Scotland Bill

Debate between Baroness Laing of Elderslie and David Mowat

Thursday 26th April 2012 Commons Chamber

[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.

Scotland Bill

Debate between Baroness Laing of Elderslie and David Mowat

Thursday 27th January 2011 Commons Chamber

[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.