Scotland Bill
Baroness Primarolo Excerpts(13 years, 5 months ago)
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Ann McKechin
The Scottish Government have to make those choices, and like my hon. Friend the Member for East Lothian (Fiona O'Donnell), I would like to get on with the businesses of discussing how they are going to use their powers, what they intend to do with them and how they will benefit people. Instead, the SNP has obsessed over process for an indeterminate period. [Interruption.]
Madam Deputy Speaker (Dawn Primarolo)
Order. The hon. Member for Banff and Buchan (Dr Whiteford) has to resume her seat when it is clear that the person who holds the floor, in this case Ann McKechin, is not giving way.
This is not a game, it is a debate, and it would be good if all Members in the Chamber behaved in a respectful way. The heckling is getting a little out of hand, and I am sure some Members would not like me to point out who is doing it at the moment. Perhaps we can return to the debate.
Mr Frank Field
On a point of order, Madam Deputy Speaker. Do you think it possible that by 10 o’clock, I might actually get the chance to speak to my amendment, which has already been dismissed by the Government and debated by other people?
Madam Deputy Speaker
That is not within my gift, Mr Field, but let me say that I sincerely hope so.
Ann McKechin
I certainly hope that my right hon. Friend will have the time to do so, and I hope to conclude my remarks fairly shortly, but I wish to move on to the amendments on excise duty.
The issues relating to excise duty constitute a relatively new demand since the completion of proceedings in Committee. They were not part of the discussions of the first legislative consent memorandum Committee, but will doubtless be discussed in detail by the second LCM Committee. I would welcome further analysis of the proposal’s methodology.
Mr Frank Field
I rise to move new clause 8 and the consequential amendment 23, which stand in my name and the names of my hon. Friends.
Madam Deputy Speaker (Dawn Primarolo)
Order. I am sorry to interrupt the right hon. Gentleman, who has waited very patiently for his opportunity to speak, but what he is doing at the moment is “speaking to” his amendments. He is not formally moving them, which would cause a few problems.
Mr Field
Whatever that means, I shall try to move on, Madam Deputy Speaker. I am grateful for that.
I wish to speak to new clause 8 and amendment 23, but I sense that I am interfering in a family row between different factions. As clearly as possible, I want to put the English case, which seems to be lacking in the debate.
This is the first time I have wanted to join in a debate on Scottish matters in the House. That is my fault, though, and I assure my hon. Friends that I will not let it happen again—I now wish to pursue Scottish matters whenever they arise. I have been struck today, listening to a Scottish debate for the first time, by how many of us—myself included, perhaps—failed to think through what devolution meant, and now we have almost hit an invisible brick wall past which we cannot get our arguments.
It seemed to me from observing the recent Scottish elections—obviously my sympathies lay with the party I have the honour to represent in Parliament—even from the language used by English politicians contributing to the Scottish debate that we had not thought through what the limited measure of devolution would mean. We got a pretty good hiding for our trouble on that score. I plead with the Labour Front-Bench team—this is meant as an encouragement, because I know that, as part of our policy review, they are thinking through what should necessarily follow from a defeat on the scale of the one we suffered at the last general election—not to go into the next general election without seriously thinking about the consequences of devolution, not just for Scotland but for the other parts of the United Kingdom, particularly England, where my seat is situated.
I have also been struck by the fact that although people try to mystify us by using various formulas and by saying, “What was given with one hand is taken by another”, I cannot answer, in the light of this debate and the work I have done, the charge put to me by a constituent of mine during the half-term break, when I visited the Scottish Parliament, which is a magnificent building—the extraordinary scale of the domestic architecture was incredibly grand. A constituent of mine greeted me as I went in and asked, “Why is it, Frank, that if I lived in Scotland, I would have free medicines, free long-term care and my children would go to university without paying the fees they pay in England?” Despite all the talk about grants and how we might review them, there is no reply yet to our English constituents on those points. If the explanation is not an unfair distribution of Exchequer grants, I want to know what we have in England that Scotland does not have that might pay for those extraordinary benefits.
