Scotland Bill

David Mowat Excerpts

Thursday 26th April 2012 Commons Chamber

[Pete Wishart]

I am grateful to the Minister for clarifying that. It is good that he agrees with the Scottish Government that joint commencement is a good idea and I welcome the fact that there will be a veto for the Scottish Parliament in regard to the commencement of potentially damaging tax powers.

The Bill does not meet the aspirations of the Scottish people. It does not meet the aspirations of the anti-independence parties either. They have all moved on as well, and decided that these provisions are not enough. The Conservative-led Unionist alliance and what accounts for their think-tanks are all now considering the next stages of devolution as they move forward. They, as well as the Scottish Parliament and the Scottish people, have passed the Bill by. The Bill is finished, it is dead, it is something that belongs to another day and another era.

[David Mowat (Warrington South) (Con)]

I think I heard the hon. Gentleman say a few moments ago that this version of the Bill would save the Scottish Government and the Scottish people many billions, compared with the version that we discussed a year ago. Will he tell the House which amendments that observation pertains to, and what it was that he was talking about?

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[David Mowat]

As my hon. Friend says, a change has been made at the last moment to what is called the no-detriment principle, which was indeed set out in the Holtham report, produced in July 2010. Does he concede that the majority of the Holtham report focused on a needs-based funding formula, and that we are not implementing that at this time?

[Iain Stewart]

I am grateful to my hon. Friend for that intervention but I do not think that you would be terribly enamoured of me, Madam Deputy Speaker, if I widened the debate into a discussion of the Barnett formula and fiscal matters more generally. My hon. Friend is right, however, that that is not part of the Bill. It is a subject to which I think we will return on another day.

In conclusion, I welcome Lords amendment 18, which would make a sensible change to the Bill. I welcome the Bill as a whole, as it is a sensible change and a sensible evolution of the devolutionary process, and I think that it will be welcomed both north and south of the border.

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[Mrs Laing]

It is a matter of fact that, since the sad passing of my mother, nobody in Scotland listens to me at all any more, but I thank the hon. Gentleman for his intervention and I hope that he will forgive me for misinterpreting what he said.

The fact is that this is the Parliament of the United Kingdom, and the matters that are discussed and examined here affect the whole of the United Kingdom. That is why Lords amendment 18 is so important. Just as the people of Epping Forest have no particular interest in what happens in Liverpool, Birmingham, Leeds, Hull, Cornwall or Belfast, those events affect all of us none the less. We live together on this small island, and any artificially created divisions cannot hide the fact that we are interdependent and that our economy is the economy of the whole of the British isles. Those things that affect one of us affect all of us, and that is why Lords amendment 18 is so important.

The amendment clearly highlights the equal partnership, particularly in regard to taxation and economic welfare, between this Parliament and the Scottish Parliament. I wonder why anyone would wish to go further and create an unnecessary and damaging artificial separation. Amendment 18 and the others pertaining to this part of the Bill relate to an enormous transfer of power and accountability from this Parliament to the Scottish Parliament. So it should be. As a result of the transparency introduced by the Bill, as a result of Lords amendment 18, both Parliaments will be required to examine the economic fiscal affairs of each part of the United Kingdom. I hope that those matters will therefore be clearly seen as the years go on. If separation were to take place, we would lose all the strength that has been built up over a long time. I hope, however, that it will become apparent, with more transparency and a greater ability on the part of each of our legislative Houses to examine these matters, that the interdependence of the United Kingdom brings benefits to all of the United Kingdom.

[David Mowat]

To paraphrase my hon. Friend the Member for Penrith and The Border (Rory Stewart), I rise with passionate moderation to speak in favour of Lords amendment 18, although I will ask for some clarification of those provisions and of the legislative consent motion from the Scottish Parliament.

