We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Her Majesty's Government (Relations)

– in the Scottish Parliament at 9:15 am on 27th May 2010.

Alert me about debates like this

Photo of Alex Fergusson Alex Fergusson None 9:15 am, 27th May 2010

Good morning. The first item of business this morning is a debate on motion S3M-6409, in the name of Annabel Goldie, on relationships between Her Majesty's Government and the Scottish Parliament and Government. I advise members that we are pretty tight for time and ask them to stick to the guidance that is given.

Photo of Annabel Goldie Annabel Goldie Conservative

I commence by intimating that I may have to withdraw from the debate before the conclusion of proceedings. I apologise for that, Presiding Officer. No discourtesy is intended to you or to members in the chamber, but I require to prepare for First Minister's questions. I hope that the chamber will understand that there is an irreconcilable conflict of interest.

This is the first Conservative business debate since the general election. I have waited 11 years to say this, but it is also the first Conservative business debate in the Parliament to take place with a Conservative Prime Minister at Westminster, leading a Liberal-Conservative Government. We have in David Cameron a Prime Minister who came to the Scottish Parliament before he even went to Westminster. We also have a new Government that is committed not just to respecting devolution but to strengthening it. In short, we have a new politics.

We have turned the page in Scottish politics. When the nationalist First Minister of Scotland is able to have a constructive dialogue with a Conservative and Unionist Prime Minister and a Liberal Democrat Secretary of State for Scotland, we see three parties looking to the future. Although Labour, ousted from Government, must adjust to the humbling experience of being in opposition, I hope that it will recognise the opportunities that are being created for Scotland in the United Kingdom and contribute positively to that process. Of course, that task is made more challenging by Labour's appalling legacy of debt, but no one can doubt the coalition Government's resolve to take the tough decisions that are needed to sort out Labour's mess.

However, enough about Labour, and enough about the past. Scotland can look forward to the future with confidence. Our new Government will do what the Labour Government failed to do—work together with the Scottish Government for the good of the people of Scotland. We will scrap Labour's jobs tax, because we want to keep Scots in work, not tax them out of work. We will scrap Labour's identity cards, because we believe that the state should protect our liberty, not erode our freedoms. We will strengthen the Parliament, because we believe in devolution and are determined to make it work better. We will build an agenda of mutual respect between Scotland's two Parliaments and Governments, because Scotland needs co-operation, not confrontation.

Of course, it takes two to tango. Everyone knows that the First Minister wants Scotland to separate from the rest of the United Kingdom. Alex Salmond knows full well that he and I will never agree on our ultimate constitutional destination. I will fight him every step of the way if he tries to separate Scotland from the rest of the UK. I take heart from the fact that, once again, the overwhelming majority of Scots chose parties that support the union over parties that support separation. Despite our differences on the constitution, nationalists and unionists can work together in Scotland's interest. Indeed, our differences on the constitution need not preclude us from working together on the constitution, where we can find common ground.

I was disappointed that the Scottish National Party did not participate in the work of the Calman commission, but that is in the past. I take at face value the Scottish Government's desire to work with the UK Government to take forward the Calman proposals for financial responsibility and hope that that constructive engagement will happen. Conservatives always argued that the Calman proposals were the platform for change. I appreciate that the new Government's proposal to raise substantially the income tax threshold will have an effect on the Calman proposals; that issue, and others, should be discussed. I am pleased that we have from the Scottish Government a degree of engagement that did not exist under the previous Labour Government.

Yesterday's announcement that the Calman steering group is to be reconvened, under the chairmanship of the new Secretary of State for Scotland, Danny Alexander, is more welcome evidence of the coalition Government's resolve to take Calman forward. The steering group was originally set up to look at the implementation of the Calman commission's recommendations and included representatives of the Conservative, Labour and Liberal Democrat parties at both Westminster and Holyrood. As a member of the group, I know that Labour and Liberal Democrat representatives found it an effective and positive forum. However, I shall not support the Labour amendment in the name of Pauline McNeill, which suggests that we should just rush ahead, without proper scrutiny of the proposals, and omits all reference to the fossil fuel levy. That is indicative of a slight lack of grasp of the issues and of the new agenda of mutual respect.

The new dimension is that, following the constructive talks in Edinburgh between the Prime Minister and the First Minister, the Scotland Office will now have a dialogue with the Scottish Government on the Calman recommendations. As my colleague David Mundell, minister at the Scotland Office, said yesterday:

"The implementation of Calman recommendations is very important to Scotland. We have shown a commitment to talking to the Scottish Government on how best to take this forward and it makes sense at this time for the Steering Group to continue to meet ensuring dialogue across and between all the main parties."

He added:

"At this exciting time for Scotland it is important that everyone works together in the national interest and I look forward to discussions with politicians from all parties in Scotland in the coming weeks."

Once again, we have hard evidence of the new politics and the new coalition Government attitude to Scotland and the Scottish Government.

I have been heartened by the marked change in tone from the First Minister. From the bombast of the election campaign, we have seen Mr Salmond not only mellow but almost wax lyrical. He has talked with such warmth of the new Government that it must have been a matter of regret to him that he was not there in person on Tuesday to cheer the Queen's speech. When phrases such as "impressive", "extremely positive" and "substantive" trip off the first ministerial tongue, it is usually a sign that the First Minister is back to his favourite topic—himself. However, on this occasion, that is not the case—those words were his assessment of his meeting with the new Prime Minister. I welcome that change in tone. [Interruption.] It is not often that Lord Foulkes is lost for words, but there is always a first time.

Photo of Lord George Foulkes Lord George Foulkes Labour

The honourable lady's hearing is deficient. I said, "It won't last, it won't last." I am willing to take a bet with the honourable lady. Will it be 18 months, two years or three years?

Photo of Annabel Goldie Annabel Goldie Conservative

All relationships need a beginning. The intentions of the two parties are clear and positive. I welcome the different political climate in Scotland.

As I have said before, the First Minister may also be the leader of the Scottish National Party, but his first duty is as head of the devolved Government. His prime responsibility is to work in the national interest, not the Scottish National Party interest. The election of our new Westminster Government gives Scotland the chance of a new start in the relationship between our two Governments.

We all understand why the Labour Government saw the role of the Scotland Office as being the Opposition to the Scottish Government—I have as little faith in the ability of Scottish Labour in opposition as Jim Murphy clearly had. However, we are clear about the fact that the Scotland Office's job is to argue Scotland's corner at Westminster, to work with the Scottish Government—whichever party forms that Government—and to do so in the national interest. Instead of conflict, we now have co-operation. Instead of silence, we now have dialogue. Instead of stand-off, we now have engagement.

Photo of Bob Doris Bob Doris Scottish National Party

On engagement, I ask Annabel Goldie to ask the new UK Government to deal with members of the Scottish Parliament, via the UK Border Agency, on asylum seeker cases. It is deeply disturbing when asylum seekers pour out their hearts to me about their specific issues. However, under the previous Labour Government, I received no correspondence from the UK Border Agency. Will that change under the Conservative Government?

Photo of Annabel Goldie Annabel Goldie Conservative

I am sure that serious regard will be had to the issue that Mr Doris raises. He will accept that the new coalition Government has been in office for only a short time, but I am certain that he will pursue issues directly with the appropriate UK minister or via the conduit of the Secretary of State for Scotland. Both Mr Scott and I would like to know whether there is any difficulty in facilitating such communication.

With a new approach of mutual respect, when disagreements arise, rather than rush to the nearest television studio to lambast the other side, we will have the opportunity to try to find common ground and, if that cannot be found, at least to understand why that is the case. There will be respect for the right of the Scottish Government and the UK Government to pursue their different agendas within the areas for which they are responsible.

A good example of the new politics is the fossil fuel levy, which has been raised as an issue by the Scottish Government on many occasions. Almost £200 million from the proceeds of the levy in Scotland is held by the Office of Gas and Electricity Markets, yet currently if Scottish ministers ordered that the money be paid into the Scottish consolidated fund, the Treasury would reduce the block grant by the same amount. In those circumstances, it is difficult to see how it would ever be in the interests of any Scottish Government of any political persuasion to seek the release of that money. It is right and proper that the Treasury looks at the issue again, so I am delighted that George Osborne has ordered that to happen. Complex issues are involved, but the new UK Government has already taken a substantial step to listen to the legitimate concerns of the Scottish Government and to see what can be done to address them.

That is the respect agenda in practice, and it has taken a Liberal-Conservative Government to deliver it. Shamefully, Labour did not even try to build any relationship between our two Governments and our two Parliaments. Since leaving office, Labour has made it abundantly clear that it has a similar lack of respect for the intelligence of the public. Iain Gray has been happy to rant on in this chamber about "cuts, cuts, cuts" as if the spending squeeze had nothing to do with the out-going Labour Government, which was racking up debt at the rate of £3 billion a week.

Thus, although there is much that is new in the new politics, there are clearly some things that do not change. For example, those who take over from a Labour Government always have to clean up the mess. Liam Byrne was not joking when he said there was no money left. The Treasury cupboard is indeed bare. Labour's recession was the longest and deepest since the second world war. Britain's deficit is the largest in the European Union. The Labour Government was spending one third more than it raised. It was addicted to out-of-control spending and to mortgaging our nation's future in an attempt to save its own political skin. Labour's waste and Labour's financial mess mean that tough times lie ahead, but our Liberal-Conservative Government will always ensure that we look after the most vulnerable in society and that the spending decisions that are taken, although tough, are fair.

Let us be honest: there will be difficult days ahead. Yes, there will be disagreements between the Scottish Government and the UK Government. Indeed, there may be disagreements between the two coalition partners. However, this new age of mutual respect and of constructive engagement lays the foundations for a new era of devolution and genuinely offers a fresh start and an exciting and different future for Scotland.

I move,

That the Parliament welcomes the commitment of HM Government to establish a positive and constructive working relationship with the Scottish Government and Parliament to tackle the problems facing the country and, in particular, welcomes the commitment in the Queen's Speech to introduce legislation to implement recommendations from the final report of the Commission on Scottish Devolution and the willingness to consider matters in relation to the Fossil Fuel Levy.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party 9:28 am, 27th May 2010

We agree that it is important to have a positive and constructive relationship between the UK Government and the Scottish Government to advance Scotland's interests. In addition, we note the early contact by the new UK Government with the Scottish Parliament.

We think that the relationship between the UK and Scottish Governments should be based on mutual respect and parity of esteem. The Prime Minister has met the First Minister. I understand that that was a productive meeting, and I look forward to the development of a constructive intergovernmental relationship with the UK Government. That is how it should be, but the fact that some progress is now being made probably says more about the previous Labour UK Government than anything else. What we have called for is straightforward normal intergovernment practice. Although some might see progress as concessions, those shifts are just the realisation of reasonable requests and of normalising a Government-to-Government approach.

However, we have been clear that the test of this respect relationship will be deeds, not words. If the UK Government makes progress on the issues that we have raised—including capital acceleration, borrowing powers for the Scottish Parliament, releasing the £180 million fossil fuel levy rather than just reviewing it, and a fair approach to Olympics regeneration Barnett consequentials—that would indicate respect in action.

Photo of Robert Brown Robert Brown Liberal Democrat

Will the minister outline the Scottish Government's side of the respect agenda?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I was about to come on to that point, on which we have indeed made progress.

In addressing the content of the Conservative motion, I confirm, as we did in our response at the time, that we can support a significant number of the Calman recommendations, particularly in the areas of relationships and legislation. There are 29 recommendations that we accept and a further 20 that either need more clarification or relate to the Parliament. I have already indicated to the Secretary of State for Scotland that we can work with him on the issues. We note that the Conservative motion does not commit to the implementation of all the Calman recommendations.

However, I do not think that any party accepted all of Calman. Indeed, the Labour Government's white paper did not accept them all. In the debate in December, Derek Brownlee pointed out:

"The UK Government's position is not the same as Calman's or that of the independent expert group. There is scope in the white paper for anyone with an interest to put forward their views on how the proposals could be improved."—[Official Report, 9 December 2009; c 21971.]

The Labour amendment looks backward, whereas everyone else is looking forward. Time has moved on and circumstances have changed.

Since the publication of the Calman report, the financial aspects in particular have come under more scrutiny, with serious concerns raised by a number of economists. The recommendations have been overtaken by events—indeed, the personal tax allowance changes in the coalition agreement would have an impact on reducing Scotland's income—so there clearly must be a reappraisal of Calman's financial proposals. True financial responsibility cannot be based on such a narrow range of tax powers. For example, under Calman's financial proposals, the coalition's proposed change in income tax thresholds would mean Scotland losing out on £250 million a year while British Government revenues would remain unaffected.

A recent Fraser of Allander publication from Jim and Margaret Cuthbert showed that the then UK Government's Calman proposals would impose an economic straitjacket on Scotland while filling the coffers of the UK Treasury. Our revenues would be dependent on forecasts over which we would have no control, they would be subject to fluctuations in the economy over which we would have no control and they would be based on tax allowances and bands over which we would have no control. The benefits of growth would be returned not to the Scottish Government but to the UK Treasury, over which we would have no control.

