Scotland Bill

Debate between Lord McCluskey and Lord Higgins

Monday 21st March 2016 Lords Chamber

[Lord McCluskey]

I shall conclude by saying that I acknowledge that that is exactly correct. It was an extremely worthwhile proposal and I am thankful that, one way or another, as the months and years pass by, we will be able to get the whole truth out about what has happened in relation to this settlement.

[Lord Higgins (Con)]

My Lords, the noble and learned Lord, Lord McCluskey, says that he has been involved in these matters for some 40 years. I have been involved, at one end of the building or the other, for 50—33 at the other end and 18 or so at this end—dealing to a large extent with financial and Treasury matters, but I have to say that I cannot recall any financial issue, in either House, that has been dealt with in such an inadequate way as the legislation that we have in front of us. The fiscal framework, which is at the heart of the Bill, has still not been debated at all in the House of Commons. We had a very truncated debate in Committee, with no debate on the fiscal framework, and very limited debate thereafter.

The Minister referred, in the debate on the previous group, to the promises made in the course of the referendum campaign. He described them as joint promises, but they were made, of course, with absolutely no consultation. The so-called vow was made during the referendum campaign and the statement by the Prime Minister was made the morning after the referendum took place. The deal that has been struck perpetuates a grossly unfair balance for those paying taxes and involved with financial matters in England, Wales and Northern Ireland and perpetuates the very substantial subsidy that is given to Scotland. Members of Parliament have not had any opportunity whatever to debate this. One must hope that their constituents will hold them to account when the details begin to sink in to the consciousness of the public at large in the parts of the United Kingdom other than Scotland.

The noble and learned Lord’s amendment is very much to be commended. We are stuck with the Barnett formula, which we all know the late Lord Barnett himself decided was obsolete long before his lamented departure. The reality is that we are now going to go on doing this with virtually no prospect of the matter being changed again in five years’ time or beyond. That is a dreadful situation as far as taxpayers in the rest of the United Kingdom are concerned. I certainly support the noble and learned Lord’s suggestion that we at least ought to know the details of what has been agreed.

Scotland Bill

Debate between Lord McCluskey and Lord Higgins

Monday 29th February 2016 Lords Chamber

[Lord McCluskey (CB)]

My Amendment 67A is in a different group but, with respect, because it deals with the Barnett formula it ought to be considered at this stage. It raises the general question of the formula, as did its predecessor, which contained a reference to the Government’s obligation to publish the Scottish fiscal framework.

The Barnett formula runs through the whole document—rather like dry rot in a south Edinburgh house I used to live in. It cost an awful lot to put that right, and I dare say it will cost an awful lot to get this right.

The noble Lord, Lord Forsyth, referred to getting the briefing. I saw the document on Friday, and I came to today’s very useful briefing with, like President Wilson, 14 points. However, I did not dare raise the 14 points because many people were anxious to speak and we had very limited time. I do not propose to raise them all now, and I am happy to note that many have been dealt with by others, but there remains one rather important one.

This Scottish fiscal framework is recognised by everyone as being fundamental to the whole Bill. The entire Bill rests upon the Smith agreement, which was reached in nine weeks. It took nine months to frame the fiscal framework. The Smith agreement was reached by 10 elected Scottish politicians—Members of the Scottish Parliament. They included representatives of the Labour Party, the Liberal party and the Greens, none of whom, as far as I can see, have been consulted at all about the Scottish fiscal framework, and certainly not in the formal consultations. It is a very odd situation. This document has been produced between the two Governments, after nine months, and it contains things that are simply not in the Smith agreement.

For example, we talk about “no detriment”. I never knew what it meant, and I am happy to say that I was not alone in my failure to understand. The committee of the House of Lords that looked at it could not understand the second detriment, and even the noble Lord, Lord Forsyth, for whom one has the highest regard, was not able to understand it. He asked in vain if anybody would explain it to him, and we are still waiting for an explanation. Now, the paper has come up with something that was not considered by the Labour Party, the Liberals or the Greens: division of detriment into direct detriment and behavioural detriment. Last week, we were told about not behavioural detriment, but indirect detriment. All those concepts have come up to fill out the notion of no detriment, which no one has yet been able to explain.

I want to pick up one or two of the points that have been made, just to show my support for the approach of the noble Lord, Lord Forsyth. Paragraph 7 of the document states that,

“the … block grant will continue to be determined via the operation of the Barnett Formula”.

That seems to fly in the face of what the noble Lord, Lord Lang, said, but that is what the document says. House of Lords paper No. 55, A Fracturing Union?, states:

“The Formula contains no mechanism to correct any unintended consequences being built permanently into the baseline”.

That surely means that Scotland continues to get the benefit of built-in unintended consequences for at least five years, and perhaps in perpetuity, given the remarks made by others about the arrangements at the end of the five years.

The document continues:

“For welfare … and … other spending”—

nothing to do with the Barnett formula, at the moment—

“the chosen method will be the Barnett formula”.

Does that mean that, in respect of the devolution of welfare payments, the block grant will be adjusted to give Scotland the benefit of the unintended consequences of the operation of the Barnett formula?

We talk about the unintended consequences, but it is entirely foreseeable—

[Lord Higgins]

It is intended.

[Lord McCluskey]

Forgive me—yes. The document that talks about the unintended consequences is the House of Lords document.

One thing is foreseeable: that the Scottish population will decline in relation to the UK population because, as the noble Lord, Lord McFall, pointed out, that has been the position for hundreds of years. In law, or certain branches of it, if you can foresee the consequences of your actions, you are deemed to intend them.

I do not want to go through all my 14 points, but I have the greatest difficulty in understanding paragraphs 15 to 19. I do not understand what is meant by “Income tax, 87.7%”—per cent of what? These things are rather difficult, and they are not explained. Not being an accountant, I am unable to follow entirely what is going on.

I repeat the point that was made a little earlier: if Scotland’s population declines in relation to that of the rest of the UK, the funding will not go down under this document. Funding per capita is bound to rise; that is just inevitable. So I do not see how we can have “no detriment” to Scotland without causing detriment to other taxpayers throughout the United Kingdom.

On a point of detail that I hope will be echoed by my noble and learned friend Lord Hope of Craighead, the courts and tribunals are dealt with in paragraph 28. There is no agreement, apparently, as to who is to pay for the Supreme Court. I am not sure whether it is regarded as a court in Scotland or a court in the United Kingdom. That is a small detail.

I have little more to say. However, I do not understand how the £200 million figure and others related to it can possibly be justified. They are certainly not justified within the document.

My other amendment relating to this issue concerned the independent scrutiny of these matters in Scotland. However, this is now going to be dealt with by a government amendment and I give notice that I will not seek to move Amendment 67.