For the avoidance of doubt, the proposed new clause in Lords amendment 18, for which many claims have been made in the debate, is concerned with the implementation of the financial aspects of the Bill. It is extremely welcome that we are going to have a yearly review of those aspects. My points relate to some of the wording in the Secretary of State’s statement in March and to the prior negotiation between him and the Scottish Parliament.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 18th April 2012 Commons Chamber

[Michael Moore]

The last Labour Secretary of State, who has now joined the hon. Lady on the Front Bench, said that Labour had to be credible on the economy and on the financial regime, but it is not being credible in the proposals it is making. I stand by my comments. My intention and that of my colleagues with this Budget is to ensure that we provide support to the lowest and middle-income earners and that those on the highest earnings pay their way. Through the abolition of tax reliefs, we will ensure that they do.

[David Mowat (Warrington South) (Con)]

3. What discussions he has had with the Chancellor of the Exchequer on the funding formula for Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The Government are aware of the concerns that have been expressed about the current system of devolution funding, whereby changes to the block grant are calculated according to the Barnett formula. Owing to the unprecedented deficit that we inherited, our immediate priority is to reduce the deficit, and we have no plans to change the present arrangements before the public finances have been stabilised.

[David Mowat]

Given that the Government have no plans to replace the current formula with a formula based on need, and given the requirement for clarity so that the people of Scotland know what proportion of the national debt they will inherit before they vote, does my hon. Friend agree that the Barnett multiplier would provide a good solution?

[David Mundell]

I believe that we need to move on from the discussion of issues of process relating to the referendum, and engage in a substantive debate on the issues that would affect Scotland if it became independent. Having, it would appear, campaigned relentlessly for independence, the SNP now seems to want to delay the question and the issues for as long as possible.

Scotland’s Constitutional Future

David Mowat Excerpts

Tuesday 10th January 2012 Commons Chamber

[Michael Moore]

The hon. Gentleman is not usually so churlish. He should understand better than almost anyone else, because he studies these things carefully, that businesses take decisions on a very long time scale. They are looking for certainty. They want confidence in the future, and as we have seen with the Citigroup report, the Institution of Mechanical Engineers and the CBI, which the last time I looked spoke for many businesses across Scotland and the UK, uncertainty is bad for business and bad for jobs. Let us get rid of that uncertainty. I cannot understand why the hon. Gentleman and his friends do not want to resolve this and get on with the real debate.

[David Mowat (Warrington South) (Con)]

The Secretary of State will have seen today’s press reports which say that apparently, as of this week, the Scottish First Minister is applying the finishing touches to his own referendum plans and will publish them in the next month. If that turns out to be the case, would the Secretary of State agree that at last we were making some progress?

[Michael Moore]

I hope that on the basis of the early conversation that we have had and the intent on my part that we should have further discussions, we will be able to consider the proposals that we have set out in detail this afternoon. It makes common sense and it is the most reasonable proposition on earth that we should get the two Governments working together to provide a legal, certain basis for the referendum, and then we can get on and have this most profound debate about our future in Scotland.

Public Sector Pensions

David Mowat Excerpts

Thursday 8th December 2011 Commons Chamber

[David Mundell]

I do not accept that analysis. The hon. Gentleman might have got a laugh if he had thought that up himself rather than stealing it from the Twittersphere.

The Scottish Government’s proposals were a toxic cocktail topped up by suggestions to introduce later retirement ages, change accrual rates, apply changes to all members, not just new scheme members, and move to a defined contribution scheme, which places the risk of uncertainty over the value of the final pension on the member. All those proposals would mean a worse deal for public service employees than the coalition’s proposals.

[David Mowat (Warrington South) (Con)]

Will the Minister give way?

[David Mundell]

One last time.

[David Mowat]

I am listening very carefully to the Minister’s comments on the interaction between the Scottish Government and himself. Does he agree that one of the interesting features of the motion is the last part, which appears to concede the point that the Barnett consequentials should be reviewed and that certain types of expenditure should be taken out of them? If that is a principle that the SNP wishes to adopt, we should consider the Barnett formula more generally and the whole settlement and block grant for Scotland.