Those who argue that fiscal responsibility would introduce better accountability and more responsibility for spending need to explain where the incentive for that is in Calman's limited finance proposals. Earlier this month, Tom Farmer said:

"Fiscal autonomy is actually straight-forward. Scotland would raise the money that it spends. Members of the Scottish Parliament would have to spend as much time thinking about the revenue side of the balance sheet as the expenditure side"— that point has been raised by the Conservatives on many occasions—

"which would focus minds and, I believe, lead to more responsible behaviour on all sides."

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

No, I will not.

The Scottish Government clearly wants the full powers of independence for our country, but even those who do not want independence for Scotland surely see that transfer of fiscal responsibility to Scotland would improve our capacity at least to try to stimulate growth in the economy to deal with a fragile recovery. There is a very serious debate to be had—it is happening as we speak—in which it is argued that, to deal with the recession, we need a growth agenda, which improved fiscal responsibility would enable. However, Calman's financial proposals do not offer that. Without greater financial responsibility, Scotland would be locked into decisions taken by the UK Government, whatever the state of growth in Scotland. We would not share the proceeds of any growth; we would get only what we were given. The serious point is that perpetual dependency is hardly an inspiring state for economic recovery. An agreement to welcome the UK Government's willingness to consider fiscal responsibility would be a step in the right direction.

Given that need for a debate on alternatives to the Calman proposals that would allow this Parliament the fiscal responsibility that it needs and which we all support, my concern with the Labour amendment is that it rejects the previous Labour Government's white paper and goes backwards to the full Calman recommendations. As I have already pointed out, not one party—not even the Labour Party at that time—agreed with all the recommendations.

I come back to the consideration of the debate as it now stands. Economics professors Andrew Hughes-Hallett and Drew Scott conclude:

"the Calman proposals ... are unworkable because, to function, they require information that the policy makers cannot possibly have; and because, without borrowing for current activities, they contain no mechanism to reconcile contractual spending (most of the budget) with variable revenue flows—which is to invite an eventual breakdown."

Therefore, I welcome today's debate as it will provide material for the Scottish Government and the UK Government in considering what powers Scotland needs to succeed, including in relation to fiscal responsibility.

We are also conscious of other relationships. We have discussed our approach to the new UK Government with the other devolved Administrations. When the First Minister and I met the First Ministers and Deputy First Ministers of Wales and Northern Ireland in Belfast on Monday, we identified—this picks up Robert Brown's point—a number of issues on which respect from, and positive relationships with, the UK Government could quickly be established.

We identified a need for co-operation, fairness and transparency in UK Government finances, including the Olympic Barnett consequentials. I point out that, in terms of the proposals that it put out only this week, the UK Government is prepared to count the cuts in the Olympic budget as a negative consequential for Scotland but not to consider regeneration consequentials as a positive. That is an area that would benefit from openness and transparency in calculations.

We are also concerned to ensure that the devolved Administrations are assured of proper representation at European Union meetings, including the ability to speak for the UK at such meetings. We look to engage with the new UK Government on that proposal.

We agreed on the need for, and importance of, the Prime Minister's role in relation to the joint ministerial committee meetings and the British-Irish Council. That role must be established. Indeed, since 2007, the Scottish Government has worked with the other devolved Administrations to use existing intergovernmental machinery such as the joint ministerial committee to help in building stronger relationships between the Governments of the United Kingdom. That machinery is vital to fostering a co-operative and open relationship and to demonstrating respect between our Governments.

The SNP Government led the way in making the case for improvement. I do not think that the memorandum had been reconsidered since it was agreed in 2001 but, after many long years without progress, we achieved agreement on how the process would work. I point out, before Annabel Goldie gets overenthusiastic about the warmth in the relationships, that that agreement was achieved under the previous UK Government. The devolved Administrations also concluded a protocol on dispute avoidance and resolution. We look forward to that mechanism working in practice, both to the letter and in spirit.

There is another key challenge that we probably have not focused on to such an extent—I know that it was a difficulty for the previous Labour-Liberal Democrat Administration. It arises when a dispute is about not what is reserved or devolved, but reserved areas that have an impact on devolved areas. I am talking about how we ensure proper and early understanding of the impact of proposed changes in Scotland, not only by politicians but by the Whitehall civil service. One example is the reform of social care and welfare to work, which will impact directly on devolved interests.

The Scottish Government will always seek to advance Scotland's interests and will work constructively and positively with the UK Government to do so, but we need actions, not just words. As a country, we need to move forward. The Scottish Government will argue our case and our corner, but we will do so in a mature relationship of engagement between Governments. The Scottish public deserve and expect no less.

I move amendment S3M-6409.1, to insert at end:

"and fiscal responsibility issues."

Photo of Pauline McNeill Pauline McNeill Labour 9:37 am, 27th May 2010

The general election result in Scotland was evidence, if it was ever needed, that Scotland did not want a Conservative Government or David Cameron as Prime Minister. Despite the overtures and the claims about how much the Tories have changed, the Scottish people were not in the least convinced. In 13 years of Labour, the Tories made almost no progress in Scotland. People in Scotland came out in their droves to vote against the prospect of a Tory Government and for the party most likely to achieve that outcome: Labour.

I am proud of the Labour Government and what it achieved with the working families tax credit for the poorest families. Do the Conservatives agree with that measure? Previous Conservative Governments never provided working families tax credit for the poorest families, the minimum wage, enhanced trade union rights at work, improved maternity rights, pension credits or civil partnerships, which represented a radical reform of social legislation. [Interruption.]

Photo of Pauline McNeill Pauline McNeill Labour

Scots trusted the Labour Party to deliver for them.

In order to get respect for our country, our Government and our Parliament, there has to be, as the motion says,

"a positive and constructive ... relationship" with the Westminster Government

"to tackle the problems facing the country".

That is a reasonable start. We expect no less, because David Cameron, the Prime Minister, knows that he has a steep uphill struggle in Scotland. Then again, he also has Nick Clegg, and now we hear that he has the Scottish Government and the nationalists, to help him with that uphill struggle.

We have heard so much about the new politics, but I have a sense of déjà vu from 2007. Did the Scottish National Party not also talk about the new politics? I am sorry, but that did not last—the jury is out on that.

Scotland has not easily forgotten the Tory years. There can be no doubt that those were the catalyst for home rule in Scotland and the establishment of this Parliament, ensuring that Scotland could reflect its distinct values and policies and protect itself against a right-wing Administration. However, this is a new world, with the Tories now embracing constitutional change—or, more accurately, being forced into doing so by their coalition partners. UK ministers are to engage more with our Parliament—there will be a visit at least once a year to call on our committees—and with the Scottish Government. That is all good stuff, and it is in tune with the Calman commission's report.

Before the Prime Minister's visit to Scotland earlier this month, David Cameron said of the First Minister that he lived in

"a perpetual episode of Braveheart".

I guess that he wanted to see that drama for himself.

During his visit, the Prime Minister reiterated that he wanted to "win Scotland's respect". That will be tested. Indeed, it is already being tested: recent reports of the prospect of a clash of dates with the Holyrood elections do not imply respect where it is needed. Such announcements at least need to be consulted upon.

Photo of Pauline McNeill Pauline McNeill Labour

I am sorry, but I am really short of time.

It goes without saying that Scotland will judge the coalition Government and its new promise of mutual respect by its values, its actions and its policies. To that degree, I agree with Fiona Hyslop. However, the true test of public opinion will come with the drastic budget cuts as the new Tory-Liberal coalition implements its speedy plans to reduce the deficit. Jim Murphy, the former Secretary of State for Scotland, was clear that if Labour had returned to government we would have implemented the Calman commission's recommendations.

Photo of Pauline McNeill Pauline McNeill Labour

You have five seconds, on that point.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

You said in your amendment that you want to implement the full Calman proposals—

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Sorry, Presiding Officer.

In the circumstances, given that Labour rejected nine of the proposals in areas such as intergovernment arrangements, finance and electoral arrangements, are you still seriously saying that you want to implement the full Calman proposals?

Photo of Alex Fergusson Alex Fergusson None

I remind members that they should always speak through the chair and not directly to each other.

Photo of Pauline McNeill Pauline McNeill Labour

Labour was clear during the election, and Jim Murphy is on record as saying, that we would take the Calman recommendations forward to legislation.

The motion welcomes the commitment to introduce legislation to give more powers to the Scottish Parliament, but the Queen's speech did not refer to "the recommendations"; it referred only to "recommendations". We await the detail, but that has given rise to rumours that the pace of change will be slow and that not all the recommendations will be adopted.

Labour, of course, also welcomes the commitment to legislate, but we would like an unequivocal assurance that that will happen before the Scottish Parliament elections in 2011. We sense a dragging of feet on the matter. I hope that that is not the case, because I believe that the parties in this chamber that brought about the proposals to strengthen devolution should be able to work together to finish what we started. However, there is, even today, speculation that the tax proposals will not be fully enacted.

The Secretary of State for Scotland, Danny Alexander, has so far refused to say what tax powers will be in the bill. He admitted on Tuesday that the reason for that was consideration of the objections that were raised by the First Minister. Perhaps he was impressed by the First Minister's call to the electorate to vote Liberal Democrat to get a balanced Government—who knows? Of course, Alex Salmond and Fiona Hyslop have objections, because they do not believe in the Calman recommendations. I say to Danny Alexander, in the most respectful and constructive way, that he should wake up and smell the tactics, because the SNP has been the least constructive party when it comes to constitutional change. A journalist said this week:

"the SNP has boycotted all three of devolution's landmark reports, while also being the beneficiary of their intellectual groundwork. The Nationalists will also, I suspect, ensure that the Calman proposals aren't introduced, at least in the form set out last week."

We cannot lose sight of the constructive work that was done when this Parliament voted for the Calman commission's recommendations. The men and women who were on the finance group are serious and highly respected people, and we, as MSPs, must make serious progress to make this Parliament more financially accountable.

The Labour amendment calls for implementation of Calman to proceed "without delay".

Photo of Pauline McNeill Pauline McNeill Labour

In full.

We are seeking assurances that the approach will be constructive and that the coalition will guarantee and clearly demonstrate that, in government, it will legislate to bring about stronger devolution and is prepared to put that to the test in the elections in 2011.

I move amendment S3M-6409.3, to leave out from ", in particular," to end and insert:

"calls on the UK Government to implement the recommendations of the Commission on Scottish Devolution in full and without delay."

Photo of Alex Fergusson Alex Fergusson None

I call Mike Rumbles to speak to and move amendment S3M-6409.2.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat 9:45 am, 27th May 2010

Thank you very much, Presiding Officer, and Lord Foulkes.

The new coalition Government at Westminster is certainly good news for Scotland and for devolution. Within three days of taking office, the new Prime Minister and Secretary of State for Scotland came to the Scottish Parliament, which is in sharp contrast to the actions of the previous Prime Minister, who never found the time to make a formal visit in his three years in office. Their willingness to come here so soon is a practical example of their commitment to establish a positive and constructive working relationship with our minority Scottish Government in its last year of office, and with us in the Scottish Parliament.

The new UK coalition Government has outlined many positive commitments in the Queen's speech, which is great news for Scotland. As Danny Alexander, our new Secretary of State for Scotland, said, the Queen's speech

"will deliver real benefit for Scotland."

Sixteen of the 20 new bills will contain provisions that apply to Scotland, either in full or in part. The new coalition's priority is to reduce the budget deficit, which is why the legislative programme focuses on restoring economic growth throughout the UK. Measures to safeguard jobs, cut taxes and restore the earnings link for the basic state pension are at the forefront of the programme.

Photo of Margaret Curran Margaret Curran Labour

Will Mike Rumbles outline what measures the coalition Government is taking this year to protect and safeguard jobs in Scotland?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Considering that the Government has been in office for less than three weeks, that is a little bit previous of the Labour Party. The new coalition Government's commitment to work towards establishing a pre-tax threshold of £10,000 a year, which would take almost half a million people in Scotland directly out of the tax bracket, answers that direct question from the Labour benches. That measure is particularly welcomed by the Liberal Democrats in the Parliament.

Our new Liberal Democrat Secretary of State for Scotland has made it clear that we will benefit from measures that the coalition is taking to reform the political system. Not only will there be a referendum on establishing the alternative vote to replace the discredited 19th century voting system of first past the post for UK elections, but there will be a Scotland bill, which will implement recommendations from the Calman commission and will be aimed at building on and improving the current devolution settlement. The Liberal Democrats in Scotland want a strong version of the Calman proposals to be implemented in the new legislation. Just yesterday, Danny Alexander said:

"There's a serious intention to get on with this. We're moving faster than was previously envisaged but we are having engagement along the way to make sure we get a better package."

That is surely heartening news to all of us who want greater measures on what we as Liberal Democrats, and Liberals before us, have always called home rule for Scotland.

As far as the Liberal Democrats are concerned, it is refreshing to see the new Government establishing itself so quickly at Westminster and the parties there working well together for the good of the country. Their new programme of freedom, fairness and responsibility builds on the policies on which both parties can agree. A coalition Government can work only when the parties in it can put aside their differences and focus on the issues on which they can agree, for the good of the people whom they are elected to serve.

