Scotland Bill

Baroness Liddell of Coatdyke Excerpts

Tuesday 6th September 2011 Lords Chamber

[Baroness Liddell of Coatdyke]

Your Lordships can be reassured that I am not going to give a lengthy seminar on the Australian taxation system. At this late hour, I would not wish your Lordships to become overly excited. I thank the noble Lord, Lord Forsyth, and my noble friend Lord McAvoy for taking into account my plight. Scotland had to wait 115 years to have a woman Secretary of State, so having to wait seven hours to speak is not all that challenging.

As the only woman who has ever been Secretary of State for Scotland, perhaps I may give this House one piece of advice that previous male Secretaries of State could not give. You cannot be a little bit pregnant, just as you cannot be a little bit independent. Some of the recent debate that we have heard in Scotland, from the First Minister in particular, leads us to believe that he thinks that you can be a little bit independent, with the same monarchy, the same embassies, the same army, the same regiments. No. One of the valid points made by the noble Lord, Lord Steel, was that the Bill was intended as a fine-tuning of the devolution settlement.

There is a certain symmetry in our sitting here late at night. Prior to devolution a lot of Scottish legislation was done very late at night in the other place. Devolution is a modern word for what happened at the Act of Union and was re-emphasised with modern legislation and the establishment of the office of the Secretary of State. The noble Lords, Lord Forsyth and Lord Lang, presided over a department that covered the equivalent of 13 different UK government departments. That was the argument for devolution. The aim of this Bill is to fine-tune that. But as the noble Lord, Lord Forsyth, said, this Bill has missed its time. It was introduced when it was legitimate to look at ways by which we could improve devolution, make it more effective, and in particular deal with this issue of fiscal and financial accountability. Last May’s election changed that. I was active in that election. I am sure that many Members of this House were very attentive in watching the Scottish media. All of us in this House have things to have answer for in not winning that election. But there is one thing of which I am certain. Separation was not part of the debate. I agree with the noble and learned Lord, Lord Boyd, who says that it is not enough to portray the negatives of separation. You must portray the positives of the United Kingdom.

I am a Scot who is proud to be British, and I am a Brit who is proud to be European. I am quite comfortable with having multiple identities. I believe that one of the key issues that we have to address in a mature manner is that the debate in Scotland is not about soft and cuddly words like independence but about secession. As we look to the future and to the ramifications of what is in this Bill, we should look in detail at the elements of this Bill in relation to secession. There are certain things, particularly in relation to tax, on which we need some adequate costings. If we were to find ourselves negotiating a secession treaty—I do not believe that we will find ourselves in that situation, but it is a foolish person who does not plan ahead—would we want to have conceded so much in advance? Frankly, I want answers on some elements of this Bill.

In general, I support the Bill. In principle, I support the Bill. I had nothing to do with the Calman commission—I was in the colonies at that time, fortunately as a free person, not as a prisoner—but I can see the reasoning behind what Calman has come up with and is embodied in this Bill. However, there are many aspects of this Bill that require further thought, I have issues that I want to raise in Committee, and I have questions that I do not expect the Minister to reply to tonight. He is always most gracious in trying to answer people’s questions. I want to flag up these questions because I want to refer to them in some detail in Committee.

The points on taxation made by the noble Lord, Lord Forsyth, are extremely valid. One of the key arguments around the 3 per cent variation on taxation in the second question in the first referendum was around how much would be raised. There are three elements in the development of any tax. The first is the amount of money that it will raise, the second is the cost of collecting it, and the third is the ability to avoid it. I am sorry that the noble Lord, Lord Sassoon, is not in his place, although I saw him in the Chamber earlier, as some of these issues are for the Treasury. I would like to know how HMRC proposes to manage the introduction of a separate variable rate of income tax in Scotland, the cost of transferring that, how the burden of collection will be shared and the level of avoidance anticipated. Many of us in this House are forced into having two dwellings—the point that the noble Lord, Lord Forsyth, made—so where are we liable to be taxed?

The other area I would like to cover is borrowing. Anyone who has been watching the bond markets in recent weeks knows that the issue of government borrowing is extremely fraught at the moment. We have seen the debate about the US AAA rating, and we have had huge debates about Greece and Italy and their credit ratings, and France and its credit ratings. What would Scotland’s credit rating be, particularly when we take into account that RBS is headquartered in Scotland? What element of that comes into the computation of the interest rate in relation to Scottish bonds floated in the open market? These questions may seem esoteric, but they are not esoteric if we are considering a secession treaty. I ask the Minister to ask the Treasury to look at some of these issues.

The mechanics of bond issuing also have to be looked at. Are we going to have to replicate the Debt Management Office in Scotland? You get the impression that Scotland would just suddenly come along and say, “Oops, we want to have another hospital. Let’s go and raise some money. Let’s get it on hire purchase”. It does not work like that. Government debt has to be managed, and we also have to know what would be the impact of putting the Scottish borrowing requirement alongside the United Kingdom borrowing requirement and what would be the projected or extrapolated rate of interest on UK bonds as a consequence of Scottish borrowing. I ask the Minister to give us some answers in due course.

The debate around the future of the Crown Estate is extremely complex, not least because there is a pressing need for considerable investment in wind and tidal energy. The Crown Estate will end up having to shoulder a fair amount of that. Where will it come from? Who is liable for it? The growth of wind and tidal energy requires the upgrading of the national grid, which is creaking at the moment, particularly in remote parts of Scotland. Where will the money come from to allow the national grid to be upgraded? To pay for that, is it likely that Scottish-generated electricity will have to be sold to England to raise revenues and that the Scottish consumer will therefore face a higher cost for electricity? I do not know the answer to that, but I would like somebody who is clever to go away and work out what it is.

We have had a fairly vituperative debate about the Supreme Court. Many of us in this Chamber have been around the houses a few times in Scotland. The level of debate there has always been quite robust, but we have seen it in recent months become increasingly personalised. I think that the appalling attacks on the noble and learned Lord, Lord Hope, in particular cause many of us distress and do Scotland’s reputation no good. I dread the detail that we will have to go into because we will hear that kind of vilification again, but we must not desist from asking the questions. We have to ask the questions, and get the answers, as to what this model of secession will look like. This Bill is an opportunity to do that. I know that it will be some time before it comes back to the House in Committee. That is a positive thing, because it will give time for the work that needs to be done. No one dreamt at the beginning of this process that the Bill would be so pivotal to Scotland’s constitutional future. It is understandable that some of the work has not been done but we cannot delay any longer. It is vital that we get a move-on in looking at some of these issues, particularly in relation to costing, accountability and who carries the burden.

My noble and learned friend Lord Boyd talked about the benefits of being part of the United Kingdom. I believe that the people of Scotland, whenever they confront the realities of being part of the United Kingdom, will recognise the strength that we get from it. We are told that the Scottish Government would seek to become a member of the European Union. One has to comply with certain rules before one can do that, and new accession countries have to become members of the eurozone. I wonder how many people in Scotland right now would like to have euros in their pockets rather than pounds sterling. These are issues that people are going to have to address.

My father was in the RAF. Most people in this House will have fathers, uncles or brothers who served in the forces. They did so because of the concept of a country that brought us all together. I entered politics not because I was concerned about the vulnerable in Scotland; I was concerned about the vulnerable throughout the United Kingdom. I see the challenges that we face in building a better Britain as a route to building a better Scotland. We should be self-confident enough now to know that we play a dominant role in the United Kingdom and long may that continue. The Minister always seems to get the thin end of the wedge and these long, rather complicated Bills. I think that the Bill will be a long time in Committee, but it will be one of the most vital things that we do in this term of this House.