Common Consolidated Corporate Tax Base
Baroness Primarolo Excerpts(13 years, 6 months ago)
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Mr Redwood
I am not sure I believe that. We have heard from the Minister that they are a happy and united team and that she is proud of the work she has brought to us. I am saying that I would like her to improve the work and to go back and make that happy team one that can perhaps make us happier. The simple answer is veto. She should say, “No, this cannot work. It is a dreadful constitutional intrusion on a country that desperately needs its own economic recovery to accelerate, that needs lower tax rates and greater tax simplification and that needs to promote economic growth.” My right hon. Friend the Chancellor is beginning to do that, but I think more measures are needed to secure the deal and make sure it works.
I am quite sure that this huge deal—the 102-page draft law—is not the way forward. My hon. Friend the Minister says that there is no proposal, but I regard a 102-page draft law as a very serious proposal. Experience has taught me never to underestimate the power and persuasion of the European Union when it wants to do something. I think that it is now on a great push to establish all the central powers it needs for the economic governance of a single-economy, single-country model, and that this is part of it along with the economic six-pack. My strong advice to my hon. Friend is that Britain can do better, Britain needs to say no and Britain needs to exempt herself from all this, as we are entitled to do, so that we keep a sovereign Parliament and a growing economy.
Madam Deputy Speaker (Dawn Primarolo)
Order. I know that there is a terrible pull for the Minister to turn around and face the Benches behind her, but I remind her that she should be looking forwards, or towards me, so that we can hear clearly what she is saying.
Justine Greening
I will of course do that, Madam Deputy Speaker. Your observation demonstrates that there have been few questions from any part of the Chamber other than behind me. That shows which Members of this House are prepared to stand up for our national interest and scrutinise proposals that affect our national interest, and which Members would rather go home and watch TV than represent their communities as they should.
We are committed to pursuing our national interest. My hon. Friend the Member for Amber Valley was right to raise the issue of complexity in regulation and the need for simplification. The Government set up the Office of Tax Simplification because we understand why those issues are important in helping business domestically. We are taking those very same arguments to Europe.
When I look at the proposal that we have been debating tonight, I find it hard to see how it can be reconciled with, for example, the Europe 2020 document and strategy that have been launched, which are all about stimulating growth. The impact assessment of the current proposal gives rise to grave concerns that it will do the exact opposite of that. It could hinder growth, investment and employment. We will focus our arguments not just on whether the proposal complies with subsidiarity and proportionality but on the important issues of policy substance that have been highlighted. That is the best way to ensure that we get the right outcome for the UK and for our UK businesses operating across Europe. I can assure the House that the UK will continue to participate fully in the EU negotiations on the proposal, and I will, of course, as I have been asked, keep the European Scrutiny Committee updated on the progress of those negotiations.
Question put and agreed to.
Resolved,
That this House considers that the Draft Directive to introduce a Common Consolidated Corporate Tax Base (European Union Document No. 7263/11) does not comply with the principle of subsidiarity, for the reasons set out in chapter 2 of the Twenty-seventh Report of the European Scrutiny Committee (HC 428-xxv); and, in accordance with Article 6 of the Protocol on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the presidents of the European institutions.
Finance (No. 3) Bill
Baroness Primarolo Excerpts(13 years, 6 months ago)
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Mr Love
Yes, absolutely. If we look at business investment, which in some senses reflects how optimistic employers, manufacturers and other parts of the economy are about the future, we will see that we have not had the increase in business investment that all the forecasters, economists and coalition politicians have been telling us we should have. That reflects the wider issues in the economy that should be of such major concern. We cannot expect a cut in corporation tax to solve all the problems, but the merit of the amendment is that it proposes that the Government try to indicate how much additional growth and employment will be created as a result. In the previous debate, the Minister suggested that a cut in corporation tax would boost investment.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
Order. I appreciate that the Government themselves have said that corporation tax and capital allowances are part of a package, and I have therefore allowed a linked debate, even though we have finished debating corporation tax. However, the hon. Gentleman needs to focus a little more on capital allowances, which are the subject of the amendment.