The Scottish Parliament has experienced coalition Government. I see that Lord Foulkes is shaking his head—he has not experienced it, but we have experienced it. In the first two sessions of Parliament, two parties agreed on a radical and reforming programme of land reform, voting reform for local government and public service reform.

Photo of Murdo Fraser Murdo Fraser Conservative

The member was doing so well.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Now, come on.

That coalition was replaced by a minority Administration, which as I said is in its last year of government. Without a majority in Parliament, it has been unable to do very much. It is much better for the people we serve if, after an election, politicians agree on a programme of government that commands the support of Parliament. That has been done in recent days in Westminster. I am sure that the new coalition Government will be a success for the whole of the UK and for Scotland in particular. I look forward to the next test of public opinion in Scotland—the elections to the Scottish Parliament that are due in less than 12 months. In those elections, the Scottish people will give their verdict not only on the minority Administration at Holyrood, but on the new UK Government's radical and reforming proposals for Scotland.

I move amendment S3M-6409.2, to insert at end:

", and believes that the UK Government's programme, including plans to raise the income tax threshold to £10,000, build a new, sustainable economy and reform the political system, will put fairness at the heart of government and deliver real benefits to the people of Scotland."

Photo of Derek Brownlee Derek Brownlee Conservative 9:50 am, 27th May 2010

As someone who has not always been able to forge a consensus with our new Liberal Democrat friends, despite my best efforts, I am genuinely impressed that the coalition agreement has provided a coherent programme for government that takes the best from both parties and agrees a workable consensus for both sides. That just goes to show what can happen when the old parties work together.

I accept that, as Fiona Hyslop said, the respect agenda that we have heard about is about action as much as words. As Annabel Goldie said, the SNP decided not to work with the Commission on Scottish Devolution because it was predicated on the continuation of the UK. I believe that the SNP was wrong to stand aside from it and that, arguably, the Calman commission proposals would have been different if all political parties had engaged in it. The issue is less that one party stands aside from the process, and more that—as the Conservatives and the SNP found to our cost in the 1990s with the Scottish Constitutional Convention—being on the sidelines allows others to set the parameters of the eventual outcome. When the constitutional arrangements of the country are being discussed, that is a great risk. I say that not to make a party-political point against the SNP, but to make the case for why, even at this stage, well after the final report of the Calman commission, we should welcome genuine engagement by the Scottish Government.

The Labour Party argument appears to be that, by not proceeding straight to implementation of the Calman recommendations, the new Government is kicking the issue into the long grass. However, as we have already heard, the Labour Government's white paper on the issue did not propose implementation of Calman. In any case, the long-grass argument is based on a profound misreading of the new Government's position. I do not doubt that the Liberal Democrats wish to implement fiscal devolution as quickly as possible—just as I do—but, as long-time supporters of fiscal devolution, surely they will want to ensure that the scheme works as intended. It serves no one's interests, whether unionist or nationalist, to introduce a scheme of fiscal devolution that does not improve financial responsibility or that has administration problems.

Fiscal devolution—or fiscal responsibility, as it is increasingly being known—is an essential part of bringing stability to devolution as a whole.

Photo of Lord George Foulkes Lord George Foulkes Labour

I wanted to ask this question of Fiona Hyslop, but she would not let me intervene. However, Derek Brownlee is probably more able to answer it. What kind of tax-raising powers does he want to give the Scottish Government? If he could give an indication of the kind of tax-raising powers that he is thinking about—over corporation tax, sales tax or whatever—that would be helpful to the debate.

Photo of Derek Brownlee Derek Brownlee Conservative

As Fiona Hyslop said, the point is that some of the proposals in the Calman report to an extent have been superseded by issues in the coalition agreement. We must consider those issues. There is no point in pretending that they do not exist.

The point of fiscal responsibility is to reduce on an institutional basis—regardless of who is in government at Westminster and here—the squabbling between the UK and Scottish Governments over financial issues. That is why I see financial responsibility as a Conservative principle, although I would wish all parties to share it. A stable devolved settlement, which financial responsibility would give us, is a key unionist principle. So to long grass fiscal devolution is not a sensible position for a Conservative or a unionist, nor is it a sensible position for a party that aspires to be in government in Scotland.

Listening to concerns from the Scottish Government or anyone else on the detail of the Calman proposals is sensible, however. When the Calman commission met, there was little, if any, debate on the likelihood of a substantial raising of the personal allowance, as the Liberal-Conservative Government is proposing. A £10,000 personal allowance would reduce the projected Scottish share of tax take under Calman by up to £875 million, and the Calman proposals contain no equivalent to the provision for the existing Scottish variable rate that requires the Treasury to come up with alternative proposals where changes to the tax regime alter the yield.

Every party went into the UK elections promising greater powers for the Scottish Parliament and greater financial powers, and we can either try to build a consensus on their form or not. That is not an abstract point. We all agree that one area in which Scotland has been lagging behind significantly—not just in recent years, but over a longer period, including when the Conservatives were in government in the 1990s—is its business growth rate. We need a significant expansion in the private sector economy to provide the jobs of the future.

The coalition has adopted from the Conservative manifesto a proposal to review the case for flexibility on corporation tax for Northern Ireland. There is nothing that requires all parts of the union to have the same powers or fiscal arrangements, but it seems to me that if such flexibility can be provided for Northern Ireland, it could, at least technically, be provided for Scotland. If such flexibility could allow us to increase the growth rate in Scotland, create jobs and provide the opportunity for new businesses to thrive, should we reject it simply because it was not in the Calman proposals? Should we reject out of hand other ideas that might improve financial responsibility in Scotland or help to grow the economy just because they did not feature in the final Calman report? Of course we should not. We should be open to new ideas, as we get on with the process of implementing Calman.

Photo of Derek Brownlee Derek Brownlee Conservative

I do not think that I have time, I am sorry.

The test of the new politics and the respect agenda is not so much whether the UK Government does what the Scottish Government demands, or whether the Scottish Government does what the UK Government wants it to do; it is whether both sides are able to work together to find common ground for shared goals. I do not doubt that that is a challenge for the UK Government, but it is also a challenge to the Scottish Government. I hope that both our Governments rise to that challenge. It is early days but, so far, the signs are positive.

Photo of Linda Fabiani Linda Fabiani Scottish National Party 9:56 am, 27th May 2010

The motions and amendments that are before us today are a mark of how the political landscape of the United Kingdom has altered and the change that has taken place within the UK and its constituent nations. It is worth discussing the relationships between the UK Government and the Scottish Government, so the debate is welcome.

The political landscape here at home certainly changed in May 2007, when the Scottish National Party formed the Government. However, it should be noted that change also took place in Wales, where a governing coalition was formed between Plaid Cymru and the Labour Party, and in Northern Ireland, where the Democratic Unionist Party and Sinn Fein share power. Those arrangements were a big shift in democratic political representation because, for the first time, not all parts of the UK were ruled by the same political party. Since 1999, it was often said that the true mark of devolution in Scotland would be when a different party from the London party was in control, and no doubt the same was said about the Welsh Assembly. I believe that the shift in UK politics started then, and that that change continues, with the coalition Government in Westminster and the proposed changes in the electoral system. After all, to paraphrase, this is a process, not an event.

I welcome the respect agenda that is being talked about in relation to relationships between our Government and the UK Government, and I trust that the joint ministerial committee system will now work with an ethos of mutual respect for ministers of all Administrations. Unfortunately, the concordat agreements for JMCs had been allowed to collect dust in the first years of devolution, with only the Europe JMC being active—and I use that term loosely—when the SNP formed the Government in 2007. I was pleased to see that, after much work by this and the other devolved Administrations, a revised memorandum of understanding was agreed in March 2010, with dispute resolution aspects extending to financial issues. That is extremely important, particularly now, when we are considering the implementation of recommendations from the Commission on Scottish Devolution.

Photo of Margo MacDonald Margo MacDonald Independent

Does the member agree that heightened awareness of the joint meetings, which should have been part of the statutory requirements, has come about because of the political situation and not because of a great shift in emphasis between the two layers of government? If there had been such a shift, we would not have been forgotten when it came to fixing the date of the five-yearly Westminster elections.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

That is a good point. I hope that the new Administration will take on board the views of practically everyone in this chamber and discuss the matter with respect and dignity, in the spirit of co-operation that I have been discussing.

On the financial aspects of the Calman plan, I have serious concerns about the taxation proposals, which many people have also expressed in this chamber and elsewhere.

I note that Wendy Alexander commented on television on Tuesday evening that the taxation proposal in the Calman report was made by

"the most eminent economists in Scotland".

That intrigued me because nowhere in either of the reports that were made to Calman by the independent expert group can I find the proposal to devolve income tax and adjust the block grant along the lines that Calman finally came up with.

Certainly, the general principle of assigned taxes was discussed and reported on by the group, but the proposition of the 10p variable rate and the block grant adjustment was not dealt with. I hope that the Labour group can clear that matter up for us today and point us to the publication in which

"the most eminent economists in Scotland" made that particular proposal, or where we might find it in the public record. Indeed, in his paper, which was jointly produced with Professor Scott, Professor Hughes-Hallett, who actually sat on the expert panel for Calman, stated that the then UK Government's proposals were "defective in economic terms" and were likely to create

"key instabilities in the budgetary arrangements of Scotland's government with significant ramifications for the delivery of public goods and services".

Surely there is no one here today who wishes to implement proposals, in a carte-blanche manner, that are likely to create "key instabilities" at this time and which could adversely affect the delivery of public services, beyond the cuts in budgets that we are all facing. Scotland's Government is committed to the protection of the vulnerable and to creating a fairer society. A more buoyant economy is crucial to all of that, and the deficiencies within the current Calman proposals would hamstring the Scottish Government's ability to advance economic growth and truly address the needs of our citizens.

Fiscal independence, fiscal autonomy, fiscal responsibility, additional financial powers—whatever the terminology, the actuality requires much deeper discussion. There is no time to go into all of the examples of matters that should be discussed further, but among them are the potential effect of raising the income tax threshold, as mentioned in the Liberal Democrat amendment, and the inability to use short-term borrowing to fund unanticipated shortfalls in income tax—I point out that those income tax revenues would, after all, be subject to prediction.

There are many more potential pitfalls and concerns. That is why the amendment in Fiona Hyslop's name should be supported and the amendment in Pauline McNeill's name should be rejected. That is why mutual respect between the Westminster and the Scottish Parliaments and Governments is crucial. If in this Parliament we start to work together for Scotland's benefit and have mutual respect among ourselves, today's debate will surely have been worthwhile indeed.

Photo of Cathy Jamieson Cathy Jamieson Labour 10:03 am, 27th May 2010

It is interesting to be back in this place after spending a few days elsewhere, although I suspect that some of my new colleagues are already weary of hearing me tell them how well the Scottish Parliament does certain things and deals with various issues. I hope that members will forgive me if I follow the lead of Lord Foulkes and mistakenly slip into language that is better suited to the green benches.

I note that, in the Scottish Parliament, I am at least guaranteed a seat and do not have to ask colleagues to move along and let me sit in the small space available. Further, here, I can see that the Tories and the Liberal Democrats are still just about separate entities, whereas, in the other place, they all now look and sound the same. I see that, this morning, the Liberal Democrats did not quite cheer Annabel Goldie's welcome of David Cameron as the new Prime Minister, and a couple of them managed to look away when Mike Rumbles was extolling the virtues of the new coalition. Speaking of which, I thought that that was an astonishing turnaround for Mr Rumbles, whom I well remember having to deal with in coalition in this place. I have to say that I do not recall him always being quite so sympathetic to the principles of co-operation.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I was very keen that our coalition kept to the coalition agreement and did not deviate from it.

Photo of Cathy Jamieson Cathy Jamieson Labour

I hesitate to say that the member is rewriting history; I say merely that I remember some fairly robust exchanges.

Anyway, that is enough of the pleasantries. The debate is important, if for no other reason than to highlight, as people have referred to already, that warm words, co-operation and respect will not be enough for the relationship between the Governments, and that it will be action that counts—a point that even the minister, Fiona Hyslop, recognised.

One of the tests of the so-called respect agenda will be the way in which the UK Government takes forward the recommendations and principles of the Calman report. I was pleased to hear a commitment to that in the Queen's speech, but I am concerned at the continued uncertainty, and the rumour that certain measures may not be taken forward if the Scottish Government does not agree, as if the SNP has a veto in the process. That does not reflect the will of the Scottish people. Judging by the opinion polls and comments during the election, there is a general feeling among the Scottish people that although the Scottish Parliament has done a good job in many areas, the majority want the Parliament to be given additional powers. People want the relationship between the tax-raising powers and spending to be clarified differently. However, they do not want what the SNP would put forward as independence.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Does the member support the proposals in the previous UK Labour Government's white paper or does she support the full Calman proposals? Which of the nine proposals that she previously rejected does she now accept?

