Scotland Bill

Fiona O'Donnell Excerpts

Monday 14th March 2011 Commons Chamber

[Stewart Hosie]

I did not want to take up too much time by listing all the business people in annexe A of the Committee’s minority report, but I shall be happy to do so if the hon. Gentleman wishes.

It is not simply the business community that has backed the devolution of corporation tax. A man who is hugely respected across the political divide in Scotland is Campbell Christie, the former leader of the Scottish Trades Union Congress. He has said:

“Higher growth will create jobs and generate more tax revenues to protect frontline public services, as well as repaying the high level of debt. To achieve this, Scotland's government need greater economic powers. But the Calman legislation does not meet this need.”

[Fiona O’Donnell (East Lothian) (Lab)]

I cannot let the hon. Gentleman get away with saying that the business community in Scotland supports the devolution of corporation tax. The Scottish Parliament Bill Committee report clearly states that there was not widespread support from that community.

[Stewart Hosie]

I did say that there was significant support in the business community, and I stand by that. The one thing I will not do in the next two days is engage in the politics of the Committee report. I want to consider its recommendations, and indeed identify proposals to which there was opposition. There is certainly significant business support for the devolution of corporation tax, which will enable the right decisions to be made to engender economic growth.

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Our amendments and the new clauses associated with them lay out the mechanism to complete that devolution. They are very simple amendments and follow the process set out in schedule 7 to the Scotland Act 1998—

[Fiona O'Donnell]

Will the hon. Gentleman give way?

[Stewart Hosie]

I am just about to finish.

I commend the amendment to the House.

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It is interesting that the Scottish National party is proposing two further taxes, fuel duty and corporation tax, and spent, on my reckoning, just under 20 minutes presenting what is apparently a full case explaining why those should be devolved to the Scottish Parliament. That, again, follows a pattern. There are no costings, no specification, and no material explaining the practical implications for taxpayers, employers and Scotland’s financial sector, or the collection plans.

[Fiona O'Donnell]

Is my hon. Friend aware that when the Scottish Affairs Committee played good cop to the Holyrood Bill Committee’s bad cop, Professors Hughes Hallett and Scott went as far as to say that there was no real link between fiscal autonomy and economic growth, and that it is what is done with the powers that achieves growth?

[Ann McKechin]

My hon. Friend raises a pertinent point and one which even those who have argued for fiscal decentralisation admitted in Committee, including Ben Thomson from Reform Scotland, who had been a firm advocate of that policy. It was stated that all the evidence showed that it is the powers that are available and how they are used, and factors that are not purely fiscal, such as technological progress, investment in human capital and policies on education, that largely determine economic growth. Many of those powers are already with the Scottish Government.

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[Mr Brown]

I appreciate the hon. Gentleman’s clarification of the distances that people travel. I believe that that will be important in the case that the Government are trying to make for a rural fuel derogation. I am not demeaning anyone, but saying that we need to be clear when discussing finance what the situation will be.

Those are the brief points that I wanted to make, and I hope that we can get clarification before we vote on these issues this evening.

[Fiona O'Donnell]

You may not have been present the last time I spoke on the Scotland Bill, Mr Walker, but it was my birthday. Every time I speak about the Scotland Bill, it feels like my birthday.

In contrast to the amendments tabled by the hon. Member for Dundee East (Stewart Hosie), the Bill offers real progress for Scotland and a recognition of all that has been achieved at Holyrood. At the same time, it offers the stability of remaining as part of the Union, which protects Scotland against some risks. The hon. Gentleman seemed to be disappointed by what he called the politics in the report of the Scottish Parliament’s Scotland Bill Committee. Perhaps, however, we should look at the history of how we have come to this point.

We had the Scottish constitutional convention and the Calman commission, both of which the hon. Gentleman’s party declined to be part of. Those things stand in sharp contrast to the SNP’s own record, because the national conversation, which my hon. Friend the Member for Glasgow North (Ann McKechin) spoke about at some length, has delivered nothing for the people of Scotland or the Scottish Parliament. That contrasts with what is on offer before the Committee today. Of course there is detail in the Bill that we need the Government to iron out, but even the Bill Committee in the Scottish Parliament—I believe it is the first time that a Committee of that type has been established, to give the Bill the scrutiny that it deserves and merits—has acknowledged that there is time to work on some of the details.

We could fair see how all puffed up with pride the hon. Gentleman was about all the amendments that he had brought before us, but I have to say that I found his arguments unconvincing. The SNP had all the time that Calman was discussing a way forward to come up with some detailed proposals, and it had some weeks of the Scotland Bill Committee’s work in Holyrood, yet what do we see? A single piece of paper containing its proposals for lasting change and progress in Scotland. I am afraid that is the sum total of its contribution.

[Stewart Hosie]

This is very confusing. I am not puffed up with pride; I am simply doing my job. We have tabled amendments on capital borrowing, revenue borrowing, corporation tax, fuel duty, air passenger duty, aggregates duty and previously on air weapons, road safety, the coastguard and other matters. I believe Labour’s substantive amendment would re-reserve some food labelling powers. That is not a hugely impressive record.

[Fiona O'Donnell]

I will withdraw my remark, then, and acknowledge the humility that we have now heard from the hon. Gentleman. Up until 20 February, however, we had seen none of the details of the SNP proposals. I have sometimes accused Conservative Members of shotgun legislation, and I have to level that accusation against him as well.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does my hon. Friend agree that one reason why we do not need to table copious amendments is that we took part in the deliberations of the Calman commission and in all the consultation related to it?

