in the euro currency zone between Germany and the Netherlands, because they do not have the full range of common policies that they may need. At present, it appears that the Dutch and German economies are sufficiently synchronised for the arrangement not to cause problems in the Netherlands, but that is clearly not true of Portugal, Spain, Ireland or Greece. The fact that there are more countries that it does not fit than countries that it does fit implies that there is something wrong with the fundamental architecture of the euro. That is why I am anxious for us to bear it in mind, when we are debating the issue of how much welfare discretion there should be, that a common welfare system is normally one of the characteristics of successful currency unions.
Yes, I do believe in redistribution. We all believe in redistribution. We believe that, in a civilised country such as ours, we should tax the rich more and give money to those who need support. We have arguments about how much the amounts should be and about the conditions, but we all believe in transfers, and we all believe that the balance must be right.
When I asked the hon. Member for Banff and Buchan to say how much more an enlightened Scottish Government would like to give, by means of welfare payments, to tackle immediate problems of low income or poverty, she was not able to tell me. That was a pity, because I took it that her intention, and the purpose of the amendments, was to give the Scottish Executive power to increase benefit levels in comparison with the levels, or the range, of benefits currently on offer in the Union. I did not think that SNP Members were seeking these powers in order to be meaner than the Union Government are proposing to be, and I see them consenting to that. I feel that this debate would be richer and fuller if they shared with us the amount of extra money that they would like to spend.
Surely the point is that it is for the Scottish Government, whatever their colour, to decide how they want to use the powers. Perhaps one day a Government of the right hon. Gentleman’s colour will be using them. However, no Government would be able to use any powers that had been vetoed by the Secretary of State.
That brings us back to an important and interesting question. At what point does the transfer of power become destabilising for the currency union and the common transfers that make up our common country? That, surely, is one of the issues that were examined in the referendum, when a majority of Scottish people felt that they wanted to remain in the United Kingdom and in the currency union. Having read and listened to what was said by those who were actively involved in the debate, I suspect that the currency union was rather central to the securing of that vote, and that it was when the parties of the Union said that Scotland should leave the currency as well as the UK, if that was the wish of the Scottish people, that the majority voted to stay in the Union.
I should be fascinated to know the size of the changes in welfare spending that the right hon. Gentleman would find destabilising. Sir Edward Leigh said yesterday:
“the Scottish Parliament spends £37 billion and raises £30 billion”.—[Hansard, 29 June 2015; Vol. 597, c. 1234.]
He described that as “quite responsible”. He also said that the UK raised staggeringly more—£648 billion, an amount that is about 20 times greater—but, of course, the UK also spent a great deal more, with a black hole of £732 billion. Given those figures, and given the difference between the sizes of the states of Scotland and the UK, in terms of both spending and raising powers, just what type of changes does the right hon. Gentleman think would have to hit welfare before it began to destabilise the Union? I suggest that it would be necessary to make a millionaire of each and every unemployed person before that point was reached.
I do not think that it would be necessary to go that far. At present, there is clearly a disproportion between the size of Scotland and that of the rest of the United Kingdom, and, as the hon. Gentleman’s budget figures show, a lot more money is collected elsewhere than in Scotland. That, however, is not the point at issue. [Interruption.] I am not asserting anything; I am just asking a question. We are engaging in a crucial debate on how much welfare power should go to Scotland. I am one of those who agree that some welfare power should go to Scotland in accordance with Smith, but we have to ask how far it goes, and what the consequences might be.
If countries have a common work area and a free movement area, and if they share a language, a labour market and a currency, that arrangement can bring benefits when it has settled down, because it is backed by political union. When we start to unpick the political union, we must ask ourselves at what point that unpicking of that union, or the welfare transfer union, will become damaging. A point will be reached when it does become damaging, because one part of the country will be too attractive, or too unattractive, compared with another part. A single currency area as big as the United Kingdom can work only if there are fair systems for raising money from the rich, wherever they may be in that big area, and giving enough to the poor, wherever they may be.
Is the right hon. Gentleman aware that parts of the United Kingdom are already more unattractive because of decisions on welfare spending? The bedroom tax is one example. In the highlands, there are some 70 communities with no one or two-bedroom properties on the social register for people to move to. How can it possibly be fair for that principle to apply across the UK, when the people who live there are unable to cope with that heinous tax?
I fully understand the arguments against the spare room subsidy, or the bedroom tax. I understand the politics of it only too well. I do not want to go into my private views now, but it is a matter to be settled within the Union Parliament, and by the Government of the Union, under current powers. It does not make good law to say that if there is a particular benefit that people in Scotland do not like very much, that is the one that we should be able to fix. We need to come up with a settlement for a longer-term period which takes account of the principles.
It is for that reason that I am presuming to spend just a few minutes reminding colleagues that very big principles are involved in this instance. We need to secure the right balance, one that enables Scotland to feel that it can make enough of its own decisions to meet the mood of the majority, but falls short of giving it so much power that the Union’s mechanisms for switching money around do not work. I find it very difficult to make decisions on this Bill without knowing what the financial settlement will be, because it will not work unless there is enough money to make it work, or if England does not think that it is fair to them. Scotland may well find that the financial settlement is not fair to them—I am sure our SNP colleagues will not be shy if that is the case—but England has delivered big majorities for me and many of my colleagues, so we have a mandate and a voice and we need to make sure that the financial settlement that emerges is fair to us. The range of powers that Scotland has will have a bearing on that settlement.
I thank the right hon. Gentleman for giving way; he is being very kind. On welfare, we already share a common language with a country in the common travel area, namely the Republic of Ireland, where people can get up to €188 per week, with extra payable for those who have children. I am not saying that people are going from Liverpool or the north-east of England to a far more advantageous situation in the Republic of Ireland in the common travel area—which they could do—so I think that the right hon. Gentleman’s fears are misplaced. I would almost suggest that his fears are politically motivated and based on wanting to keep powers in Westminster and a deep psychological need for Westminster to over-control aspects of people’s lives around the current UK.
I am afraid that that is a bad example, because it proves my case. Ireland broke from the pound, set up its own currency and then, unfortunately for Ireland, chose the euro, but that was Ireland’s decision and it has had a bumpy ride ever since.
The big difference we need to remind ourselves about for the purposes of this welfare debate is that there is a common currency, so there have to be some limits to the amount of freedom appropriate for welfare benefits. If the SNP wishes to be truly independent and wants an independent currency, I fully understand its position and none of these arguments makes any sense.
I think I have made my point and I hope that Ministers will bear in mind that it is very difficult to come to a conclusion before we know what the financial settlement will be. It is also very important to remember that there is a common work, language and currency area, which means that there has to be some family resemblance in the benefits that are paid.
I want to follow on from some of the issues touched on by John Redwood, particularly his last point about a financial settlement. When debating the earlier group of amendments, he intervened on the Secretary of State to ask whether he would address how the Barnett formula might be adjusted.
In essence, I think that the right hon. Gentleman is corroborating some of the basic questions asked by Dr Whiteford about clauses 24 and 25, which presume an awful lot and raise a lot of questions about what else should be in them and what is happening outside them. The clauses presume a standard of behaviour and courses of action and events in relation to how decisions will be made. For instance, the word “concurrently” is used, but if we look at the sequence of decisions and processes involved, we will see that they do not look very concurrent. There could be distended periods and a lot of dispute and difference. The most important gap in clauses 24 and 25 —both Labour and the SNP have tabled amendments to address this—is that they do not say what will happen if Scottish Ministers and the Secretary of State do not concur on some of the issues.
If we as legislators are going to pass clauses that presume certain standards, the course of events and political behaviour, the question we need to ask is, “And what if not?” The Bill does not answer that question. If there is no agreement between Scottish Ministers and the Secretary of the State on the decisions, timelines, details and other implications, what will happen? We will be in difficulty and we will be told, “Well, the legislation faithfully followed Smith and we couldn’t do any more than that,” but it is clear that Smith is not of itself sufficient to address those questions, so we as legislators must address them. The Smith commission exercise was different from that for which we have responsibility as legislators. It is not good enough for us to say, “We’re not going to answer those obvious questions, because Smith didn’t address them.”
I speak from the experience of having been through the Northern Ireland process, during which we negotiated agreement after agreement and had lots of developments. Often, the Government—by which I mean both parties—would say, “We’re faithfully implementing the agreement,” but it was clear, and many of us said, that it was not adequate for its purpose and that more needed to be done. We were, of course, proved right, so I feel a lot of empathy for Scottish colleagues who are saying that it is not enough to say that the Bill faithfully implements Smith when it does not answer practical, basic fundamental questions.
It is not enough to say, “We’ll see what happens,” or, “We’ll see who goes to the courts first,” because that does not give a proper answer in constitutional terms. Neither would it be edifying to the public, in terms of giving politics any sort of good reputation, if politicians end up blaming each other for their own powerlessness or for the fact that they are delivering confusion.