Photo of Cathy Jamieson Cathy Jamieson Labour

I want to take things forward—this is not about looking back. We are in a new political situation, so I would ask the Scottish Government, and indeed all parties here and at Westminster, to look positively at reconvening the working group on Calman and to engage in that process. My question for the minister is how she and her party will engage in that process. We have to consider the Calman recommendations in the light of the present constitutional circumstances—[ Interruption .] I am having difficulty hearing what the Minister for Parliamentary Business is saying but I am prepared to take an intervention from him.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am sorry for making a sedentary intervention but it was interesting to hear the member say that she wanted to revisit some of the Calman recommendations, given that the Labour amendment talks about fully supporting all of the Calman proposals.

Photo of Cathy Jamieson Cathy Jamieson Labour

If the minister had not been making sedentary interventions and had been listening to what I was saying, he would have heard me say that it is important to look again at all the recommendations to see how they can be acted on in light of the new circumstances in which we find ourselves politically and of the constitutional settlement.

I hope that the SNP will give a commitment to move on from its previous approach of cherry-picking two or three things that suit its agenda and that it is prepared to consider all of the Calman recommendations and work positively to see how they can be taken forward.

Of course, Calman is not the only area in which co-operation and respect are needed. I ask the Conservatives where the respect agenda is in relation to the future jobs fund, for example. In my local area, young people are already benefiting from the fund; local organisations think that it is a success; and Jobcentre Plus staff think that it is working. It was not long ago that the now Prime Minister, David Cameron, thought that it was a good scheme, yet the Tories and the Liberal Democrats are now lining up to tell us that it is wasteful and is to be cut. Sadly, that is all too reminiscent of the decision taken by the SNP Government when it slashed funding for project Scotland.

We have an opportunity to look again at the working relationship between the UK Government and the Scottish Government. We must not rewrite history: it is not the case that previously there was no co-operation between Scottish ministers and UK ministers. That is my experience of going to European meetings. On occasion I spoke for the UK Government on a range of matters and I was fully involved in the discussions on those matters. For the SNP Government and the Tories to suggest otherwise is just not good enough.

I hope that the ministers and the Conservatives will take account of my points and answer my questions.

Photo of Alasdair Allan Alasdair Allan Scottish National Party 10:09 am, 27th May 2010

The debate will serve little purpose if it merely revisits the past—we have heard a little of that—or restates each of our well-known positions in the debate on Scotland's constitution. Those positions may well be heartfelt, vocal and even, in some cases, right, but their mere rehearsal will not suffice. It will be of much more interest to the people of Scotland if we each show some willingness to listen to a debate on which there is, surprisingly, at least some common ground. If members will allow me a Hebridean analogy, our common ground is perhaps like the apocryphal disputed peat bank: it has been the subject of a tense stand-off for decades; it is the object of deeply entrenched positions; and it is narrow. However, it is in everyone's interests that the Scottish and UK Governments speak to each other constructively now that proposals for constitutional change in Scotland are on the table once more. The challenge is to come up with legislative measures that will work.

The Queen's speech talks about implementing the Calman commission recommendations, and there is evidently willingness on the part of both Governments to continue a dialogue about what that might mean in practical terms. There is no doubt that for those of us who see Scotland's destination as independence, the Calman proposals do not take the political temperature in Scotland anywhere close to the flash-point of heather. However, although, as I and other nationalists have said before in Parliament, we recognise that there are elements of the Calman proposals that are good and worthy of implementation, the proposals are neither indivisible nor sacrosanct. I suspect that mine is not the only party in Scotland that takes that practical point of view.

The fact that the UK Government is prepared to repatriate to Scotland legislative competence in areas such as drink-driving, speed limits and air-guns is to be welcomed. In as far as those issues go, those are highly reasonable proposals. My colleague Dave Thompson has been active among members of all parties in his support for the Scottish Parliament to have control over drink-driving law. Likewise, many have campaigned hard for Holyrood to legislate on air-guns. Further, it seems strange for a country with its own legal and criminal justice systems not to be able to legislate on something as everyday as speed limits. However, Calman is more problematic when he talks about fiscal powers. If I thought that Calman was proposing fiscal autonomy or anything resembling it, I would have no such reservations, but I am afraid that in his fiscal proposals, Calman has simply not presented a coherent picture. It is for all parties in Scotland to engage rationally on how to provide genuine fiscal responsibility for Parliament.

Photo of Robert Brown Robert Brown Liberal Democrat

On that issue, I would appreciate some clarity on the direction of travel. Is the principle that it is less about block grants or full fiscal autonomy and more about the Parliament having appropriate tax-raising powers to fulfil its responsibilities, whatever they may be at any point in future, one to which the member would adhere?

Photo of Alasdair Allan Alasdair Allan Scottish National Party

The member uses the word "appropriate" in relation to fiscal responsibilities. When Calman talks about fiscal responsibilities, he is not coherent. For instance, Calman's proposal to reduce UK income tax to 10p in Scotland, leaving Scotland to levy the rest herself, sounds radical only until we consider that income tax is but one tax. Under those proposals, 80 per cent of tax revenue generated in Scotland would continue to go to the UK Treasury. The Scottish Parliament would have roughly the same scope for fiscal manoeuvre as Clackmannanshire Council has—less, probably, as we would have no borrowing powers.

Valuable as much in Calman is, scepticism about his fiscal proposals is far from confined to the SNP benches. The existing fiscal proposals are undermined, even from out of the mouths of members of Calman's advisory panel. Professor Andrew Hughes-Hallett—who has already been referred to—has described the fiscal proposals as

"seriously flawed—if not illiterate".

Others have pointed to the fact that Calman's system, which assigns revenues to Scotland based on UK Treasury forecasts, ensures that when growth is forecast the UK Treasury gains, and when decline is forecast Scotland loses.

Photo of Margo MacDonald Margo MacDonald Independent

I wonder whether it helps if I suggest that the full fiscal autonomy that we talk about is no such thing unless it encompasses the collection of money to pay pensions and benefits. They are two sides of the one coin.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

The member will not be surprised to hear that I would like Scotland to do all those things. However, there is a wider debate to be had. When other studies in this area, ranging from the Scottish Government's national conversation to the Lib Dem Steel commission, have all identified far more fiscally autonomous solutions for our country, I find it surprising that some cannot get beyond our previous debate on Calman and still view it as indivisible. If Scotland is to be economically competitive in future, there has to be some relationship between what Scottish Governments plough into the country's economic development and what they are able to reap from that activity through a stronger tax base.

Despite the manifold differences between them, there is a clear willingness among the UK and Scottish Governments to talk sensibly about these issues together. I contend that talking sensibly can lead us only to the conclusion that not all in the Calman report can go through without further debate. By all means, let us implement the report's uncontentious measures. However, if there is a respect agenda, we should acknowledge the demand from all political quarters in Scotland that we take more responsibility for raising the money that Scotland spends.

Photo of Des McNulty Des McNulty Labour 10:16 am, 27th May 2010

Oscar Wilde famously described fox hunting as

"the unspeakable in ... pursuit of the uneatable".

I wonder what he would have made of the courtship between the Liberal Democrats and the Conservatives. We can see on the seats opposite that, although our Liberals and our Conservatives are not necessarily happy about the process, they are acting a bit like relatives at a wedding: so far they are not protesting too loudly about their respective parties' new partner. Indeed, Mike Rumbles gave a good impression of a best man giving an uncomfortable speech at a wedding. One wonders whether we are simply waiting for enough time to pass and sufficient drink to be consumed before the inevitable fight breaks out.

Is this truly a coming together of equals or will the old lady of British politics, the Tory party, turn out to be a black widow spider and eat her partner shortly after consummating the deal? I presume that she will do so with relish, but she might have to suffer a little bit of indigestion. Of course, we do not need Oscar Wilde to describe the First Minister's preening and posturing when David Cameron came to visit, or the empty mouthings about the respect agenda.

We on this side of the chamber are absolutely clear what the Government of David Cameron and Nick Clegg means for Scottish jobs and public services and our aspirations for social justice. When David Cameron talks about fairness, people in Scotland look at who his cabinet of millionaires really represents; when he talks about our constitution, we focus on his efforts to impose a five-year fixed term for his Government by seeking to perpetuate its life beyond a no-confidence vote; and when he talks about benefits and pensions, people look to the cuts that his Government intends to make to their incomes. Whenever we think about the Conservatives, we should look to our back pockets.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Does Des McNulty regret that the Labour Party at Westminster did not seek to form a Government with other parties?

Photo of Des McNulty Des McNulty Labour

The biggest regret is that the SNP advocated that people in England should vote Liberal Democrat. Look how that turned out.

For the Liberal Democrats, this is the price of power. The whiff of a red box was sufficient for them to abandon all principles and credibility, and it is a harsh reminder that the Liberal Democrats are the least principled and most delusional of all parties. Their claim that they have won Conservative support for a predominantly Liberal Democrat agenda shows that they have no understanding whatever of the embrace in which they are now caught.

Annabel Goldie mentioned how Alex Salmond described his discussions with the Prime Minister as highly "positive", "substantive" and "productive". I am more interested in Mr Salmond's actions—and, of course, the actions of Mr Swinney. As we know, the UK Government has brought in the first tranche of cuts for the UK and that that £6 billion translates into a £330 million reduction in funding for Scotland.

Photo of Des McNulty Des McNulty Labour

I am sorry, but I really do not have the time.

We also know that more severe cuts are in the pipeline. The forthcoming spending review will slice back public services throughout the UK and inevitably cause very serious difficulties for Scotland in the next financial year and subsequent years. Next year, the cuts will directly affect front-line services. The scale of the savings will not only damage key health, education and local government services, but will have a very serious impact on infrastructure plans, our police, our criminal justice system and everything else. Given the likely impact of these decisions—Mr Osborne has certainly made his intentions perfectly clear—why is the SNP saying that it will defer to next year this year's £300 million reduction? Surely that will leave Scotland facing not just Tory cuts but an SNP top-up. The Scottish Government's objective should be to protect public services. If the SNP's intention is to dodge the implications of what Westminster is doing now, just to carry on exchanging warm words and so on, we are simply going to face double the cuts next year. That approach is completely at variance with the approach that has been adopted in Wales and Northern Ireland.

We know that wrong choices are this Government's hallmark. Its flawed concordat has already delivered year-on-year cuts in education at a time when the block grant has been increasing and the amount of money at the Government's disposal has reached its highest-ever level. What we have experienced thus far in education—and, I suspect, in other public services—will be as nothing compared with what we face next year with the Tory-Lib Dem cuts and the SNP top-up. Looking to the sustainability of public services, minimising the shock and impact of the cuts to come and dealing properly with the public finances are the right things to do, but I regret to say that the SNP will, as always, put party before country. That is its hallmark as a political party.

Three weeks ago, the people of Scotland delivered their verdict on the Conservatives by voting overwhelmingly against them in favour of the Labour Party, in the main, but also for the Lib Dems and the SNP. Those two parties are now in different forms of partnership with the Conservatives. They might be sending each other billets doux and exchanging bons mots, but they are all letting the country down.

Photo of Liam McArthur Liam McArthur Liberal Democrat 10:22 am, 27th May 2010

Last week we had Norwegian constitution day, which is celebrated in my constituency in a manner befitting Orkney's status as a cherished former outpost of the Norwegian patria. At a reception last Monday, I was discussing the general election's outcome with some of our Norwegian guests, all of whom were amazed at the response in many quarters to the fact that no single party had won an overall majority. What is a routine feature of the political process in most western democracies prompted even some of our more level-headed journalists and commentators to dissolve into babbling hyperbole. We were reliably informed that our political system is such a delicate flower, and that the so-called mother of all Parliaments is so neurotic that an election result requiring two or more parties to work together is a recipe for political stasis, not to mention a trigger for a run on the pound and a meltdown of the financial markets.

What utter nonsense. Not only does such a view ignore the experience of many, if not most, of our European neighbours, it inexplicably turns a Nelsonian eye to what has been happening north of the border since the Scottish Parliament was established. As for the markets, they were and are quite rightly more concerned with goings-on in the birthplace of democracy and the issue of sovereign debt. Nevertheless, they—and, indeed, the governor of the Bank of England—have responded to the signal that the new UK Government is prepared to take early and decisive action to tackle our serious debt problem.

The unpalatable consequences of the situation in which we find ourselves also seem to have been accepted across the political spectrum. It is not just Liam Byrne who has twigged that

"There's no money left."

Alex Salmond has conceded that no matter whether the cuts are implemented this year or next, they will be implemented. Elsewhere, Plaid Cymru's Rhodri Glyn Thomas has said that he does not think that

"we should put off cuts until next year" while his Labour counterpart and Des McNulty's colleague Jane Hutt has insisted that

"we need to reduce the deficit and reduce the national debt".

It is in that spirit and in these most challenging of circumstances that the coalition Government's commitment to forging a new constructive working relationship with the Scottish Government and this Parliament is most welcome. The dysfunctional relationship between the former UK Labour Government and the minority SNP Administration in Scotland served no useful or productive purpose. Fault can perhaps be laid on both sides, and doubtless the situation stemmed from Gordon Brown and Alex Salmond's mutual distrust. However, that it was allowed to shape and distort relations between both Governments to such an extent is tragic.

A fresh start is needed, and Danny Alexander among others has very much set the tone. I echo the comments of Derek Brownlee and, to an extent, those of Alasdair Allan on the two-way nature of the working relationship.