Mr Love
Thank you for your guidance, Ms Primarolo. I will move swiftly on to capital allowances. The Government have discussed the need to widen the tax base and they have told us that reducing capital allowances is partly a method of paying for the cut in the headline rate. As I mentioned in an intervention, that phenomenon has been apparent in most western countries in recent years and, indeed, all the economists project that there will be much greater competition in business taxes. Corporation tax is likely to continue to come down, and the reduction will be partly made up by widening the tax base.
Like my right hon. Friend the Member for Delyn (Mr Hanson), I am prepared to consider the changes to capital allowances, although I am concerned about the cut in the annual investment allowance from £100,000 to £25,000. I am perfectly happy, however, to look at that if we are reassured that the proposal in the amendment will make a significant difference. As has been said—and I have said so myself—the Office for Budget Responsibility added a rather sceptical note to the debate by suggesting, even though it had been informed at a late stage of the 1% cut in corporation tax, that that would not have a great impact on growth.
Finally, I want to focus on the issue of who will benefit from the changes to capital allowances. As a number of Opposition Members have said, high-profit, low-investment companies will be the main beneficiaries of the package, which is unfair and, if I may say so, will not achieve the rebalancing of the economy that the Chancellor has promoted for a considerable period, away from financial services towards the manufacturing and production of export-oriented goods. The change militates against all that. In particular—and I refer to the cut from £100,000 to £25,000—it will penalise manufacturing, particularly businesses with high capital costs. My right hon. Friend the Member for Delyn mentioned the motor industry and others, but I am concerned, because I have a number of small, capital-intensive manufacturers in my constituency. Sadly, they are only a remnant of the manufacturing sector that we had 25 or 30 years ago, but we need them and we need to promote them. I am therefore worried about the Government’s proposals.
Finance (No. 3) Bill
Baroness Primarolo Excerpts(13 years, 6 months ago)
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The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
Order. Before the hon. Gentleman responds, may I remind Members that interventions are supposed to be brief—not mini-speeches in their own right? There will be plenty of opportunity to join in the debate later.
Chris Leslie
Thank you, Ms Primarolo. Notwithstanding your strictures, that was an incredibly important intervention from my hon. Friend, who is correct, particularly in his assessment of the attractions of York as a destination for tourism, which was of course helped by the investment that the previous Administration put into some of those key elements within his constituency. I do not want to be diverted, however, as time is short and we need to focus on the amendment.
The amendment relates to the level of the bank levy in the context of bank taxation and the bonus culture. As I said, the Government could not even bring themselves to have transparency on what the bonuses were, let alone take action against them. However, we know some things about the realities of bank bonuses today, and the figures are truly astonishing. From the limited disclosure that we have seen, we know that in 2010, John Varley, the former chief executive of Barclays, received a £2.2 million bonus; Stuart Gulliver, the chief executive of HSBC, received only £5.2 million in bonuses; Stephen Hester, the chief executive of RBS—wholly owned by the taxpayer, by the way—got £2 million in bonuses; and Eric Daniels, the chief executive of Lloyds, largely owned by the taxpayer, got £1.45 million in bonuses. Let us not forget Bob Diamond, the chief executive of Barclays since January this year, who received £6.5 million in bonuses in 2010. He was head of Barclays investment banking before that and perhaps his bonus relates to that. Poor old Bob Diamond, however, loses out in the bonus bonanza when compared with the top two managers at Barclays: Tom Kalaris received a cool £10.9 million in salary and bonuses in 2010 and its other top manager received a tidy £10.6 million.
Ms Primarolo, can you guess the name of that other top manager at Barclays? His name is Rich Ricci—and I kid you not! It would be the stuff of a Dickensian novel if it did not sound so far fetched, but it is indeed true. Between them, the top five earners at Barclays—including Mr Rich Ricci, but excluding executive directors—received more than £38 million in salary and bonuses in 2010 alone.