Again, I speak from experience in Northern Ireland, where, as is the case with this Bill, particularly clauses 24 and 25, there is an image of dual control. There is a degree of devolution, but there is also a degree of control from Westminster and Whitehall. The idea is that it will all be done swimmingly and smoothly, but the fact is that when that does not happen, decisions are not taken and politicians of different parties say that they want to take certain decisions but cannot do so. That blame game does no credit to any of the political institutions or parties. I do not want to see the same sort of presumption being used in this Bill, because it could end up creating a crisis.
Not only are words such as “concurrently” used when the processes are not very concurrent; there is also the idea that the Secretary of State can give agreement and that such agreement will not be “unreasonably withheld.” Who decides what is unreasonable? Whose judgment does that rely on? What is the real motive behind that? There are different views in Northern Ireland as to who is being reasonable and who is being unreasonable.
To return to the point raised by the right hon. Member for Wokingham about the financial settlement and the idea that there would have to be a test of whether it was fair to England, in Northern Ireland, what was supposed to be a devolved legislative decision on welfare has essentially been subject to a budget bullying exercise, not by the Secretary of State for Northern Ireland, but by the Treasury. This Bill is silent on the issue of the Treasury, so I think that an amendment will be needed on Report to address the Treasury’s role.
I know that on paper the devolution of welfare to Northern Ireland is not the same as that proposed in this Bill, but the lesson is salient. The karaoke legislative power that the Northern Ireland Assembly has to pass legislation is such that it has to be delivered according to the words and music passed by this House. If not, the Treasury has told us, “We will claw back your money,” by which it means not the welfare spending, but the devolved budget. The Treasury is interfering in what was meant to be the financial settlement under the Barnett formula.
The right hon. Member for Wokingham asked earlier what would happen in relation to the Barnett formula. He also asked a very good question when he said he agreed with the findings of the Smith commission on devolving aspects of welfare. He pointed out that we had to ask the question: “How far does it go?” I believe that the amendments tabled by Labour and the Scottish National party are an attempt to clarify how far that devolution would go. They would make it clear from the start what paths were open to Scottish Ministers and to the Scottish Parliament. Incidentally, I would have preferred to see more emphasis on the Scottish Parliament in the Bill; all the references seem to be to Scottish Ministers. But that is another issue.
The right hon. Gentleman’s question—how far does it go?—will not be answered by clauses 24 and 25 or by the Government’s rejection of the amendments. Instead, the question will have to be answered on each and every occasion that the Secretary of State is asked how far Scottish Ministers and the Scottish Parliament can go in relation to the available discretion on welfare spending. We should not have to have that constant political checkpoint in place for the Scottish Parliament and Scottish Ministers, whereby it will fall to Ministers here to say how far the devolution of welfare should go on each separate decision. That will be recipe for permanent tension and contention. I thought that the purpose of the Smith commission and of this Bill was to ensure that we would be relieved of such contention, both here and in the Scottish Parliament.
The Scottish Parliament should be able to use its discretion to address the merits of the particular benefit changes and innovations that it wants to introduce. Those benefits might relate to cancer sufferers, for example. There could be a specific cancer support allowance that could effectively cut through a lot of the confusion that exists in relation to other benefits such as employment and support allowance. We should let the people in the Scottish Parliament address the question of how benefits can be made to work and to deal with the real problems that people have in Scotland. They could set a good example to the rest of us. They should be empowered and emancipated to concentrate on those issues by these devolutionary measures, instead of constantly having to deal with political crises and political fallout and to wonder what kind of political gamesmanship Ministers in London or in Scotland will be accused of playing in relation to a matter as fundamental as welfare.
Nothing scandalises the public more than the perception that an issue as fundamental as welfare—particularly for people with disabilities and long-term conditions—has become a political football. We have seen that sense of scandal in Northern Ireland, and I do not want to see it repeated anywhere else. That is why the Secretary of State needs to listen to the points raised in the amendments. This is not about political point scoring; it is about ensuring, in the spirit in which this devolution is meant to be extended, that the people in Scotland can address these issues and ideas without feeling that they are getting into serious political quicksand. They do not want to feel that their actions could trigger a demand for another referendum, for example. We must let them put to the Scottish Parliament their own ideas for the betterment of their people without feeling that they could get into an awkward situation.
That would result in the Scottish Parliament working better and in freeing this Parliament of arguments and contention that it does not need to bother itself with. It would also set a very good example to the rest of us who need to sort out our own alignment on the devolution of welfare. I do not want to return to our own situation in Northern Ireland, however. I am not saying that the proposals in this Bill should automatically be translated into a Bill for Northern Ireland. I support most of the amendments that have been tabled, but I cannot pretend that all the new clauses would work in the context of, or be applicable to, Northern Ireland. There would obviously be differences, and I do not wish to presume anything in that regard. Let us get this devolution right, and let us give the Scottish Parliament the chance to get welfare right on its own terms. That would involve no risk or threat to this Parliament, and it would certainly set an example to the rest of us.
I should like to speak to new clause 55. The explanatory statement tells us:
“This new Clause would remove from the list of reserved matters in the 1998 Act (and so transfer to the Scottish Parliament) all social security schemes, including National Insurance and housing benefit, as well as child support, occupational and personal pensions and war pensions.”
I shall start by making a controversial statement. I believe that, by dribbling out powers—that is not my own phrase, but one given to me by one of my Scottish friends; I still have one or two left—we are giving the Scottish National party a crowbar with which to blast the Union apart. This Parliament is giving the SNP just enough purchase on that crowbar by giving it just enough powers to feed a sense of grievance. If we were to give the Scottish Parliament full responsibility for social security, it would be difficult for it to feed on that grievance. It would have to be a responsible Parliament and take responsible decisions, and I am confident that it would do so.
My amendment would place all social security within Scotland, including pensions, in the hands of the Scottish Parliament. Scotland has a more ageing population than the UK as a whole, and immigration there is much lower—I never understand why, but apparently it is—so Scotland will need a needs-based formula to protect the pensions of Scottish people. That is precisely the argument I have been using in these debates. A needs-based formula that buttressed a Scottish Parliament with full fiscal autonomy would sustain the Union, and I would therefore replace the Barnett formula with such a needs-based formula to protect the pensions of Scotland’s ageing population. That is where I am coming from.
We are not very far into this Parliament, yet already I feel that I might be wearying my colleagues by making the same point over and again. However, it is an important point to make. There are not a huge number of my colleagues present in the Chamber today, but I recall from reading my history books that during the debates on what was to become the Government of India Act 1935, the House of Commons debated the Bill day after day. In those debates, people such as Brendan Bracken, Harold Macmillan and Winston Churchill made the point over and again that dribbling out powers to India would destroy the connection between India and the United Kingdom. Very few people listened to them.
I do not claim to be in the same league as them, but I believe that this debate is extremely important. It is important to understand that we could destroy the Union by not getting this right, and we must debate that contention.
It is interesting to hear the hon. Gentleman talk about the angst over the connection with India that was palpable in the Chamber during those debates. Does he agree that the angst—admittedly, there is not much on the Labour and Tory Benches today, given how few of their Members are here—that will be created by the Government’s voting against the wishes of the 95% of Scottish MPs who want to achieve x, y and z in the Scotland Bill will go away some day, when the powers go out from this place? At that time, English Members will need to worry only about matters that relate to England, rather than about those that relate to Scotland.
I think we have to act responsibly and to remember that, unfortunately, only three Unionist MPs are left in Scotland. The SNP has won a notable victory in Scotland and needs to be listened to—we do not always have to agree, but we have to listen. Ultimately, I am as passionate a Unionist as anybody on these Benches, but I believe that there is a better route to maintaining the Union. If we dribble out these powers, we are making a grave mistake.
Let me deal with the point that if we have a single currency system we must have a common welfare system. That is a perfectly respectable point and I completely understand it. It was made by my hon. Friend Mr Rees-Mogg in the debates two weeks ago and has been made extremely well by my right hon. Friend John Redwood. I understand where they are coming from, and we are all very much aware of the Greek situation, but I would argue that the comparison is misplaced: the difference between Germany and Greece is infinitely greater than that between England and Scotland. In the United States, full fiscal autonomy for the states works because there is a common English language and full mobility of labour. When there are disparities in wealth, labour moves around the United States in a very vigorous way that is difficult to achieve in the European Union.
The comparison of Scotland and England with the Netherlands and Germany is much more apposite. We have a common language, a common border and very similar systems, albeit separate legal systems—although they are based on many of the same traditions. Members can understand the point that I am making. Of course, if the Scottish Parliament was to act completely irresponsibly and take control of its social security and just spend, spend, spend, the thing would break apart; I agree that the currency union would become unsustainable. But surely as parliamentarians, with confidence in our own Parliament and elected representatives, we should have the same confidence in our fellow countrymen and ladies who will be running the Scottish Parliament. I personally believe that if we gave them full responsibility, they would have to act responsibly if they wished to be re-elected.