[Fiona O'Donnell]

I absolutely agree. The whole process has been about consultation, and at some point the SNP has to admit that perhaps the reason why it has been outside the process, and why it had to file a minority report, is that it is just plain wrong on this issue. I genuinely appeal to SNP Members to pause and consider whether Unionist parties would really advance legislation that would put Scotland and the Union at risk.

I am tempted to think that spring has come to the House, because what we have heard today is not the sound of chickens but the sound of constitutional cuckoos. That is what SNP Members are. They allow others to do the work and build the nest, then they come and try to throw our eggs out.

[Stewart Hosie]

We are hearing some interesting analogies. Far from throwing the eggs or the chicks out of the nest, we are bringing to the table today the aggregates levy amendment recommended by the Committee in the Scottish Parliament and by Calman. We hope to divide the Committee on it today. Will the hon. Lady join us in backing it?

[Fiona O'Donnell]

My hon. Friend the Member for Glasgow North has answered that question. If the hon. Gentleman was not listening, or if he was not able to follow it, I am afraid I cannot take responsibility for that.

I will press on and talk about the SNP’s corporation tax proposals.

[Pete Wishart]

Will the hon. Lady give way?

[Fiona O'Donnell]

No, I would like to make some progress and actually talk about the amendments. [Hon. Members: “Come on!”] Oh, alright then. Don’t say I’m not kind.

[Pete Wishart]

I am trying to understand Labour’s position on our amendments. They are what the Scottish Bill Committee and Calman agreed on, and we are providing an opportunity to put them to the vote today. Is she honestly saying that she will not take the opportunity to support her own case?

[Fiona O'Donnell]

This may not be something that the hon. Gentleman is used to hearing, but I am going to tell him, “Not yet”. As my hon. Friend the Member for Glasgow North said, until we have a ruling and clarification, there is a risk to the Scottish Government. That does not mean withholding those powers for ever, but it is about protecting Scotland and looking out for its interests.

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[Stewart Hosie]

I think it was Wendy Alexander who said, “Bring it on,” but Labour then ran away. Let us deal with the provisions of the Bill, because we need to get them right. I suggest to the hon. Gentleman, whom I like and respect, that we will have plenty of time in the next 52 days leading up to the Scottish elections to have this discussion, but we should not take up the Committee’s time tonight.

The Scottish Government, and the SNP here at Westminster, do not consider an arbitrary statutory limit on borrowing set by Westminster and lacking any objective justification to be an acceptable basis for an agreement between the Governments. In particular, an arbitrary limit this low will do little to promote long-term capital investment or responsible capital budgeting. A regime along the lines of the prudential borrowing regime that applies to local authorities, in which decisions are based on affordability, would be far more appropriate. Such an approach could be operated within the guidelines suggested in our amendment. Such guidelines would be agreed between the Scottish and UK Governments, including any terms, conditions and limits set out in the code in relation to capital borrowing between the Treasury and the Scottish Government.

[Fiona O'Donnell]

I was present when Fiona Hyslop gave evidence to the Scottish Affairs Committee, and I am aware that the SNP’s position is to promote unlimited borrowing. Will the hon. Gentleman at least concede that the UK Government do have some interest in this matter, given that any amount that a future Scottish Government might choose to borrow under his proposal would have an impact on the deficit here and on the country as a whole?

[Stewart Hosie]

I recognise that, which is why the proposal is about affordability, and why the code of practice would have to be based on established principles to promote long-term sustainability. Of course, within that, there understandably has to be a recognition of the debt and the deficit position. I was critical of the rise in the deficit, and in the debt, in Budgets from 2005 onwards, before the recession and before the banking crisis, so of course sustainability and affordability have to be considered within this proposal and dealt with in some detail.

[Fiona O'Donnell]

The hon. Gentleman is really confusing me. He seems to be trying to have his Dundee cake and eat it. He said that, in times of difficulty, the last thing we should do is cut expenditure. Is he saying that it was wrong of the previous Government to spend money bailing out the banks when we faced the crisis?

[Stewart Hosie]

No, I said that I welcomed the fiscal stimulus to the economy. Many of the efforts on financial intervention were absolutely necessary, and I supported them. Of course that had to be done. My criticism was not that action was taken during difficult periods, but that we went into the recession and the downturn with half a trillion pounds of debt. I am digressing, however—

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The rationale for restricting Scottish Ministers’ borrowing for capital expenditure by way of loans is simple. Scottish borrowing through bonds would be classified as UK borrowing and, as borrowing through bonds is likely to be more expensive than raising finance through UK gilts, those higher costs would be reflected in increased UK debt interest payments, which would ultimately result in higher costs for the UK. In these uncertain times we cannot afford the risk of extending the power to issue bonds. The hon. Member for Dundee East quoted Professor Holtham, but, because of the likely greater cost of bonds, the professor also made the point that the issuing of bonds by the Scottish Government would essentially be a vanity project. These matters need to be considered in that context.

[Fiona O'Donnell]

Why did the Conservative members of the Bill Committee in the Scottish Parliament vote for the measures?

[Mr Gauke]

We will, of course, look at what the Scottish Parliament has set out and we will engage with those suggestions on alternative ways of proceeding. None the less, given the difficulties that would arise if bonds were issued, particularly in the circumstances we face—there is a crisis in the public finances and it is essential that we meet our fiscal mandate and stick to our spending and deficit reduction plans—we need to take into account the uncertainty and additional cost that could be created at this point. However, there is a general point to be made about borrowing limits. Circumstances will change and the opportunity for greater flexibility in future is something we are willing to look at, but we believe we have the balance right at the moment.