Scotland’s Fiscal Framework — Statement

Part of the debate – in the House of Lords at 3:43 pm on 24th February 2016.

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Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords) 3:43 pm, 24th February 2016

My Lords, I thank the Minister for repeating the Statement on the fiscal framework and for the pivotal role that he has played in bringing about yesterday’s arrangement. First, we welcome unequivocally the news that an agreement has been reached on the fiscal framework. Thanks should rightly be extended to both Governments, the Deputy First Minister, the Chief Secretary to the Treasury and the Secretary of State for Scotland, as well as for a late intervention by the Chancellor. We congratulate and thank them all on working so hard to secure an arrangement, along with the officials of both Governments.

Yesterday’s agreement marks the removal of the final obstacle to the transfer of significant and substantial new powers to Scotland. As the Minister has already indicated, the noble Lord, Lord Smith, has said that the agreement,

“sees the recommendations of the Smith Commission delivered in full”.

In his Statement, the Secretary of State committed himself to publishing details of the agreement by the end of the week. Given that your Lordships’ House will be debating the fiscal and welfare elements of the Scotland Bill on Monday, we very much welcome this commitment. On that point, can the Minister briefly say whether he has an update on whether Committee rules will be applied for the final day on Report, as was suggested in Committee on Monday?

My honourable friend the shadow Secretary of State has, from the outset, called for greater transparency on the way these deals are negotiated. What this process highlights is that future intergovernmental relationships must be improved to make these powers work for Scotland. We all know that the major stumbling block was the indexation method used for the block grant adjustment. Under the compromise reached, there will be a five-year transitional period, which will cover the full term of a Scottish Parliament. Towards the end of this period, an independent review and recommendation will be published that will form the basis of a more permanent solution. We all hope and demand that agreement is reached. We would also welcome any further clarity that the Minister can provide on the transitional period. The Secretary of State has said that the new income tax powers will be available by April 2017, but the Deputy First Minister seems to have cast some doubt on that.

In the remainder of my reply, I will focus on the review. I welcome the fact that it will be fully independent, but can the Minister answer some very specific questions at this stage? How will the review body be chosen? Can he confirm that it will be done in a spirit of consensus with the full agreement of both Governments? What criteria will be used to determine its independence? This independent review is a guarantor for the United Kingdom and Scotland of the fairness of the final agreement and should assuage any doubts or problems about accepting it.

I close by saying once again how welcome this agreement is, and I hope that Monday will give us an opportunity to look at the issues in more detail. The priority for us now is to facilitate the passage of the Scotland Bill. It will be a historic date, and I believe it is now up to your Lordships’ House to deliver the Scotland Bill without delay.