My hon. Friend the Member for North East Somerset and my right hon. Friend the Member for Wokingham have made a perfectly respectable point and the Minister will want to deal with it. No doubt he will agree with them and make the point himself, but I think that if there are shared or similar traditions and there is a similarly incorrupt system, it is possible within a currency union to have different welfare systems.
Let us consider what has been given to Scotland. This is a bit of detail, but it is important. With its remit, the Scottish Parliament transformed social fund community care grants and crisis loans into the Scottish welfare fund, while council tax benefit was replaced with council tax reduction. There have already been some changes. In addition, Holyrood is in charge of discretionary housing payments within Scotland. My point is that all those benefits together amounted to just £422 million in 2013-14. That is less than 2.4% of all welfare spending in Scotland and, if my calculations are correct—I might be wrong—less than 0.21% of all welfare spending in Great Britain, such is the disparity between spending in Scotland and in the United Kingdom as a whole. It is inconceivable that decisions made in the Scottish Parliament would upset the balance of payments in the United Kingdom as a whole.
Of course, I welcome the Government’s move to expand Scotland’s control over its own benefits, as we all do. The debate now is about how much we should do it. I want to ask Ministers why we are not devolving the job lot of it. How can anyone effectively half-run welfare? It comes as a package. Is that not the point of universal credit? In fact, universal credit cannot stand alone, so we cannot start dribbling out powers and keep universal credit. I think we are making a mistake, but the point is arguable so the Minister might be able to knock down my arguments. I make them with a sense of humility.
One of the arguments for uniformity of benefits is that it supports a common social citizenship across the Union. That point was made by Ian Murray, and it is perfectly fair. He says that we believe in a common social citizenship, and I accept that, but I believe that the argument has been broken in such important regards as tuition fees and prescription charges. I am not entirely sure why it is important to have a common social citizenship for welfare, for which the hon. Gentleman argued very well, but not for tuition fees.
There is also the argument that the social security system is so immeasurably complex and interconnected, with decisions in one area having vast implications and repercussions elsewhere, that devolving it would be virtually impossible or unachievable. If anything, I would have thought that would bolster the case for universal credit, but is it not possible that Scotland, in charge of social security for more than 5 million people, might innovate in its system—simplify it or even provide models for the rest of the United Kingdom? Do we not believe in competing social security systems throughout Europe? Does not Holland believe that it can have a competing social security system with Germany while maintaining its independence?
The proposals are a step in the right direction, but I do not believe that they go far enough. In 2013-14, expenditure in Scotland on the benefits that the Smith commission proposed to devolve totalled less than £2.6 billion out of the £16 billion to £17 billion spent on welfare in Scotland. It is true that that is more than the current £422 million, so we are making progress, but the Scottish Government do not believe it is enough and I think they have a point. We should at least listen and argue about this and knock down their arguments if they are not sustainable. Given the very strong mandate the electorate have given to the SNP, we must listen to some of their arguments and deal with them in a constructive way.
Of course, as a Conservative I believe in evolution not revolution, but I also believe in learning from history and, as I have said before, we failed before because we were too afraid of taking the plunge and trusting people. Today we need to think of grand gestures, not just this benefit and that welfare payment. The way to secure Scotland’s place in the Union is to grant her full fiscal autonomy, full fiscal responsibility and full home rule in a modern sense. I hope Ministers—all good Unionists, just as I am—will explain their thinking in not going down the route I propose. It is the way to keep our family of nations happy together; that is what my amendment seeks to move closer to achieving.
I fear we are trying to counter nationalism with fear and fudge, and that never works; we will counter nationalism only with hope and aspiration. In the United Kingdom as a whole, 70% of people support benefit reform. Universal credit, which I support, will make a difference, but given the overwhelming importance of welfare in a modern parliamentary system, no self-respecting Parliament worth the name cannot take full accountability for welfare payments. I hope and expect that the Scottish Parliament will keep universal credit if given the chance, but that should be a matter for it to decide. It is in that spirit that I move my new clause.
I thank Sir Edward Leigh for introducing his new clause. I want to pay credit to him: in both his speech this afternoon and his other contributions throughout the debate on the Scotland Bill we have heard many thoughtful and intelligent remarks on the future of Scotland and, from his perspective, the preservation of the Union. On our Benches, we come from a different position, but none the less I respect the position he has taken and the clear thought that has gone into the contributions he has made.
In the election campaign, those of us on the SNP Benches asked the people of Scotland to vote for us in order that we would come to this House to speak up for what we were promised by Gordon Brown: that we would get as close to federalism as possible. Much was said about delivering home rule in the spirit of Keir Hardie, too. It is on that basis that we can argue that, with our share of the popular vote and having won 56 of the 59 seats, we have a clearly expressed mandate from the Scottish people to get what was proclaimed: home rule for Scotland. It is in that context that I commend the amendment before us. It seems to understand the expectations of the Scottish people for the return of power to Holyrood, which has become much stronger in the recent past.
As I mentioned, the hon. Member for Gainsborough comes from a different perspective, in as far as he wants to protect the Union. We wish to see powers in the hands of the Scottish Parliament that allow it to deliver the sustainable economic growth which enables us to deliver on the social priorities that the people of Scotland expect. I say to the Secretary of State for Scotland and the Government that if they will not listen to the
Scottish people and their elected representatives here, they should listen to the wise counsel that in this case comes from their own Benches.
We respect the fact that the Government won the election in the UK—although that does not mean we like it. However, the Government should also respect that we won the election in Scotland. The Secretary of State is of course a lone Government voice, with only 14% of Scots voting for his party—the lowest level of support for a Tory Government in history. It is clear that the Scottish people want the Edinburgh Parliament to have greater control over welfare. I am reminded of the Charles Stewart Parnell quotation often mentioned by my right hon. Friend Alex Salmond:
“no man has the right to fix the boundary to the march of a nation. No man has the right to say to his country, ‘Thus far shall thou go and no further.’”
Perhaps, whether on this amendment or on many others, the Government ought to reflect on that quotation.
The issues of fiscal autonomy and freedom to deliver on our aspirations for social security are intertwined. For us, fiscal autonomy is about hope and aspirations, something we heard about just recently. We need the full set of powers to deliver a new Scottish enlightenment that recognises that we need to create the circumstances that will drive up our investment, and deliver growth and productivity. That will result in a rise in real wages, generating the tax receipts that will allow us to deliver investment in social policy, particularly in social security.
That is why we are critical of the taxation powers on offer, which leave the Scottish Parliament in direct control over less than 30% of taxation and, crucially, fall way short on the range of tax powers that could see us incentivise the Scottish economy and deliver growth. This is critical, as the issue of sustainable growth is central to our desire to deliver the investment we need in welfare. Our desire is to invest and deliver a stronger economy, and, through doing so, create the resources that allow us to invest in social protection and, as part of that, to look after today’s and tomorrow’s pensioners.
With those remarks, I welcome the new clause tabled by the hon. Member for Gainsborough and the discussion we are now having. In just over a week, the Chancellor will rise and deliver his emergency Budget. I expect there is in some quarters a sense of anticipation as to what the Budget will deliver, but many SNP Members have a sense of dread, knowing what is coming. The last Government’s failure to grow the economy and deliver tax receipts sees the poor and the disadvantaged of the UK having to pay the price of failure, with an expectation of an additional £12 billion of welfare cuts to come. The ongoing austerity regime will drive an increasing number of people into poverty, and that fact was central to our campaign—showing that there was and indeed is an alternative to austerity, and why we need powers in Scotland to protect our citizens from the most damaging aspects of the UK Government’s welfare programme.
Through the limited powers we have today, to which reference has been made, the Scottish Government are providing £300 million of additional funds between 2013-14 and 2015-16 to mitigate the impact on families in Scotland of Westminster welfare cuts. Not only do we know that the pressure on many working families is going to increase, but we know that the UK Government wish to reassess the definition of “relative poverty” , a sure sign that they recognise that their policies are going to see a dramatic increase in the number of families pushed into poverty as a direct result of their measures.
We know from the analysis done by the Institute for Fiscal Studies, much commented on by the Child Poverty Action Group, that up to 100,000 more children in Scotland risk being pushed into poverty by 2020. For SNP Members, and for many in Scotland and, I expect, throughout the UK, it is unacceptable that anyone should be living in poverty in Scotland and in the UK. That, among other reasons, is why we need powers over welfare in Scotland. A principle important to many on our side, which we firmly believe in, is that society is as strong as its weakest link. That principle is in the mainstream of public opinion in Scotland, but the welfare cuts to come would lead us to the conclusion that it is not shared by all.
