Scotland’s Fiscal Framework

Debate between Edward Leigh and David Mundell

Wednesday 24th February 2016 Commons Chamber

[David Mundell]

I note what the hon. Lady says. Of course people in Scotland will know that the SNP position used to be to abolish air passenger duty completely, so there is somewhat of a change there. None the less, she makes an important point. There is a review, and I am sure that those issues will be considered as the Budget process goes ahead in this Parliament.

[Sir Edward Leigh (Gainsborough) (Con)]

Is not the measure of statesmanship the imagination to give to others what one demands for oneself? For centuries, the English have demanded full control over our spending and taxation. Why should the Scottish people feel any different? Does the Secretary of State not realise that there must be some merit in the argument that as long as we maintain the outmoded, outdated and unfair Barnett formula, which thoroughly disadvantages the English, we will simply stoke up resentment on both sides of the border, and that will ultimately lead to more calls for independence?

[David Mundell]

My hon. Friend, as we well know, is the staunchest advocate of full fiscal freedom in this Chamber—more staunchly so than those on the SNP Benches when he moved his amendment for complete fiscal freedom. My response is that the people of Scotland would not respond well to having a £10 billion annual black hole in their finances, and that full fiscal freedom is not the answer. Further devolution as set out in the Scotland Bill to create a powerhouse Parliament is what the people of Scotland want and it is what this Government are delivering.

Scotland Bill

Debate between Edward Leigh and David Mundell

Monday 9th November 2015 Commons Chamber

[David Mundell]

I want to respond to all the points raised on the new clauses and amendments if I can.

The hon. Member for Nottingham North (Mr Allen) has put forward various suggestions on local government. On the one hand, I agree with the SNP that it is a matter for the Scottish Parliament to determine the nature of local government in Scotland. On the other hand, I agree with the hon. Gentleman that as many matters as possible in Scotland should be devolved locally. Indeed, that was one of Lord Smith’s proposals for the Bill.

On the question of permanence, I am glad that the current proposal, which I had previously shared with the Scottish Government and the Devolved Powers Committee, meets everyone’s aspirations. In response to the hon. Member for Caerphilly (Wayne David), this is an important proposal which demonstrates what the people of Scotland have clearly indicated they wish to see in the legislation. I am also pleased that the proposals relating to elections have been relatively uncontentious, as were the measures relating to a super-majority. I therefore hope that the amendments to those measures will not be pressed to a vote.

I am afraid that I cannot agree with Labour’s proposal for the full amount of VAT raised in Scotland to be assigned to Scotland. It was a key part of the Smith agreement that half the VAT revenue should be so assigned, in order to ensure a stable balance between encouraging Scotland’s economy to grow and insulating the Scottish Government’s budget from UK-wide economic shocks. I hope that the relevant amendment will therefore not be pressed to a vote.

The question of human rights was raised by the hon. and learned Member for Edinburgh South West (Joanna Cherry). I have found her previous contributions to this Parliament to be based on fact and not on politics, so it will not surprise her to learn that I was disappointed with her contribution this evening. This is an important issue. The House will be aware that we have outlined our proposal to reform and modernise our human rights framework by replacing the Human Rights Act with a Bill of Rights. Of course I am very aware of the possible devolution implications of reform, and we will engage with the devolved Administrations as we develop these proposals. We spoke about this matter in Committee, and the Government’s view has not changed. The Government are working on proposals for the reform of the human rights framework, and we will bring forward those proposals in due course, in consultation with the devolved Administrations.

The fiscal framework has also been discussed today. I want to put on record the fact that I am absolutely confident that John Swinney, negotiating on behalf of the Scottish Government, will be able to get a good deal for them. I have that confidence in Mr Swinney, and I know that he and the UK Government are absolutely committed to achieving that objective. We have had a number of detailed discussions on the fiscal framework, and we agreed at the start that we would not provide a running commentary on those negotiations. Nothing is agreed until everything is agreed. However, there is no suggestion that agreement cannot be reached, and it will be an agreement that is fair for Scotland and fair for the rest of the United Kingdom. I look forward to Members of this House and of the Scottish Parliament being able to properly scrutinise that agreement.

[Sir Edward Leigh]

Will my right hon. Friend deal briefly with amendment 224, which has been tabled by the SNP? According to its accompanying explanatory statement, instead of asking the House to impose full fiscal autonomy, the Scottish Parliament

“could then legislate in these areas to provide for full fiscal autonomy in Scotland.”

In other words, SNP Members do not actually want full fiscal autonomy yet. They are like St Augustine: they want to stop sinning, but not quite yet. I think we should call their bluff on this one.

[David Mundell]

Throughout the course of these debates it has been clear that the strongest advocate of full fiscal devolution in this House is my hon. Friend the Member for Gainsborough (Sir Edward Leigh). He is willing to put his money where his mouth is. I am not willing to put the livelihoods of people in Scotland on the line just to demonstrate that some scheme would not work.

Scotland Bill

Debate between Edward Leigh and David Mundell

Monday 29th June 2015 Commons Chamber

[David Mundell]

No, I will not at this stage—[Interruption.] The hon. Gentleman is one of the most frequent contributors to debates in the House, and he does get to have his say, although not as much as his former leader does. The right hon. Member for Gordon (Alex Salmond) is a very frequent contributor.

The SNP’s new clause 54 goes further than amendment 124, tabled by my hon. Friend the Member for Gainsborough (Sir Edward Leigh). However, to go further than the powers set out in the Bill would break the concept of shared tax and be complicated for individuals and employers with activity on both sides of the border, as they would have to understand and comply with two potentially entirely different tax systems. The Law Society of Scotland agreed with us, saying of the proposed change:

“The administrative burden would increase considerably. The complexities regarding the UK savings and investment market may also be particularly problematic”.

