Scotland Bill

Debate between Kate Green and David Mundell

Monday 8th June 2015 Commons Chamber

[David Mundell]

I do not agree with the hon. Gentleman’s analysis at all. The provision is not even about agreement to a decision. It is a timing arrangement as part of the systems that need to operate. It will work the other way, too; the UK Government will need to consult the Scottish Government when they want to make changes to devolved universal credit flexibilities that will have an impact on Scotland. Other clauses, such as those on transport and elections, also require the UK Government to consult Scottish Ministers before acting.

[Kate Green (Stretford and Urmston) (Lab)]

It is helpful that the Secretary of State has said on the record in this Chamber what the intentions are in relation to the clauses in question. What will happen in the event of a dispute about the outcome of such a consultation process? Where will disputes be decided?

[David Mundell]

There are existing dispute reconciliation mechanisms in the Joint Ministerial Committee. There have inevitably been a number of disputes between the Government of the United Kingdom and the devolved Administrations, and most of them have been able to be resolved through that process.

To respond to the hon. Member for Dundee East (Stewart Hosie), I will turn to the provisions of the Bill. It is a wide-ranging Bill that will bring about a transfer of responsibility to Holyrood that will touch just about every aspect of Scottish life, affect every pay packet in Scotland and have the potential to deliver real and tangible benefits to the people of Scotland.

I turn first to the provisions on taxation. Central to the Bill is the devolution of income tax. Although the definition of income tax will remain reserved, the Scottish Parliament will have full control over rates and bands. That builds on the tax devolution set out in the Scotland Act 2012, which provided for significant powers over income tax that will come into effect next April.

One notable change to the Bill, compared with the draft clauses published in January, is the confirmation that the Scottish Parliament will be able to set a zero rate of income tax on earnings if it so chooses. That effectively gives it the opportunity to reduce the individual’s tax burden significantly if it can afford to do so and makes appropriate spending cuts or tax rises elsewhere. Of course, the reverse is true—if the Scottish Government want to spend more, they will be able to do so by taxing more, and they will be accountable to the Scottish taxpayer for it.

Alongside the devolution of income tax sits the assignment of half of Scotland’s VAT revenues. Members will recall that it is against EU law to have differential VAT rates within a member state, so the devolution of VAT would not be legal.