Scotland Bill

Debate between Lord Browne of Ladyton and Lord Sassoon

Wednesday 28th March 2012 Lords Chamber

[Lord Sassoon]

My Lords, I take that as a no.

[Lord Browne of Ladyton]

I am not allowed to.

[Lord Sassoon]

Then it was a no for a very good reason.

My Lords, I thank the noble Lord, Lord Browne of Ladyton, and the noble and learned Lords, Lord Davidson of Glen Clova and Lord Boyd of Duncansby, for the amendment, which exposes an important issue that it is quite right that we should debate. As was well anticipated, I say at the outset that it does not find favour. However, in the spirit in which the noble Lord, Lord Browne of Ladyton, led me on, I will be positive in my response, because there is further reassurance to be given here about what I hope your Lordships will think is a pragmatic and proportionate way forward.

I am not sure whether we are talking about Amendment 17 at this point. My noble friend did not speak to Amendment 17, which is a fundamental one about removing the ability of the Scottish Government to legislate on any taxes that are devolved. Perhaps I will not need to say very much about that; it links to our previous discussion.

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[Lord Sassoon]

We are going back to another question. I am answering the question about the empty space that is created. It is easiest to do that by reference to a specific example of where we are creating the space within which the Scottish Parliament will have the ability to create a new tax framework to fill that space. That example is specifically envisaged. By analogy, that is how I anticipate it will work for possible other taxes in the future if they meet a number of thresholds and requirements, legislative and otherwise, including meeting the requirements that we have been discussing in the Command Paper.

[Lord Browne of Ladyton]

My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. I am particularly grateful to the noble Lords, Lord Forsyth of Drumlean and Lord Kerr of Kinlochard, for their comprehensive support, stated commendably briefly, for my amendment. I very much thank the noble Lord, Lord Sanderson of Bowden, and the noble Earl, Lord Caithness, for their specific support for the last argument I made, which is the key perhaps to the future of this amendment.

I am also extremely grateful to the noble and learned Lord, Lord Cameron of Lochbroom, who has made a suggestion that will improve the amendment. I agree with him that the order of the amendment would be more fortuitous the other way around but we may have an opportunity to come back to that. I have to say that I will come back to the noble Lord, Lord Lyell, but I thank him for his intervention about “Monty Python”. He has given me an idea for a peroration, which I think he will appreciate—but he will need to wait for it.

In the way in which the Minister has responded to the debate he has entered into the spirit of the day, but that is where it ends. He has only entered into the spirit of the day; we now need to get the content. The Government are listening and responding to the House’s position on this provision. I think that the Minister gets it and understands the point. Although I was a Treasury Minister for a period, I am not entirely sure where the blockage lies but I am sure that it can be moved.

The Minister says that he has made the arguments and hopes that they are convincing. I have to say that I do not think that he made any arguments on either my first or second points, the first being that it would be better if this extensive provision was ring-fenced by the Government’s own criteria in the Bill for the purposes of accountability, at least for the future. With respect to the Minister, a report—I will have to look carefully at the words he used about how it will work—which is an augmentation of one that is part of the agreement with the Scottish Government for the legislative consent Motion will not do. It will not do for all the reasons that the noble Lord, Lord Kerr, and others identified. Although it may have a degree of prospectiveness about it, the problem is that it would be more likely to be retrospective. However, even if it is prospective, it does not have the element of accountability about it that your Lordships’ House is looking for and the Opposition are looking for.

I could have been convinced by some offer that was more solid than the one that was put to me, but I am not persuaded by that offer. I am wary of the devolved taxation equivalent of an impact assessment report, which I think is what he also offered me. A statement by a Minister saying that these criteria are met will not be enough for this purpose. I am afraid that it will probably come to some Minister, whose bona fides I am not questioning in advance, saying, “The criteria that we set are met by this”, or “I assure the House”, or whatever. That will not quite be enough for this.

Even if I have not, and we cannot, find in this Bill a mechanism that gives the accountability that I—and, I sense, your Lordships’ House—would like to see, the Minister did not address at all the point about how we get the Scottish Parliament and Scottish Government to buy into and own these criteria. Experience tells us that that is essential. Even when they do buy into and own criteria or legislation by legislative consent Motions, they deny it later on, or they say that it was not enough, or they ask for more. That I can live with. We can debate that. That is politics. But we surely need to get the Scottish Government and Scottish Parliament to own the whole of this process. We cannot allow them the deniability of saying, “That was your Command Paper. It’s not got our imprimatur on it. We did not agree to it. What we agreed to is in the Act, so we are not having these London-based criteria imposed on us”. We all know this script. They need to own them. If they want these powers—and they do—then they need to own the whole package. I do not know whether the Minister or any of his colleagues have applied their minds to how to get the Scottish Parliament and Scottish Government to own this package, but there is a very simple way: get them to pass a legislative consent Motion for an Act of Parliament that includes them.