Let me turn to the issue of pensions, which was raised by the hon. Member for Gainsborough. One of our particular concerns is the increase in the age when pensioners will access their state pension; it is going up to 66 in 2020, and to 67 between 2034 and 2036, before increasing to 68 thereafter. That may be perfectly acceptable in the parts of the UK where life expectancy has been rising, but the disparity that exists between life expectancy north and south of the border suggests that we need a Scottish solution to our own circumstances. For example, life expectancy for a male child born today in Glasgow is 71.6 years, some seven years below the UK average of 78.2 years. The World Health Organisation has claimed that in the district of Calton in Glasgow, life expectancy for males is 54 years, substantially below the current UK pension age, never mind the increased pension age.
For a woman, the gap in life expectancy is also marked—78 years against a UK average of 82.3. It is little wonder that the state pension represents 11.9% of taxation income in Scotland but 12.1% in the UK. Quite simply, we are not living long enough to enjoy the fruits of the old age pension. If powers over pensions were devolved, our Parliament in Edinburgh could determine how we reflect on our own circumstances to ensure that our citizens can look forward to a comfortable and secure retirement.
The amendment tabled by the hon. Member for Gainsborough would have the effect of devolving powers over all pensions, not just the state pension. We welcome that. It would allow us in Scotland to reflect on how we respond to the challenges for both defined contribution and defined benefit schemes. Defined benefit schemes are something of a rare breed these days, and we should reflect on the damage that we have done to the sustainability of such schemes as a consequence of the tax raid on pension schemes initiated when he was Chancellor of the Exchequer by the Member of Parliament for Kirkcaldy and Cowdenbeath.
No, not the current Member for Kirkcaldy and Cowdenbeath; my hon. Friend would not do anything so rash.
There is a crisis in the funding of such schemes and the tax treatment of dividends requires a fresh examination. Pension freedoms were initiated in the last Parliament.
While we broadly welcome the enhancement of consumer choice, SNP Members have gone on record as questioning the appropriateness of the advice that consumers receive and the risks of mis-selling. Those concerns have not been adequately addressed, and if pensions are devolved to Scotland, the Parliament in Edinburgh may want to look at it.
We welcome the amendment, especially in the light of the threatened attack on the most vulnerable in our society if the Government go ahead with their £12 billion-worth of cuts. We recognise that we can deliver only if we have fiscal responsibility as part of the equation. We recognise our responsibilities to look after the vulnerable in our society. We firmly believe that we need power over our economy to deliver sustainable economic growth and grow the tax base to generate the resources to create not only a wealthier but a fairer Scotland. Passing the amendment today at least gives us the power to intervene to ameliorate some of the pain that will be inflicted on so many of our people by the policies of the UK Government.
I am delighted to speak in favour of amendment 118 and new clause 45, which call for the removal of the requirement for the Scottish Government to obtain consent from the UK Secretary of State in relation to universal credit and the cost of claimants who rent accommodation.
In the light of our mandate from the Scottish people, and the lack of democratic mandate that the Conservatives —indeed, any of the other parties—have in Scotland, we urge all in the Committee to support the amendment. We set it out unequivocally in our manifesto that, as part of our welfare priorities, there should be an immediate scrapping of the bedroom tax and a halt to the roll-out of universal credit and PIP payments. We said that we would support an increase in the work allowance. Those policies were supported by both the people of Scotland and civic Scotland and we have a clear democratic mandate for that demand, given the result of the general election.
We are particularly concerned about the work allowance element of universal credit—the amount of income that a household can earn before their universal credit entitlement is reduced. We demand that the work allowance be devolved to the Scottish Government as part of new clause 45, and democratic integrity requires that that demand be met. We support increases in the personal tax allowance, but we also back an increase in the work allowance. In this, we are in keeping with a Resolution Foundation policy proposal paper, which pointed out:
“if we really want to help working families on low and middle incomes, boosting the Work Allowance would be more effective and better value for money than any tax cuts”.
For a lone parent with housing costs, for example, the work allowance is currently set at just over £3,000 per year. After that point benefits start to be withdrawn. For example, those on universal credit lose £65 of benefit for every £100 of post-allowance salary. Of course we need to put in place some sort of tapering system to make work pay, but the complexity of the system allows—indeed, encourages—the Government to focus on simpler measures, even if those simpler measures are far less effective. Take the personal allowance. People begin paying tax at 20% after earning £10,000 a year, but we pay less attention to the fact that a sole working parent faces a 65% deduction rate when they earn over £3,000 a year.
For people who receive universal credit and pay income tax, the Chancellor’s £600 a year increase to their personal allowance is welcome. That would boost their income by £42, but the same increase in work allowance would increase their income by £390.
Even the Institute for Fiscal Studies has weighed into this debate, arguing:
“In-work benefits provide a more precise and cost-effective way of supporting low-earning working families than changes to direct taxes.”
The freezing of work allowance is profoundly misguided and effectively cuts the benefits of workers on low incomes. What happened to making work pay? What we need is a work allowance to help to ensure that those in work have a better chance of lifting themselves and their families out of poverty. We need the power in Scotland to change work allowances in Scotland, so that we can help families to help themselves out of poverty as they go out every day to earn a living through increasingly difficult times.
Universal credit does not help some of our poorest households, but much could be done by increasing work allowance and making work pay. This could be one—only one—of the tools that could help to combat the scandal of those in work having to rely on food banks to put food on their tables and feed themselves and their families. Scotland needs powers over the work allowance element of universal credit—no ifs, no buts.
I draw the Committee’s attention to the letter in The Herald today, which has already been mentioned by my hon. Friend Dr Whiteford. It is a letter from the third sector in Scotland protesting against the socially divisive and damaging impact of the UK Government’s cuts of a further £12 billion in social security spending—cuts which, despite attempts to rewrite history, the Labour party signed up to prior to the general election. [Interruption.] These cuts—[Interruption.] Let me put the cuts in context. In the pre-election debate Rachel Reeves said that the Labour party was not the party of people on benefits. I notice that there is no retort to that. These cuts first and foremost—
These cuts first and foremost will bear down on the most vulnerable and poorest in society. The whole of the third sector in Scotland supports the devolution of working- age benefits to Scotland because there is a recognition that the Scottish Government can and will do things better. They will set out a welfare system competently and with compassion. Make no mistake. Such devolution of welfare powers—
I am listening with great care to the hon. Lady, as I hope are my right hon. Friend the Secretary of State and the shadow Secretary of State, because I maintain that she is making the same point that I was making, although from a different direction. If we dribble out powers, the SNP will constantly blame us for everything that goes wrong—“Cuts? They’re responsible for the cuts.” Give them the responsibility and they will have to take responsibility.
We will be proud to take responsibility for investing in the growth of Scotland’s economy, in our infrastructure and in the people of Scotland.
Make no mistake: the devolution of the welfare powers in the Bill is supported by Citizens Advice Scotland, Barnardo’s Scotland, the Child Poverty Action Group, the Church of Scotland, Oxfam Scotland, the Poverty Alliance, the Scottish Trades Union Congress—I could go on, but I think I have made my point.
We on the SNP Benches are seeking to protect those we represent in Scotland from the worst excesses of this Government. We speak with the clear democratic mandate of the people of Scotland, and behind that we have the increasingly raised voices of Scotland’s third sector and civic society. We must not balance the books on the backs of the poor. It is time that the Government listened to a valued and equal partner in this Union—Scotland—in the spirit of the respect agenda.
For the record, and for the avoidance of any doubt, the SNP set out unequivocally in our manifesto, as part of our welfare priorities, that there should be an immediate scrapping of the bedroom tax and a halt to the roll-out of universal credit and PIP payments. As far as working-age benefits go, the Bill does not meet what was set out in the Smith agreement.
The Secretary of State has argued that there is no effective UK Government veto over the powers in the Bill relating to welfare arrangements, limited as they are, yet there is a clear requirement for the Scottish Government to
“have consulted the Secretary of State about the practicability of implementing the regulations”.
The Secretary of State would then have to give
“his or her agreement as to when any change made by the regulations is to start to have effect, such agreement not to be unreasonably withheld.”
Is it likely that the current Secretary of State and the Scottish people would ever agree on a definition of what is unreasonable? For example, the people of Scotland believe that it is unreasonable that a party that has a far weaker mandate in Scotland than at any time during any of the years when it last led a majority Government now pontificates over what powers Scotland should have while reneging on the all-party agreements arrived at in Smith. The Secretary of State clearly thinks that this situation is entirely reasonable and presides over the Dispatch Box like a colossal Governor-General, with no shame, taking on the elected and legitimate representatives of the huge majority of the Scottish people.
For the sake of social justice in Scotland, for the sake of our most vulnerable, who are being crushed beneath the weight of the illogical and misguided attempts to punish those who require assistance from the state, for the sake of what was promised in Smith, for the sake of Scotland’s position as a “valued and equal partner” in this Union, for the sake of the wisdom of Scotland’s civic society, and for the sake of the SNP’s democratic mandate, I urge the Committee to support amendment 118 and new clause 45.
