Committee (4th Day)

Part of Scotland Bill – in the House of Lords at 5:30 pm on 15th March 2012.

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Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury 5:30 pm, 15th March 2012

It does not make it right, but what we are discussing this afternoon is nothing new. This has been on the table for 15 months or however long it is, a good long length of time. The essential point that we have to understand is that there is going to be a permanent adjustment, as my noble friend knows, to the block grant for the move of the Scottish income tax to Scotland. The compensation that we are talking about is merely that if the basis on which the carve-out of income tax changes so that the relationship between the adjusted block grant and the income tax that Scotland expects to raise changes because of a subsequent decision, in effect we are saying that the permanent deduction needs to be adjusted because we have changed the income base from what it was expected to be, which seems entirely reasonable.

This is not the blank cheque that my noble friend is portraying it as: that the UK Government will be prepared to write whenever the income tax changes. The deal with Scotland is that there will be a one-off change to be worked on, as my noble friend knows. If the basis of that is subsequently changed because the UK Government change the base on which income tax is raised, it is perfectly right and proper that a compensating adjustment is made. It is as simple as that. It is not that there is a double whammy for the UK.