Economy: Growth

Lord Kilclooney Excerpts

Tuesday 11th February 2014 Lords Chamber

[Lord Newby]

My Lords, I agree. For example, it is very interesting, looking at what has been happening to unemployment not just over the past few months but over the past couple of decades, that in the 1990s unemployment in Scotland was slightly higher than it was here. In recent years, and particularly in the past few quarters, it has been slightly lower. It shows that Scotland, while moving broadly in line with the UK, can do better than the rest of the UK, as it has done in a number of respects. It is quite difficult to see how it could replicate that pattern if it were independent.

[Lord Kilclooney (CB)]

My Lords, Scotland, like Northern Ireland and Wales, receives an annual block grant. Can the Minister confirm that the block grant to Scotland is now £30 billion per year, and that should Scotland become independent, the people of Scotland would lose that £30 billion?

[Lord Newby]

My Lords, it is not quite as straightforward as that. There are, for example, great arguments about the division of oil revenues. This has to be set against the block grant that Scotland gets. When looking at the economic consequences of independence, you have to look a long time in the future, not just a year or two. Independence is not for Christmas—it is a long-term business. The question for everyone in Scotland is not whether we are going to be better off in six months or a year or five years, but where we are going to be 10, 20 or 50 years down the line, because once you have done this, you cannot reverse it.

Scotland Bill

Lord Kilclooney Excerpts

Thursday 15th March 2012 Lords Chamber

[Lord Campbell of Alloway]

My Lords, I support what has been said by and large for this amendment in the name of my noble friend the Duke of Montrose. This is a highly complex problem and very difficult to understand. The question is whether it falls within devolution or not. It is understood that an arrangement has been made for members of the Privy Council to consider, if a question such as this arises, whether it is within or without the concept of devolution. This matter is so complicated that I am only grateful for having been able to listen to what was said about it. I hope that it may be satisfactorily resolved.

[Lord Kilclooney]

My Lords, the people of Northern Ireland are increasingly concerned that Scotland is heading towards a higher taxation system—be it devolution or potentially independence. There needs to be clarification to the people of Northern Ireland since the Larne and Belfast ferries to Cairnryan and Stranraer are some of the busiest within the United Kingdom. The people in Northern Ireland on those ferries will remain United Kingdom taxpayers until they land in Scotland.

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[Lord Sassoon]

My Lords, in answer to the first question, there are lots of situations where employers may move people around as a requirement of their employment contract. That is not by any means confined to the Ministry of Defence. People in a number of professions and occupations are moved around from one tax jurisdiction to another. Differential tax rates comprise a factor that needs to be taken into account in the total benefit package. The Armed Forces build that into the packages of servicemen working here or elsewhere.

As regards voting, I am getting into difficult philosophical discussions concerning tax without representation that could keep us going deep into the night. However, my understanding is that we are talking about a very specific matter to do with a rate of income tax which is quite separate from the law that relates to where people can vote.

In answer to the question from the noble Lord, Lord Browne of Ladyton, I have made the general point that employers need to consider total packages. However, I can give him specific reassurance that in the event that Scottish and UK rates differ at any point in the future, the Ministry of Defence will do what I suggested any employer has to do, which is to explore options to mitigate the effects of different rates of tax by using processes which are currently used for personnel serving abroad. I am glad to confirm that it will do what I rather expected it would.

[Lord Kilclooney]

My Lords, as I said earlier, there is a general impression in Northern Ireland that as Scotland moves towards greater devolution, perhaps even independence, there will be a higher level of taxation in Scotland than in the rest of the United Kingdom. That is the fear in Northern Ireland, because we have particularly close connections with Scotland, and we do not like the idea of paying more tax. Many people from Northern Ireland are in Scottish regiments and are based in Scotland. Are they going to have to pay higher taxation because they are in Scottish regiments, or, because their homes are still in Northern Ireland, will they still be paying United Kingdom taxation?

[Lord Sassoon]

My Lords, they will pay the Scottish rate of tax only if they meet the close-connection test that is at the heart of the clauses we debated in the previous group of amendments. It therefore entirely depends on the close-connection test, and particularly where their main place of residence is.

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[Lord West of Spithead]

My Lords, I apologise to the House because I have not been here for the whole debate. Indeed, I only came in because I suddenly became aware of this point. This is an issue that could easily be resolved, but the position we have got ourselves into stands against reason. It will not go down well with people. Perhaps the Government could take it away to think about it. If it gets someone like me dragged out of my office when I am working because I suddenly become aware of it, my goodness, I can tell noble Lords what effect it will have on the military across the board. I beg the Minister to think about making some concessions along the lines suggested by the noble Lord, Lord Forsyth.

[Lord Kilclooney]

My Lords, I come back to the position in Northern Ireland. It is all very well to say that if there are higher taxes in Scotland, a serviceman serving in a Scottish regiment in Northern Ireland, who at the moment pays a standard United Kingdom tax rate, will be judged as living in the place with which he is most closely identified. It should be remembered that many soldiers stationed in Scotland do not like to register their address in Northern Ireland for obvious security reasons. Therefore, they could well be looked on as being Scottish taxpayers and have to pay the higher taxation that we fear will apply in Scotland.

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[Lord Kerr of Kinlochard]

As always, the noble Lord, Lord Forsyth, follows precisely the recommendations of the Scottish Parliament committee.