Finance (No. 3) Bill
Baroness Primarolo Excerpts(13 years, 7 months ago)
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Madam Deputy Speaker (Dawn Primarolo)
Before calling the Minister to move Second Reading, I inform the House that Mr Speaker has selected the amendment standing in the name of the Leader of the Opposition.
Amendment of the Law
Baroness Primarolo Excerpts(13 years, 8 months ago)
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Madam Deputy Speaker (Dawn Primarolo)
Order. I remind hon. Members that there is now an eight-minute limit on all Back-Bench speeches and 30 or more Members wish to participate, so will each Member bear in mind that they have a colleague who might also like to make a contribution? It is not compulsory to use the full eight minutes; you could always leave time for somebody else.
Amendment of the Law
Baroness Primarolo Excerpts(13 years, 8 months ago)
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Stephen Williams (Bristol West) (LD)
I understand that the bank levy is about £2.5 billion a year. The Chancellor announced recently that the levy, which was £1.8 billion in its first year, would be increased to £2.5 billion, and today it has been confirmed that the banks will not benefit from the reduction in corporation tax and that the levy will be increased.
Another issue connected with the banks is what we should do with our ownership, as taxpayers, of Lloyds Banking Group and the Royal Bank of Scotland. That is an issue with which the Government will have to deal at some point in the next few years. A couple of weeks ago I published a pamphlet, with CentreForum, which suggested that the shares should be given to the people so that the state could recover the £67 billion that was invested in the banks bail-out in 2008. The citizen should enjoy the upside: the citizen should enjoy the growth in those shares in the future. I hope that my Treasury colleagues will look favourably on that proposal as they decide what to do with the legacy from the last Government.
The Liberal Democrat-Conservative coalition Government have dealt with Labour’s toxic legacy, but Labour Members seem to be still in denial about the problem. They have not acknowledged its existence, let alone shown any sign of contrition for their role in the deficit. The Leader of the Opposition produced some very good jokes today—I will give him that—but he could at least have made an apology. We have started to clear up the mess. Today’s Budget sets in train a plan for a Britain that is fairer, with a stable economy and a low-carbon future. It recognises the need to help households with their budgets now, and to give them confidence that the economy and their country are back on track.
Several hon. Members rose—
Madam Deputy Speaker (Dawn Primarolo)
Before we move on, I have to announce the result of a Division deferred from a previous day. On the question relating to a stability mechanism for member states whose currency is the euro, the Ayes were 310 and the Noes were 29. Therefore, the Ayes have it.
[The Division list is published at the end of today’s debates.]
I shall call Mr Dan Jarvis next, who will be making his maiden speech, and I remind hon. Members of the normal courtesies that should be extended when hearing a maiden speech.
Mr Amess
We do not, and I find it hypocritical that although Labour Members used to speak about cuts before the general election—I can only talk about those who were here before the election—we no longer hear about the cuts they were going to make. It is as though the Conservatives and Liberals rejoice in making cuts. If anyone wants to know why the country is in a mess, I can tell them it is because the Labour party took away regulation from the Bank of England and gave it to an organisation that was not fit for purpose. Also, as one of my colleagues said during Prime Minister’s questions, Labour stupidly sold off our gold reserves.
I will go further: in all his Budgets the then Chancellor of the Exchequer would make announcements about spending in terms not of millions but billions, and we in opposition used to wonder how it could be funded. We now know that it could not be funded and that we were spending money we never had. I will never forgive Tony Blair—[Interruption.] Hon. Members might huff and puff, but I am entitled to say this because it was Tony Blair who got me to vote for the war in Iraq and I will never forgive him for having told us a pack of lies at the Dispatch Box.
Madam Deputy Speaker (Dawn Primarolo)
Order. I know that the hon. Gentleman feels very passionately about the subject, but perhaps he would like to temper his language and, in particular, withdraw the accusation of lying.
Madam Deputy Speaker
The hon. Gentleman can make remarks about people who are not Members of Parliament. I am touching on his language, and the convention in this House on the moderate use of language and on allegations against people who are unable to correct what has been said.
