Scotland Bill

Debate between Lord Browne of Ladyton and Lord Sewel

Tuesday 28th February 2012 Lords Chamber

[Lord Browne of Ladyton]

Someone had to create the sales tax in the first place. I might be wrong but I do not think that in the United States the creation of a sales tax is a federal function that is then devolved to the states.

[Lord Sewel]

My Lords—

[Lord Browne of Ladyton]

May I just answer this point first, if noble Lords will allow me? I am perfectly willing to try to dredge up examples as I stand here, but it would be pointless. I fundamentally disagree, as does the noble Lord, Lord Kerr, that the difference between creating new taxes and raising taxes is as fundamental as the noble Lord, Lord Forsyth, says it is. There is very little meeting of minds between us in this, but there is no meeting of minds even in relation to that.

[Lord Sewel]

I am grateful to my noble friend for giving way. The comparison to the United States is very ill judged. The United States is a federal system. The United Kingdom is a unitary state with devolved Administrations, which is fundamentally different when you talk about sovereignty.

[Lord Browne of Ladyton]

We have already had the benefit of a very interesting contribution from my noble friend Lord Morgan, which I will read with care, about the Protean nature of sovereignty. I merely responded to the point that I understood my noble friend Lord Sewel to make—that the defining characteristic of sovereignty relates to taxation. He seems to be conceding the point that it does not. I am sure that if we all read what the noble Lord, Lord Morgan, said this afternoon and perhaps read more extensively what he has probably written on the subject, we will conclude that it does not. I make the point in passing that I do not think taxation is the defining issue of sovereignty.

On the genesis of the power, the noble Lord, Lord Forsyth, asked whether it was recommended by Calman. The true answer to that is that it was not, but the power has its roots in the recommendation of the Calman commission, which concluded:

“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”.

I am not entirely sure whether that statement has a sufficient shock effect for the noble Lord, Lord Forsyth, as I think he indicated that he would be surprised if Calman recommended that. However, there can be no doubt that the Bill goes further than this. As I said, the power was not recommended by Calman but it has its roots in the recommendation of the Calman commission.

The Bill goes further than the recommendation, not only prescribing a much wider power for the creation of new Scottish taxes, which is the concern of the noble Lord, Lord Forsyth, but allowing for the future devolution of existing UK taxes, as Scottish Financial Enterprise and the Scottish Affairs Select Committee, to which I have previously referred, have pointed out. However, there is also no doubt that the breadth of this provision answers a specific call for the further flexible development of the devolution settlement. That is why it is so important to the Bill and of such great significance and cannot be dismissed as a small step. I say that with all due respect to the noble Lord, Lord Steel. It is a very significant step in the devolution settlement. I agree with the noble Lord, Lord Forsyth, that it is a pity that this measure has not been accorded due significance in public debates by those who should have known about it.

The significance of the Calman commission’s recommendations as a whole lies in providing a framework for the continued development of devolution in a legitimate and managed way. I support that. However, I argue that if we agree with the principle of greater financial accountability for the Scottish Government—we on these Benches broadly agree with that; I do not think there is much discontent about that on our Benches—the decision over whether additional taxes should be devolved in the future comes down to a decision about the practical impact of such a devolution for Scotland and for the United Kingdom as a whole. To that extent I agree with the noble Lord, Lord Kerr.

Thus, this is not in my view an issue of constitutional principle. The issue of constitutional principle is whether we agree to the devolution of taxes, which is what the Bill is specifically about. Thereafter, it is a matter of the practical requirements of such a power. I hope that noble Lords who think they disagree with me will bear with me as I think that I will answer the point that is milling round in their heads about why this argument is deficient. It is for this reason that we have tabled Amendment 51B, which would place a duty on the Secretary of State to seek parliamentary approval for draft regulations on the conditions that must be met by any proposed tax for it to be devolved and the specific consultative procedure that must be followed by the Scottish and UK Governments. It has become a habit in this Committee for noble Lords to say that the drafting of measures may be deficient. The drafting of the relevant amendment may indeed be deficient, but this is the best that I could do. If the Committee and the Government are inclined to support it, we can make it much better between now and Report.

I believe that much of the concern expressed by my noble friend Lord Sewel and others about the wide-ranging nature of the power in new Section 80A could be allayed if the Government set out in more specific detail the criteria that will be expected of any new candidate for devolution and a clear process by which those criteria will be applied. I regret that we have got this far without that becoming apparent for the reasons that I am about to go into. The big problem is that Parliament is being asked to approve the allocation of a significant and wide-ranging power to the Executive with practically no information about how this will be used in practice and the safeguards that will exist to constrain it.

Indeed, the Select Committee, to which I have already referred, understood this well. It concluded in its report that it was,

“disappointed that, when pressed, the Secretary of State could not give us examples of the type of tax which could potentially be acceptable … We are also concerned by the absence of any clear process or mechanism by which the criteria will be applied”.

In his evidence, the Secretary of State for Scotland, Michael Moore, set out extensive and broad criteria that he said would need to be applied to any tax for it to overcome the hurdles necessary for devolution.

The Select Committee went on to ask the Government,

“to provide a more thorough and detailed explanation of how this process would work, during the passage of the Bill through this House”.

We should bear in mind that the committee is talking about the other place. I commend the report of the Scottish Affairs Select Committee more generally to noble Lords. I do not know how many of them have had the opportunity to read it, but I commend it. I particularly commend paragraphs 92 to 96, although I do not intend to read them out at this time of night, and the evidence of the Secretary of State, Michael Moore, because it reveals significantly the basis of a mechanism for dealing with this issue.

Noble Lords should not underestimate the importance of the power provided by Clause 28, and I do not think that they will do so after this debate. It provides a real and tangible mechanism for the continued strengthening of the devolution settlement and the devolution of further powers. In many ways it is the antithesis of the further undefined devolution that has been alluded to by the Prime Minister of late and, indeed, by the First Minister in his flirtation with the concept of devo-max, whatever that might be.