[Lord Kilclooney]

When discussing what should happen with Scotland, we should always also take into account not just England but Wales and Northern Ireland. In Scotland at the moment, as I understand it, there is already a variation in air passenger duty. Quite a few of the airports in the islands are already excluded, so the idea of having a different air passenger duty in Scotland is, in principle, accepted. If the power was devolved to a Scottish Parliament, would that lead to a reduction in the block grant to the Scottish Exchequer from the central Exchequer? Is there not something of a contradiction in government policy on the issue of air passenger duty, in that the Secretary of State for Northern Ireland is already recommending that air passenger duty should be transferred to the Stormont Executive?

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[Lord Sassoon]

I would suggest that it is really very long for this amendment. The previous intervention from the noble Lord asked me to address points that I had precisely addressed: the non-tax-raising issues indeed include important issues related to APD. Those were the issues that, among others, came up in response to the consultation. That is why, in the response to the consultation published last December, we continued to explore the feasibility and likely effects of devolution of APD to Scotland—for the very reasons, among others, that the noble Lord sets out. That is what we will do.

I should like to think that not only the noble Lord, Lord O’Neill, but other noble Lords would recognise that it would be inappropriate for the Government to devolve APD until we have considered the impact of the proposals fully from both the Scottish and the UK perspectives. In this connection, I say to the noble Lord, Lord Kilclooney, that a particular consideration applies in Northern Ireland because of the land connection in Ireland and competition on flights of a different nature, which is why a particular stance was taken on Northern Ireland.

[Lord Kilclooney]

I certainly accept that point, but my question particularly related to Scotland. There are people in Scotland and Northern Ireland who increasingly want tax-raising powers devolved to Edinburgh and Stormont. They seem to think that they can then reduce taxes in Scotland and Northern Ireland without any implications. If the Scottish Government has air passenger duty devolved to Edinburgh and reduces the duty in Scotland, will it or will it not mean a reduction in the block grant to the Scottish Government?

[Lord Sassoon]

I thought that the noble Lord, Lord Kilclooney, asked me two questions. I answered one; I was coming on to answer the second; although I know that he asked them in the other order. It is completely clear that there will indeed be a permanent adjustment to the block grant for any devolved tax, including, if it came about, APD. That is unequivocal.

We need to consider the full impact. The Bill contains powers in Clause 28 which would enable the Government and Parliament to devolve APD should they decide to in future. Although I fully agree with my noble friend about the importance of the recommendation for APD, I agree on this point with the noble and learned Lord, Lord Davidson of Glen Clova, that now is not the time to amend the Bill. APD can be looked at on its merits under the framework of the Bill in due time. I therefore again urge my noble friend to withdraw his amendment.

Ireland: Financial Assistance

Lord Kilclooney Excerpts

Monday 22nd November 2010 Lords Chamber

[Lord Sassoon]

My Lords, we have been giving it very considerable attention, which is precisely why the first series of actions of this Government was around convincing the world that we had a plan to deal with our deficit so that we did not find ourselves remotely in the position in which Ireland has regrettably found itself. That is the way that we have managed to keep interest rates low and the foundation of our growth policies. We have then gone on, whether in tax, capital expenditure through the spending review, the economic infrastructure, the attack on regulation or in other areas, to build a strong series of growth policies in this country.

[Lord Kilclooney]

My Lords, Ireland broke away from the United Kingdom and gained sovereign control over its taxation, interest rates and currency, but all these things have been thrown away. Even interference in its budget is now a requirement. There is now a great economic crisis in the south of Ireland, and that is bad news for us in Northern Ireland and in the United Kingdom. I therefore welcome the bilateral grant that we in the United Kingdom will be giving to support the present dire distress in the south of Ireland. However, one thing that worries me in a broader sense—it is not specifically about the Republic of Ireland—is whether when other countries in the eurozone get into economic difficulties, as has already happened in Greece and in southern Ireland, we are still going to be required to support them financially.

[Lord Sassoon]

My Lords, as I have explained in repeating the Statement, we take the situation in Northern Ireland extremely seriously, which is why my right honourable friend the Secretary of State for Northern Ireland and my honourable friend the Financial Secretary will go there later this week. As to the question of support for other countries in Europe, I will not give a running commentary on other countries and their economic conditions. But, as I have made completely clear this afternoon, the situation of Ireland is very different from any other country and our response has been commensurate with that.

Comprehensive Spending Review

Lord Kilclooney Excerpts

Wednesday 20th October 2010 Lords Chamber

[Lord Sassoon]

I am happy to confirm the very succinct summary put forward by my noble friend Lady Noakes of what is at the heart of this spending review. Effectiveness and fairness are what we are aiming at.

[Lord Kilclooney]

My Lords—

[Lord Desai]

My Lords—

[Lord Kilclooney]

My Lords, it is only right to say thank you. Northern Ireland, historically and geographically, has been very closely associated with Scotland. As a result, the Presbyterian Church in Northern Ireland is the largest Protestant communion in that province. The problems of the Presbyterian Mutual Society have been a running sore for several years. Will the Minister take note that there will be widespread appreciation across Northern Ireland that this problem has finally been addressed in the Statement?

[Lord Sassoon]

I am very grateful to the noble Lord for drawing attention to the fact that the Presbyterian Mutual Society has been a long-running issue which was not gripped by the previous Government. Whether it is that or properly compensating the policyholders of Equitable Life, we have got on and made what we believe to be fair decisions which were dodged by the previous Government.