Mr Amess
I hope that Tony Blair will correct what I have said when he again gives evidence, but I blame him for the way he completely misled the country on any number of issues. Not the least part of his lasting legacy is the fact that he destroyed the House of Commons, because this is certainly not the place that I entered in 1983. I further blame the last Prime Minister, who was Chancellor of the Exchequer. New Labour Members come into the Chamber and castigate Government Members for what is going on; what on earth were they standing for in the general election campaign in May?
Fuel Prices and the Cost of Living
Baroness Primarolo Excerpts(13 years, 8 months ago)
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Tessa Munt
Does the hon. Lady agree that the Minister will be very generous in seeing representatives of the FairFuelUK campaign, who have 140,000 signatures on their petition as of today? That is organised by Peter Carroll. The chief executives of the Road Haulage Association and the Freight Transport Association and the operations director of the RAC, together with Quentin Willson, the motor journalist, and I, coming from a hard-hit rural constituency, will discuss this tomorrow. We are suffering the double whammy of domestic oil and fuel oil—
Madam Deputy Speaker (Dawn Primarolo)
Order. This is supposed to be an intervention, not an opportunity to make another speech or to put out an advert.
Kerry McCarthy
I would not expect any less of the Minister, as she certainly should be meeting the organisations. It is a shame that the Chancellor and the Chief Secretary to the Treasury were not also here today to listen to people.
The hon. Member for Brigg and Goole (Andrew Percy) talked about his election leaflets hounding his constituents about the fuel duty stabiliser. He referred to the work that Conservative central office had put into the policy, which he described as a well-thought-out policy from before the election that will be implemented shortly. I may disabuse him of that delusion a bit later in my speech.
The hon. Member for Amber Valley (Nigel Mills) talked about the impact in rural areas and the fact that people could not afford to go to work, and he urged the Chancellor not to go ahead with the fuel duty escalator. My hon. Friend the Member for Stockton North (Alex Cunningham) ventured further afield and discussed the impact of fuel poverty on people who were having to spend more than 10% of their income on heating their homes, saying that what the Government are doing across the board is likely to push more people into fuel poverty. It was a very thoughtful speech.
The hon. Member for Bristol West (Stephen Williams) talked about petrol prices in Bristol. I am sure that one of the few things on which we can agree is that Bristol desperately needs to sort out its transport issues and develop a better public transport system. It has the worst congestion of any city in the country, and we need to address that. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil)—did I pronounce that correctly?
Madam Deputy Speaker (Dawn Primarolo)
I now have to announce the result of a Division deferred from a previous day. On the question relating to environmental protection, the Ayes were 282 and the Noes were 20, so the Ayes have it.
[The Division list is published at the end of today’s debates.]
Scotland Bill
Baroness Primarolo Excerpts(13 years, 8 months ago)
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Mark Lazarowicz
For the sake of clarity, the point that I raised about the Scottish Government’s ability—
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
Order. I am sorry. I should have put the Question, because the amendment has already been debated in a previous group.
Amendment 63 agreed to.
Clause 29, as amended, ordered to stand part of the Bill.
Schedule 4
Scottish tax on land transactions: consequential amendments
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
With this it will be convenient to discuss Government amendments 34 to 36.
Mr Gauke
Schedule 4, which is introduced by clause 29, makes consequential provisions in connection with the disapplication of stamp duty land tax in Scotland, and is in two parts. Part 1 provides for general amendments to stamp duty land tax legislation in consequence of stamp duty land tax ceasing to apply in Scotland, and part 2 provides for the Scottish Government to supply information to HMRC regarding Scottish land tax.
Amendment 33 makes changes to the stamp duty land tax first-time buyers relief to ensure that a person who has previously bought a property in Scotland cannot qualify for relief when he or she subsequently purchases a property in England, Wales or Northern Ireland. Amendment 34 omits a further reference to Scottish land law terminology.