We are considering a lot of amendments, and some of them cover quite technically detailed matters, but I think that the context of the debate is about big ideas; it is about big differences between this side of the House and the Government side of the House. I think that there can be no bigger difference than how we view our society with regard to welfare provision. On the Opposition Benches we see welfare as a means of social insurance whereby we work together to protect each other through periods of illness and disability and in old age, and also to protect people who are casualties of economic circumstances as they move from one period of employment to another. It is something we should do with kindness and generosity and in the spirit of co-operation. I fear that the attitude of Government Members is founded on prejudice and parsimony. It is about a welfare state that grudgingly gives to people as a means of last resort. It is because of that difference in opinion that this debate matters so much.
We want to transfer these powers to the Scottish Government to begin the task of creating a welfare system in Scotland that reflects the priorities and ambition of the people who live in Scotland. I have no difficulty whatever in accepting that we remain part of the United Kingdom and that a minimum standard should apply for universal credit. I must say to the Government that they have not set the minimum standard bar too high, so it will not be too difficult to cross it.
In order to get beyond that, however, we will need to work together, and new clauses 45 and 46 provide a mechanism by which the Scottish and the UK Governments can work together to look at how universal credit can be implemented in Scotland and at how additional measures that the Scottish Government may choose to bring in can be implemented in that context. It offers an opportunity within the United Kingdom—within the settlement agreed in the referendum and post-Smith—for the Governments to work together and do something constructive that will meet the aspirations of the Scottish people.
That is important because we want to move away from what is happening to welfare in this country.
I entirely agree with the hon. Gentleman’s description of what we want from our welfare system, but by how much does he want pensions and universal credit to go up to meet his aspirations compared with what is on offer?
The right hon. Gentleman has on several occasions in this and previous debates talked about cost and about how much will be paid for certain welfare benefits. I have to say to him that he must not assume that the cuts his Government are making in the welfare budget are cost free. There will be consequences as a result of what they are doing.
If the Government reduce the amount of money that poor people have and impoverish them even further, there will be consequences for the rest of society. It will increase the burden on our national health service as people become physically and mentally ill. It will drive people to drug dependency and petty crime, and put extra demands on our police service. Most of all, it will cost our economy in the lost opportunity of those wasted lives. Do not think for one minute that there are no consequences to what the Government are doing with the welfare budget.
This is a debate, and I am delighted that the hon. Gentleman is prepared to get into such a debate. I have no wish to take money away from people who need it; fortunately, we do not have to debate that today. What is the answer: how much more is needed to meet his aspirations for greater generosity than the Government have volunteered?
I am happy to have a debate; I just do not want to have it with the right hon. Gentleman by himself. It is a matter for assessment: we will have to sit down and work out exactly how much more will be required. The question here is: who should make the assessment—should it be the representatives of the people in the Scottish Government, or should it be someone else?
I want to talk about the bedroom tax, which has been mentioned several times. I will give one example of a human story, rather than the statistics that people have thrown around the Chamber. I have a 62-year-old constituent, who has lived in the area for 30 years in the same two-bedroom house. She has brought up her family, who have now left home. She now suffers from chronic angina and arthritis, and she can barely leave the house, never mind go into employment. She is probably not going to work again. The question is: what type of social protection do we offer someone in that position?
When I came across my constituent last year, she was running up against the spare bedroom subsidy regulations. She was told that she would either lose £14 a week off her benefit, or she would have to move house. Not having £14 to lose, she inquired about where she should move to. The only options given to her were five miles away, in an estate with a number of social problems that hers did not have, with no support from family or friends and no ability to continue the life she had. She was almost terrorised when I came across her: she was at the point of distraction and was making herself ill. I am glad to say that, because of the actions of the Scottish Government, we have now been able to help that woman and others in her situation, but I fear for people throughout the rest of the United Kingdom who are in that terrible situation.
Another example of parsimony is the sanctions regime, which has been mentioned several times. Let us not kid ourselves that officials in the DWP are using sanctions as a last resort. In many cases, they are being used as a first resort. We all know of cases in which people have been sanctioned for the most petty of breaches.
During the last Parliament and the election campaign, Tory Members chuntered on about the Labour party apparently wishing to weaponise the national health service. From the assessment that my hon. Friend gives, I am sure he agrees that the Tories have weaponised the social security system and are terrorising people across the country with it.
My hon. Friend makes an excellent point. It is because of the iniquity of the current system, and the prospect that is being held out of worse things to come, that we seek a change. We seek to be able to take control of our welfare system in Scotland and shape it so that it meets the aspirations of the people. Mr Allen said earlier that Scotland could perhaps be an example of what might happen in the rest of the United Kingdom, and I very much hope that will be the case.
I congratulate the hon. Gentleman on the tone of his contribution. It is important that he recognises that the problems that he is lucidly describing apply to many working-class people throughout the United Kingdom, including in my constituency. We hope that the new powers will do something to help people in Scotland, but I ask him to remember that people throughout the United Kingdom are affected.
I absolutely understand that. If we get a chance in the years ahead, while welfare remains the responsibility of the UK Parliament, to join the Labour party in voting to apply the measures that we will introduce in Scotland to the hon. Gentleman’s constituents, I will be happy to take the opportunity to do so.
I turn to the Secretary of State’s veto, which has been mentioned. I know he will deny that it is a veto, but everyone else who has looked at the provisions thinks it is a veto, including most third sector organisations in Scotland. It will allow the Secretary of State to object to regulations that the Scottish Parliament might introduce to improve the welfare system in Scotland. How can it be right that a power is devolved yet not devolved, and that the Secretary of State will retain authority to govern such decisions? In an earlier stage of the debates on the Bill, one Conservative Member said that we should all trust each other and that life would be an awful lot better. Could the Secretary of State not find it in his heart to trust the Scottish Government to make regulations? After all, there are fairly closely defined parameters for those regulations, so why on earth burden everyone with the requirement that the Scottish Government have to seek the Secretary of State’s consent? It is absolutely ridiculous.
If there is one way in which Secretary of State could indicate that he is listening to Scotland, it is by saying, “Fair enough—if the Scottish Government take a decision, we will let them get on with it, because we have transferred authority. We do not have to keep looking over their shoulder and checking their homework.” I hope that he will take that on board.
The crux of the whole argument is political authority. We are now halfway through the fourth day of debates on the Bill, and the Government and the Secretary of State have yet to suggest that they will make any substantive change to it. The Minister for Employment suggested earlier that the clauses we were discussing were in line with the spirit and substance of the Smith agreement, but it is strange that everyone else disagrees, including the Scottish Parliament’s devolution committee, on which the Conservative party is represented. That all-party group said that the clauses as drafted did not represent the spirit or substance of the Smith agreement. Something has got to give, unless we are going to rename the Secretary of State the governor-general and accept that we will not have government with the consent of the people in Scotland. I hope that he will listen to the people and accept some amendments.
When I quizzed the Secretary of State yesterday, he leapt to his feet and said that he was listening, and that he was in fact in conversation with the Scottish Government. He cited conversations with my colleague the Deputy First Minister, John Swinney. That caused John Swinney to write to the Secretary of State to say that he considers that his name has almost been taken in vain. He states:
“you cited our ‘productive discussion’…There will have to be clear movement by the UK Government, otherwise it is becoming harder to justify that description.”
Today the Secretary of State has the opportunity to make some minor concessions to show that he is willing to listen to the people who were elected in Scotland—I am not talking just about the 56 SNP MPs; I think we can safely say that 58 out 59 MPs from Scotland do not want the Secretary of State to have a veto over powers that this Parliament might devolve to the Scottish Government. I hope that he will reflect on that and give some ground in his concluding remarks to show that he is listening.
I pay tribute to Tommy Sheppard, and he was right to point out that we need a welfare system that shows compassion to those who have fallen on hard times, whether through illness, disability, economic circumstances or old age. He told the story of a 62-year-old constituent who was affected by the bedroom tax, and I am sure that all Members can recall similar stories from their surgeries of the most vulnerable being hit the hardest by what is probably the most pernicious tax that any Government have ever bestowed on people. It is right that the Scottish Government have been able to mitigate the bedroom tax in Scotland, and this evening we will vote on new clause 31 that would give the Scottish Parliament the power to consider such matters. The hon. Gentleman is right to have given that description of the social security system. That is the fourth time we have agreed today and I hope we will continue in that spirit.
I will speak to amendments 5, 6, 7 and new clauses 28 and 53 in my name and those of my hon. Friends. Amendments 5, 6 and 7 are different from the SNP’s amendments 118 and 119, but if the SNP presses its amendments to the vote we will support it and withdraw our amendments. Clause 24 gives Scottish Ministers regulation-making powers on the housing costs element of universal credit for claimants who rent their homes. The Secretary of State would also retain regulation-making powers, meaning that both the Scottish and UK Governments would have powers in that area and be able to exercise them independently.
Clause 25 gives Scottish Ministers regulation-making powers in Scotland to provide for alternative payment arrangements for universal credit, including
“the person to whom, or the time when, universal credit is to be paid”.