I hope that Mr Salmond and his colleagues will embrace the opportunity that exists. They will no doubt take encouragement from some of the early actions that the new Government has proposed, which will have a significant and positive impact in Scotland. Priority has rightly been placed on action to tackle our debt crisis and the mess that the outgoing Labour Government left the country's finances in, but measures were also contained in the Queen's speech that demonstrate determination to take a new approach to delivering fairness. That reflects the Liberal Democrat influence on the new UK Government, which would have been very different if David Cameron had secured an outright majority.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I am afraid that I do not have time to do so.

Our amendment refers to the plan to raise the income tax threshold to £10,000, which will help to take many low-income households out of paying tax altogether and will put £700 on average back into the pockets of low and middle-income earners. That shows a commitment to delivering fairness in our taxation system.

The radical and wide-ranging reforms of our political system that Nick Clegg set out earlier this month are widely welcomed and again have fairness at their core. I am not entirely clear why the SNP seems to be unwilling to back those plans or the Lib Dem amendment.

Similarly, I am not clear why Labour's amendment seeks to remove the reference in Ms Goldie's motion to the action that is being taken on the fossil fuel levy. If any issue symbolises the destructive impasse that was reached between former Labour ministers and their SNP counterparts, that is surely it. I hope that swift progress can now be made on the issue, and that investment can be delivered that will make a real difference in helping to build a new sustainable economy, with jobs and wealth that could be created by harnessing Scotland's world-class renewables potential.

Fuel duty is another issue on which we have seen more progress in the past two weeks than there was over the entire terms of office of the previous two Labour and Conservative Governments at Westminster. I acknowledge that, in last month's debate on fuel duty, my amendment, which called for reduced fuel duty in remote rural areas, secured cross-party support. There was recognition of the higher costs that are faced by rural motorists, for whom a car is not a luxury but a necessity, and that increased fuel prices have more serious and wide-ranging effects in rural areas. The decision to take forward a pilot project on how such a system might work—as it does in other European Union member states—has been warmly welcomed in my constituency. I look forward to the islands being included in that pilot initiative, if they are not the focus of it.

The new Government also recognises the broadband needs of those who live and work in rural communities. From the many debates on the matter, I know that members of all parties share concerns about the widening digital divide that is opening up between our urban and rural areas. Therefore, I hope that they, too, will welcome the new coalition Government's commitment to ensuring that the roll-out of high-speed broadband, which is an increasingly essential tool for businesses and households, involves rural communities and does not simply leave them at the end of the queue.

Neither party can claim to have got everything that it wanted in the coalition agreement. As we know, that is the nature of coalitions and Parliaments in which no single party commands a majority. Indeed, even single-party Governments are coalitions. The SNP can count on Annabel Goldie and her colleagues to provide confidence and supply support on key votes, although I dare say that Bruce Crawford has his work cut out persuading Sandra White and Fergus Ewing, for example, to see the world in quite the same way.

As the American historian Bernice Johnson Reagon observed:

"If you're in a coalition and you're comfortable, you know it's not a broad enough coalition".

The next five years will not always be comfortable, but I am pleased that we have a new Government that has set a new tone and has shown a commitment to putting fairness at the heart of government and to delivering real benefits to the people of Scotland.

Photo of Michael Matheson Michael Matheson Scottish National Party 10:28 am, 27th May 2010

Although my political instincts may wish me to say otherwise, it would be churlish not to welcome the fact that the new London Government has taken a new approach in seeking to establish more constructive relationships with the Scottish Government and the Scottish Parliament, as we seek to tackle the problems that our nations face. However, the so-called respect agenda, which has been referred to a number of times, is anything but special. In fact, that agenda should be the norm for how two Governments and two Parliaments interact with each other in a mature and responsible way. If anything, the new respect agenda only serves to highlight the sheer lack of respect that the previous Labour Government had for the Scottish Parliament, and for the SNP Government in particular. Sadly, the new Labour approach to that relationship seemed to be shaped more by Labour MPs' petty jealousies about the Scottish Parliament and a hatred of the SNP's being in government. Despite our considerable political differences with the new London Government, if there is an opportunity to take Scotland's interests forward with it, we should work to do so to try to achieve that.

The late Donald Dewar often pointed out that devolution is not an end in itself, but is very much a process. It appears that the new London Government, in trying to take forward the Calman proposals, recognises that. It will be no surprise to members to hear that I, as a nationalist, believe that the best option for my country is that it should be a normal independent country. However, I also welcome a number of proposals in the Calman report, which the London Government is now looking at taking forward.

My colleagues have referred to a number of measures that SNP members are happy to support. That does not prevent us from highlighting the fact that there are serious concerns about the financial elements of the proposals in the Calman report. Even in what Scotland Office ministers have said over the past couple of weeks, I have detected hesitancy in their comments on the financial package that came with the Calman report. I suspect that that is a reflection of their realisation of the limitations of the proposals. The Calman tax proposals are more reflective of a desire to find common ground for the unionist parties than of a desire to provide a financial package that effectively delivers more fiscal responsibility. In creating that compromise, a financial package has been produced that many leading economists and businessmen have viewed as being potentially damaging to Scotland's interests. The proposals would do no more than take Scotland from a position of getting its pocket money from the London Government to its having a Saturday job. If the objective is to create greater financial responsibility and transparency, I do not see how the Calman proposals can achieve that.

That is where Labour's problem lies in signing up entirely to the Calman report. Calman's proposals have been largely overtaken by events. The comments and concerns of a number of leading economists must be taken seriously. Professor Andrew Hughes-Hallett, who was a member of the advisory panel to the Calman commission, has been quoted a number of times. He said of the tax proposals:

"However attractive the Calman proposals might be in the political context, they are seriously flawed ... for simple economic reasons".

We have a responsibility to listen to such concerns. In doing so, we should be prepared to move beyond the political context of the proposals and ensure that the measures that the London Government takes forward create greater financial responsibility in Scotland and are based on sound economic grounds.

The tax elements of Calman's proposals are far from radical, and they certainly could not be considered to be a significant step towards full fiscal responsibility. As my colleague Alasdair Allan highlighted, they would not give us control over tax revenues, rates or offshore revenues. That would place our financial responsibility largely on a par with that of local authorities.

I am prepared to take the new London Government's respect agenda at face value, but its actions will demonstrate the true extent of its commitment. In economic terms, respect for Scotland involves our having fiscal responsibility that allows the Scottish Parliament to take greater control over Scotland's financial affairs. The Steel commission report summed up the best way of achieving greater financial responsibility when it spoke about allowing the Scottish Government to

"raise as much as practical of its own spending."

One option may be to have all taxes raised and held in Scotland and a portion paid to the London Treasury. Another option may be the assigned-revenue route. I am more supportive of the first option, although both are simply much clearer and focused than the Calman proposals. If the London Government is serious about respect, it must recognise such weaknesses and take measures that will deliver more financial responsibility.

Photo of Margaret Curran Margaret Curran Labour 10:34 am, 27th May 2010

I am disappointed that Annabel Goldie is not in the chamber to hear this because I wanted to begin with a surprise and thank her for giving us so many quotations today that we can use ad nauseam in debates. I am very grateful for her recognition of Alex Salmond's admiration for David Cameron and the idea of liberal conservatism to which we will return in debates. Perhaps I will refer to that more later on.

Photo of Margaret Curran Margaret Curran Labour

I ask Mary Scanlon to bear with me for a bit.

I also thank the Conservatives for the timing of today's debate. We have just gone through significant shifts in our political circumstances in Scotland and the United Kingdom, so it is an apposite debate. It gives me the opportunity to reflect on my change in circumstances as I have joined Cathy Jamieson on those green benches. I, too, have made myself particularly popular by recommending many of the Scottish Parliament practices for that place's deliberations.

It has been a tumultuous three weeks with serious implications for Scotland. We have heard much about the new politics, but we see the same old Tories. I cannot believe that here we are talking about Tory cuts and a threat to jobs so quickly. We were promised easy efficiencies in the weeks leading up to the election, but here we are starting with the slashing of the child trust funds.

However, I must be honest and say that the past weeks have been tumultuous for all parties in Scotland and we have all faced opportunities and difficulties. I acknowledge that Labour lost the election across the United Kingdom and I am deeply disappointed by that. It has serious implications for my party, but I have always argued that denial of defeat is a serious political mistake and I will argue within my party that we undergo the necessary reflection and changes that defeat requires.

Photo of Mary Scanlon Mary Scanlon Conservative

Now that Margaret Curran also belongs to another house, and given the new respect agenda, does she regret on behalf of the Labour Party that in 11 years we had one visit from a Labour Prime Minister in which he gave a lecture to this Parliament? Does she welcome the respect agenda?

Photo of Margaret Curran Margaret Curran Labour

I will come to some of those points later, but it will be no surprise to Mary Scanlon, who knows me well, to hear that I am a bit too long in the tooth to fall for the idea that one visit from a Prime Minister somehow translates into respect.

It is incumbent on all of us in Scotland to take serious note of the Scottish electorate's views as expressed in the recent general election: their voice was clear and we ignore it at our peril. It was my experience, shared by many throughout Scotland and borne out in the Tories' comments, that there is recognition among the Scottish electorate that the Conservative Party has not changed. Recall of the Thatcher years was profound and visceral throughout the Scottish general election campaign, and the risk to jobs in public services being at the top of the Tories' agenda is deeply worrying for Scots.

So—the Tories are back and they have some new friends. As Mike Rumbles said, 16 out of the 20 proposed new bills have implications for Scotland and we have a big job to do as we face testing times. Some of the political comment has said, "Actually, what we are witnessing across the United Kingdom is a restructuring of the right" and that explains why David Cameron has been so joyous in his accommodation of the Liberal Democrats; he sees an opportunity to undergo that restructuring. Liam McArthur, who is no longer in the chamber either, would have been uncomfortable if he had seen what Cathy Jamieson and I witnessed during the week—the seamless integration of the Conservative and Liberal Democrat parties as they presented themselves. David Laws's performance was striking in that he could not be distinguished from a Tory minister. The developing situation will be interesting to witness.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I would be interested to hear Margaret Curran's reflections on the Labour-Liberal Democrat coalition and the way in which the ministers worked together. Was it not seamless, too?

Photo of Margaret Curran Margaret Curran Labour

My most striking reflection on that coalition—I had many discussions on the subject—is how the two parties remained distinct from one another. We sat separately and were very distinct. What is most striking about the coalition down south has been its automatic integration. I am sure that we will debate that point many times in the future.

I will mention briefly the respect agenda. It is vital that we challenge instances of respect being offered at press conferences but not in Scottish communities. The future jobs fund is being cancelled at a cost of 15,400 jobs in Scotland—that is what we worries me about the lack of respect. Forgive me when I say that I do not think that we are at the dawn of a new politics. In fact, I argue that the creation of the Calman commission was the new politics. It was a cross-party commission and—I take heart from this—it was promoted by parties in opposition, which demonstrates what can be done in opposition. It was a good example of evidence-led and informed change. I very much welcome the reconvening of that group.

I make two points in conclusion. Derek Brownlee made an interesting contribution: I am not sure whether he was implying that Calman's remit should be extended much further. I do not want to get into a silly debate about whether we support every single recommendation or whether there is one with which we disagree. We need to establish today that the core of the Calman report should be respected. That is what respect means—that it has the support of the Scottish Parliament and the Scottish people and that it is informed and evidence led. I hope that we do not get ourselves into a position where the SNP Government in Scotland ignores that substantial evidence and the Tories at Westminster try to change it. We have an agenda with Calman and we should stick to it. That is how to show respect in Scotland.

Photo of Gavin Brown Gavin Brown Conservative 10:41 am, 27th May 2010

It was interesting to hear Margaret Curran say at the end of her speech that she does not want to get into a "silly debate" about whether we should implement Calman in full. I am intrigued to know whether, at 5 o'clock, the member will vote for Pauline McNeill's amendment, which talks about Calman being implemented

"in full and without delay."

I am desperate to know the answer, so for that reason alone I will take her intervention.

Photo of Margaret Curran Margaret Curran Labour

I always like to make Gavin Brown happy; he knows that.

Of course I will vote for Pauline McNeill's amendment, but let us not be diverted by a minor part of the Calman report. We all know that it has the substantial support of the Parliament and its core must be protected. I hope that the member will promise me in his response that he will protect the core of the Calman report.

Photo of Gavin Brown Gavin Brown Conservative

I am grateful for that response—at least the Scottish Labour Party coalition is holding together.

I will pick up on two of the debate's substantive issues before coming back to the extremely important respect agenda. The fossil fuel levy was mentioned in the Queen's speech. The coalition agreement says:

"We will review the control and use of the accumulated and future revenues from the Fossil Fuel Levy in Scotland."

The sum is pretty substantial. At the last estimate, it was the best part of £180 million, which is currently held in a pot by Ofgem. What was disappointing about the previous Government is that there was a dogmatic refusal to examine that issue. I do not pretend that there is a simple and straightforward resolution, but that there was a refusal to even examine the issue is unacceptable. That money could be used to promote green causes the length and breadth of Scotland.

