Scotland Bill

Baroness Liddell of Coatdyke Excerpts

Tuesday 28th February 2012 Lords Chamber

[Lord Browne of Ladyton]

Taking my own advice, I am utterly reluctant to express any opinion that is even marginally related to any football club in Scotland. Most people in Scotland know where my allegiances lie, and engaging in this debate would make it even worse for me. I apologise to my noble friend Lord Foulkes, who has been engaged in Scottish football. His support for Heart of Midlothian Football Club is well known and he has made an important contribution to Scottish football over the years. However, I think that he probably has more scars on his back from that time than he has from any political confrontations in Scotland. I just give the Minister a bit of gratuitous advice: he would be wise to take these matters away and perhaps write some very carefully worded letters to my noble friend and his noble friend if he thinks that these questions need answering.

I want to raise a point that I mentioned in my contribution to the debate on the previous group of amendments. I do this by reference to my contribution to the Second Reading of this Bill, which took place on 6 September 2011. During my contribution to that debate, I asked about the progress of the high-level implementation group and the joint Exchequer committee, which are complementary elements. The joint Exchequer committee, led by Ministers, and the high-level group of civil servants—from both the Civil Service that supports the Scottish Executive and the UK Civil Service—are to work out the process and deal with the challenges and issues in preparation for the implementation of the provisions that we have been debating when this Bill becomes an Act, as I hope it will.

I raise this because I have a suspicion—and I put it no higher than that as I share my motivation with the Committee—that perhaps from the Scotland side of this process of engagement there is less willingness to engage, and less capacity to engage, in the preparation for these issues than we will need if we are to meet the expectations that we all share that these devolved powers will be available to be used for the benefit of the Scottish people, broadly by about 2015. I do not expect the Minister to make any comments at the Dispatch Box about willingness, but I would be able to deduce from the detail of his answers whether there has been that willingness.

I raise this issue for one very good reason. There is an impression in Scotland that the Scottish Government are anxious to get their hands on these additional powers. In fact, they want more. It is not sufficient to say to the Scottish people that you want these powers; you have to explain to them what you are going to do with them when you get them and you have to convince the Scottish people that you are preparing yourself for these powers and for the use of them. I went on at some length at the beginning of this Committee about what I thought was happening in Scotland, and there was convincing evidence that the Scottish Government were falling down in all of those respects.

Therefore, can the Minister tell the Committee not just how many times the high-level implementation group has met but what progress is actually being made? Even if it has to be described generically, I will be satisfied by that, but I will keep pressing as long as this Bill is before this House to get more detail. What progress is being made to prepare the structure in Scotland to receive these powers or any powers that relate to the raising of taxation?

[Baroness Liddell of Coatdyke]

I apologise to the Committee that I was not present through the earlier parts of the discussion of Clause 29, but my noble friend is making one of the most critical and crucial points in relation to these tax-raising powers. I would be interested if, when the noble Lord, Lord Sassoon, replies to him, he could put some figures on to the costs of implementation. He will know well that one of the essential ingredients of analysing the effectiveness of any taxation is the cost of collection. In this case, it is not just the cost of collection that we need to know about; it is also the cost of disaggregation of HM Revenue and Customs and the cost to the overall UK taxpayer, not just the Scottish taxpayer. If the noble Lord does not have those figures available at the moment, I would be grateful if he could give them to us in due course.

[Lord Browne of Ladyton]

My noble friend Lady Liddell—through me as a conduit—raises some very interesting questions for the noble Lord. I expect that, because of the nature of the amendments in further groups, we may get an opportunity to explore in more detail the issue of the cost of implementation of these provisions and of who should bear that cost. I will be interested to hear the Minister’s response to my noble friend’s very pertinent question.

I have dealt with the high-level implementation group. I am interested not only in how often it meets but in what it does and in whether we are making genuine progress toward creating the infrastructure that will be necessary for Scotland to receive these powers. I have said before that almost all members of the Scottish Government voted in the Scottish Parliament for these tax-raising powers. Therefore, I expect them to be at least beginning the process of consultation with the people of Scotland on how they intend to use them. If they are to be ready to use them by about 2015, and if they are to give the people of Scotland a level of consultation that devolution has conditioned them to expect, they should be beginning to draft the documentation to put before the Scottish people that explains how they intend to use the powers.

It does not matter whether this is devo-plus or devo-max. Whatever powers the Scottish Government have in relation to tax, they should be getting ready to implement them. As I said earlier, there is an extraordinarily interesting debate and discussion to be had in Scotland about how stamp duty land tax could be used to help to inject energy into the economy in different parts of Scotland. I am not an expert in these areas, but I know from representing for many years a constituency in Scotland that using taxation revenue in a more localised way at least has the potential to generate economic activity. I would like this explored further. If the debate and discussion reveal that it cannot be used in this way, at least that would be a conclusion.

