Scotland Bill

Lord MacGregor of Pulham Market Excerpts

Monday 29th February 2016 Lords Chamber

[Lord Empey]

I can say to the noble Lord that we raised several times with the Treasury the question of issuing bonds for capital projects. Some people in America who wanted to be helpful said that they would be interested in providing resources. However, the Treasury blocked that on the basis that it would have to go on to the national debt because, unless it was ultimately guaranteed by the Treasury, there would be less likelihood of investors coming forward to take over the bonds. Therefore, the national Government would be required to guarantee the debt. I do not know whether the Treasury is no longer concerned about things going on to the national debt but that used to be the big thing that it wanted to ensure was adhered to. Is the situation here that the Scottish Government’s decisions are effectively being insured? If so, I assure the Minister that there will be others knocking on the door for that insurance policy.

[Lord MacGregor of Pulham Market (Con)]

My Lords, I can speak fairly briefly on this occasion because my noble friend Lord Forsyth put the whole case brilliantly and compulsively. I have sympathy with my noble friend the Minister because he has been put in the almost impossible position of having to defend what is, frankly, the indefensible. That is not his fault. I also understand why it has taken so long to reach an agreement on the fiscal framework. It was obviously comprised of many difficult matters, which is precisely why we ought to look at it in much greater detail than we are going to be able to do.

The framework covers a whole range of important matters, which both Houses should be able to look at in detail, yet the other place was not able to do so and we are having the most minimal consideration of it, which is fairly disgraceful. We are not going to be able to go into any detail tonight because we have only just seen the fiscal framework. We were told that we would be able to have a briefing on Friday, but it was postponed until today. We had a briefing at lunchtime today on a whole range of matters, with a lot of criticism and concern being expressed, and those concerns ought to be looked at in both Houses. I stress that, as others have said, this will affect not only Scotland; there are huge implications for the rest of the United Kingdom, which I shall mention briefly in a moment.

One point that I want to take up is the Barnett formula. I know that there is a slight difference between my noble friend Lord Lang and me on that but I think that we have come to the same conclusion in the consideration of this Bill, as he explained very clearly. I have always been very unhappy about the Barnett formula. I was on the Finance Bill Committee in the House of Commons when the Barnett formula was first created. I remember it well. It was at the time when the then Chancellor of the Exchequer, Denis Healey, made a sudden departure one lunchtime to beg for loans from the IMF. Poor Lord Barnett had to deal with all that as well as a very long and difficult Finance Bill, which included various things such as the capital transfer tax. In sheer desperation he invented the Barnett formula to get himself out of some real difficulties.

We all know that the late Lord Barnett felt that the formula should have gone long ago. It should have been replaced by a formula based on need, as Select Committees from both Houses have recommended in the past, and that seems to be the fair way to go. I heard what my noble friend said but, whichever way you try to demonstrate that the Barnett formula is based on need, it is not, yet it remains an integral part of the fiscal framework and, as I said, it has substantial implications for the rest of the UK—so obviously the north-east of England but many other parts, as well as Wales. It has implications for East Anglia, where I was an MP for 27 years. I remember that there was considerable concern about some of the implications of the Barnett formula for East Anglia. Many MPs now will have very serious concerns about the way in which the framework has been drawn up and how it affects them.

The concerns over the fiscal framework relate not only to the Barnett formula. I was very grateful to my noble friend and the Chief Secretary, who offered a briefing on the fiscal framework today, but the result of that was that many of us had even more concerns and misgivings than we had had when we went into the room. The borrowing powers aspect of the framework has to be debated in this House, and there are many other examples that we could give.

I understand why the Government want to get the Bill on to the statute book before the Scottish election, and my noble friend Lord Lang referred to some of the political aspects, but it is not our fault that this key part of the Bill has come so late in the proceedings. From my long experience in both Houses—as Leader of the House in the Commons, I was responsible for the legislative programme at one stage—I cannot recall any occasion when one of the most critical parts of a Bill has received only the most cursory examination in this House and none in the other place. I support Amendment 56ZA because I think that it would enable us to carry out that examination.

Scotland Bill

Lord MacGregor of Pulham Market Excerpts

Monday 22nd February 2016 Lords Chamber

[Lord Darling of Roulanish (Lab)]

My Lords, I have a great deal of sympathy with the remarks made by many Members of this House on the importance of the fiscal framework. It is no exaggeration to say that, without it, this entire legislation will fall apart—it is the most important part of the Smith settlement. It is deeply regrettable, therefore, that here we are at the parliamentary equivalent of the 11th hour and we still do not know what it is or what is in it.