It will not be easy to unpick Treasury rules, but we must ask ourselves whether the position in which we find ourselves is an unintended consequence. As Annabel Goldie said, no Scottish Government would want to extract that money if the same amount were to be taken out of the Scottish consolidated fund. Surely when the fossil fuel levy was originally set up, it was not the intention of the Government of the day that the money would simply sit there in a pot and grow to the tune of £40 million a year with no incentive for it ever to be used. It is disappointing that the Labour amendment kicks out of the motion the welcome for the decision to review the fossil fuel levy. I cannot understand why any representative of any party in Scotland would not welcome such a review. I cannot prejudge the results of that review, but I hope that it is inherently positive and that the entire sum comes to Scotland as quickly as possible. I cannot understand why any party does not accept that considering the issue is a good idea.

Photo of Margo MacDonald Margo MacDonald Independent

Will Gavin Brown take it from me that, had the levy been on anything other than fossil fuels, we would have received it? However, there is far too much of a political connection between fossil fuels, oil and money that flows right past us.

Photo of Gavin Brown Gavin Brown Conservative

I am not sure whether I follow the full consequences of what Margo MacDonald said. Until now, using the fossil fuel levy would have taken money out of and had a direct impact on the consolidated fund. As I said, that is being reviewed and needs to be unpicked. I am not sure how the two aspects go together.

The Commission on Scottish Devolution has—rightly—been the subject of much debate today. The coalition agreement says clearly:

"We will implement the proposals of the Calman Commission".

We have heard of positive movement already—the Calman steering group has been reconvened and dialogue has taken place between the Scottish Government and the Scotland Office.

I return to Labour's amendment, with which I struggle. It refers to implementing recommendations

"in full and without delay."

The question was asked—initially by Fiona Hyslop—whether the Scottish Labour Party wants the Calman report or the previous UK Government's white paper to be implemented in full. The two documents differ. As Jim Murphy, the former Secretary of State for Scotland, said, the white paper that he introduced proposed that any borrowing powers—a fundamental reform—had to go hand in hand with an automatic tax increase at the same time. The right to borrow would be given, but the second that any Scottish Government wanted to borrow—whether that was £10 or £10 million—that would go hand in hand with an automatic tax increase.

Photo of Gavin Brown Gavin Brown Conservative

I have only 15 seconds left, so I hope that the minister will forgive me for not giving way.

The Calman report and the white paper differ fundamentally and the Labour Party does not seem to know whether it prefers Calman or its own white paper.

The debate had the straightforward aim of uniting all the parties around a simple concept. I hope that the Labour Party can see sense and that the Parliament can unite at 5 o'clock.

Photo of Angela Constance Angela Constance Scottish National Party 10:47 am, 27th May 2010

I declare an interest: I am what people would call a paint-your-face-blue nationalist. I have believed in independence since I was eight years old—the 1979 referendum campaign had an impact that has been long lasting. As an adult, I can articulate my political, economic and cultural reasons for believing in independence, but the bottom line is that I believe in independence just because I do. In essence, I consider it my birthright to live in a self-determining country.

The current devolution settlement is not my final destination, but I voted yes-yes with great pride in the 1997 referendum. Scotland changed and changed for ever and for the better. In day-to-day life, I am a pragmatist—we must do the best with what we have and with what is on offer.

There is much talk about respect and positive relationships, which all sounds a bit like marriage guidance counselling to me. Words are important—perhaps more so to women than to men—but words without actions are meaningless. The devil is always in the detail.

The Calman report contains much that is positive and consensus exists about a range of discrete and worthy issues, such as powers over drink driving, speed limits and air-guns, on which I have campaigned in my constituency. Of course, we could have made much progress on those issues, but for the previous Labour United Kingdom Government's intransigence.

It is a great irony that those who—unlike me—believe in UK plc are at the vanguard of Calman's tax proposals, which would only exacerbate the prospect of conflict. Even if the Scottish Government and the UK Government were of the same political colour, assessing Scotland's tax yield and by how much the Scottish block grant should be reduced would be complex, divisive and unworkable.

Many of my colleagues have quoted eminent economists. I will add a quote from Professor Drew Scott, Ronald MacDonald, Neil Kay and Rod Cross, who say:

"the fiscal reforms proposed by the Calman Commission are at best an opportunity missed and at worst a recipe for economic instability in the future."

The Calman proposals would give the Scottish Government influence over a maximum of 20 per cent of its finances—the same as Scottish local authorities have over their funding via council tax.

That situation would not advance transparency or political accountability. There is strength in simplicity, and fiscal responsibility involves spending what we raise. When talking about finances, the Government's responsibility is to advance our social contract between the people and the Government. People want to know what they pay to which Government and what they receive in return. They want financial responsibility that works.

Photo of Robert Brown Robert Brown Liberal Democrat

Does Angela Constance accept that her proposition about the Parliament raising what it spends differs slightly from Michael Matheson's proposition that the Parliament should raise all its revenues and remit to Westminster its bit? Which of the two scenarios does she support?

Photo of Angela Constance Angela Constance Scottish National Party

That is a bit of a Hobson's choice for a nationalist and I have already nailed my colours to the mast and painted my face blue. The devil is always in the detail. Countries throughout the world use many forms of financial responsibility or fiscal autonomy, such as the Basque model. In dealing with the day-to-day business of practical politics, I just want something that moves Scotland forward simply, fairly and comprehensively. I note that the Steel commission went further than the Calman commission did.

Yesterday's Scotsman contained an interesting article by Gerry Hassan, who drew historical parallels between the Calman commission and the Scottish Constitutional Convention, which Derek Brownlee spoke about. Gerry Hassan said that the Constitutional Convention was comparatively tame and cautious and that the consequential Scotland Act 1998 was much bolder and much more radical. That is where we are at. We now need a bolder step—we need to move on from Calman and we need comprehensive and sound financial responsibility.

I will speak briefly about the Liberal party's amendment, which mentions political reform. I appeal to the Liberals: if they are going to the effort of having a referendum and primary legislation, please could they do so on something that is a bit more radical than the alternative vote? AV's benefits would be only marginal and it would be completely out of step with the more proportional systems for elections to local authorities and to the Parliament. If we have a referendum on the voting system for Westminster elections, perhaps the Liberal Democrats will reconsider their stance on a referendum on Scotland's constitutional future.

Photo of Lord George Foulkes Lord George Foulkes Labour 10:54 am, 27th May 2010

I welcome the Pauline conversion of the Conservative party to enthusiasm for devolution and particularly that of Annabel Goldie and Murdo Fraser, whom I remember as stalwarts of both no campaigns—in 1979 and 1997—[Interruption.] Perhaps not Murdo.

Photo of Murdo Fraser Murdo Fraser Conservative

I gently remind Lord Foulkes that I was 13 in 1979 and that, sadly, I was involved in no campaigning of any sort.

Photo of Lord George Foulkes Lord George Foulkes Labour

That is absolutely true. I profoundly apologise. It was only the older ones—the dear, but departed-from-the-chamber Annabel Goldie and, of course, David McLetchie

Photo of Lord George Foulkes Lord George Foulkes Labour

I suppose that the Conservatives now realise that this is the only Parliament in which they can get more than one Scottish representative. They have come round to being enthusiastic about the Scottish Parliament.

I am not surprised by the ready co-operation between the Tories and the Tartan Tories—the SNP. We now see the latter coming out in their true light. I include in that remark the so-called blue-faced lady who I have just followed and who I greatly respect. The co-operation between the Tories and the Tartan Tories in the Scottish Parliament sees the Tories—the real Conservatives—propping up the Scottish Administration.

Photo of Lord George Foulkes Lord George Foulkes Labour

Not just now.

Year zero was not 6 May 2010 or even May 2007—

Photo of Lord George Foulkes Lord George Foulkes Labour

Yes, indeed. Not even 1314. Good co-operation existed between Holyrood and Westminster from 1999 onwards. I will give an important example from my experience as Minister of State for Scotland. Helen Liddell, who was then Secretary of State for Scotland, asked me to take particular responsibility for co-operation between the two Parliaments—

Members:

Oh, no!

Photo of Lord George Foulkes Lord George Foulkes Labour

Members should wait a minute. I think even old Mike Rumbles will like this.

I had regular meetings with Cathy Jamieson, Margaret Curran and Malcolm Chisholm. They were not always co-operative, but I have an example of our co-operation: the Proceeds of Crime Bill. I was one of the ministers who was responsible for piloting the bill through the House of Commons, particularly during the committee stage. When the bill was first introduced, its provisions did not extend to Scotland. I took the initiative and suggested to the Scottish ministers that the bill should extend to Scotland. I consulted the then Lord Advocate, Colin Boyd, and the Scottish ministers, including Cathy Jamieson, who I am sure will confirm that. As a result, we changed the bill substantially all the way through and all its provisions were extended to Scotland. As a result, Scottish drug baron money is being seized and invested in communities that are affected by drugs. Kenny MacAskill—yesterday's unlikely rebel—regularly commends the measures in what is now the Proceeds of Crime Act 2002 and their effect on Scotland. That is one of many examples of the co-operation that took place.

That said, since 2007, one factor has changed the relationship between Holyrood and Westminster. I refer not to "The X-Factor" but to what my colleague Frank McAveety calls "The Eck-Factor". For the past three years, Alex Salmond has taken every opportunity to promote and further grievances between Edinburgh and London. Again and again, including at First Minister's question time, we hear him say, "the London Government". Indeed, we heard it from an SNP back bencher today. I say to the SNP that the London Government is run by a man called Boris Johnson and it governs London. The UK Government is based in Westminster and is a coalition, as we know.

It is only now that the SNP tartan Tories are coming out in their real light.

Photo of Angela Constance Angela Constance Scottish National Party

Does Lord Foulkes not accept that what holds Scotland back is his attitude in harking back to the past—whatever his interpretation of the past is—and using politically sectarian language? Given the Labour party's political blindness to negotiating with others, should he not accept responsibility for the fact that it was you guys who gave Dave the keys to number 10?

Photo of Lord George Foulkes Lord George Foulkes Labour

No. As I said in an intervention on Annabel Goldie, the coalition will not last. It is doomed to failure. We hear about fiscal powers and fiscal responsibility but, when I put the question to Derek Brownlee, he had no answer. No other member has put forward an alternative to the proposal for fiscal responsibility that is included in Calman; not one member, least of all the minister. The coalition parties will find that there is no easy answer to the question. The Liberal-Conservative alliance will discover the reality of the pressures of Government. When the Tories revert to type, as inevitably they will; when the mask drops and they are found to be looking after their millionaire friends, many of whom are in the Cabinet and most of whom are old Etonians, we will see that the coalition will not last.

As far as Scotland is concerned, and as far as the Labour party is concerned, the Scottish elections cannot come too soon.

Photo of Bob Doris Bob Doris Scottish National Party 11:00 am, 27th May 2010

From his speech, I suspect that Lord Foulkes may have opted out of the respect agenda.

We have heard much about the Calman commission, but no UK party gave a ringing endorsement to all its recommendations on fiscal powers. That is the case, no matter how much one party might wish to rewrite history. That said, every party—including the party of Scottish independence, the SNP—believes in greater fiscal powers for the Scottish Parliament.

I turn to mutual respect. Every party must be able to express their views on further fiscal powers in an open, considered and respectful manner. There is a responsibility on all parties to do so. Scotland is moving beyond Calman and it is important that we do that in an inclusive way. Calman's fiscal proposals revolve around personal income tax rates. As the proposals currently stand, the UK Government would reduce income tax rates at every level by 10 per cent and decrease the Scottish block grant by a corresponding level. If Scotland wanted to reverse the cuts to our block grant, the Scottish Government would have to disapply the 10 per cent UK cut in order to maintain current income levels.

I have serious issues in relation to those proposals. For instance, how would the UK Exchequer estimate the amount of money that would be raised in Scotland in the coming financial year through income tax? Of course, in order to calculate Scotland's block grant for any financial year, any cash reduction would need to be estimated in advance. What procedures would be put in place to adjust the cash that is given to the Scottish Government in subsequent financial years should the UK Government underestimate the tax that it would collect in Scotland? Would we see a corresponding cut in income to Scotland from London in the following financial year? If so, would that be fair to Scotland, given that the lower tax take may be due to a UK Government mishandling of the economy? That is a very real concern, given the current state of the UK economy and the UK's financial predicament.

Furthermore, given the expenditure limits that the UK Government places on the Scottish Parliament, which were exposed most infamously in the discovery of the £180 million fossil fuel levy that Scotland has had denied to it thus far, would any additional tax take through growth from UK Treasury forecasts actually be forthcoming to the Scottish Parliament and a Scottish Treasury? Would any increased national insurance contributions that result from growth in the economy be forthcoming to the Scottish Parliament? The great fear is that tinkering with fiscal powers, as Calman proposes, may be used by English MPs as a Trojan horse to reduce funding to Scotland in forthcoming years, year after year. I am not saying that that will happen, but it is a very real fear.