[David Mundell]

My hon. Friend makes an interesting point, because that is one issue on which there is an absolute divide between Plaid Cymru and the SNP. Plaid Cymru wants significant change to the Barnett formula and, as I understand it, the SNP does not. That is part of the inherent illogicality that is at the heart of their argument.

I am surprised that we hear nothing these days about independence, which is relevant. Perhaps that is because Plaid Cymru does not promote independence. I look forward to hearing SNP Members set out exactly how an independent Scotland would be able to fund not only existing pensions, but provide enhanced pensions, without consequences for pensioners in Scotland. I am sure that we will hear calls for the break-up of the United Kingdom.

I also look forward to hearing from Labour Members. I understand that Labour MSPs chose not to take part in the debate in the Scottish Parliament because they were working in their constituencies that day. I know that the Labour party has not been an effective Opposition in Holyrood, particularly since the hon. Member for Glasgow East (Margaret Curran) left, but not to turn up at all is taking that to an extreme. I look forward to hearing their contributions today.

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[Mr Bain]

The responsibility for the hike in pension contributions, and for the loss in pensions that public sector workers are going to suffer, is the responsibility of this Government, and I will not be deflected from ensuring that they take full account of it.

The Scottish National party should also—

[David Mowat]

Will the hon. Gentleman give way?

[Mr Bain]

I have been generous enough in giving way. With respect, I encourage the hon. Gentleman to catch Madam Deputy Speaker’s eye if he wants to make further points.

The Scottish National party should thoroughly disown the proposals submitted by the Scottish Public Pensions Agency, which is accountable to Scottish Ministers, as its recommendations would be even more unfair for tens of thousands of Scottish public sector workers. The Scottish Government have power over the NHS, teachers, local government, police and firefighters pension schemes, with the exception of the local government pension scheme. They have not yet declared what they intend do in relation to local government workers, who face the possibility of paying additional contributions to their pensions, so they should end that uncertainty and make their position clear now.

The Government need to change course, to sustain and not destroy the living standards of public sector workers and to recognise that the crushing austerity that they seek to entrench for years to come will leave a legacy of higher child and family poverty. This country deserves better than a Government who are out of touch, out of growth and out of ideas for the future.

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[Lindsay Roy (Glenrothes) (Lab)]

I congratulate the SNP and Plaid Cymru on their choice of debate today. I take part in this debate with a heavy heart, and with genuine anger and frustration at the way in which public sector workers, who have done such invaluable work in our communities, have been treated by this Government. Some of what I have to say is constructive reinforcement of points already made, rather than unnecessary duplication. These raw sentiments reflect the views of hundreds of public sector workers in my constituency.

One of the hallmarks of a civilised society is the way we treat our citizens—people who have contributed immensely to society throughout their working lives. Indeed, for years there was a genuine trust and confidence in the public sector that, in return for often smaller salaries—although sometimes not—compared with the private sector, they would receive a fair, if generally modest, pension on retirement, and those pensions had been negotiated in good faith. That trust has well and truly evaporated. However, that erosion in trust has not occurred because of the Hutton report, which recognised again the need to review pension contributions as people live longer, but because of the cavalier way this Government have proceeded, on a unilateral basis, to disguise the real purpose of the precipitate 3% increase for public sector workers. To put it bluntly, public sector workers feel that they are sacrificial lambs.

The immediate increase has nothing directly to do with the present affordability, fairness and sustainability of public sector pensions, but everything to do with a cynical attack on ordinary working people at a time of pay freezes, increased VAT, higher fuel costs and a dramatic increase in living costs. The real reason for this smash and grab raid on the public sector was blatantly to contribute to the deficit reduction plan, as highlighted by the hon. Member for Arfon (Hywel Williams).

[David Mowat]

I have listened carefully to the hon. Gentleman’s argument and he seems to be saying that he supports the proposals in the Hutton report, but does not support what the Government have done. Which aspects of what the Government are doing are not in the Hutton report?