Amendments 35 and 36 omit provisions in the Finance (No. 2) Act 2005 and the Public Finance and Accountability (Scotland) Act 2000, which is an Act of the Scottish Parliament relating to functions of the keeper of the registers of Scotland. Those relate to the registers of Scotland’s automated registration of title to land system, which includes facilities for returns and payment of stamp duty land tax.
Lastly, amendment 36 makes detailed modifications to the provisions in the Finance Act 2009 in relation to alternative finance investment bonds or sukuk. Those modifications reflect the fact that the stamp duty land tax relief will no longer apply to sukuk in relation to land in Scotland, although the provisions for capital gains and capital allowances will continue to apply. Those changes are essential to the proper operation of stamp duty land tax after the tax is disapplied in Scotland.
Amendment 33 agreed to.
Amendments made: 34, page 35, line 36, at end insert—
‘( ) In paragraph 10 (tenants’ obligations etc that do not count as chargeable consideration), in sub-paragraph (1)(a) omit “(in Scotland, the leased premises)”.’.
Amendment 35, page 36, line 9, at end insert—
‘Finance (No. 2) Act 2005
In section 47 of the Finance (No. 2) Act 2005 (e-conveyancing) omit—
(a) subsection (1);
(b) subsection (6)(b).’.
Amendment 36, page 36, line 12, at end insert—
‘Finance Act 2009
(1) Schedule 61 to the Finance Act 2009 (alternative finance investment bonds) is amended as follows.
(2) Paragraph 1 (interpretation) is amended as follows.
(3) In sub-paragraph (1)—
(a) before the definition of “HMRC” insert—
““effective date”, for a transaction relating to land in Scotland, is the date which would be the effective date (under section 119 of FA 2003) if Part 4 of FA 2003 applied to land in Scotland;”;
(b) omit the definition of “qualifying interest”.
(4) After sub-paragraph (1) insert—
(1A) In this Schedule “qualifying interest”—
(a) in relation to land in England and Wales or Northern Ireland, means a major interest in land (within the meaning given by section 117 of FA 2003) except that it does not include a lease for a term of years of 21 years or less;
(b) in relation to land in Scotland, means—
(i) the interest of an owner of land, or
(ii) the tenant’s right over or interest in a property subject to a lease,
except that it does not include a lease for a period of 21 years or less.”
(5) Paragraph 5 (conditions for operation of relief) is amended as follows.
(6) In sub-paragraph (6) (Condition D)—
(a) after “Condition D” insert “(which applies in the case of land in England and Wales or Northern Ireland)”;
(b) omit paragraph (b).
(7) In sub-paragraph (7) (charge or security for purposes of Condition D)—
(a) omit “or security”;
(b) in paragraph (a) omit “, or a security ranking first granted over,”.
(8) In paragraph 6(1)(a) (relief from stamp duty land tax) for “the United Kingdom” substitute “England and Wales or Northern Ireland”.
(9) In paragraph 7 (withdrawal of relief in certain circumstances)—
(a) in sub-paragraph (1) after “This paragraph applies if” insert “paragraph 6 applies but”;
(b) in sub-paragraph (2) after “This paragraph also applies if” insert “paragraph 6 applies but”.
(10) In paragraph 9 (discharge of charge when conditions for relief met) omit “or security”.
(11) In paragraph 11(2) (disapplication of CGT relief if charge not given) for “the United Kingdom” substitute “England and Wales or Northern Ireland”.
(12) In paragraph 12(1)(b) (CGT relief on second transaction) for “the United Kingdom” substitute “England and Wales or Northern Ireland”.
(13) In paragraph 18(5) and (6) (discharge of charge if original land replaced)—
(a) for “the United Kingdom” substitute “England and Wales or Northern Ireland”;
(b) omit “or security”.
(14) In paragraph 19(1) (HMRC to notify Registrar of discharge)—
(a) omit “or security”;
(b) omit paragraph (b).