Despite all those issues, Calman's fiscal powers are important in one vital aspect: they have created consensus between the UK parties and the SNP. The consensus is not the Calman report itself—after all, the proposals are not set in stone—but that we all want further empowerment in terms of fiscal powers for the Scottish Parliament. That is the consensus that we have in the chamber today. I want full fiscal powers within an independent Scotland. I passionately believe that that is best for us all. I want the Scottish people to vote on the proposal in an independence referendum. I also believe that it is for the Scottish Parliament to decide whether the Scottish people get a vote on the matter. That said, if the next step in Scotland's financial relationship with the UK falls short of independence but delivers further fiscal powers, let us ensure that those powers are as empowering as possible for this place and for Scotland.

Other members have referenced the Steel commission, about which many of my Liberal Democrat colleagues are supportive. The commission said:

"The Scottish Parliament should be given responsibility for all taxes except those reserved to the UK" and that it

"should have the ability to vary the tax rate for each of the 'devolved' taxes."

In other words: purely devolved taxes for devolved services and purely reserved taxes for reserved services. The commission also suggested that devolved taxes could include income and corporation tax. The Steel commission envisaged that taxes for devolved services should be entirely designed and set by the Scottish Parliament—which is in direct contrast with Calman. The Steel commission allows for a progressive devolved taxation, with the ability to choose personal allowance levels for that system. The commission also believed that the Scottish Government should be given borrowing powers.

The Steel commission does not provide the solution that I advocate, and I will continue to push for independence, but its findings demonstrate that the fiscal elements of Calman have substantial inadequacies, not just as far as the party of independence is concerned, but for the other parties, which believe in the United Kingdom. We have all exposed those inadequacies—that has been done here this morning.

I want a financial framework that has been designed in Scotland and which allows all cash that has been raised in Scotland to go directly to the Scottish Parliament. That means income tax, national insurance, corporation tax and criminal fines imposed in Scottish courts going not to the UK Exchequer, but to a Scottish Exchequer—and, of course, oil revenues. All those powers and more remain missing—and let us not forget that this Parliament cannot borrow one single penny.

Short of independence, the relationship that we should have is one where we sign a cheque to the UK Exchequer for reserved areas—a block grant to Westminster. Let the British parties decide whether they wish to sign a cheque for nuclear weapons, illegal wars or subsidising the London Olympic games. Short of independence, that would be a move in the correct direction, although that is merely my opinion. I prefer independence. We have heard several opinions today, but one thing is clear: all those opinions take us far beyond Calman in empowering the Parliament in terms of financial independence.

Photo of Trish Godman Trish Godman Labour

I call Margo MacDonald. You can have five minutes.

Photo of Margo MacDonald Margo MacDonald Independent 11:06 am, 27th May 2010

Oh, thank you, Presiding Officer.

I was thinking that an alternative title for this morning's motion could have been "Half a loaf is better than no bread." Then, I came up with a better one: "Forget Calman—Uriah Heep got it right." We will talk about the Calman proposals, as that is what the motion before us is about. It will not matter what else is going on—we will talk about Calman. What we will really be talking about, however, is the fault line that runs through Scottish politics, between those people, true Scots all of them, who, like Bob Doris, believe in independence, and the other folk—I will not embarrass them by saying their names—who believe in the union. I am not sure that they actually do believe in the union. I think there might be other forces at play.

This morning's real debate is about that fault line. The pro-union parties have to prove the superior wisdom of Scotland continuing to be part of a political and economic union that the United Kingdom's Prime Minister has described as all but "bankrupt", "broken" and "bust". What is the argument for remaining in this union, if that is how the Prime Minister describes it? Unionists are members whose first loyalty, or greater emotional attachment, is to their party, rather than to Scotland.

Photo of Margo MacDonald Margo MacDonald Independent

In a minute.

Those members must show that there is no alternative other than to remain as a region of the United Kingdom economy that cannot ever reasonably aspire to have a better rate of business start-ups, a better growth rate, better health statistics, better housing or better transport links than the best-performing regions of the United Kingdom. Why can we just get a wee bit better, but not aspire to be the best?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I thank Margo for giving way. To say that members who believe in the union between Scotland and the other nations of the United Kingdom have a greater interest in their own party is completely wrong. I ask her to withdraw her remark.

Photo of Margo MacDonald Margo MacDonald Independent

I am sorry if I have offended members who think that that is what I implied—I did not. I am trying to be as honest as I can about many people whose contributions to the Parliament I respect. Their greater, deeper loyalty—the one that they perhaps understand better—is their loyalty to their party, rather than to their country. That is because they have been able to indulge the one, rather than the other. We can talk about that another time, however.

We hear calls for the findings and recommendations of the Calman commission to be adopted. Why? Because it might be a little better for this Parliament to take more responsibility for our decisions on health, education and social policies. But why not full responsibility? Why not responsibility for pensions and benefits? Are we really so lacking in natural, manufactured and human resources that we cannot do as Denmark, Sweden, Iceland, Norway and Ireland do—to name only five countries that have experienced the same economic storms and financial tsunamis as Scotland? The Governments and people of those countries are making the most of what they have in terms of resources and capacity to reboot their economies to a pace and programme that suits their needs, as different communities. They will all perform differently. That is not to say that one will perform better than the others.

As is glaringly obvious, not only are there now two different economies on either side of the border; there are also two communities, or countries, which expressed their differences in their votes at the general election. That was not all about money. It is about the difference in the communal approach to social policies. If those policies are to be delivered differently, Scotland needs a different, customised delivery mechanism, and it cannot have that without sovereignty or independence.

We have heard much about respect. Michael Matheson, in his curate's egg of a speech, was correct on respect, but he was wrong about the motivation on the part of the Tory and Lib Dem people in London for giving Scots more responsibility. They are not doing that because they have suddenly decided that we are worthy of it. I am sure that lots of them have thought that for ages. They are playing us like fish on a hook. They are being a lot more fly at managing us.

Scotland's politicians, even good ones such as Gavin Brown, will have to face the fact that the retention of power over the entire United Kingdom is what motivates Westminster and what has motivated successive Governments. They have been going for 1,000 years, and they know how to operate power—and Westminster is operating us.

We should have a modernised, new co-operation or union, or a confederation, if that is what is needed—I have no objection to that—but let us not talk about respect without equality.

Photo of Robert Brown Robert Brown Liberal Democrat 11:12 am, 27th May 2010

This has been a good debate, with a lot of interesting contributions, and it will bear rereading afterwards. It is a great pity, however, about the jarring note that we have heard from Margo MacDonald, who seemed to suggest that there is a difference of attitude, philosophy and commitment on the part of those who believe in independence compared to the rest of us, who want either the union in something like its present form or, as we Liberal Democrats wish, a more federal relationship between the countries of this island.

I will cast my eye back over the general election that we have just experienced. I confess to being an old hand at elections, and indeed partnership agreements—I have gone through quite a lot of them in my time in politics. However, this month's election and its aftermath were like no other. It was a series of events that kept the nation—young and old alike, but particularly the young—glued to their television sets for weeks, watching politics. It is not entirely fanciful to describe it as being like the world cup finals, with the final being decided on penalties. The coalition negotiations were just as enthralling as the election itself.

It was a cathartic experience, and it went a long way towards cleansing the body politic of the festering sores that were created by the Iraq war, by the MP expenses scandals and by the bankers' bonuses saga. In my view, the three party leaders were a credit to themselves, to their parties and to Britain. Gordon Brown was dignified in the manner of his going, and Nick Clegg and David Cameron struck exactly the right tone in the manner of their coming. Their mood music was and remains one of inclusion, seriousness, fairness and, above all, a new type of politics. The electorate did not award the laurel crown to any one of the parties, but expected them to work together to deal with one of the most serious crises since the war. That applies across the UK, and it applies to the relations between the UK Government and the Scottish Government.

I was struck by the jarring tone of the opening speech from Labour. If the new politics is in its honeymoon period—how long that will last is questionable, I accept—the old politics is alive and well in the Labour Party. What emerged was a yawning chasm between the approach that Pauline McNeill took in her opening speech and that taken by Labour's two Westminster members on exactly what to do with Calman—and I congratulate Cathy Jamieson and Margaret Curran on their successes.

Members:

Hear, hear.

Photo of Robert Brown Robert Brown Liberal Democrat

Labour cannot disguise that yawning chasm, and Margaret Curran and Cathy Jamieson's attempts to move the debate forward simply emphasised that.

I should mention the question of a veto for the Scottish Government. While it is perfectly true that the coalition Government wants to engage proactively with the Scottish Government and to look at the implications and detail of the Calman recommendations, there is no question of a veto by the Scottish Government, and the Secretary of State for Scotland, Danny Alexander, made that very clear.

I want to say a couple of things about Calman. The Calman commission will, in essence, be implemented, and by a Liberal Democrat Secretary of State for Scotland at that. The reinvention of the Labour Party seems to encompass the issuing of dire threats if the new Government does not deliver on Calman, but the reality is that it was often the Labour Party that seemed least enthusiastic and most timid about further constitutional reform. Mike Rumbles has already commented on the speed of engagement on the issue to produce the best package, as promised by Danny Alexander.

My next point is about the basis for the approach. If I may say so to my SNP colleagues, there is a narrow line between criticising and taking up certain issues that arise out of Calman, which is entirely legitimate, and damning the whole enterprise altogether. One or two members went a little bit over the top on that. There is an issue around the principles that the Scottish Government will bring to that debate, and it cannot dodge that point. Is it about going for full fiscal independence, which is independence under another name and is not part of Calman's proposals, or is it about engaging with what Calman ought to mean, which is greater responsibility for raising the Scottish Parliament's income lying with the Parliament?

I was interested to hear Bob Doris's close examination of the Steel commission report, in which I take an interest, because I was the vice-chair of the commission. I recommend to other members many of its conclusions and analysis.

The Prime Minister's visit to Scotland and the fair consideration that has been given to financial issues, such as the fossil fuel levy, have rather disconcerted the First Minister and blown away his game plan. No one expects anyone to abandon their beliefs or views on the constitutional issue, but it is not enough to girn about cuts—that does not wash in the current financial climate. In fact, it has not washed since the UK Government had to step in to bail out Scotland's two largest banks. Nor does the idea of an independent Scotland as the salvation for all our problems stand up when an independent Ireland, formerly extolled as part of the Celtic arc of prosperity, has had to slash public sector pay and impose emergency taxation far beyond anything that has been suggested here, and it is still in difficulties.

The respect agenda goes both ways, and it involves the First Minister recognising the reality of the new UK Government and the need for him to play his part in getting the deficit under control. Fiona Hyslop did not give us any indication of the Scottish Government's part in that.

We live in tumultuous times, and the country could still be blown off course, as the stock markets have indicated during the past few days. This is not the time for constitutional brinkmanship on the part of the First Minister, or indeed on the part of the UK Government. Whatever our perspective, Calman is an opportunity. It is not perfect—no government arrangement is perfect—but it widens the options and possibilities for us all. It focuses on the financial and economic tools that we need to battle our way out of recession, and it makes demands on us all to work together in the national interest. That was the will of the people at the general election, and in a democratic society the people are often wiser than they are given credit for by the chattering classes.

Photo of Paul Martin Paul Martin Labour 11:18 am, 27th May 2010

Many of the contributions from Tory and Liberal members of the new coalition have lectured us about the importance of welcoming a positive and constructive relationship with the Westminster Government. Are those members suggesting that they have a monopoly on co-operating with devolved Governments? There is more to working with devolved Governments than the Prime Minister's ministerial vehicle arriving outside the Scottish Parliament building.

I remind those members of the old saying that actions speak louder than words. As George Foulkes said, we are the party who, within a year of being in Government, introduced the legislation that formed the Scottish Parliament, and we provided the Parliament with record funding year after year, so I make no apologies for saying that we will not take lectures from any other parties on holding Governments and this Parliament to account where necessary.

I also remind the Conservative party that, in the past, it covertly and overtly opposed the Scottish Parliament and the Calman commission. I only have to quote a well-informed article written by the one and only Alan Cochrane of The Daily Telegraph, who reported last year that

"Official Tory backing for the extra powers provoked Lord (Michael) Forsyth of Drumlean, the former Scottish Secretary, to attack as 'appeasement' the actions of those Unionists who gave their support to Calman."

I am more than happy to give way to any Tory member who wants to correct Lord Forsyth and oppose that very well developed argument on the split within the Tory party.

Photo of Derek Brownlee Derek Brownlee Conservative

I am delighted to take the opportunity to remind Mr Martin that we have supported devolution since the referendum result in 1997. Thankfully, Lord Forsyth now agrees with us.

Photo of Paul Martin Paul Martin Labour

That was an easy opportunity to refute totally what Lord Forsyth said, and Derek Brownlee missed it.

The recent election results highlighted the public's support for the principles of devolution and its rejection of the SNP's separatist agenda.

Pauline McNeill was correct to mention the minimum wage, and the Scottish Labour Party and the Labour Party in the UK make no apologies for delivering it. I recall security guards in my constituency working for 60 pence an hour. We brought in the minimum wage to ensure that such abuse of people's employment conditions did not take place. We make no apologies for that.