That will allow universal credit payments to be split between household members, and for payments to be made more frequently than under the UK Government’s current monthly plan. Although I am sure that we all welcome the devolution of those powers, that part of the Bill has caused considerable controversy by affording UK Ministers what some have interpreted as a veto over the Scottish Government’s regulation-making powers. That relates to the requirement in clauses 24 and 25 that, before exercising their regulation-making powers, Scottish Ministers consult the Secretary of State on the practicability of implementing proposed changes to universal credit, and obtain his agreement on when those changes are to happen. It is worth examining whether that amounts to an effective veto.
The Deputy First Minister John Swinney—he has just been mentioned by the hon. Member for Edinburgh East—has detected in what he calls those “pretty innocuous requirements” a sinister intent on behalf of the UK Government to exercise “a blocking power” that would act to
“prevent the Scottish Government from doing something”.
What does the UK Government seek to do with these provisions? I do not believe that the current provision is intended as a veto, but it could be more clearly worded to remove any ambiguity.
As I said on Second Reading, the Government have an opportunity to clear up any ambiguity, and if they are intent on saying that there is no effective veto in the Bill, they should remove that ambiguity once and for all. Amendments 5, 6 and 7 seek to allay the concerns of the Deputy First Minister and the charitable organisations that have been mentioned, by clarifying that Scottish Ministers need only “consult” the Secretary of State about the timing and—crucially—the delivery mechanisms of any new regulations.
I understand and fully appreciate that if a discretionary housing payment is made by the Scottish Government to those liable for the bedroom tax, if I may use that particular example, they have a delivery mechanism. A pot of money can be given to local authorities so that they can distribute that discretionary payment. If there is an addition to universal credit and the Scottish Government have the power to alter universal credit, the implications for the delivery mechanism are crucial, because the Scottish Government may have to use the Department for Work and Pensions or another reserved delivery mechanism that is part of the UK Government. If the veto is a veto in the sense that the Secretary of State needs to approve the delivery mechanism, he must consider redrafting the clauses to make that clear. If a discretionary payment were to be made on a reserved benefit or a top-up benefit that is currently paid through the complicated system of the DWP, we would need some discussion of how that would operate. I would appreciate it if the Secretary of State—or the new governor-general of Scotland, as he has been termed this afternoon—responded to those points about the veto.
New clause 28 proposes the full devolution of housing benefit to the Scottish Parliament. This is another new clause, on a serious issue, that has attracted significant support from across the third sector, including from the Scottish Council for Voluntary Organisations. There are a number of compelling reasons why we believe housing benefit should be devolved, including the joint report today to the UN by the four UK Children’s Commissioners, which warns that child poverty levels in the UK are unacceptably high and rising—their main concern being the housing element.
Is not another compelling reason for the effective devolution of housing benefit to the Scottish Parliament that housing policy is already devolved? It would allow the Scottish Government to have a fully integrated housing policy, using those resources much more smartly and, effectively, being able to abolish the bedroom tax.
I have a touch of déjà vu, as that is twice my hon. Friend has intervened with the next sentence of my speech—[Interruption.] Yes, I should stop sharing it around. He is right, and that is exactly what we said in our submission to the Smith commission. Perhaps he has read it—if he has any trouble sleeping, I highly recommend it to him. We want to increase the powers of the Scottish Parliament in areas that are closely related to devolved services, especially if that allows us to address and eliminate anomalies in the administration and delivery of vital public services. Housing policy is one such anomaly.
Most aspects of housing policy, specifically those relating to social housing, are already devolved to Scotland, including—most recently—discretionary housing payments. Social housing and housing benefit are inextricably linked: it therefore does not make sense for a devolved legislature to have control over one and not the other. That view is shared by the Institute for Public Policy Research. Devolving housing benefit to Scotland would allow for a more holistic approach to housing policy in Scotland, affording the Scottish Parliament and, crucially, local authorities far greater autonomy to tailor delivery to suit local and regional needs and circumstances. It would also transfer to the Scottish Parliament significant new resources with which to deal with the ongoing crisis in social housing.
At present, demand for social housing in Scotland, as across much of the UK, is greatly outstripping supply. Indeed, Scotland is facing its biggest housing crisis since the second world war with nearly 180,000 people in Scotland on social housing waiting lists, including 23,000 in Edinburgh alone. Earlier this year, Audit Scotland estimated that Scotland will need more than 500,000 new homes in the next 25 years. Under this Government, we have the lowest number of houses being built since 1947, and our public housing stock is decreasing drastically. The number of new social homes being built each year is down by more than 20%. Generation Rent is overlooked by the Government: Those in Scotland’s growing private rented sector face rising rents and being forced to move house too often. An individual living in social rented housing has the same address for an average of only 2.6 years, and families make up nearly half of the people who are moving around in less than that average.
In the past 10 years, the number of people living in the private rented sector has doubled to 368,000; the number of households in poverty in the private rented sector has also doubled in the past decade, to 120,000. In 2014, almost 1 million households, or 2 million individuals, were living in fuel poverty, an increase of almost 300,000 on the previous year. That all relates to policies and their impact on people living in inadequate private housing. We will continue to fight for a better deal for the private rented sector.
Shelter Scotland, the much-respected charity, identified the negative effect of homelessness and temporary housing on children’s education and health. It researched the impact, particularly on children and on families with children, of living in inadequate housing in the private rented sector, as well as of homelessness, the inability to get into social housing and being stuck in temporary housing for too long. I will pick out just one or two points.
The research states that homeless children are two or three times more likely to be absent from school than other children due to the disruption caused by moving into, and between, temporary accommodation. I see that in my own constituency, where the situation is drastic. My constituency must have one of the most acute social housing shortages in the country. Many families end up either stuck in temporary accommodation or moved around temporary accommodation regularly. Homeless children are three or four times more likely to have mental health problems—a fairly obvious conclusion because of such instability. Some 90% of respondents to a Shelter survey said that their children had suffered from living in temporary accommodation. The longer families live in temporary accommodation, the more likely they are to attribute to it their worsening health.
It is important that we should be able to deal with those issues, but there is no doubt that housing benefit and the ability to access housing benefit resources are inextricably linked with building more social homes and the whole of social housing policy within the Scottish Parliament. Karen Campbell, the director of policy and operations at Homes for Scotland, stated:
“Scotland’s housing crisis affects all tenures, whether for social/private rent or sale. This is having a severe impact on the lives of Scots across the whole country, particularly young people and growing families. No other sector impacts such a wide range of policy issues yet the number of new homes being built has fallen to its lowest level in some 70 years, threatening Scotland’s social and economic well-being.”
From the results of the Shelter survey, we can see that the social wellbeing of many families, and particularly the children in those families, is a real issue.
Devolving housing benefit to Scotland would afford the Scottish Parliament substantial additional funds to address the shortfall. It would unlock up to £1.8 billion of resources, the largest spend on a single benefit in Scotland after the old age state pension. That could, over time, be invested in the provision of new housing stock in Scotland. I appreciate that that cannot happen overnight, because there would have to be some mechanism to allow the fund to be accessed—potentially through prudential borrowing, which local authorities could use to reduce housing benefit and build more houses. That would not onlyserve to alleviate the pressure on social housing, but create jobs and help to depress housing costs across the private rented sector. As the Joseph Rowntree Foundation noted,
“investing in affordable supply will place downward pressure on rents and subsequently reduce the burden of housing costs upon the budgets of low income households living in the private rented sector in Scotland.”
That point is hugely important. The Government have tried to come down incredibly hard on the housing benefit bill, but it has doubled in the past decade or so—they have not been able to deal with the supply and demand issue. The number of my constituents who end up in the much more expensive private rented sector—almost double the rent of social or affordable housing—clearly pushes up the housing benefit bill. Before the Secretary of State, or the governor of Scotland, jumps to his feet and tells us that the housing benefit bill is going up because of worklessness, let me state the reality: nearly 70% of my constituents in receipt of housing benefit are actually in work. This is a huge issue not just in terms of social impact, but in getting the housing benefit bill down. We have to get people into much more affordable housing.
As an added and not insignificant bonus, devolving housing benefit would, as we have discussed, allow the Scottish Parliament to put an end to one of the cruellest and most iniquitous policies of recent years—the bedroom tax. We need to consider double devolution, a point made regularly in these debates, as the Scottish Parliament is very centralist. We need to devolve power down to the communities best able to use them. For example, housing benefit should be administered at the local authority level because each local authority has its own housing needs and demands—for example, in respect of key workers and specific demographics. I hope that these strong arguments will convince the Government and hon. Members to support our new clause 28.
