Scotland Bill

Baroness Kennedy of Shaws Excerpts

Tuesday 6th September 2011 Lords Chamber

[Baroness Kennedy of The Shaws]

My Lords, it will surprise none of your Lordships to hear that I am not going to speak about air guns.

I was very proud to be among those who championed devolution for many years as chair of Charter 88, and I was in this House to see the passage of the first Scotland Bill, which fundamentally altered the constitutional architecture of the United Kingdom. I endorse what was said by the noble Baroness, Lady Ramsay; it was a time of excitement and exhilaration for so many of us who had wanted it for so long. It was not about holding the Scottish nationalists at bay. For us, it was about strengthening democracy and letting people make decisions closer to home on matters that affect them directly. I think that the reforms have been a success and that the new Parliament has made a real difference to the lives of everyone in Scotland.

There has been a bit of an argument about who said that devolution was a process, not an event. Donald Dewar recognised that we would continue to see a transfer of power from the House of Commons to the Scottish Parliament as the new Parliament bedded down and gained the confidence of the people. I know that because he told me so. Like Donald Dewar, I am a strong believer in genuine devolution. I do not support independence, because I think that the unity of our island gives us greater sway in the world. I think that huge benefits come from our union, from our partnership of nations but, as in the best of contemporary marriages, I think that strength comes from recognition of the distinct identities of the partners—that they are complementary yet separate entities within a conjoined state.

Few modern women would want to go back to the marriage of old, where their status was second-class and survival depended on the good will of their man, without recognition of their huge contribution to the family and where their autonomy and ability to make choices on matters directly affecting them were profoundly constrained by their spouse. A modern marriage involves constant evolution. Donald Dewar always recognised that Scotland would have to have its own fiscal powers, and the first drafts of the devolved powers included fiscal powers. It is claimed that it was our then Chancellor who quashed those plans.

As my noble and learned friend Lord Davidson and the noble and learned Lord, Lord McCluskey, said, there are matters to resolve around the Supreme Court. I hope at some point in Committee to add my voice to those concerns and my belief that the Supreme Court plays an important role for our whole United Kingdom.

There is much that I support in the Bill. It accepts that greater financial powers should be devolved to the Scottish Parliament. I welcome that shift—in principle. I am rather tired of the talk of whinging Scotland. As has my noble friend Lady Ramsay, I have listened over the years to speakers in this House complain about the Barnett formula and the way in which Scotland has apparently benefited disproportionately from the Westminster grant. Nothing is ever said in those debates about the reciprocity involved: the benefits to the United Kingdom as a whole of the North Sea oil revenues over many years or the intellectual property brought to the United Kingdom by Scottish inventions from Watt to Macadam. We can name those great inventors, and they still exist in Scotland. We even gave you capitalism, for which you should still be paying us commission.

The Barnett formula has not been mentioned in the Bill. That causes me concern, too. It does not have to be mentioned because it is an administrative arrangement, but I suspect that it will be altered once the Bill is passed. It seems clear to me that it is an intention of Government to have a staged withdrawal of that grant. We should be clear, and there should be discussion in Committee, on what the implications of that are and whether increases in taxation are actually going to meet the default.

The people of Scotland want to see the functions of their Parliament strengthened. They want their Parliament to have greater fiscal responsibility so that it can be held accountable. They would accept the Calman proposition that the Scottish Parliament should not be there simply to divide up the block grant but that it should have fiscal accountability. Currently, the budget bears no relation to economic performance in Scotland. The Bill replaces the Scottish variable rate of income tax with a new Scottish rate that will be decided by the Scottish Parliament annually and applied consistently to the basic, higher and additional rates of tax.

Although there are other areas where the Scottish Parliament can make changes, the noble Lord, Lord Forsyth, told the House that Alex Salmond said that you cannot make an economy run on a narrow tax base. On other occasions, the noble Lord described it as,

“You can’t play golf with just one club”.

You cannot limit financial responsibility to income tax and stamp duty if you want to manage the economy. If the Scottish Parliament is to have responsibility, it must be responsible not just for varying tax but for its own economy. The noble Lord, Lord Forsyth, said that and I agree with him. Scotland has to be given the levers to grow its own economy, then it really can be self-reliant on taxation, otherwise Scots are going to suffer. That means that there have to be increased borrowing powers. We have already seen those in the Bill, but they are not adequate to the task. Nor, as my noble and learned friend Lord Davidson said, are they coming into force soon enough. The limited £500 million borrowing powers are allowed only if tax receipts fall short of those anticipated. That puts Scotland under pressure to make significant cuts should a shortfall arise.

