Public Finances: Scotland
Debate between David Mowat and Ian Murray(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ian Murray
I am grateful to my hon. Friend for that intervention, because what we have seen this afternoon in Scotland is a Scottish Labour party determined to use the current powers of the Scottish Parliament to try to do something different from Conservative austerity. The result of that is a Scottish Finance Minister and a Scottish Government just managing that Conservative austerity. As I said earlier, when faced with the choice of managing the Tory austerity or creating a different future for Scotland, we have chosen to create that different future.
I was explaining the principles behind the Scotland Bill. However, before the Scotland Bill can be enacted they must be underpinned by a new fiscal framework for Scotland. That runs alongside the legislative process, which is slightly different from what happened with the Scotland Act in 2012.
It is crucial to state that the Smith commission stipulated that the Barnett formula would be retained as the mechanism for determining Scotland’s block grant. That is not in question in this debate. However, Scotland’s block grant will need to be adjusted to reflect both the new tax-raising powers and new expenditure responsibilities that are being devolved, and that is at the heart of today’s debate. Until that revised framework is agreed by the UK and Scottish Governments, the Scotland Bill cannot be enacted and the new powers and responsibilities it transfers cannot be implemented. We need a negotiated agreement in order to move on, otherwise the new powers will lie dormant and Scotland’s financial position in the future will remain very uncertain.
David Mowat (Warrington South) (Con)
The hon. Gentleman mentioned the Barnett formula and the vow, and of course he is right that the Barnett formula will be retained, but he will also be aware that it is not based on relative need and therefore is not fair to England, and in particular to Wales. Will he therefore, as a member of a party of the left, support reform of the Barnett formula to make it more progressive for the whole island?
Ian Murray
There is consensus across the entire Chamber that the Barnett formula should stay in place. It was in the vow signed by all the major party leaders who went into the general election. The Smith agreement has been signed by all five political parties, and that includes the maintenance of the Barnett formula. The hon. Gentleman, from the Conservative Back Benches, wants to renew and review the Barnett formula, which means only the Labour party in this Chamber will defend it. It would seem that the policy from the Conservative Back Benches is to do away with Barnett and that the Scottish National party wants full fiscal autonomy, which would also do away with the Barnett formula. We will defend the Barnett formula, because it is in the interests of our constituents to do so.
Ian Murray
I am happy to give way to the hon. Gentleman again, while bearing in mind that this debate is very much curtailed.
David Mowat
I do not want to do away with the Barnett formula. I would just like to see it revised so it is based on relative need, because that seems to me to be a very fair way forward.
Ian Murray
The Barnett formula is based on that need. It was designed in the 1970s to take into account not only the contribution that Scotland makes to the United Kingdom but its public service requirements and geographical nature. It commands broad political consensus and I do not think we should break that. That would be a very difficult message to send out.
The message from today is that it is the job of the Scottish and UK Government Ministers to get a deal. We heard today that the Chief Secretary to the Treasury, who I am delighted is in his place, will be in Edinburgh for talks all day on Monday. The people of Scotland will expect nothing less than a final deal that is signed, sealed and delivered. We support the Scottish Government in their efforts to reach an agreement that is fair, equitable and consistent with the Smith agreement. Again that is not in question, but reach an agreement they must.
Growth and Infrastructure Bill
Debate between David Mowat and Ian Murray
Ian Murray
I suspect that we shall see two developments. We shall probably see an advertisement for employee ownership contracts in the first instance, and we shall probably see unscrupulous employers offering contracts on an employee-ownership basis to people when they feel that it will not be in the best interests for those people to be on normal full-time contracts. [Interruption.] Ministers are shouting “You cannot answer the question” from a sedentary position. I should like the Minister of State to come to the Dispatch Box and give a cast-iron guarantee that not one employee in the country, either in or out of work, will be forced to accept one of these contracts. I can assure him that that will not be the case.
Ian Murray
I am running out of time, so I shall canter on, if I may.
There are so many unanswered questions that I should probably be here until midnight if I dealt with them in detail, but let me give a little of the flavour of what people have been saying to me. I hope that the Minister of State has had his pencil sharpened so that he can take all this down.
First, the value of shares that employees receive in return for relinquishing their rights is wholly inadequate. It may also be difficult in some instances for employees to value the shares accurately, or indeed to realise fair value in the event of sale. Those problems are all the more pronounced given the absence of provision for independent legal and financial advice for employees.
Secondly, the administrative costs of valuing and issuing or allotting small numbers of new shares to a great many employees may be prohibitively high for business. If there is no market, companies may have to purchase the shares back, which will impose a huge financial burden on them.
Thirdly, most of the businesses involved will not be listed. Who will value the shares, what voting rights will be attached to them, how can they be redeemed or transferred when they have no real market value, and who will deal with any disputes that arise?
Fourthly, at a time when an employee wishes to sell, on redundancy or otherwise, the company is likely to be performing poorly, which is why staff are being laid off. That means that the shares will be worth less, or indeed worthless. What happens if a business issues more shares to itself to dilute staff holdings prior to any redundancy? What about dilution in the event of further investment in the company?
Ian Murray
I will give way to the hon. Member for Warrington South (David Mowat), who was a member of the Committee considering the Enterprise and Regulatory Reform Bill.
David Mowat
I was indeed.
Every year, thousands of people who work for firms of lawyers and accountants give away all their employment rights by joining the partnership, thus taking a stake in the business. Why are Opposition Front Benchers opposed to the extension of that principle to ordinary people in ordinary companies?
Ian Murray
I think that there is a slight difference between people who take on a partnership in an accountancy firm and people who embark on training.
Fifthly, what will happen to PAYE and national insurance contributions? At present, any shares “in kind” would be subject to the usual Inland Revenue rules.
Postal Services Bill
Debate between David Mowat and Ian Murray(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ian Murray
I will just make a little progress, because many hon. Members want to speak.
The Bill does not safeguard the inter-business agreement through which Royal Mail guarantees the use of the Post Office as its retail arm. When the agreement is renegotiated, a privatised Royal Mail will try to reduce costs by using other outlets such as supermarkets and high street chains instead of the post office network.
In my intervention on the hon. Member for Northampton South, I used the example of Germany, which has privatised, or certainly reformed, its national mail services through Deutsche Post. It has written protection of its post office network and services into legislation. We are giving no such protection. Deutsche Post could happily buy Royal Mail and decimate the unprotected UK post office network to subsidise its network at home, which is guaranteed by legislation.