The Bill could also be enhanced on the provision of childcare, which Labour’s new clause 53 would do by devolving the childcare element of universal credit to the Scottish Parliament. The childcare element is closely linked to the provision of employment support programmes, and devolving it would increase the capacity of the Scottish Parliament and local authorities to help parents obtain and remain in employment by assisting them with the rapidly escalating cost of childcare—the cost of childcare in Scotland has risen much higher than in the rest of the UK. It is one of the main obstacles to parents entering and remaining in the labour market. Devolving the childcare element would afford the Scottish Parliament a valuable new mechanism for removing that obstacle and allowing parents to enter the jobs market.
Dr McCormick, the Scotland adviser to the Joseph Rowntree Foundation and a member of the Social Security Advisory Committee, stated in response to the Smith commission proposals that
“the costs of childcare in Scotland are high by international standards and rise much faster than inflation... Childcare is a clear example where both closer alignment with the Scottish Government’s childcare offer and stronger incentives to invest are needed. The Bill should empower the Scottish Government to vary childcare allowances via Universal Credit, on the same basis as housing allowances.”
New clause 53 would provide for the power to be devolved to the Scottish Government so that they can do precisely that, and I hope that the Government and hon. Members across the House see the value of supporting it.
I wish to turn briefly to other amendments, chiefly to new clauses 39, 40, 44 and 46, in the name of the SNP, and to new clause 55, in the name of the SNP’s favourite Conservative, Sir Edward Leigh. As I said, there is no fundamental problem with the devolution of the entire social security system—or, indeed, of the entire income tax system or any of these other policies. They do, however, have one thing in common. New clause 55 would end the UK-wide welfare state, and we do not wish to see an end to it—that will not come as a surprise to the House. We completely reject anything that would end the UK-wide welfare state. In the context of keeping the UK-wide welfare state together, it would not be desirable to devolve to the Scottish Parliament powers that the Smith agreement stipulated should remain reserved—for example, around Jobcentre Plus, national insurance contributions and child benefit.
In the past, my hon. Friend has spoken passionately about the need to pool resources and risks across the whole UK. Does he share my concern that the effective ending of a UK-wide national insurance system would also end the pooling of those risks and responsibilities for a UK-wide welfare state?
My hon. Friend must have brilliant eyesight. I am not sure whether it is the glasses, whether he is just insightful or whether he can read minds, but, believe it or not, I am about to come to that. Perhaps we are on the same wavelength.
I shall examine some of those issues now. I am a little confused, because I am not sure whether Dr Whiteford moved new clauses 39 and 40 on the devolution of national insurance contributions. [Interruption.] She might be moving them later. I know she spoke to them, but I am unaware that she moved them. For the record, we would oppose the devolution of national insurance contributions, for the very reason that my hon. Friend Andrew Gwynne just set out. The pooling of risks and resources is explicit in national insurance contributions. The UK national insurance system is the largest insurance scheme of all and secures benefits to all through the widest possible risk pool.
The SNP’s new clauses seek to devolve national insurance in a manner that betrays a basic lack of understanding about the highly integrated and interlocking nature of the social security system, and they would mean having to deal with a huge array of complex issues. Even if we went beyond the principle of the pooling and sharing of resources, there would have to be a separate Scottish national insurance fund to receive all future national insurance contributions from Scottish taxpayers; all existing contributory benefits accumulated up to the vested date would have to be honoured by the UK national insurance fund; and transfers from the Scottish to the UK national insurance fund would have to follow Scottish taxpayers moving elsewhere in the UK.
Some issues were mentioned by the hon. Member for Gainsborough in speaking to his new clause 3, which related to the first part of the Bill. In talking about full fiscal autonomy, he mentioned that there would have to be significant redress to the UK national insurance fund. He raised issues about survivors’ benefits and where the people affected were living. As well as the principle of not devolving national insurance, there is also the matter of how to deal with the complex issues that would be raised across the United Kingdom.
At this point, I would like to look at the supporting evidence and testimony of the Scottish Council for Voluntary Organisations, which has been superb in providing briefings on some amendments and commenting on aspects of the Bill. In a briefing, which I am sure Members have read, it made astute observations about why devolving national insurance is fundamentally not the best idea for either the UK or Scotland. It said:
“National insurance is used to calculate entitlements to the second state pension and entitlement to some of the old forms of JSA and ESA that are still reserved through Universal Credit. Indeed, many people will have topped-up their NI contributions in order to secure their pension. SCVO does not support the devolution of pensions, and therefore, due to the potential confusion and unintended consequences that may arise, we also do not support the devolution of National Insurance.”
A plethora of other organisations would warn against the matrix of national insurance being devolved—including the Institute for Fiscal Studies, which has been quoted positively on a number of occasions by SNP Members this afternoon only 12 hours or so after they completely trashed the organisation for its analysis of full fiscal autonomy. I am glad that there has been a conversion and they now support the impartial and independent Institute for Fiscal Studies—alternatively, if I may be so bold, it could be that it suits the SNP to quote it on some occasions, but not on others.
I have laid out the Labour party’s position on devolution. We will support the SNP’s amendments 118 and 119 if they wish to press them, and we will withdraw ours as we are not voting on the same principle of removing the vetoes. I hope that the Secretary of State will give us some positive news—that we might not have to vote at all. Would not that be a wonderful thing for this Committee? We could get away early this evening if the Secretary of State came to the Dispatch Box and spent 90 seconds saying, “Everyone is absolutely right, and I am wrong. I am going to accept all these amendments, so Scotland can flourish with the welfare state that it deserves and wants to design.”
I finish where I started—with the Labour party as the guardians of the welfare state across the United Kingdom. There is a significant difference between what we believe and what the SNP believes about breaking up that welfare state. These are broad principles; neither is right or wrong. We believe that there should be pooling and sharing across the UK—a principle that we have shared and that has provided a thread running through all our amendments. What we wish to see is a Bill that responds to the Smith agreement and goes further than it in allowing the Scottish Parliament and, indeed, the Scottish people, to design something in the best interests of a welfare state that fits not just Scotland, but Scotland’s communities.
On this occasion, I am afraid I will disappoint Ian Murray because I am going to speak for more than 90 seconds. I have enjoyed hearing the full contribution rather than just interventions from Ian Blackford, although the length was probably not that different. Patricia Gibson gave a spirited contribution, although I did not recognise myself in her description. As for Tommy Sheppard, we are in agreement on so many things; it is only bits in his contribution that spoil it. I do trust the Scottish Parliament and I want it to make significant decisions on welfare unimpeded by the views of the UK Government. I shall say more about clause 25(3) later, but there is no restriction on the policy decisions of the Scottish Government and Parliament in relation to those provisions. The issue is about timing.
Let me make some wider comments about what was said by the hon. Gentleman. As I have said throughout, I am reflecting on points that have been made during all our discussions. I have given that undertaking not just to Parliament but to the Devolution (Further Powers) Committee, and, indeed, to the Scottish Government. If Members want selective quotations from Mr Swinney’s letter, I will give them one that I think sums up the situation.
“When we met on
That is absolutely my position, and I am committed to working with the Deputy First Minister in that regard.
Does the Secretary of State not accept that, if we read further in the letter, we find that the Deputy First Minister fears that that process is not going to take place? We, too, are marvelling at the fact that after four days of debate, the Secretary of State still refuses to accept one single line of one single amendment that has been put to him.
I think that the hon. Gentleman has got the order of the statements in the letter wrong. Mr Swinney says that if the process did not take place, the undertaking would obviously not be valid. That is of course correct, but my approach to the Bill is to proceed with it on the basis that it fully reflects the Smith commission proposals, and that it takes account of the issues and concerns that have been raised.
SNP Members have tabled a number of amendments with which I do not agree, but which I think might be described as Smith-plus. We are listening to the points being made about the amendments, but we are also listening to what everyone is saying about the Bill in its current form and how it reflects Smith. I have appeared before the Devolution (Further Powers) Committee, and we have had a lengthy discussion about the clauses that we have debated today. I expect to have further discussions with the Committee, and there will, of course, be further parliamentary debate.
Much of what is being said is predicated on the view that the Scottish Government and the United Kingdom Government are always at odds. That is simply not the case, and it should not be given common currency.
On 90% of issues, the two Governments work together very closely for the benefit of the people of Scotland. They are working together closely on very serious ongoing issues at this moment, and there are absolutely no problems and no need to resort to external review processes. The Smith process established a shared response for welfare, and I think that it shows that we must adopt a new mindset. That, to me, is what the spirit of the Smith commission is about: working together in a shared space. A commitment to doing that is as important as anything in the Bill.
Dr Whiteford is always extremely passionate about these issues. I generally consider her to be a reasonable person until she stands up to speak in the Chamber. The way she has portrayed the relationship between the two Governments is simply not correct. We have established a joint ministerial working group on welfare, and last Thursday I met Alex Neil—no doubt there will be a letter about that meeting—to discuss the transitional arrangements and the next meeting of the joint ministerial group. Our discussions have been very productive and have led to a great deal of good work on the transition of powers and the establishment of processes in Scotland. I see no reason to believe that that cannot continue. That is what people in Scotland want: they want the two Parliaments and Governments to work together. They do not want to see constant bickering and I am making a determined effort to ensure that that does not happen and that we can deliver a process.