In essence, our amendment to Annabel Goldie's motion call for the Calman commission's recommendations to be implemented. The Calman commission report is common sense in many areas and provides clarity. Members from the other parties have referred to the co-operative agenda on a number of occasions, and I refer them to recommendation 4.7, which refers to what would be expected of UK and Scottish ministers. They

"should commit to respond positively to requests to appear before committees of the others' Parliament."

It also refers to the First Minister appearing before the Westminster Parliament. So when we talk about the co-operative agenda, the template for that is already set out in the Calman commission report.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

Earlier, I talked about the tax proposals in the final Calman report, so could the Labour members point to where the independent group of experts and eminent economists that Wendy Alexander referred to on television actually recommended such a proposal? I cannot find it anywhere on public record.

Photo of Paul Martin Paul Martin Labour

The Calman commission report is probably the most comprehensive report that has ever been brought before the Scottish Parliament, and it came from the Calman commission's interrogation at every opportunity of the evidence that was placed before it. Many of Calman's recommendations, including that to devolve the regulation of air-guns to the Scottish Parliament, have been the subject of MSP campaigns. I know that Margaret Curran campaigned for such regulation to be allowed for in the Scottish Parliament.

We agree that the Scottish Parliament elections should be administered by the Scottish Parliament. However, I hope that we can do that on a cross-party basis and not in the style that prevails in Westminster, where members have secured themselves a five-year term. That is the kind of co-operative and forward-thinking agenda that is being adopted by the new Westminster Government.

Photo of Paul Martin Paul Martin Labour

Presiding Officer, I do not have time. I am usually more than happy to give way to Margo MacDonald.

The task was to find out how the Scottish Parliament might better serve the people of Scotland and improve the quality of their lives, and to find out how Scotland might become more financially accountable. Our amendment makes clear our position on the way forward. I call on members to support Pauline McNeill's amendment.

Photo of Bruce Crawford Bruce Crawford Scottish National Party 11:24 am, 27th May 2010

I am pleased to be able to offer some closing remarks for the Government on the motion and amendments that are before us today. There have been many thoughtful speeches from throughout the chamber, some of which I have agreed with and some of which I have disagreed with. I, too, congratulate Cathy Jamieson and Margaret Curran on their election to the House of Commons. I hope that they spend as much time as possible on those green benches at Westminster—I hope that they are nice and warm for them.

As my colleague Fiona Hyslop has made clear, the Scottish Government is keen to establish an open and productive relationship with the UK Government. Indeed, since the formation of the UK coalition Government, the Scottish Government has been working to build just such a relationship, founded on the principles of mutual respect and parity of esteem. The Scottish ministers have demonstrated their intention to work together with the UK Government for the good of Scotland and to build a positive dialogue with UK ministers. In that regard, I welcome the words in the Conservative motion that recognise the importance of a positive and constructive Government-to-Government working relationship. Nevertheless, as Fiona Hyslop, Cathy Jamieson, Michael Matheson and others have said, deeds and actions, not words, will ultimately be the true test of any relationship.

The UK Government's legislative programme, which was set out on Tuesday in the Queen's speech, is an early chance for us to consider areas in which we might have opportunities to build a strong relationship. Of the 24 bills that were mentioned in the Queen's speech, five are likely to require the consent of the Scottish Parliament. I will constructively and positively liaise with the new UK Government on those bills, as I did with the previous Government. My relationship with David Cairns and Ann McKechin was well developed and very positive. Yes, we faced challenges and there were difficulties, but not all of our relationship with the previous UK Government was difficult—there were areas on which we agreed.

The Queen's speech also introduced the prospect of a new Scotland bill, which demonstrates the fact that the UK Government recognises the validity of the Scottish Parliament attaining more devolved responsibilities. The issue is also covered in the Conservative motion. However, I hope that the chamber will accept our argument that the position that is agreed by Parliament at decision time would be strengthened with the insertion of the words "and fiscal responsibility issues" from the Government's amendment. It is now almost universally recognised that the current financial settlement does not provide the Scottish Parliament with the responsibility or the necessary mechanisms to boost long-term competitiveness or to respond to economic shocks. In short, Scotland's lack of financial responsibility has real long-term consequences. For instance, the Scottish Government has no scope to borrow prudently to invest in vital infrastructure projects, and neither does it have at its disposal the full levers that are necessary to spur growth It goes without saying that the Scottish Government firmly believes that if Scotland is to achieve its full economic potential, it must have control of the economic levers of an independent country. However, we also believe that it would be better for our economy and our country if the maximum level of fiscal responsibility were devolved to this place. In contrast, Labour's position of absolute support for the Calman financial package does not recognise the reality of where we are now. The debate has moved on but, judging by their amendment, Labour members seem to be stuck in a time warp. They seem to be stuck in a time before the election campaign—indeed, in a time before their own former Government's response to the Calman report, which rejected many of its elements. My colleague Fiona Hyslop, in her opening speech, rightly highlighted and drew attention to the flaws and dangers that are inherent in the Calman financial proposals.

The Conservative motion rightly makes a point of highlighting the need for a positive and constructive relationship between the Scottish and UK Governments. The Calman financial proposals, as they stand, would put the potential for conflict and disagreement at the very heart of intergovernmental relationships. Derek Brownlee made that point well, as did Angela Constance. Angela Constance quoted Gerry Hassan, who wrote an insightful article in The Guardian yesterday. Referring to the Calman proposals, he wrote:

"Sadly, though, the tax powers are not as straightforward or inviting as they look. They could be deeply damaging to Scotland's public spending and tax take, and encourage a culture of conflict between the Scottish and UK governments. They do not even advance fiscal autonomy very far, would not have fairness or transparency in them, and would not encourage responsibility, instead aiding conflict and disagreement. In short, they would have the potential of becoming an unpopular, detested 'tartan tax'—both north and south of the border."

The weaknesses in the Calman proposals are well illustrated—as they have been by other members this morning—by the UK Government's plans for income tax allowances and national insurance. Cathy Jamieson and Margaret Curran referred to the Calman proposals. To both of them, I say that the devil is often in the detail. Of all the Calman proposals, only 23 were accepted by the UK Government in its white paper, whereas the Scottish Government accepted 29 of them, so it is not fair to say that we were not prepared to take on board good ideas.

I turn to the proposals that have been put forward by the Liberal Democrats. I give credit where it is due—it is a very valiant attempt by the Liberal Democrats to pretend that everything in the coalition garden is rosy. They knew, when they lodged their amendment, that it had absolutely no prospect of being supported at decision time. It is simply incredible to think that the Parliament could support—with no reservations—the whole of the new UK Government's programme, which is what the Liberal Democrat amendment asks us to do. Frankly, it is incredible that all of the Liberals in the Scottish Parliament could support the entire package of the coalition proposals.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

If the minister has read the Liberal Democrat amendment, he will know as well as I do that it says no such thing. It does not commit the Scottish Parliament to supporting every element of the coalition agreement—it does not even refer to that. It talks about plans to

"put fairness at the heart of government and deliver real benefits to the people of Scotland."

I would have thought that the whole chamber could unite around that.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

The first part of the amendment asks us to endorse the whole of "the UK Government's programme".

I will give Mr Rumbles one glaring example of why the Liberals should not vote for their own amendment at decision time. On 16 June 2007, in an historic vote, the Scottish Parliament voted against the renewal of Trident by 71 votes to 16, with 39 abstentions. All of the Liberals voted against renewal, but they are now committed to supporting all of the proposals in their coalition's UK programme, including proposals for a new Trident weapons system. It is, of course, their prerogative to change their minds, but they should not expect the rest of us in the Scottish Parliament, who are fundamentally opposed to the basing of weapons of mass destruction on the Clyde, meekly to do the same.

Photo of Murdo Fraser Murdo Fraser Conservative 11:32 am, 27th May 2010

I echo Robert Brown's and Bruce Crawford's remarks in welcoming Cathy Jamieson and Margaret Curran back to the chamber, and I join others in congratulating them on their election to another place. We shall be sorry to lose them both in due course, but our loss will be Westminster's gain.

The debate has provided a worthwhile opportunity for us to discuss the greatly improved relationship between Her Majesty's Government and the Scottish Government and Scottish Parliament. Let us be clear: the relationship was broken. In his three years as Prime Minister, Gordon Brown did not once set foot in the Scottish Parliament. By contrast, as my good friend—or, I should say, having heard his speech, my excellent friend—Mike Rumbles reminded us, within three days of becoming Prime Minister, David Cameron was here at Holyrood and then at St Andrew's house to meet the First Minister. There could be no clearer signal of the intention of the new UK Government to have a more fruitful relationship with Scotland than did its predecessor.

The coalition Government means a much-needed fresh start for our country. The programme for government is based on the principles of freedom, fairness and responsibility, and it includes action to tackle Labour's recession, to sort out the banks, to get business back on its feet, to restore our civil liberties, to devolve power to individuals and communities, to promote a green economy, to protect the national health service and to reform our political system. It is a radical and ambitious programme, which is exactly what our country needs at this difficult time.

Unaccustomed as I am to saying nice things about the Liberal Democrats, I must praise the constructive role that they have played and are playing in the new Government. We particularly welcome the constructive role that is being played by the excellent David Laws as chief secretary to the Treasury. We know that the Government has difficult decisions to make, and it is helpful to have our Liberal Democrat friends on board to share the responsibility. David Laws is the man who received the famous letter from Liam Byrne that has been referred to throughout the debate. As far as Mr Byrne's career is concerned, I suspect that it will go down as one of the shortest suicide notes in history.

It is a bit rich for Des McNulty and Margaret Curran to drone on about the spectre of cuts in the public sector, as if somehow the budget deficit emerged overnight on 6 May 2010. Let us not forget that the sole reason for any cuts that we now face is Labour's mismanagement of the British economy and its ruination of the public finances. Labour left us with the worst set of public finances in the G20. Any cuts that we now face are Labour's legacy. They are not Tory cuts or Tory-Liberal cuts or even SNP cuts; they are solely Labour cuts, and we will not let Des McNulty, Margaret Curran or anyone else forget that basic fact.

As Annabel Goldie set out, the coalition Government is determined to develop a positive relationship with the Scottish Government and the Scottish Parliament. That ambition was signalled at the outset by the willingness of David Cameron and Danny Alexander to engage with the First Minister and his ministerial team. I understand that that initial meeting has been followed up by a number of other contacts at ministerial level. As is mentioned in our motion, and as Gavin Brown highlighted, the issue of Scotland's share of the climate change levy is actively being considered.

The most important part of the new Government's programme as it relates to Scotland is probably in connection with the proposals of the Calman commission on enhancing devolution. In that regard, the intent of the coalition Government is clear: we will introduce legislation to implement proposals from the Calman commission that will pass to Scotland and the Scottish Parliament responsibility in a wide range of additional areas, including, crucially, powers to vary taxes and take on a greater share of financial responsibility.

Over the years, many in my party have argued for this Parliament to have a greater degree of financial accountability. The Calman commission certainly did not go as far as to propose full fiscal autonomy, but its proposals are an important step in improving the accountability of this institution and of the ministers of the Scottish Government.

Photo of Margo MacDonald Margo MacDonald Independent

The Calman commission's proposals are an important step towards more responsibility. Are they an important step towards proper, full fiscal responsibility?

Photo of Murdo Fraser Murdo Fraser Conservative

I disagree with Margo MacDonald. I do not believe that the full fiscal autonomy that she sets out is compatible with the maintenance of the United Kingdom, so I reject that approach.

There are sceptics, including members of the Labour Party, who suggest that moves are afoot to water down Calman's financial proposals—we heard such scaremongering from Pauline McNeill. They say that we are prepared to have further discussions around the financial powers, which they regard as some form of retreat. I gently remind Labour that it was in power at Westminster for 13 years. If it wanted to devolve more powers to the Scottish Parliament, it had ample opportunity to do so. We have been in power for three weeks, and we will look carefully at what has been proposed.

As Derek Brownlee set out, it is time to look again at the Calman tax proposals, not least because the Scottish Government has approached us in a constructive manner and asked us to do so. As Fiona Hyslop fairly said, some of the tax changes that the coalition Government has proposed, not least the increase in personal thresholds, will have an impact on the Calman tax proposals. We are prepared to listen, but far from retreating on tax-varying powers, it is more likely, as Derek Brownlee said, that the direction of travel will be towards enhancing and extending those powers.

I welcome the new engagement that the Scottish Government is having with the coalition Government. Alex Salmond has dropped his usual negative rhetoric about Westminster and about the dreaded Tories, which is an important shift, because the respect agenda cuts both ways: it requires respect and co-operation on both sides. In that spirit, I welcome the tone of the speeches of Fiona Hyslop, Bruce Crawford and many SNP back benchers. We are keen to consider issues such as Scottish ministerial representation as part of UK delegations to Europe and elsewhere. We are happy to have constructive discussions on such matters, which the previous Labour Government never was. That is a stark contrast.

We are now seeing a new start for Scotland and a new era of co-operation between the Scottish and British Governments, which is a dramatic improvement on what went before, when Labour and the SNP were at daggers drawn. I believe that Scotland will be the winner from that new approach, which is why I am so pleased to support the motion in the name of Annabel Goldie.