Devolution and the Union

Diane Abbott Excerpts

Thursday 20th November 2014 Commons Chamber

[John Glen]

I favour a fair funding commission that would examine all funding across the United Kingdom at the same time, not the cherry-picking of reviews. We must ensure that any solutions are led by the will of our constituents. The clear reaction against regional assemblies, following the referendum in the north-east, must lead us to think carefully about the different affinities of different parts of the United Kingdom to the idea that their community, county, nearest city or region should be the locus of power and allocation of resources.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Does the hon. Gentleman agree that attempts at regionalisation in the previous Parliament showed that the British electorate are not interested in new layers of government in England?

[John Glen]

Absolutely. I agree. I was going on to say that what our constituents want is to avoid a higher cost of politics, more politicians or irrelevant local talking shops.

The Prime Minister also promised a decisive answer to the West Lothian question in the form of English votes for English laws. I know that some hon. Members will advocate an English Parliament or English assembly. I believe that that would be the wrong reform. The Scottish people voted to stay in the United Kingdom, and this House should respect and applaud that. We should not try to break up the UK by other means; we should not make this place a hollowed out, federal senate or part-time English Parliament.

It is important, though, that we deliver a decisive answer to the West Lothian question. We are fortunate to be able to draw on careful work and thinking on this issue by colleagues on both sides of the House and people outside this place. The principle is simple. English votes for English laws demands that hon. Members from English constituencies have sole final discretion on laws that affect only England. It is not always acknowledged that that issue is related to the Barnett formula, but the formula privileges English spending just as changes in English spending create the Barnett differentials applied to the consolidated grant. For this process to continue to have legitimacy, all hon. Members must be able to have a say on English spending. No one should be excluded from speaking or voting. However, to meet the principle of sole final discretion, there must be a majority of Members from English constituencies finally in favour.

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[Mr Allen]

I suspect that the hon. Gentleman, as someone who tried to leave the family of nations, does not speak with quite the authority he may think he has.

What about the positive things we need to address in terms of devolution? It is key—we often say this in the Chamber—that we address the sclerotic over-centralisation of the United Kingdom, particularly with regard to Whitehall. In the big family of nations, we are probably the third most over-centralised nation of the western democracies. Albania is worse than us—that is an obvious example—and, of course, the SNP’s Scotland is also massively over-centralised, sucking up powers on a daily basis. We can hear that slurping sound of local autonomy being sucked into Holyrood, which makes it a highly centralised nation.

[Ms Abbott]

Does my hon. Friend agree that one of the issues arising from the current debate on devolution and the Union is that of more powers for our great cities? As the London Finance Commission and the Independent City Growth Commission have set out, there is a strong argument for many of our great cities to be allowed to keep more of their property taxes and to empower people in those cities.

[Mr Allen]

My hon. Friend is uncharacteristically moderate in her proposal on this occasion. I will come to some better ideas that she may care to think about.

To continue the dialogue with my friends on the SNP Bench, double devolution—in other words, taking stuff beyond the devolved settlement and into local authorities, and even into neighbourhoods and communities—is one of the things we need to press when we discuss devolution, rather than run after the bone the Prime Minister threw out at 7 am on the day after the referendum. Such key things need to be on the agenda when we talk about devolution.

Of course, the pledges made to Scotland in the vow have to be pulled together. Indeed, as we speak they are being pulled together in the Smith package. I am used to seeing SNP Members rolling around in agony and crying, “Foul!”, but this is the first time they have done it before the starting whistle of the match has been blown. People of good will in all parts of the political spectrum want this package for Scotland. I want us to do it, first, because it is honest, and secondly, because it will set a bar and a benchmark for what we in England should get as we talk further about devolution to our cities, towns, villages and rural areas across the whole of England.

If we are going to do this, we—particularly my own party—have to come to terms with the concept of giving genuine independence to local government, just as most local governments in most western democracies enjoy. For the first time in this country, local government would be equal rather than subordinate and supplicant, holding out for, in effect, charity from the centre. That needs to be entrenched and beyond easy repeal.

We are opposite the building that used to house the Greater London council, which on the whim of a particular Prime Minister—although it could have been any of them—was abolished, as were other tiers. We need to entrench local government, rather than give it powers that could be taken away at a later date. We need to give it its own life. It is pointless giving people powers unless we give them the right to have what Scotland has pioneered, namely an assignment of income tax to ensure that it can maintain its financial certainty. A second Chamber made up of representatives from the four nations of the Union is also key. Let us not be modest; let us be ambitious for devolution beyond Scotland.

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[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

I am pleased to be able to speak in this important debate on devolution and the Union and I congratulate the Backbench Business Committee on making it possible. I want to speak about the devolution of powers to our great cities in the Union. There is a growing consensus about the importance of growth, if nothing else, and about devolving powers to our great cities. There was last year’s London Finance Commission. There was the RSA City Growth Commission, chaired by Jim O’Neill. The Communities and Local Government Committee held an inquiry into fiscal devolution. The consensus is that our great cities need more local control over policies and funding for provisions such as transport, skills and housing, but that we must also look seriously at the devolution of taxes, starting with property tax.

I stress to Members that this is not about asking for more money. It is not about asking for a bigger slice of the national cake. It is not about the Barnett formula. It is about asking for cities to keep a little more of the money that they raise. This is an issue that does not have to wait for a constitutional convention. Sir Richard Leese, the leader of Manchester council has said:

“Cities should keep more of the money they raise locally so it can be spent on priorities set locally to create jobs and improve lives. The evidence shows that cities with more control over taxes do better economically”.

To show that this is not a party political point, I quote the Mayor of London, Boris Johnson. He has said:

“Now is the time to unleash a new era of civic leadership by giving larger cities greater control over how they spend a modest proportion of the money they raise. This is not asking for more money, instead it is a tried and tested formula applied successfully in other leading world cities.”

One tax that could be devolved is the mansion tax. I support the mansion tax. It is a redistributive tax, which I always think is an excellent thing. My right hon. Friend the shadow Chancellor is to be congratulated on his continuing listening ear and willingness to refine it. As always, my right hon. Friend the Member for Morley and Outwood (Ed Balls) is our flexible friend.

However, there are some cons to a mansion tax. In London, for instance, with a wildly distorted housing market and stratospheric house price rises, a Hackney teacher who bought their house 30 years ago, not to speculate and make money but to live in, could find that a house that cost them tens of thousands of pounds is now worth over £1 million. Those stratospheric house prices will make Londoners, even though their house will come in under the £2 million that we are talking about, nervous about a mansion tax. I believe that the answer is to hypothecate the tax to a housing authority for London and spend the money on affordable housing—not Boris Johnson’s ludicrous 80% of the market rate but genuinely affordable housing.

Some of the money could also be spent on giving mortgages to key public sector workers. I recollect that my very first mortgage was from Westminster council. It handed out mortgages because it thought that it made Tories out of people. It did not work with me, but it was still a good idea.

There are huge issues relating to Scotland and the Barnett formula and there are very specific issues that should be addressed now about giving new powers and control especially over new property taxes to our great cities, and I hope that the House will consider that carefully.