I am conscious of, and respect and take into account, the views of charities and voluntary organisations.
If the Secretary of State is listening to civic Scotland, third sector organisations, the Scottish Government and SNP Members, which of the amendments tabled by us and Labour will he accept?
I will repeat what I said earlier: I have agreed a programme of work to be undertaken before Report, with a view to producing a Bill that reflects the Smith commission, the concerns of stakeholders and the views of the Scottish Parliament. I will reflect on the amendments and the case that has been made for them.
I am listening to what has been said about clause 25(3)(b), which is a sensible consultation requirement about timing, not policy. Good governance in Scotland will require that decisions taken by the Scottish Government about new powers can be implemented in a timeous way. That is what it is about—respect in a shared space and working together on welfare.
I do not yet know what proposals the Scottish Government will make. I have made it clear that I would like to know what they will be, because we have heard significant criticisms of UK Government policy. That is, of course, legitimate in this Parliament and, indeed, the Scottish Parliament, but we need to know the detail. The joint ministerial group on welfare wants to understand where the Scottish Government want to go with specific programmes, so that we can help and facilitate the transitional arrangements and deliver what they want to do.
I want the Scottish Government to be held to account. I do not want the continuation of the current situation, whereby people stand up in Parliament and make grand statements for which they are not held accountable and without explaining where the money will come from or how the system will work in practice. A lot of us who live in Scotland know that what the Scottish Government say does not always—shock, horror—happen in reality. I want a system for which the Scottish Government will be held accountable and under which they will have welfare powers and will have to set out for the people of Scotland how much their policies will cost and where the money will come from.
I said in a previous debate that my hon. Friend Sir Edward Leigh was the 57th SNP Member, and today he has proved that by tabling new clause 55, which is an even stronger proposal than what the SNP says is its policy. It is a fact that no Scottish MP has tabled an amendment to devolve UK pensions, and that speaks volumes. It tells us that even the supporters of independence accept that there are parts of welfare where it makes sense to share resources and risk with the rest of the UK. It is clear that pensions are safer and more affordable if we work with everyone else in the UK and that it would be wrong to devolve UK pensions.
MPs have to respect the referendum result, at which people in Scotland voted to remain part of a United Kingdom and hold on to the benefits of being part of it. Looking after the people of Scotland who are retired, unwell or out of work is now a shared space in which the UK Government and the Scottish Government need to work together. This is about getting the right balance and having the best of both worlds. Sometimes it will be right for people in Cumbernauld to know that they have exactly the same protection and support as people in Cardiff or Carlisle. On other occasions, the Scottish Parliament might want to offer different help for people in Scotland, using the taxes that have been raised in Scotland.
The hon. Member for Edinburgh South spoke to various amendments. I do not share his views, and I do not believe that he made a case for the proposals on childcare. I shall comment in more detail, however, on what he said about new clause 28, which covers an issue that has been raised before. The Scottish Government already have competence to work with all housing sectors in Scotland to support and encourage new builds. Indeed, they have been very active in heralding their affordable housing supply programme, which ranges across all types of tenure.
The Scottish Government also have the ability to regulate the private rental market, and I believe they have been active in that area. The Housing (Scotland) Act 2014 included a number of provisions to deal with what might be classed as standards of housing in the private sector, such as powers for local authorities to tackle disrepair in the sector. As regards funding, hon. Members will no doubt realise that housing benefit is paid to claimants for the express purpose of meeting an individual’s housing costs when the eligibility rules are met. Because it covers rent at a specific point in time, there would be no margin from which to create a house building investment fund from housing benefit.
However, we have already heard how the powers in the Bill will give Scottish Ministers flexibility over housing costs within universal credit. That flexibility could be used to reduce housing costs for renters, and if Scottish Ministers wished to spend in other areas in order to generate funding, they could do so. There is no need for housing benefit to be devolved to allow for that. Establishing such a fund would also require appropriate powers to be put in place.
It was interesting to hear hon. Members’ assumptions about the amount of money they would have available for investment in housing. The figure of £1.8 billion was mentioned. That equates to the total amount of housing benefit expenditure in Scotland, which appears to suggest that hon. Members are saying that housing benefit should be abolished in Scotland. I am assuming that that is not really their intention, but the amendment could still have serious consequences for Scottish landlords in the social and private sectors. Hon. Members need to think carefully about the implications for the business viability of housing associations and private landlords. Housing benefit is a payment towards the rental liabilities of people on benefits. It is not intended to fund the expansion of housing stock.
I am grateful to the Secretary of State for that explanation, but the point that he is missing is that there is no incentive for either local government or the Scottish Government to build new affordable homes, because the housing benefit bill comes from a different Government—the UK Government. Devolving responsibility for housing benefit would devolve the responsibility to build more affordable and social homes and the accountability for so doing.
This is a matter for the hon. Gentleman’s and my colleagues to raise in the Scottish Parliament. They need to hold the Scottish Government to account for their housing policies.
The hon. Gentleman’s amendment would also carry a significant cost, and although it appears to be a simple proposition, that is in fact far from being the case. On that basis, I am unable to recommend acceptance of the proposal. As I have said, however, I am reflecting on all the amendments that have been tabled. My intention is to move as quickly as possible to achieve the devolution of these significant welfare powers to the Scottish Parliament, so that we can move on and have a proper, mature debate in Scotland about how the powers should be used and who is going to pay the cost of any additional benefits that might be proposed by a future Scottish Government.
We have had an interesting and wide-ranging debate on the amendments this afternoon, perhaps more wide-ranging than I could ever have envisaged. I am not sure how we managed to get sidetracked into Greece so early in the afternoon’s debate, and the comparison between Greece and Scotland did seem rather ill-conceived. It was, of course, refuted ably and comprehensively by the hon. Friend of John Redwood, Sir Edward Leigh.
However different Scotland and Greece might be in cultural, economic and climatic terms—
I will not give way just at the moment, because I think we have talked quite enough about Greece. I want to make a couple of substantive points about the issues that were raised, however.
Whatever differences Scotland and Greece have, what we have in common, apart from our patron saint, is the fact that people in Scotland will feel great sympathy for their fellow European citizens in Greece and will have a sense of solidarity about the level of deprivation they are having to undergo. My hon. Friend Mr MacNeil, who is not in the Chamber at the moment, made the important point that the real morality tale from the Greek situation that is relevant to our discussions today is that austerity does not work and that we need the power to create alternatives to it.
The other salutary tale we heard this afternoon came from Mark Durkan who, with his usual eloquence, drew on his experiences in Northern Ireland to warn of the difficulties ahead if we fail to legislate clearly. He also warned of the dangers of what has been termed “karaoke legislation” in Northern Ireland, in which people have powers but not the power to enforce those powers.
My hon. Friend Ian Blackford made a powerful speech that highlighted some of the real differences between the challenges we face with welfare and pensions in Scotland and those in other parts of the UK, pointing out the low life expectancy and the poor value that Scottish pensioners get. Indeed, we have some of the lowest pensions in Europe and Scottish pensioners end up about £10,000 each worse off because of our pension arrangements. My hon. Friend Patricia Gibson drew attention to the issues with the work allowance, which is a really good example of what we might do with these powers to improve the support we give to lower paid workers.
Above all, we need to talk about the veto. My hon. Friend Tommy Sheppard, who is quickly becoming one of the stars of this Parliament, set out how new clauses 45 and 46 would enable constructive working between the UK and Scottish Governments. That means not just fine words about constructive working but fine working.
To move on to those who spoke from the Front Benches, I welcome the support from Ian Murray for our lead amendment and for amendment 119. I listened very carefully to the Secretary of State’s conclusion to the debate. I fully accept that there are constructive relationships through the joint ministerial working group and many other parts of the Scottish and UK Governments, but when there are genuine differences of opinion and of ideological direction as well as different policies and different circumstances, we need the mechanisms and the legislation that enables us to deal with them effectively. That is what we still do not see on the face of the Bill.
The problem is that the Bill, in its current form, does not cut the mustard. The Secretary of State’s position on this could probably be summed up by the old saying, “They’re aw oot o’ step but oor Jock.” There is a consensus in Scotland, among all the other Scottish MPs, among MSPs, including MSPs from the Secretary of State’s own party, and among civil society that the veto needs to be taken out of the Bill. I urge the Secretary of State to listen. Part of the problem in Scotland for too long has been that people have not listened, but the voices of the people of Scotland will not be silenced. If the Secretary of State thinks that these issues will go away, I can tell him that they will not. We have heard salutary lessons about why we need to have the legislation pinned down and secure.
Earlier in the debate, I should also have stated my intention to move new clauses 39 and 40 and I am grateful to the hon. Member for Edinburgh South for flagging up that omission. We will press—