There are two aspects to this. First, there is the engagement between the UK and Scottish Governments and their respective civil servants on planning for this. Secondly, there is the question of fitness and preparation, and the condition that the Scottish Government are putting themselves in to exercise any devolved taxation powers. I see no evidence of any of this in Scotland.

I turn to the joint Exchequer committee, about which the noble Lord and I have already had an exchange. I asked about the committee at Second Reading and was told that it was anticipated that it would meet for the first time on 27 September. My earlier intervention implied that I thought that that was a bit late when one considered how long the process had been in gestation and how long the Bill spent in the other place and here—but I had to live with that. The committee met on 27 September. The noble Lord implied that when it met it made progress on some issues that were aired in the debate on the previous group of amendments, which dealt with some of the challenges that people had identified.

My information, which was provided very graciously by the Scotland Office, is that the committee met and there appeared to be some agreement on a set of principles on the block grant adjustment mechanism. Apparently, three principles were agreed that will apply to the mechanism for the adjustment. The first is fairness. It is not defined, but we all know what it means. The second is resilience in different fiscal circumstances. The third is the avoidance of unintended consequences, including the transfer of resources one way or another. It may be my fault, but the principles do not tell me very much about the nature of the agreement. They smack a little of motherhood and apple pie and do not seem to engage with some of the difficult and challenging issues that the devolution of tax powers to Scotland will inevitably generate, some of which we have already debated.

Certainly, if the committee is not to meet again for another six months, unless the high-level implementation group is drilling down into some of these difficult issues and starting to display a level of competence and ability in dealing with the infrastructure that is necessary for implementing this, these meetings of the joint Exchequer committee are not going to make very much progress. Before this House gives its approval to this Bill and it becomes an Act—I fervently hope that it will and I will do everything in my power to achieve that—I ask of the Minister that at least we spend some time getting some sense and some idea of whether Scotland, its Government and its Civil Service will be in any shape to actually use these powers if and when we pass them.

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[Lord Sassoon]

We have a Bill; it is important that we press on, and the legislative consent Motion could come at any time. This is idle speculation. It is important that the Motion gets passed, and we look forward to it, but it is in the hands of the Scottish Parliament. There is really nothing more I can usefully say. I certainly do not believe for one minute that we are wasting our time considering the important provisions in this Bill.

Let me move on to the question asked by the noble Baroness, Lady Liddell of Coatdyke, about the cost of all of this. The major cost will be to the systems that would support the tax changes and the possible new tax rate in Scotland. It is all set out in the impact assessment that is published alongside the Bill. However, for the Scottish rate of income tax, HMRC’s initial estimate is of £40 million to £45 million over a period of years up to the introduction in 2016-17. Clearly the final cost will be dependent on a number of decisions to be made at the implementation stage; and HMRC, HM Treasury, the Scotland Office, with the Scottish Government, will continue to work to determine the optimal implementation approach. The costs may vary in some way as those decisions are taken, but the indicative estimate at the moment is £40 million to £45 million.

[Baroness Liddell of Coatdyke]

I thank the noble Lord for giving us that figure. Does that figure include the 31,000 civil servants in reserve departments who operate in Scotland, and the impact of the HMRC element of those 31,000? Will they continue to be in Scotland? Could he also perhaps give an indication of where that cost will be levied? Will Scottish taxpayers or UK-wide taxpayers take up the cost of disaggregation?

[Lord Sassoon]

My Lords, on the first point, this will be the cost in isolation of the changes necessary to enable the introduction of the Scottish income tax provision. Of course, for fully devolved taxes, the cost will depend on decisions taken by Scottish Parliaments on the design of those taxes, and of course who should administer them. It is therefore a cost estimate that relates essentially to income tax. It assumes that nothing changes in the deployment of other people. It is the necessary cost related to the introduction of the new Scottish income tax regime. As the noble Baroness will know, it is a principle of devolution that costs that are to the benefit of the devolved Administration fall on the devolved Administration, so that is where these costs will fall.

The noble Lord, Lord Browne of Ladyton, asked important questions relating to the Scottish Government’s readiness for implementation, the high-level implementation group and the joint Exchequer committee. I very much agree with him that these are important issues about the capacity of all sides, particularly the Scottish Government, to carry out what is necessary. I have already addressed the mechanics of the processes. We have the high-level implementation group, as the noble Lord has set out, and below that the technical groups established by HMRC to work out the detail.

The Scottish Government have focused on pressing for further powers in the Bill. Of course, while one respects their different views on other matters that they might want in the Bill, we would welcome greater attention on implementation from them. I appreciate the point that the noble Lord is making. Close attention has been shown to issues, such as the block grant adjustment mechanism. There is work to do and we should like to see the Scottish Government set out how they will use the powers provided to them in the Bill. My right honourable friend the Secretary of State for Scotland yesterday called for clarification in particular of the stamp duty land tax, and I very much agree with him on that point.