How, therefore, given that I am not convinced by the Minister’s arguments, do I propose that we deal this issue? Members of the House will be relieved to know that I do not intend to divide the House in the afternoon of the day before Recess. I do not intend to do so for this reason: that the Bill has another stage to go and I wish to continue talking to Ministers about this issue. I sense a growing coalition across the House for a revision and amendment of the Bill which could attract wide support and I have not had the opportunity to build that coalition. I am being open. I want an opportunity to try to build a coalition for an amendment that will find favour with your Lordships’ House and have some possibility of being passed.

I make one more offer to the Minister—I do not expect him to respond now—to engage to see whether we can find a way of amending the Bill or of obtaining from the Government a bankable undertaking that is owned by the Government and the Scottish Government. I cannot see what that can possibly be other than this amendment. I shall not be leaving the country during the Recess and I will make myself available for any discussions—if I can, I will bring members of our own Treasury team with me—to see whether we can find a way around this issue and, if we can, I shall be happy to commend it to the House.

Scotland Bill

Debate between Lord Browne of Ladyton and Lord Sassoon

Thursday 15th March 2012 Lords Chamber

[Lord Sassoon]

My Lords, we need to make sure that UK expenditure, including Scottish expenditure, continues to be controlled in a way that imposes appropriate disciplines. The purpose of the Bill is of course to give the Scottish Government more responsibility for a proportion of their tax-raising powers, and that is linked to the expenditure. However, the expenditure having been agreed, it is appropriate that money from taxation should continue to flow as it does now into the Consolidated Fund, subject to the current regime under the Scotland Act 1998, which permits the Treasury, after consultation with Scottish Ministers, to designate receipts that go to the Consolidated Fund.

The devolved Administration in Scotland is currently required to surrender receipts from fines, forfeitures, fixed penalties, dividends on public dividend capital and most interest collected by Scottish Ministers. So there is currently a provision to recognise the flow of funds between Scotland and the UK Consolidated Fund. At the moment, the vast majority of the income in question is derived from fines and fixed penalties, which the Office for National Statistics defines as analogous to taxes. That arrangement is consistent with the Government’s view that taxes that are not devolved should be collected centrally and then redistributed across the UK. We continue to believe that, with the exception of what is explicitly devolved, the revenue should flow into the Consolidated Fund and that expenditure controls should otherwise continue to be exercised on the current basis.

There are much wider questions to be asked about end-year flexibility in individual departmental expenditure in the rest of the UK, and there is certainly a debate to be had—it is well outside the scope of the Bill—on the appropriateness for all government departments across the UK to carry forward expenditure from one year to another. The Treasury rules on this have changed over the years. I cannot remember in which year it was, but health expenditure got out of hand in the latter stages of the previous Government. I cannot remember if it was when the noble Lord, Lord Browne, was Chief Secretary. The noble Lord is indicating that it was, so he will know very well the difficulties of any regime under which expenditure is carried forward.

I do not want to be dismissive of my noble friend’s point, because there is a real issue here.

[Lord Browne of Ladyton]

For the purposes of clarity, my recollection is that the problem arose before I became Chief Secretary to the Treasury. However, it was brought under control when I was Chief Secretary.

[Lord Sassoon]

If my memory serves me, it was got under control by ending the system of end-year flexibility for departments to carry forward expenditure. There is an important debate to be had about this, but locking up funds in the Scottish Consolidated Fund, as a sort of back-door way of addressing the question of what should or should not be carried forward, which applies to the whole United Kingdom, is not the appropriate way to deal with this. However, I recognise that there is a broader issue here which the Treasury has wrestled with over a number of years.

Scotland Bill

Debate between Lord Browne of Ladyton and Lord Sassoon

Tuesday 28th February 2012 Lords Chamber

[Lord Browne of Ladyton]

I am not saying that this is devo-max; I am saying that this is the Bill. The Bill is a very significant piece of legislation and a remarkable advance in the potential devolution in Scotland. However, as the noble Lord has pointed out, it is misunderstood and has not been properly explained. Broadly, it is not supported or championed in the observations of those who have brought it to this Parliament. More specifically, it has not been championed by the Prime Minister, who has suggested in fact that it is just a small step and that greater steps can be taken in future.

The people who drafted the Bill and are responsible for it may not have intended to do this, but they have given us the answer to the challenge for the future post the referendum on the issue of separation. They may not know that they have given us the answer but they have. Now they need to build the other part of the mechanism that allows this Parliament—the sovereign Parliament—to play its proper role in deciding what the criteria are in advance of specific proposals of the sort of devolution that can take place. In other ways, they should spell out, as Michael Moore did in his evidence to the Select Committee, the criteria that need to be applied and would need to be met before a tax—either a new one or a part of the United Kingdom’s existing taxation—could be devolved.

We need to amend the Bill to provide that mechanism. I believe that it can be provided by regulation, which is why the amendment has been drafted in the way that it has. At the risk of boring noble Lords, particularly the noble Lord, Lord Forsyth, I do not think it is an issue of principle, once we establish the principle, as we will by passing the Bill, that taxation can be devolved in this way to the Scottish Parliament. It is a mechanism to make sure that that is done properly and in a way in which the various parts of this deal take their proper responsibilities. That is the bit that we are missing because this Parliament is entitled to be confident that any devolved taxes will be used for the benefit of the Scottish people and the union. It is for this reason that we believe the Government have a duty to enshrine conditions to this effect in some form of legislation—regulations would be quite sufficient. This would provide a clear regulatory framework that can be approved by this Parliament and then used flexibly in the future in the context of a changing settlement between the United Kingdom Parliament and the Scottish Parliament —between the United Kingdom and the people of Scotland.

