Scotland Bill

Lindsay Roy Excerpts

Thursday 26th April 2012 Commons Chamber

[David Mundell]

With the leave of the House, I shall respond specifically to the points raised by my hon. Friend the Member for Warrington South (David Mowat), because I understood all the other Members who have spoken to be expressing support for the amendments, some more grudgingly than others.

I do not wish to question the accuracy of my hon. Friend’s analysis of the debates that have taken place in the House of Lords and the Scottish Parliament, but according to my reading of Bruce Crawford’s contribution to the Scottish debate, he made no reference to the no-detriment principle. He did, however, refer to the Holtham approach. There are two separate issues in play. The Holtham approach is about the adjustment of the block grant.

[Lindsay Roy (Glenrothes) (Lab)]

Can the Minister confirm that the same Bruce Crawford did not describe the Bill as a poison pill, a dog’s breakfast, and dangerous?

[David Mundell]

I accept the hon. Gentleman’s recollection of what Mr Crawford may have said about the Bill on previous occasions, but as I said earlier, I welcomed his constructive approach in his dealings with me, with the Secretary of State and with the UK Government in taking the Bill through the Scottish Parliament by way of a unanimously expressed legislative consent motion.

During the debate in that Parliament, Mr Crawford referred to the Holtham approach, which, as I said a moment ago, relates to the adjustment of the block grant and is separate from the no-detriment principle. The Government have accepted that, as in relation to Wales, the Holtham methodology should apply for calculating block grant adjustments. That is the basis on which we will move forward. I do not accept that over the past 12 years or so the Scottish Parliament and Government have been deprived of funds. As others have said, no matter how much money is allocated to the current Scottish Government under whatever mechanism, it would never be enough.

The no-detriment principle refers to how the financial system will operate after the Scottish rate of income tax comes into force. Under that principle, the UK Government would either compensate the Scottish budget for the costs of their policy change on the devolved tax base through the block grant, or receive funds back if the Scottish budget benefits from the policy change in raised receipts. The cost or benefit to the UK from decisions taken on the income tax structure is therefore exactly the same as it would have been before this Bill devolved 10p on income tax to Scotland, and the Scottish budget would be no better or worse off.

The Office for Budget Responsibility will forecast the impact of UK decisions on the Scottish rate of income tax, and we will take steps to ensure that the Scottish budget is compensated. There is therefore a principle of reciprocity. Where one Administration either gains or loses as a result of decisions taken by the other Administration, across the shared income tax there are measures in place to compensate for that loss or gain. This is simply a matter of common sense. It is based on the principle of accountability, which lies at the heart of the statement of funding policy.

I assure my hon. Friend the Member for Warrington South that where decisions taken by any of the devolved Administrations have financial implications for UK Departments, or where UK decisions lead to additional costs for any of the devolved Administrations, the body whose decision leads to the additional cost will meet that cost.

Lords amendment 2 agreed to.

Clause 10

Continued effect of provisions where legislative competence conferred for limited period