Devolved Administrations: Borrowing Powers

Debate between Jesse Norman and Ian Murray

Tuesday 9th July 2019 Westminster Hall

[The Financial Secretary to the Treasury (Jesse Norman)]

It is a delight to speak under your chairmanship, Mr Hollobone. This is an important topic that commands interest not only across the House but, more importantly, across the four constituent nations of our Union and among our constituents. I take my hat off to my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate and for the energy that he and his generation of Scottish Conservative MPs bring to the House of Commons. It has been a tremendous tonic and has been very good for the House as a whole.

Like my hon. Friend, I am surprised and a little dismayed that the Scottish National party is not present for the debate. That in itself tells a story that we need to explore more widely and that I will come to later. He raised a wider issue, so I will talk about what the Government are doing more generally before I address the question of Scotland that he raised so eloquently.

As my hon. Friend and everyone in the Chamber will know, the Government are committed to strengthening the Union, which is arguably the oldest and most successful partnership of its kind in the world. Only last week, the Prime Minister announced an independent review to ensure that Departments in Whitehall work in the best interests of the Union. Protecting the Union is also a priority for both candidates who are vying to be the next Prime Minister.

[Ian Murray]

I understand that the Minister’s opening remarks are about the Government protecting the Union, but what does he say to the 63% of Conservative members who would rather see Brexit than the UK staying together?

[Jesse Norman]

I do not think that they regard that as in tension with a proper unionism; they worry about the union with the EU. In their view, they are giving voice to a sovereignty that the United Kingdom of Great Britain and Northern Ireland expresses and has done for more than 200 years.

As colleagues will know, I can never talk about the Union without mentioning my great hero, Adam Smith. He said that the 1701 union was:

“a measure from which infinite Good has been derived”

to Scotland. How right he was. The reason why that was true for Smith and is true now is that the Scots took advantage of the potential offered by that incorporating political arrangement. As the House will know, Scots spread out across the world, ran large chunks of it and were extremely effective and successful entrepreneurs and businesspeople. Their country and the United Kingdom as a whole greatly benefited.

Borrowing powers are one of the most important ways in which the Government are strengthening the constitutional settlement, by providing devolved Administrations with greater choice and responsibility. Greater resource borrowing helps to ensure budgetary stability and affords devolved Administrations the flexibility to manage volatility associated with their new revenue-raising powers—or tax powers, in Scotland’s case. Similarly, capital borrowing powers offer much greater control over infrastructure investment.

The Scotland Act 2016 increased the Scottish Government’s capital borrowing limit to £3 billion, with an annual limit of £450 million. The resource limit was also raised to £1.75 billion, with an annual limit of £600 million. Those are substantial sums that create a degree of responsibility. To have those powers is to be trusted to exercise them responsibly. If that means investing them in better services on behalf of local people, that is the responsibility that those Administrations face.

It should be clear that those individual borrowing powers come on top of the funding that devolved Administrations receive through the Barnett formula. The fact that devolved Administrations already receive a share of all UK Government borrowing under the formula explains the need for limits on their borrowing to ensure the sustainability of the public finances. Spending decisions taken by the UK Government continue to deliver growth and prosperity across the whole of the United Kingdom. As my hon. Friend and colleagues will know, last year’s Budget provided a funding boost of £950 million in Scotland, £550 million in Wales and £320 million in Northern Ireland.

By 2020, all three devolved Administrations will therefore have received a real-terms increase during this spending review. Before adjustments for tax devolution, block grant funding will have grown to more than £32 billion in Scotland, £16.1 billion in Wales and £11.7 billion in Northern Ireland. There has been further support through city deals and growth deals, including more than £1.3 billion for eight such deals in Scotland.