Public Finance and Accountability (Scotland) Act 2000 (asp 1)
In section 9(1) of the Public Finance and Accountability (Scotland) Act 2000 (Keeper of the Registers of Scotland: financial arrangements) omit “(other than payments of stamp duty land tax)”.’.—(Mr Gauke.)
Schedule 4, as amended, agreed to.
Clause 30
Scottish tax on disposals to landfill
Question proposed, That the clause stand part of the Bill.
Stewart Hosie
I beg to move amendment 51, page 24, line 20, leave out from ‘which’ to end of line 22 and insert—
‘are required by them to meet current expenditure because of a shortfall in receipts from the Scottish rate of income tax or devolved taxes.’.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 52, page 24, line 22, at end insert—
‘(1ZA) In borrowing sums under subsection (1), the Scottish Ministers must have regard to any code of practice agreed by them and the Treasury.
(1ZB) A code of practice agreed under subsection (1ZA) may include provision as to—
(a) how the Scottish Ministers are to determine and keep under review how much they can afford to borrow,
(b) the terms and conditions on which sums may be borrowed,
(c) limits on the aggregate at any time outstanding in respect of the principal of sums borrowed.’.
Amendment 54, page 24, line 23, leave out from ‘may’ to ‘any’ in line 24 and insert ‘borrow’.
Amendment 55, page 24, line 28, at end insert—
‘(1C) In borrowing any sums under subsection (1A), the Scottish Ministers must have regard to any code of practice agreed by them and the Treasury.
(1D) A code of practive agreed under subsection (1C) may include provision as to—
(a) how the Scottish Ministers are to determine and keep under review how much they can afford to borrow,
(b) the terms and conditions on which sums may be borrowed,
(c) limits on the aggregate at any time outstanding in respect of the principal of sums borrowed.’.
Amendment 53, page 24, line 31, leave out subsections (6) to (8) and insert—
‘(5A) Subsections (2) and (3) are omitted.’.
Amendment 56, page 24, leave out line 38 to line 5 on page 25.
Amendment 57, page 25, leave out subsection (10).
Clause 32 stand part.
Stewart Hosie
The borrowing powers in the Bill are at the heart of devolution. On Second Reading, a number of serious questions were raised on both revenue and capital borrowing powers. I shall come to the detailed issues in the main part of my comments, but, fundamentally, I am seeking to put in place a code of practice for the Treasury and the Scottish Government to address limits, restrictions, thresholds, maximum amounts and the nature of borrowing, be it through bonds or direct loans from the consolidated fund. That is a sensible way to amend the Bill. To make such provisions otherwise would require draft orders to be tabled, but amendments to Bills cannot be made with draft orders. Much of the narrative on this matter is in the Command Paper, but it is likewise impossible to amend by amending the Bill.
The amendments are pretty self-explanatory but I would like to detail the reasons for them. The revenue-borrowing powers are fundamentally linked to the wider taxation proposals in the Bill. Both the Scottish National party and the Scottish Government have previously made clear their concerns about the tax proposals. If a full range of fiscal policy levers were available to the Scottish Government, it would have to include a borrowing regime with sufficient flexibility to allow public spending profiles to be managed across entire economic cycles, not simply four-year forecast periods. The UK Government’s proposals, however, fall far short of that, yet by exposing the Scottish Government and the Scottish Parliament to cyclical fluctuations in income tax they embed a high degree of volatility in Scotland’s public finances, which cannot be right when we are seeking to protect public services and find means to grow the economy.
The Bill proposes to allow for annual borrowing of up to £200 million in any one year, and for a maximum limit of £500 million to finance current expenditure where there are differences between forecasts and the outturns of Scottish tax revenue under the Bill’s income tax proposals. Loans must be made within four years of being taken out. I understand that these provisions are additional to the provisions of the Scotland Act 1998, which allows revenue borrowing for the purposes of providing cash balances and maintaining cash flow. The aggregate limit of the Act is also £500 million, so the additional purpose proposed in the Bill, plus the passage of the 13 years since the original limit was set, has apparently not been considered sufficient reason for lifting the limit. We do not believe that that is credible.