Oral Answers to Questions

David Mowat Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Michael Moore]

I make two observations to the hon. Lady. First, we need to get the economy into a place from which we can see sustained, strong and balanced growth, which would be a complete contrast to the situation we inherited from her Government. On her second point about working with the Scottish Government, she is right to highlight the serious economic powers that they already have and it is vital, as I said to the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) earlier, that we work together to ensure that we do the best for people across Scotland.

[David Mowat (Warrington South) (Con)]

15. What discussions he has had with members of the Scottish Executive on the funding of the Forth road bridge replacement.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

This issue was raised in discussions between my right hon. Friends the Deputy Prime Minister and the Secretary of State for Scotland and the First Minister on 9 June. As announced by my right hon. Friends the Chancellor and the Secretary of State on 13 June, the Government are bringing forward to 2011 the power for Scottish Ministers to make prepayments, which will allow work on the Forth replacement crossing to begin.

[David Mowat]

I thank the Minister for that reply. He will be aware that two major bridge schemes are about to take place in the UK: the Forth road bridge, to be funded by the Treasury and by the means that he has just given us, and the Mersey gateway in Cheshire, to be funded substantially by tolls. How can the Government justify that difference in the same country?

[David Mundell]

The justification is devolution; it is a decision of the Scottish Government to proceed with the Forth replacement crossing on the basis that there will be no tolls on it.

Scotland Bill

David Mowat Excerpts

Monday 7th March 2011 Commons Chamber

[Pete Wishart]

I am disappointed in the right hon. Lady, because she usually does better than that. She has clearly not been listening to what I have said. I have given three examples of new professions that have emerged since 1999 and that have benefited from separate regulation in Scotland, but there are more. Why would anyone want to re-regulate those professions, which have given such key benefits to the NHS in Scotland?

[David Mowat (Warrington South) (Con)]

For the avoidance of doubt, will the hon. Gentleman clarify that it is his view that there are no health care scientists in England?

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[Ann McKechin]

rose—

[David Mowat]

rose—

[Fiona O'Donnell]

rose—

Scotland Bill

David Mowat Excerpts

Thursday 27th January 2011 Commons Chamber

[Iain Stewart]

I beg the hon. Gentleman’s patience, as I will turn to those points in a moment.

[David Mowat (Warrington South) (Con)]

My hon. Friend makes a powerful point about the threat to the Union posed by a perception of unfairness in relative funding, and giving Scotland control over its tax revenue raising will partially address that. However, it is widely accepted that the baseline, under the Barnett allocation, is 15% to 20% higher than it would be in equivalent places in England, and that is an issue for the Union.

[Iain Stewart]

I am grateful to my hon. Friend. I am not sure whether his birthday is coming up, but I will happily send him a copy of my book, which goes into the matter in some detail. The baseline funding for Scotland is an important point, but whether to have a needs-based assessment is not part of the Bill, although the Bill opens up the possibility that that will be reviewed in future.

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[David Mowat (Warrington South) (Con)]

Before I get into my remarks, may I apologise to the House for three things? First, it is not my birthday; secondly, I have not written a book; and thirdly, I think I am the first speaker in the debate not to have a Scottish accent. I do have a Scottish name, however, so I shall do my best with that.

I really have only one point to make about the Bill to those on the Government Front Bench. Overall, it is a good Bill that takes what Calman recommended and implements it sensibly. Indeed, a whole set of well-made recommendations will be introduced. The principal part of the Bill, as others have said, relates to fiscal autonomy, the change in the level of the block grant and the compensatory change to income tax. The theory behind it is absolutely spot-on, because it is right that Scotland is given an incentive to nurture its own tax base and to become accountable for how it spends that money. The important issue, which is not directly in the Bill but an unintended consequence of it, however, is the baseline for that allocation, the current Barnett settlement. The Barnett formula is not a subject for today’s debate, but others have spoken about it, and I shall put in my tuppence-worth.

