Scotland Bill

Debate between Lord Sewel and Lord Kerr of Kinlochard

Tuesday 28th February 2012 Lords Chamber

[Lord Kerr of Kinlochard]

I draw a distinction between the situation with a degree of devolved authority—maybe a little more if this Scotland Bill becomes law—and the position of an independent Scotland. That is a totally different question. I would think it extremely unlikely that a delegation consisting of representatives of the London Government and the Edinburgh Government negotiating in Brussels in a situation of devolution but not independence for Scotland could not work out in advance and in private what was the best line and who would make which point. I do not think it very likely that the representatives from Edinburgh would see it as their task to undercut the United Kingdom interest because that would—while devolution persists—also undercut the Scottish interest.

[Lord Sewel]

One of the difficulties in relation to Europe and getting a common view—almost parity between UK Ministers and Scottish Ministers—would be around fisheries policy. The position of the SNP Administration in Scotland is that—and God knows how it can be done; I do not think it can—Scotland would leave the common fisheries policy. That creates a totally different negotiating framework in that policy area from a Government who say, “We are staying in but we have to reform and modify the common fisheries policy”.

--- Later in debate ---

[Lord Kerr of Kinlochard]

I have a great deal of sympathy with the argument that the noble Lord, Lord Steel, has just expressed. I cannot see the fundamental point of principle that the noble Lord, Lord Sewel, can see. He spoke of this procedure proposed in the Bill as not providing the necessary and appropriate degree of scrutiny. The people who would be taxed are the people of Scotland who elect the Scottish Government. I cannot see any particular point of principle in saying that they may not determine the form of their taxation. States in the United States of America have a considerable degree of freedom. Local taxes are different all over the United States. In many cases, they have a balanced budget requirement. The people of Scotland, speaking through their representatives in Scotland, cannot determine the level of the Scottish deficit.

[Lord Sewel]

The argument that the Scottish Executive should have control over the level of taxation is one thing, but the creation of new taxes is a totally different thing.

[Lord Kerr of Kinlochard]

I cannot really see that distinction. I would be more worried about the level if the level affected the balance of the deficit of the United Kingdom. The levels would have to be adjusted so that the tax take in Scotland remained the same proportionate to expenditure in Scotland. But as for the creation of a new tax, going by a different form, if the Scots chose to lower taxes in form A and raise them in form Y, provided that they came to the same amount and had the same effect on the United Kingdom Exchequer, that seems to me entirely up to them. I cannot see a point of principle there.

[Lord Sewel]

The problem of the deficit is really a red herring, because the deficit would be controlled by borrowing powers.

[Lord Kerr of Kinlochard]

If the deficit is not important to the argument made by the noble Lord, Lord Sewel, what is the answer to mine? It is perfectly possible for the Scots, and reasonable, to decide the form in which they should be taxed.

[Lord Kerr of Kinlochard]

I agree that the Bill proposes a very eccentric procedure. I was going to go on to say that, first, on practical grounds, I would hope that no one would set up differential tax systems inside the United Kingdom. Secondly, I would not disagree with the argument of the noble Lord, Lord Forsyth, against the particular procedure for vestigial approval which is laid down here. My argument is on the point of principle of the noble Lord, Lord Sewel. Those who should be in the lead on the forms of taxation in Scotland should be the Scots; that seems to me to be clear.

I am disappointed with this bit of the Bill—

[Lord Sewel]

The noble Lord has challenged me on a point of principle. The argument surely must be that macroeconomic policy under the devolution settlement is reserved and, within that, it is absolutely right and proper that the United Kingdom Parliament examines any proposals for new taxation on the basis of how it impinges upon macroeconomic policy, and whether it is fair and would inflict great harm on any part of the economy of the whole United Kingdom.

[Lord Kerr of Kinlochard]

Yes, that is reasonable. We certainly agree on the macro point. We disagree on whether there is a point of principle about forms of taxation. I would like to pick up on the other point made by the noble Lord, Lord Steel, about the Prime Minister's speech in Edinburgh. Here, I disagree with the noble Lord, who says that we should proceed to have the referendum as soon as possible, which would give us a couple of years to work out what devo-max means. I do not know why we do not put into this Bill what we think devo-max means, with a sunset clause. I follow the argument that the referendum should have only one question but there is a genuine problem in that the Sir Alec point made by the noble Lord, Lord Steel, certainly applies in Scotland. People up there do not really believe that the London Government intend, once one has had the referendum and if its answer is no to independence, to confer a further substantial degree of devolution.