Scotland’s Fiscal Framework

Debate between Lord Clarke of Nottingham and David Mundell

Wednesday 24th February 2016 Commons Chamber

[David Mundell]

I agree with most of what the hon. Gentleman said about the opportunity this presents to change Scottish politics. I think the people of Scotland want us to move on from discussing process to discussing policies and the difference that we can make for them with these extensive new powers. It is my full expectation that the agreement and associated details should be available tomorrow, and I very much hope that that will afford the maximum amount of scrutiny. It will of course be open to Committees of this House to scrutinise the arrangements as they see fit.

For understandable reasons, the hon. Gentleman makes reference to intergovernmental relations, but it is important to look at what Lord Smith said about how this agreement was arrived at. He said:

“It is difficult to imagine a bigger test of inter-governmental relationships and while it was obviously a very tough negotiation, what matters is that an agreement was reached.

He continued:

“This provides an excellent basis for constructive engagement between the governments long into the future.”

I accept that fully. I believe that when the transition period is over and the independent reports have been published, it will be possible for the Governments to reach agreement.

The hon. Gentleman has asked many times why it has taken so long, but many important agreements are reached at the eleventh hour, just by the very nature of doing a deal. I am sure that we will be able, on the basis we have set out, to ensure that that is the case at the end of the transitional period. The independent review, to which he referred, will indeed be a matter for agreement between the two Governments, but as he is well aware, many people in Scotland hold themselves out as being independent but are perhaps not as independent as they superficially seem. It is therefore important that there is agreement between the two Governments as to how that independent review should go forward.

On the Fiscal Commission, the agreement with the Scottish Government is that its forecasts will be fully independent. Finally, this Government will place no impediment on the transfer of powers. Obviously we cannot impose the income tax powers on the Scottish Government, and we would not seek to do so, but I would have thought and hoped that they would want to take them on as soon as possible, and that is the end to which we will be working.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

First, I congratulate my right hon. Friend on his apparent success in achieving a settlement of this difficult issue—we look forward to the details tomorrow. Can he assure the House that when the settlement is implemented, it will not only give a strong Scottish Government the powers they need to conduct their devolved affairs properly, but do nothing whatever to impair the ability of United Kingdom Governments to maintain financial discipline and healthy public finances for the British economy? That, surely, is an essential condition for the future growth and prosperity of the English, British, Welsh, Irish—United Kingdom—economy.

Oral Answers to Questions

Debate between Lord Clarke of Nottingham and David Mundell

Wednesday 10th February 2016 Commons Chamber

[David Mundell]

I find it a little odd to take a lecture from that particular hon. Gentleman on moderate language.

I do not think anyone can doubt my commitment to ensuring that we have a negotiated fiscal framework, and I am delighted that, in her letter to the Prime Minister, the First Minister set out her strong commitment to achieving such an agreement, because that is the Prime Minister’s position. As I said at the weekend, both sides have done the dance; now let us do the deal.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Does my right hon. Friend agree that if we are to have the successful devolution that we all want, we need a firm and sensible framework for fiscal discipline that will last, and will stand the tests of all the unknown economic vicissitudes that may hit the country? Will he assure us that we will not repeat the mistakes that have been made in Spain, where devolved provinces frequently run up unsustainable debts which they then blame on Madrid, causing great difficulties to Spanish Governments who are seeking recovery?

[David Mundell]

As my right hon. and learned Friend will recognise, the settlement in Spain is entirely different. I agree with him about the need for a sustainable fiscal framework, but, as the Government have made clear in the negotiations, we are willing to accept a review of the arrangements in a few years to ensure that they stand up to scrutiny, and are seen to be fair to both Scotland and to the rest of the United Kingdom.

Scotland Bill

Debate between Lord Clarke of Nottingham and David Mundell

Monday 15th June 2015 Commons Chamber

[Mr Kenneth Clarke]

When pressed on the possible difficulties of fiscal autonomy, the reaction of Scottish National party Members is to point to the tremendous new levels of growth that will be achieved by the Scottish economy, and the added GDP that will flow from their enlightened measures. They are not the first politicians I have heard attribute those kinds of consequences to their economic policy. If their policy fails, they imply that any deficit would be the liability of the UK Government and the British taxpayer. Will my right hon. Friend assure me that a fiscal framework, which is still to be achieved, will include some real fiscal discipline? We cannot have an unsuccessful devolved Government running up enormous additions to the United Kingdom’s debt and deficit.

[David Mundell]

I can give that assurance. If it is to meet the various spending commitments that we hear sprayed around not only in the Chamber, but across Scotland, the Scottish National party will eventually have to tell the people of Scotland how much tax will rise to pay for all its proposed measures. The hon. Member for Dundee East (Stewart Hosie) carefully avoided any detail about tax when he set out the case for full fiscal autonomy. He criticised the proposals in the Bill for the devolution of income tax bands and rates, and he criticised the provision for a 0% rate. In fact, all he argued for was to enable the Scottish Government to reduce the personal allowance. I do not quite understand how that would benefit the less well-off in Scotland or the Scottish economy. The full range of other income tax powers worth £11 billion are coming to Scotland as part of the Bill.