The high-level implementation group was established by the UK Government. It is chaired jointly by the Secretary of State for Scotland and the Exchequer Secretary to the Treasury. It has met four times since July 2010 and the role of the group is to oversee the implementation of the financial provisions of the Bill. As I have just said, the technical groups established by HMRC report to the high-level implementation group, and they provide detailed consideration and advice to inform implementation.

On the progress that has been made, the high-level implementation group is a UK Government group. It is entirely within the capacity and the direction of Ministers in London to press on with the work of that group. It is clear that the Scottish Government want their powers increased. To do that, clearly we would welcome more progress to begin setting out how the powers will be used. From that, many more questions will flow about implementation. That is where things stand at the moment.

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[Lord Foulkes of Cumnock]

As I explained about six hours ago, I have put down a series of amendments to put “devolved” in front of Government. That is in no way to denigrate the functions of the devolved Government, or to devalue them or say that they are in any way less important by putting that word in front. It is meant to indicate that we are talking about devolution and not independence. As I said previously, Alex Salmond and his Ministers and colleagues in the Scottish Parliament, all of them in the SNP group, are going around in this great big pretence that they are already independent and acting as if they are an independent Government. They are doing things that they think they have the right to do. As we will come to in other debates, the chief civil servant in Scotland has made some amazing and unbelievable outpourings. In some of the statements made by Ministers, they clearly do not comprehend what is meant by devolution.

Devolution means that they remain part of the United Kingdom and that the United Kingdom Government and Parliament are sovereign. Ultimately, the UK institutions can make decisions affecting Scotland on a whole range of things, although by convention and out of courtesy we do not do that. The word is put in there just to remind people that we are talking about devolution; a very important concept that, as noble friends know, I have fought for since I was a young man—and that was not yesterday. I spent a long time helping to persuade the Labour Party—along with John Mackintosh, Donald Dewar and a lot of noble Lords here—to come round in favour of devolution. One or two of my colleagues were not so enthusiastic about it, but we managed to persuade the party to do it. Devolution is very important. We should be proud of it and say how important it is, and how Scotland, by having a devolved Administration, can get the benefits of both worlds. There is the benefit of being part of a strong, powerful United Kingdom—one of the most important powers in the world, with a permanent seat on the Security Council, and membership of the European Union and NATO—but also that of having a Scottish Government, with power over their own affairs in a whole range of important matters such as education, social work, law and order, health and all these areas. This is not to minimise those in any way, but to make sure that that is clearly understood.

[Baroness Liddell of Coatdyke]

The noble Lord, Lord Foulkes, makes a very important point. We have spent a lot of time in the debate today talking about the problems that surround devolution, but devolution in itself has been a very considerable achievement. It may not have gone as far as my noble friend Lord Robertson of Port Ellen suggested, to kill nationalism stone dead, but it has put in place a system of government that has rectified some of the inequities that have existed for something like 300 years. Because of the nature of the debate that we have had as part of this legislation, we are missing out on making the case that devolution was a very considerable achievement. I do not think that anyone—and I am looking at the noble Lord, Lord Forsyth—would try to put the genie back in the bottle and go back to the previous status quo. Although what the noble Lord, Lord Foulkes, is talking about is in essence a gesture, it is an opportunity for us to celebrate the fact that a transfer of powers was made very peacefully to the Scottish Parliament after the election of the Labour Government in 1997.

Many people misunderstand devolution, which has existed in Scotland for 300 years because of the nature of the Act of Union. The Scotland Act merely transferred that legislation, which often took place in this House in the middle of the night, and put it into a proper parliamentary context. By the time I became Secretary of State for Scotland, the Scotland Office was one department. When the noble Lord, Lord Forsyth, was Secretary of State for Scotland, he oversaw an empire of something like 13 different government departments. The model that we have now is the right one, and I support the noble Lord, Lord Foulkes, in his argument for celebrating the cause of devolution rather than trying to hide it.

[Lord Maxton]

My Lords, I rise as somebody else who supported devolution. There have been one or two occasions during this evening when I have had my doubts, I must say—but in the main I have supported it, because in my view it is about democracy. That is what distinguishes it from independence, which almost certainly under the SNP would be democratic but does not have to be. It is not a prerequisite of an independent Scotland that it has to be a democratic state, but the fact is that devolution is about democracy. The noble Lord, Lord Forsyth, may sit there and pull faces, but he is one of the reasons why many of us argued strongly for the democratic process of devolution. What we had developed in Scotland was a Secretary of State for Scotland of a Conservative Government who, of course, increasingly had fewer and fewer Members in support in Scotland. Legislation which affected the whole of the people of Scotland was being put through this place with no democratic validity whatever.

There was an alternative, which was to abolish the Scotland Office and do away with separate Scottish legislation altogether. That was not seriously a political option in Scotland. The reason why we argued so strongly for devolution was because we felt that the only way you could get democratic legitimacy in Scotland was to give democratic powers to a Scottish Parliament to make legislation in Scotland for—