The formula has been going for 35 years, and the most recent review of it was last year by the Lords Barnett Formula Committee, which produced an excellent report that received a poor response from the then Government. People accept that the formula no longer represents a needs basis for the allocation of moneys. The Calman report accepted that point, too, but the reason why we persevere with the formula is inertia. In the response to the Lords Committee, it was accepted that the formula was straightforward, but there are two reasons why it provides the wrong result. First, there has been no attempt to make any changes based on relative population movement over the past 35 years between the three countries in the Union which are most affected, Wales, England and Scotland. The result, as Holtham stated, is that the settlement for Scotland is about £4 billion more than it would be if it was worked out on a needs basis.

How does that relate to the Bill? The baseline will use that higher amount to set income tax, and to flex it up and down. In consequence, it will be harder to change the Barnett formula in future, because it will be linked directly to the level of income tax in Scotland in a way that it is not at the moment. From a political point of view, it would be hard for people to accept that the UK Government, while making a fairer allocation, were forcing up income tax in Scotland.

A second unintended consequence of the current baseline is that Scotland will for ever have a larger public sector in its economy than in England. I say to colleagues on the Government Benches, of whom there are not many, that it is wrong for us to go on about Scotland having to rebalance its economy towards the private sector and away from the public sector if we approve a formula that makes it arithmetically impossible for that to happen.

[Mrs Laing]

Does my hon. Friend accept the point made by my hon. Friend the Member for Milton Keynes South (Iain Stewart) that the Barnett formula works in the way it does not just because Scotland is Scotland, but because Scotland has certain features, such as areas of deprivation in its inner cities and very rural areas where transport costs are enormous, that mean that it deserves greater spending in certain areas? Such areas are also found in certain parts of England and Wales.

[David Mowat]

I thank my hon. Friend for that intervention. She made two points, the first of which was about sparsity. Scotland is more spread out than the rest of the UK. Page 18 of the Holtham report takes that sparsity into account. The Scottish national health service has to take sparsity into account in the allocation of money. Parts of Scotland are very spread out, such as the highlands and islands, Orkney and the Hebrides. The Scottish NHS adjustment in respect of that, which was validated by the Holtham formula, was 1.5%. We are dealing with a figure of 20%.

The second point that my hon. Friend made was about deprivation. There are areas of deprivation all over the country. That is why it is so important that the formula is based on need. There can be no argument about that.

[Anas Sarwar]

When discussing the rights and wrongs of the Barnett formula, would it not be sensible to compare the averages for Scotland and Wales to different regions of England, because the north of England receives almost the same amount per head as Scotland?

[David Mowat]

Paradoxically, the part of England that receives the most per head is London.

[Pete Wishart]

The hon. Gentleman said that London secures the most identified public spending—that is before we get into unidentified public spending. I am grateful to him because he has been very consistent in his view, which is a valid view held by Conservative Back Benchers, that Scotland’s budget should just be cut. Those on the Government Front Bench, with Labour support, want to cut Scotland’s budget through the financial measures in the Bill. The hon. Gentleman and I can surely agree that the way to resolve this is to give Scotland full financial autonomy on these issues—he would benefit and I would benefit. Surely that is the right way forward.

[David Mowat]

What I think we would agree about—I think this has been the consensus—is that we should have a needs-based formula. What possible objection could anybody have to a formula based on need? Members have mentioned adjustment for deprivation, and fine, let us go with that, but the difficulty that we have got into is that we have never adjusted the Barnett formula for population change.

[Iain Stewart]

I must correct my hon. Friend. The Barnett formula has been adjusted in the past to take account of population changes. He is quite correct to suggest that it was not adjusted for the first 15 or 16 years, which led to a more generous settlement year on year than a strict population count would have allowed, but I believe that it was Michael Portillo, when he was Chief Secretary to the Treasury, who introduced a mechanism by which the percentage by which Barnett changes each year would be directly related to Scotland’s share of the UK population.

[David Mowat]

My hon. Friend is right to say that the Barnett consequentials each year take the correct, current relative population into account. However, the formula does not do that to the body of spending that is adjusted by those consequentials. He will find that very clearly in the reports of the House of Lords Select Committee and the Holtham commission.

