Scotland Bill

Graeme Morrice Excerpts

Thursday 27th January 2011 Commons Chamber

[Pete Wishart]

This is a reasoned amendment. We are inviting the House to look at the many difficulties in the Bill and to consider how it might be improved.

[Graeme Morrice (Livingston) (Lab)]

rose—

[Gordon Banks]

rose—

--- Later in debate ---

[Graeme Morrice (Livingston) (Lab)]

I congratulate my hon. Friend the Member for East Lothian (Fiona O'Donnell) on her excellent and entertaining contribution. I would also like to congratulate her—on behalf of the whole House, I am sure—on it being her birthday. She tells me that she is 21. That is 21 plus VAT at a rate of 30%—do the math! [Interruption.] She is the same age as me—well, slightly younger.

I am grateful for the opportunity to speak in this debate. There can be no matter of greater importance to Scotland than the question of how we strengthen the devolution that has helped to improve the lives of our constituents over the past 11 years. Nor should we forget that it was a Labour Government who brought devolution to Scotland, through the creation of a Scottish Parliament with a significant and comprehensive range of statutory powers. Now, after more than a decade of devolution, the time is right to take the next steps in developing Scotland’s democracy and its relationship with the other nations of the United Kingdom.

That opportunity was provided, of course, only through the establishment by the previous Labour Government of the Calman commission. The proposals in the Bill, which are rooted in Calman’s cross-party work, reflect the overwhelming desire of the Scottish people to anchor Scotland’s future firmly in the United Kingdom. On that basis, I support the principles in the Bill. There are differences of detail, of course, between Labour’s approach and the plans in the Bill. For instance, the aggregates levy, food labelling and charity registration have been omitted from the Bill. Matters of considerable detail will need to be thrashed out, but the principles are the right ones. Greater magnitude of fiscal autonomy and improved accountability and transparency will ensure that Scotland’s stability and her place in the United Kingdom remain strong.

There are those who say that the Bill is part of the slippery slope to independence. There are those who said the same thing about creating a Scottish Parliament, but 10 years on, support for independence is at an all-time low. Strengthening devolution does not undermine the United Kingdom; it makes it stronger. The importance of that strength could not have been demonstrated more acutely than by the economic events of the past three years, yet the SNP still preaches separation. Rescuing the Scottish banks could never have transpired under independence, and the turmoil in the Irish economy demonstrates how vulnerable independence would have left the Scottish people.

The question of devolution is settled; how we make it work better for Scotland is the challenge that the vast majority of Scottish people want us to address. It is perverse that the SNP, which stands on a platform of autonomy, has refused to engage with the Calman commission to create and shape new powers for Scotland. There is an incredible irony at the heart of the SNP position. It rejects the Calman commission because it exposes Scotland to falling tax receipts. The SNP talks about full fiscal autonomy as an answer to Calman, but exposure to falling tax receipts would apply to Scotland’s budget whatever the degree of financial powers it acquired. Far from improving, the position under independence would be considerably worse.

[Stewart Hosie]

The hon. Gentleman is wrong. Any country will see its tax revenues fall or rise with the economic cycle—the one that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) said he had ended. The difficulty with the proposals in the Bill is not that tax revenues may go up or down, but that they embed a deflationary bias in the Scottish budget.

[Graeme Morrice]

I am obviously aware of the objection to the Bill from the SNP—it is an objection that we often hear—which is that it would mean less money for the Scottish Parliament. Indeed, the First Minister claims that the Scottish budget would have been considerably worse under Calman, compared with the current regime, yet Alex Salmond refuses to publish the numbers setting out what his plans for fiscal autonomy would have meant for the Scottish budget in the last 10 years.

[Pete Wishart]

It is not just the First Minister who has said that there is a fiscal drag with the current plans— £7 billion is what we argue—but the Secretary of State, who said that the figure would be £700 million, so we are in pretty good company. If that was the loss to the Scottish budget, would the hon. Gentleman object to these tax proposals?

[Graeme Morrice]

The reality is that Government expenditure in Scotland is considerably greater than the sums raised in taxes. In fact, in 2008-09, the last year for which figures are available, total public sector revenue in Scotland was £43.5 billion, whereas total public sector expenditure was £56.5 billion. Under the separation that Mr Salmond wants, that would lead to a fiscal deficit of £13 billion. Let us turn to the fallacy peddled by the SNP that only under a system of full fiscal autonomy would Scotland’s economy be able to generate growth. There is little evidence to suggest that this is the case. Professor Lars Feld, one of the world’s leading authorities on decentralisation, has concluded:

“We do not find any robust significant effect of decentralisation on economic growth”.

Professor Anton Muscatelli of Glasgow university has said that

“there is absolutely no statistical relationship between fiscal autonomy and growth, nor can there be.”

The Scottish Parliament’s competencies are already substantial, but we need to do more to increase accountability. Unlike the funding of most devolved regions by national Governments around the world, Scotland’s block grant is unconditional and can be spent in whichever way chosen. Voters in Scotland and Members of the Scottish Parliament are therefore not exposed to the choice between public expenditure and additional taxation. The Bill ensures that those choices are made. More shared taxes; new devolved taxes; greater borrowing; greater transparency; a fair balance of shared risk across the United Kingdom—that is a fair balance of new powers to create the accountability that the Scottish Parliament needs. The Scottish Parliament will be answerable to the Scottish people for the money that it raises and spends. That is what the vast majority of Scottish people want. They do not want separation, but they do want a Scottish Parliament that is responsible for the decisions that it takes, and that is why I am supporting this Bill.