I reassure my hon. Friend and the House that the Government are also committed to devolving greater responsibilities on tax and welfare. Once the 2016 Act is fully implemented, more than 50% of the Scottish Government’s funding will come from revenues raised in Scotland, making the Scottish Government more accountable to the people they serve. That is surely the point—with power comes responsibility—so the fact that the SNP is not present in the Chamber is a token of the wider problem of the Scottish Government’s lack of accountability. It is unfortunate that, although one constantly hears that Government’s grievances, they do not spend to address the issues of which they complain—my hon. Friend the Member for Angus (Kirstene Hair) is absolutely right to make the point about playing politics. However, the question at the heart of the debate and of the points raised by my hon. Friend the Member for Ochil and South Perthshire is not one of disingenuousness or hypocrisy but one of public service and accountability.

I thank my hon. Friend the Member for Ochil and South Perthshire for securing this debate and for his important and eloquent speech. It poses a challenge to the Scottish Government to live by what they say and to do what they profess. I am grateful to have had the opportunity to speak for the Government and demonstrate our continued support for the sustainability and prosperity not just of the Scottish nation and economy but of those of Wales and Northern Ireland.

Question put and agreed to.

Draft Electricity and Gas (Energy Company Obligation) (amendment) Order 2017

Debate between Jesse Norman and Ian Murray

Wednesday 22nd March 2017 General Committees

[Jesse Norman]

I am very grateful to my hon. Friend for that intervention, and I congratulate him on making it when my remarks have barely started, such is his eagerness. The Department of course scrutinises the cost of legislation, and the order is designed to allow a transition period precisely to set the suppliers up for the next supplier obligation, which will be introduced in 2018. That should allow time for any costs associated with the changes to be absorbed within the system.

The order will also make an important contribution to the Government’s clean growth plan and to reducing carbon emissions. We are making amendments to the existing Electricity and Gas (Energy Company Obligation) Order 2014, which covers the period from 1 April 2015 to 31 March 2017. The amendments extend the current scheme from 1 April 2017 to 30 September 2018 to enable reforms to be introduced while also allowing the industry time before further improvements are made through a new longer term scheme that will run from 2018 to 2022. Planning ahead to 2022—beyond the life of this Parliament—reflects announcements on funding made in the 2015 spending review. The longer term confirmation of funding is designed to give greater certainty to energy suppliers, installers, local authorities and other energy stakeholders.

The Government are facing up to the enormous energy challenges our country faces over the coming years. With the overhaul of the electricity market and continued investment in renewable technologies, we are making good progress towards ensuring that the UK’s energy is secure, low carbon and affordable. Improving the energy efficiency of the UK’s homes is central to that challenge and to reducing fuel poverty. The energy company obligation scheme helps occupants to keep warm, reduce their energy bills and protect their health and wellbeing by requiring energy suppliers to reduce carbon emissions and energy costs through installing energy efficiency measures in households across Great Britain. The supply chains involved in that endeavour also provide economic benefits across the country.

Since the introduction of the ECO in 2013, the scheme has proved to be a remarkably reliable and cost-effective means of upgrading our housing stock. Altogether, more than 2 million energy efficiency measures had been installed in more than 1.6 million homes by the end of December 2016, with around 1.2 million of those measures going to 900,000 low income and vulnerable households and households in deprived areas. That is a significant investment in addressing energy efficiency and fuel poverty. Thanks to the amendment order we are introducing today, we forecast more than half a million more insulation measures and around 45,000 more heating measures will be delivered through the ECO by 2018.

[Ian Murray (Edinburgh South) (Lab)]

The Minister has mentioned fuel poverty several times. Will he say what the Government are doing to prevent fuel poverty with regard to energy companies and their double-digit price rises?

[Jesse Norman]

As the hon. Gentleman will know, the Government made clear in a debate last Thursday and in other remarks that they would bring forward a consumer Green Paper and a response to the Competition and Markets Authority. A specific response on the issues he raises will be addressed in those documents.

The order will reduce the overall spend of the scheme from £860 million a year now to £640 million a year. That has been done to constrain the impact of Government policies on all consumer bills. In making the change we have also sought to ensure that the support offered by the ECO is focused more on those in more need.