[Iain Stewart]

One of my bugbears in this debate is that when we talk about the Barnett formula, we forget that Barnett does not change the baseline lock, it aggregates the annual changes in UK Departments’ spending and then adds on a population share percentage and a relevance factor percentage. My hon. Friend’s point is about changing the baseline. I believe that the Government have opened up the possibility of that in future, but we must be careful to point out that the Barnett formula deals only with year-on-year changes.

[David Mowat]

I thank my hon. Friend, but I have two points in response. First, the Government have said that they will not review the formula in the lifetime of this Parliament. Secondly, the outcome allocation that is consequent on what we call the Barnett formula takes into account two things—the spending brought forward and the Barnett consequentials. The first of those is not adjusted for population, and the second is.

Since I have nearly got to the end of my remarks, I will not take any more interventions on this subject, but—

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

rose—

[David Mowat]

Maybe one more.

[Gemma Doyle]

I am very grateful. Is the hon. Gentleman aware that the proposals to which he refers, which he seems to support, could actually lead to a £4.5 billion cut in the amount of money spent on Scotland? Is that what he proposes, and does he want to see it happen?

[David Mowat]

What I propose is that the allocation be done on a needs basis that is fair to the constituents whom I represent as well as to hers.

[David Mundell]

I very much respect what my hon. Friend says. He took part in a Westminster Hall debate on the issue, and I am sure the Chancellor and other colleagues are listening to him. We need to be clear, though, about whether he is arguing for a needs-based assessment across the whole UK. The hon. Member for Glasgow Central (Anas Sarwar) drew attention to the fact that there are significant differentials within England. The difference between the highest and lowest per capita public spending in England is £2,537, which is much greater than the difference between the Scottish and English average. We need to be clear about whether my hon. Friend and those who make the same argument want a change in spending within England, or just between the constituent parts of the UK.

[David Mowat]

The difference that we are really talking about today is the one between the constituent parts of the UK, but I have no difficulty with also applying that to the constituent parts of England. As I said, a needs-based formula is fair.

If my constituency of Warrington South, which has areas of great deprivation and some better-off areas, were in Scotland, the average constituent would receive £900 more. That is not fair—I get a considerable postbag about it. Today’s debate is not on the Barnett formula, but unless we address the matter at some point, it will become a tension in the Union from the other direction. We need to be cognisant of that, and we need to be careful.

[Ann McKechin]

The hon. Gentleman mentions basing the determination on needs. In last Wednesday’s Adjournment debate, to which the Under-Secretary referred, there was some discussion about the system in Australia. It is based on needs, and there is a commission that makes a judgment. There is frequent argument between the federal states about the definition of needs, and some commentators are now saying that they want to move back to a per capita formula, just like the Barnett formula. Does the hon. Gentleman agree that stability might be a better prize?

[David Mowat]

I do not agree that stability is a better prize if it is based on something that is wrong. I agree that it is difficult to compute need, but that is no reason not to try. We have let the matter drift. One of the determinants is relative population movement—I repeat that, notwithstanding the comments of my hon. Friend the Member for Milton Keynes South (Iain Stewart); I guess we can discuss that later in the bar.

I ask the Under-Secretary to table a simple amendment to the Bill to provide for revising the block grant allocation to take account of relative need, in the way that the House of Lords Committee on the Barnett formula and the Holtham commission recommended last year and in previous years.

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[Stewart Hosie]

The arguments in favour of the reasoned amendment will be made and they will explain, I hope with some support, why there are flaws in the Bill.

The Bill contains two fundamental fiscal measures: first, the reduction in the basic higher and additional rates of income tax by 10p, and the setting of a Scottish rate to compensate for that; and secondly, the availability of limited revenue and capital borrowing powers. Revenue borrowing will fill a part of the gap left when revenue decreases and a limited increase in capital borrowing will enhance direct capital investment.