What are the implications of that? Scotland should be allowed to say that it might choose a different route out of recession than the one selected by the current Westminster Administration. Many in the House are against the idea of Scotland being able to set its own corporation tax. That corporation tax and other fiscal matters have to be thrown into the mix if Scotland is to be able to choose a different set of priorities. I say this as someone who would like to see the harmonisation of taxation across Europe, but we are certainly not going to see that delivered by this Government. How can Westminster think of allowing Northern Ireland to set its own corporation tax but withhold such powers from the Scots? You cannot do that. Think of the feelings of inequity that that is going to create in Scotland. Think what that is going to mean in terms of adding to the numbers of those who will vote for the Scottish nationalist party.

The problem with this Bill is that it might create unintended consequences. It gives just enough tax powers to make the Scots parliamentarians more accountable, but not enough to enable a truly different set of economic choices.

Unlike the Scottish nationalist party, I do not believe that the people of Scotland as a whole want independence. What they want is a different visioning of their destiny from the one that is being offered by the coalition Government. They do not want the slash-and-burn approach to public services and the introduction of extortionate fees for a university education. They do not want sado-monetarism. They are revolted by the triumphalist language surrounding the cuts, where toughness is good and compassion is deemed pathetic. They find the current economic policies of Westminster morally repellent. They are revolted by the characterisation of the public sector as some kind of parasite, draining the wealth of the nation.

Scotland is a nation that has been built on respect for learning and public service. There is still huge admiration in Scotland for teachers, doctors and nurses, for academics and ministers of the churches. The Scots do not want the brand of global turbo-capitalism to which Westminster is so wedded, which sets itself up in hostile opposition to professional public service. They want something different. They want a modern mixed economy of private enterprise, creativity and public service, a mix of commercial success, social responsibility and civic engagement. They have turned to the Scottish nationalist party out of disdain for the three main political parties, disdain for the modern Conservative Party, disdain for the changes and shifts that the Liberal party has made, and disappointment that Labour failed to create a distinct social democratic model. They have watched the honourable, law abiding Adam Smith tradition of wealth generation being trashed, and have seen it give way to a system in which the big corporations and the bankers and the Murdochs of this world can suborn any elected Government with threats of taking their ball elsewhere; where the masters of the universe can get laws changed that in any way interfere with their super-profitability, and blackmail Governments into doing it all their way.

Well, it is not the Scottish way. This is not the model of capitalism that the Scottish people want. The deficit-cutting strategy of the coalition Government is not going to create growth in Scotland, and the Scots know it. It is going to bring higher unemployment and misery.

Around me on my own Benches—they are all absent because they are all down in the bar, I am sure—are the many who fear that giving greater powers to the Scottish Parliament will provide a gift to Alex Salmond, who will use increased borrowing powers to protect Scots public sector workers, maintain things such as free prescriptions, and increase his chances of winning a referendum on independence. Well, I think you are all underestimating the canniness of the Scottish electorate.

The Scottish nationalist party is not in government in Scotland because of the folly of devolution. It is not in government in Scotland because of some kind of peculiar election system. It is there because of the failure of the main political parties. And I am afraid it is there because of the folly of new Labour in failing to have a sufficiently social democratic agenda. If Labour wants to recover in Scotland—and I say this to my own party—it has to stop defending its romance with neoliberal economics. It has to stop canoodling with Thatcherism and revive its belief in equity and social justice. It has to embrace new models of enterprise fit for the 21st century, and provide Scotland’s Parliament and people with the powers that they really need.

One day, I hope, we—Labour—will want to exercise those powers. The noble Lord, Lord Wigley, got it right when he said that the United Kingdom in its present form is not serving Scotland’s needs, and we should take lessons from that. There is plenty of evidence that the people of Scotland want a stronger form of devolution. We now have a unique opportunity to reshape how that devolution works. Therefore, I welcome the Bill. I welcome the opportunity that it provides to us to strengthen and change it, and I hope that in its passage through this House it will become more empowering and more reflective of the concerns of the Scottish people.