Although I have some sympathy with those who are involved in negotiations, I have to say that as a non-Conservative and non-nationalist, I am not altogether sure that I am happy about the prospects for my country—either Scotland or the United Kingdom—being determined by two sets of negotiators, one of which wants to break up the United Kingdom and the other of which, the Conservative Party, has made a series of wrong calls since 19 September 2014. Talking of which, I must declare an interest in that I am still the chairman of Better Together, which is in the course of being wound up but has not been quite yet. As I said, I have a great deal of sympathy with what is being said, but it would be a mistake for this House to be seen to delay or block matters today. I hope that when the Minister comes to reply, he will give an absolute undertaking that the House will have the fiscal framework by Report, which must be imminent.

This is not just a matter for the Scottish Government and the UK Government. There will be many people outside in different parts of the UK who will have comments to make because this will determine not just how much tax is raised but how the balance is to be achieved between different parts of the United Kingdom and how adjustments are to be made, not just this year but in five years’ time. It would be very difficult to see to whose credit it was, or whose fault it was, that the tax take went up or down from that expected. This will determine who is paying for the welfare measures that are being devolved and, if no adjustments are made to them, who bears the cost of that. Also, it will determine the amount of borrowing and on whose account the borrowing is done. Is it on the part of the Scottish Government? Is it on the part of the UK Government? Is it temporary? What are the constraints? These are massive considerations. I heard what the noble Lord, Lord Stephen, said about the Treasury, but the Treasury is not always as curmudgeonly as he might suggest and sometimes has the nation’s best interests at heart—at least it did for a period in the past.

It is important that we get these things right. We cannot overestimate the importance of the fiscal framework, which is why I hope that the Minister, with whom I had the pleasure of working very closely over the last few years and who is, I am quite sure, not the villain of the piece, gives us an undertaking that we will have the fiscal framework.

I struggle to see how it is going to work. If we do not get it right, we could simply be storing up problems for the future and providing rich and fertile ground for those who seek out grudges and grievances as a way of life to feed on for many years to come. I do not want to see that happen, but I am very conscious that discussions are taking place not in the spirit of good will because, at the end of the day, these are two parties with opposing objectives. This is important, and I urge the House not to block the measure at this stage, especially if the Minister can give the undertaking that I think most of us want.

[Lord MacGregor of Pulham Market (Con)]

My Lords, I wish to intervene very briefly. We are indebted today to my noble friend Lord Forsyth for bringing this before the House. As a former chairman of the Economic Affairs Select Committee, a current member of the Constitution Committee and a former Chief Secretary to the Treasury, like the noble Lord, Lord Darling, with whose comments I very much agree, I would like to stress the absolute importance of this House being able to discuss the fiscal framework in some form or another, and its huge implications for the future of both Scotland and the rest of the United Kingdom, before the legislation is finally implemented. I support those who are making the point that, once the fiscal framework is published, we must have the opportunity to discuss it thoroughly before we can go further.

[Lord Hain (Lab)]

My Lords, I want to briefly support my noble friend Lord Darling and, indeed, endorse the point made by the noble Lord, Lord MacGregor. It arises, in a way, out of a question that he put to me when I was giving evidence to the Constitution Committee. It is this: we have allowed tax devolution to leave the station without any clear idea of what the destination is.

I am an enthusiastic devolutionist. As Secretary of State for Wales, I brought in the Government of Wales Act 2006, and I was instrumental in helping to win the 1997 Welsh referendum—albeit very narrowly; it was a hard fight. My concern is one that I do not see being addressed in the Bill, certainly not until we have the fiscal framework, at least, before us to scrutinise. It is this: 40% of the wealth of the United Kingdom is generated in London and the south-east. So what happens if parts of the UK—across the UK, not just in Wales and Scotland but in the north-east of England, Cornwall, and other parts of England that are not as wealthy as the south-east and London—are offloaded from the ability to benefit from redistribution, and the fairness involved in that redistribution?

The Government’s present ideology seems to be, “You have the powers to raise your own taxes, and it’s on your heads”. And if that particular part of the UK, be it Northern Ireland, Wales or Scotland, cannot raise what it previously raised, that is tough. I do not think that is a future for the United Kingdom that will command the support of all the nations and citizens of Britain and Northern Ireland. Therefore, although I cannot support the amendment of the noble Lord, Lord Forsyth, I want to leave on the record a severe reservation about where this is all leading.