That would not be in keeping with a stronger Scotland within the United Kingdom. It is not what the people of Scotland voted for last September, and I cannot accept the new clause.

On new clause 32, tabled by Opposition Front Benchers, I hope that I can provide some reassurance to the House. The new clause is intended to provide the House with a report on the implementation of the Scottish rate of income tax and the further income tax powers in the Bill. That is a laudable aim, but I can reassure hon. Members that current legislation already provides for annual reports on the implementation of devolved tax powers to Scotland.

Section 33 of the Scotland Act 2012 requires the Secretary of State and Scottish Ministers to lay before both Houses of Parliament and the Scottish Parliament annual reports that broadly cover the areas suggested in the new clause. Three reports have already been produced, the most recent in March, and HMRC’s accounting officer for the Scottish rate and the Comptroller and Auditor General have both given evidence to the Scottish Parliament on the progress of tax devolution to Scotland. Of course, Westminster Committees have the opportunity to call for evidence, too. Alongside that existing requirement and to ensure that Parliament can have confidence in the implementation and operation of the Scottish rate, the Comptroller and Auditor General is required to report annually on HMRC’s administration of the Scottish rate.

I can also tell the hon. Member for Edinburgh South that I am satisfied that adequate resources are being brought forward to deal with the issues relating to the transfer of these powers to Scotland and to HMRC’s involvement in that process. I would further reassure Members that reporting requirements are a feature of the negotiations currently under way between the two Governments on the fiscal settlement that accompanies the Bill.

I have set out the rationale behind the Government’s drafting of the Bill, which, as has been widely acknowledged, fully implements the Smith commission’s recommendations on income tax. The fiscal framework will be an important part of the discussions, and we are giving this exercise the focus and priority that it deserves.

[Sir Edward Leigh]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 12 to 14 ordered to stand part of the Bill.

Clause 15

Assignment of VAT

Question proposed, That the clause stand part of the Bill.

Scotland Bill

Debate between Edward Leigh and David Mundell

Monday 15th June 2015 Commons Chamber

[David Mundell]

I do not accept the hon. Gentleman’s argument. A £10 billion shortfall in spending in Scotland would affect every school, every hospital, and every family by £5,000. I am not going to countenance that, and I am not going to support any amendments that would promote it.

We have had a lengthy discussion on full fiscal autonomy.

[Sir Edward Leigh]

Will the Secretary of State give way?

[David Mundell]

I will. [Hon. Members: “Oh!”] I will take my hon. Friend’s intervention because he proposed an amendment.

[Sir Edward Leigh]

Let me be quite clear: those of us who propose full fiscal autonomy and the scrapping of the Barnett formula are also arguing that there should be a block grant based on Scotland’s needs and not on England’s spending, so that there is a real Parliament making real decisions, which is what the Scottish people want.

[David Mundell]

I have noted what my hon. Friend has said. At times today, I am sure that he will have been an honorary member of Team 57.

I want to make very clearly a point that echoes the evidence I gave to the Select Committee chaired by the hon. Member for Nottingham North (Mr Allen). I regard a Scottish Parliament as a prerequisite of a United Kingdom. There will not be a United Kingdom if there is not a Scottish Parliament. I can understand why there is a lot of debate about the exact wording, and I will continue to listen to it, but I am absolutely clear that without a Scottish Parliament there will not be a United Kingdom, and that it is not sustainable to argue about lots of preconditions on that basis.

Scotland Bill

Debate between Edward Leigh and David Mundell

Monday 8th June 2015 Commons Chamber

[David Mundell]

I think the hon. Gentleman, like me, looks forward to amendments to the Bill being tabled, setting out the SNP position on full fiscal autonomy. I have heard that issue raised on numerous occasions but I am still not absolutely clear what it means in the SNP’s terms. The Institute for Fiscal Studies identifies a black hole of between £7 billion and £10 billion in Scotland’s finances.

[Sir Edward Leigh (Gainsborough) (Con)]

With respect—[Interruption.] Actually, I am going to make a point that might be quite positive. With respect to my right hon. Friend’s arguments, what worries me is that this might not be the end of the story, because it does not get to the kernel of the problem, which is that the Scottish Parliament will raise only about 50% of what it spends and, therefore, will be fundamentally a spending Parliament, not a tax-raising Parliament. There is a good Conservative case to be made for full fiscal autonomy, because it would breed responsibility.

[David Mundell]

I do not believe that there is a Conservative case, or indeed any case, to be made for an outcome that would leave Scotland with a gap of between £7 billion and £10 billion in its finances, which would affect every school, every hospital and every person in Scotland.

The independence referendum on 18 September 2014 was a truly historic moment, and I am proud that the people of Scotland voted decisively to remain part of our United Kingdom. The debates were passionate, as many here today will attest, and extensive, and the level of participation was a credit to Scotland. The result was clear and decisive. It represented the sovereign will of the Scottish people. In voting no on independence, we Scots, for the first time in our history, made the positive, conscious and collective choice to pool our sovereignty with our neighbours in England, Wales and Northern Ireland. We made the positive choice to enjoy the best of both worlds. We chose to continue to share the benefits of being part of a strong United Kingdom while enjoying the benefits of a strong devolved Parliament in Edinburgh delivering Scottish solutions to Scottish issues. However, a no vote was not a vote for no change. The Conservatives, Labour and the Liberal Democrats all published extensive proposals for more powers for the Scottish Parliament in the months before the referendum.