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Scotland Bill — Committee (5th Day)

Part of the debate – in the House of Lords at 4:45 pm on 21st March 2012.

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Photo of Lord Kerr of Kinlochard Lord Kerr of Kinlochard Crossbench 4:45 pm, 21st March 2012

My Lords, it is déjà vu all over again. I supported the noble Lord, Lord Forsyth, the last time he raised the matter. Although I do not agree with this amendment, I am very glad he has moved it, because it enables us to discuss it again. I had not understood the no-detriment principle. It was painstakingly explained to me by the Minister and the noble Lord, Lord Sassoon. I have not been favoured with the letter of the noble Lord, Lord Sassoon, so forgive me if I am behind with the debate. As it was explained, it is indeed exactly as the noble Lord, Lord Forsyth, says. However, look at it the other way round. It would be paradoxical if the basic tranche of income tax, before the Scottish tax is added in on top, was reduced. The Scots would receive a cheque from the United Kingdom Exchequer. That seems to be very odd. However it is politically even odder, and possibly unsustainable, if it is the other way around. Supposing Chancellor Balls had decided that we needed a higher level of spending, and therefore a higher level of taxation. The Scots would have to send a cheque and they would have paid the higher level of taxation, so would have had less to devote to the higher spending which the proceeds of the tax would have brought in. I do not understand this no-detriment principle.

I draw from that unsatisfactory example exactly the opposite conclusion from the one the noble Lord, Lord Forsyth, draws. I go with the noble Lord, Lord Steel of Aikwood. It seems that we need more but I apologise to the noble Lord, Lord Forsyth, as he was saying much the same today. The trouble with this Bill is that it is a Sir Clive Bossom Bill. Sir Clive Bossom calls on the leader of his party, then the leader of the Opposition, when he joins the House of Commons. The only sentence he gets out of Mr Churchill is, "Bossom, eh? Neither one thing nor the other". That is what is wrong with this Bill. It is not actually devolving real accountable taxing authority to the Scots. It is still the block grant system with a little add-on which is presentational rather than substantive. I would much rather see a genuine devolution of taxing power. I would start with indirect taxes. Then you will not have any of the problems of defining who the taxpayer is, residence and so on. I would start at that end. I would concede from this Parliament to the Parliament in Edinburgh much greater power in order to deal with the real deficit, which is the accountability deficit. I accept that as a consequence of that, one would have to have a rather strict control on the macroeconomic effect of a degree of fiscal autonomy, so that we did not see a repetition of what we see in continental Europe right now. I accept that that follows.

However, it would be better to get into that area than to pretend to do devolution of taxation and end up with this rather miserable little measure. I understand its logic; I used to work in the Treasury. It is the logic of the Treasury office of accounts. It is the logic of the public expenditure side of the Treasury. It is a book-keeping logic. However, if you think of its economic effect-if you think of it in economic terms-it is absurd.