However, the income tax powers are inadequate and include an in-built, long-term deflationary bias in the Scottish budget. The borrowing powers, particularly the revenue powers, are so tightly controlled that they are unlikely to be effective in delivering the sensible outcomes that many of us want. It is also worth noting that even the devolution of the income tax, the small stamp duty land tax and the landfill tax means that the Scottish Parliament will still have direct control of only 15% of the taxes raised in Scotland, with the remaining 85% accruing directly to London. I do not intend to talk about full fiscal autonomy, which there has been some talk of, but as a comparator we can look to the Basque country, which has been mentioned. It controls around 86% of its revenue.

I want to concentrate on the specific problems with income tax provisions. Receipts are sensitive to changes in economic circumstances and might fall dramatically in a downturn, as I will explain later. That presents an instability to the budget in Scotland, because we are talking mainly about income tax and the shortfall that would not be matched by the Bill’s provision of very limited borrowing powers. Growth in income tax revenue is low when compared with that of total tax revenue, and that is obviously deflationary, because only the modest growth in income tax will accrue to the Scottish Parliament, with the higher growth in total tax accruing still to London.

The figures between 2004-05 and 2008-09, for example, show that total tax revenue increased by £13.7 billion, but under the proposed plan the Scottish Government, although they control 15% of the tax, will receive only 9% of the increase. That automatically begins to squeeze the Scottish budget. Even within income tax, the most significant growth comes from the higher rates, and most of that growth will not be available to Scotland.

Historically, higher rate taxpayers account for a larger share of the growth in tax receipts, and therefore most of the growth in income tax receipts will accrue directly to Westminster, not to Scotland. We might, in fact, receive a declining share of Scotland’s income tax yields, because we are assigned half the basic rate, one quarter of the 40% rate and only 20% of the 50% rate. The impact of that deflationary bias can best be demonstrated by assuming that the powers had been in place since 1999-2000. Since then, the impact of the shortfall against forecast departmental expenditure limits would have represented an accumulative cut of about £8 billion.

[David Mowat]

I understand the hon. Gentleman’s point about a deflationary bias vis-à-vis the total tax take, but, in comparing the proposal before us with the status quo, what is relevant is the increase in income tax versus the increase in public spending. That is the basis on which the current Barnett allocation works, and on that basis Scotland is likely to do better in the short term.

[Stewart Hosie]

That is not necessarily true, and we need to look at both these measures: the growth in income tax versus the growth in total tax, and the percentage of the share of growth that we receive from income tax alone, owing to how it will be assigned to Scotland, with most of the higher parts being accrued still by the UK, where growth is likely to be higher.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 26th January 2011 Commons Chamber

[Iain Stewart (Milton Keynes South) (Con)]

2. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish Devolution; and if he will make a statement.

[David Mowat (Warrington South) (Con)]

6. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish devolution; and if he will make a statement.

[The Secretary of State for Scotland (Michael Moore)]

The coalition agreement contained a commitment to implementing the recommendations of the Commission on Scottish Devolution, which is also known as the Calman commission. The Government introduced the Scotland Bill on 30 November—St Andrew’s day—2010. The Bill will have its Second Reading in this House tomorrow and I look forward to hon. Members taking part in the debate.

[Michael Moore]

I welcome my hon. Friend’s comments—I know that he has more than a passing interest in those particular powers. I can give him absolutely the assurance that he wants. Through the high-level implementation group, which brings together experts from a range of bodies, and Her Majesty’s Revenue and Customs technical groups, we are consulting very carefully and taking on board all the comments being made.

[David Mowat]

Calman acknowledged that the Barnett formula no longer reflected need. As a consequence, constituencies such as mine—Warrington South—receive many millions of pounds per year less than equivalent constituencies in Scotland. Does the Minister have any plans to amend the Scotland Bill to put the allocation on to a basis of need?

[Mr Speaker]

All I will say to the Secretary of State is that that question is very wide of the considerations of the Calman commission, and I feel sure that he will be dextrous enough to provide an orderly reply.