The Bill also lacks flexibility to deal not necessarily with forecast errors, but forecast falls identified in advance. I will return later to the reason that that is a problem. More crucially, the provisions in the Bill are insufficient to manage volatility in tax receipts that might reasonably be expected to occur. Importantly, over the past decade, UK Government income tax forecasts have, on average, been overly optimistic, and the annual cap of £200 million would have been insufficient to offset deviations in income tax receipts relative to forecasts in recent years.
Loans to Ireland Bill
Baroness Primarolo Excerpts(13 years, 11 months ago)
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Mr Hoban
I beg to move manuscript amendment (a), page 2, line 16, at end insert—
‘(d) the remaining term of each Irish loan which is outstanding at the end of that period, and
(e) the original term of each Irish loan in respect of which a payment was made by the Treasury by way of an Irish loan in that period.’.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
With this it will be convenient to consider the following:
Amendment 1, page 2, line 16, at end insert
‘, and
(d) the original term for any Irish loan and remaining terms for any outstanding Irish loans.’.
Amendment 5, page 2, leave out lines 17 to 26.
Amendment 2, page 2, leave out lines 18 and 19.
Clause 2 stand part.
Mr Hoban
In dealing with the issues emerging in Ireland, we have sought to keep the House informed as much as possible about the progress that was being made as the crisis emerged, and the role that the UK Government felt they should play in helping to resolve it and responding to the Irish Government’s request for help at the end of last month. We have done that through statements to the House and the publication of the Bill last week, and to aid debate, we ensured that before today’s debate started a copy of the loan agreement was placed in the Vote Office. I hope that hon. Members will recognise that we were not able to place the summary document in the Vote Office earlier—or, indeed, to place the full signed agreement there—because negotiations are still ongoing with the Irish Government. However, the principles that have been agreed were set out in the summary of key terms.
I think hon. Members would say, “Well, it’s all very well that you’ve been transparent and open in the run-up to the loan process, but what’s the next stage? Are you going to be transparent during the life of the loan? How are you going to keep the House informed of what’s happening, whether the Irish Government are drawing down each of the eight tranches, how far they’ve got with repayments, and so on?” For that reason, we decided that there should be a clause to deal solely with reporting. It states that the Treasury will
“prepare a report about Irish loans and lay it before the House as soon as practicable after the end of that period.”
The first period will end on 31 March 2011 and a report will be published for each subsequent six-month period. The clause states that those reports will include details of
“any payments made by the Treasury by way of”
the loan, and details of
“any sums received by the Treasury in that period by way of repayment of principal or the payment of interest”
and
“the aggregate amount of principal and interest in respect of…loans which is outstanding at the end of that period.”
Mr Cash
Perhaps a little bit of irritation, which is not usual in my case, is beginning to burgeon, because a number of questions that I tabled weeks ago about the legal advice regarding the stabilisation mechanism still have not been answered, and when I use the word “stonewall” I mean just that. When I do not get an answer, and I am told that I will get the answer as soon as possible but I still do not get it, and I have to put in a reminder but I still do not get it, there is something going on; I know that. They do not want to disclose the legal advice; they do not want even to disclose whether in fact it was given, or when it was given. I would like to know the answer to those questions because as Chairman of the European Scrutiny Committee—
The Second Deputy Chairman
Order. This is an intervention. It is a very long intervention. The hon. Gentleman has clarified what he meant by stonewalling, but perhaps we might leave the considerations about the European Scrutiny Committee for another day, because it is not particularly relevant to the amendment that we are discussing now.
Mr Hoban
It is right that the duty to report is extinguished when there is no principal outstanding, and that is the purpose of subsections (4) and (5).
I hope that, with that explanation, hon. Members will accept manuscript amendment (a) and will not seek to press amendments 1, 5 and 2.
Manuscript amendment (a) agreed to.
Clause 2, as amended, ordered to stand part of the Bill.
Clause 3
Short title, commencement and extent
Question proposed, That the clause stand part of the Bill.