I say to the noble Lord, Lord Sassoon, whom I welcome to our Committee’s deliberations—I do not know how much previous experience he has had of Scottish political matters, but over the next few hours he is in for a crash course—that the Scottish Affairs Select Committee raised these issues in its report on the Bill almost a year ago today. I therefore hope that having had the benefit of a year to consider the matter further—and I am sure the noble Lord has been thinking of nothing else—at the very least he will be able to provide this House with some sort of detailed explanation of the mechanism and criteria to be applied on the use of this power. If he cannot do so, it would be helpful if he provided us with at least some hypothetical examples of taxes that could meet such criteria.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, one thing on which I think we are all agreed is that we are getting to the heart of the Bill. There is a range of views about how significant the changes are in Clause 28, but we all recognise the importance of what we are discussing.

The Government are quite clear that the Bill delivers substantial new powers to the Scottish Parliament—powers that have been included as a result of careful and detailed consideration. I want to focus on what is in the Bill, not on what hypothetically might be in it. The Government have been clear that any consideration of further powers to be devolved is for after a referendum on independence. Let us therefore concentrate for now on what we have in front of us.

I should also say at the outset that as an intruder from outside Scotland and a Briton from elsewhere, as the noble Lord, Lord Browne of Ladyton, suggested, my observation is that to date devolution in Scotland, of which the Bill is part of a continuing process, has been delivered as a result of lengthy discussion, analysis of evidence and cross-party consensus. That was how the settlement was delivered in 1997 and that is how the measures in the Bill have been developed. I am grateful for the noble Lord’s confirmation at the outset that he believes that the tax-raising powers granted in this clause are appropriate.

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[Lord Sassoon]

My Lords, recommendation 3.3 of the Calman report states:

“The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland”.

In Calman, certain taxes were specified. In this Bill, we are building on that and building in a procedure which is proportionate and would require the agreement of both Parliaments in future to deal with specified taxes—taxes that might be specified in future. I have explained to the Committee what the criteria are. We have an amendment that sought to tease out what they are and I explained them. The critical one relates to the macroeconomic effect. It is entirely right that we take the Calman recommendation and think about how there might be new taxes to be specified in future. It is not some open-ended invitation for the Scottish Parliament to introduce things. There are very clear safeguards, including an appropriate parliamentary procedure in London.

[Lord Browne of Ladyton]

I intervene with some trepidation in this fashion because I made clear in my remarks in this debate that I seek to support this Bill. However, the noble Lord is making it more difficult for me to support this Bill for a few reasons which I will explain, because I want to pose a significant question to him. First, he said in his introductory remarks—which I passed over but I come back to—that these matters were specifically debated and passed by the other place. He should be careful about deploying that argument, given the paucity of debate there was on any of these provisions in the other place because they were timetabled. Quite large chunks of this Bill were never scrutinised at all.

Secondly, he has repeatedly characterised my amendment—which I will not press this evening—as seeking further and better explanation. It is actually not: it is seeking a part of a construct which translates what he has said on criteria and mechanism—which he says is good and is in the White Paper and the Command Paper, and was in the evidence of the Secretary of State—into regulations that this House and this Parliament can debate and decide upon. That is different.

Thirdly, he encourages us to believe that the construct of co-operation between the Scottish and UK Governments that has been put in place is already starting to address some of these issues. The joint Exchequer committee that he refers to has met once, on 27 September, which was after the Second Reading debate in this House. This was an issue that I raised on Second Reading; his noble and learned friend the Advocate General for Scotland sent me a detailed letter about what happened about these co-operative processes, but they are not functioning at all. They are barely functioning and no significant progress is being made in relation to the co-operative work that is necessary. The Minister shakes his head. Perhaps he will address the two issues that I have raised in this intervention. The first was about criteria and process translated into regulation. The second was a question: what is happening between the United Kingdom Government and the Scottish Government about preparing for the devolution of this power?

[Lord Sassoon]

I think that the noble Lord made at least three points. The first concerned the degree of scrutiny in another place. It highlights the very valuable, indeed essential, role that this House customarily plays. It is no different with this Bill. Of course, there was committee scrutiny as well as scrutiny in the formal stages of the Bill.

[Lord Browne of Ladyton]

My Lords—

[Lord Sassoon]

Perhaps I may answer the questions that the noble Lord has already raised.

[Lord Browne of Ladyton]

I refer to scrutiny and point out, again with some diffidence to the noble Lord, that this is a constitutional Bill. Everything that happened in relation to the Bill happened on the Floor of the other place. The Bill went into Committee there. It was timetabled by the Government and many of these provisions were not debated.

[Lord Sassoon]

My Lords, I will not stand here and criticise or question the way that another place goes about its business. We are now giving the Bill—and this clause in particular—appropriate scrutiny, and I will take as long as I need to give appropriate answers to the questions that were raised.