Scotland Bill

Lord Bruce of Bennachie Excerpts

Thursday 27th January 2011 Commons Chamber

[Michael Moore]

The essence of debates in the House is that we are allowed to have opinions. I carefully used the word “credible”, and credibility is lacking in the Scottish Government’s proposals. The desperate efforts to undermine the proposals in the Bill have now been exposed for what they are.

[Malcolm Bruce (Gordon) (LD)]

Have the Scottish Government given an indication of the share of the national debt, and the share of the underwriting of the bankrupt Scottish banks, that the Scottish Parliament would be willing to undertake under fiscal autonomy?

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[Malcolm Bruce]

If that is the attitude of the Scottish National party, why have its members taken no part in the constitutional convention or the Calman commission over the years, and then appeared at the last minute, in a grudging and curmudgeonly fashion, to take part in a debate that they have not entered into for 25 years?

[Pete Wishart]

It is a matter of principle. I know that the right hon. Gentleman knows very little about principle in the context of the Liberal Democrats, but we happen to believe in independence. It may have escaped his attention, but that is what our party is all about. The fact that a reference to independence was not included in—indeed, was intentionally excluded from—the wording of the Calman report meant that if we were to retain our principled position, we could not participate. That is what we call principle, and perhaps that is a little lesson for the right hon. Gentleman.

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[Malcolm Bruce (Gordon) (LD)]

I am very happy to follow the hon. Member for Glasgow North (Ann McKechin), who made a fair analysis of the co-operation and consensus that have characterised the process over many years. She presented a constructive role for the Opposition, as is right and proper, in scrutinising and trying to improve the legislation, and in addressing some of the issues. I certainly hope that matters are proceeded with in that spirit.

I am very happy also to welcome the Bill, as someone who has been involved in the process since its very early days—indeed, for 25 or more years. Frankly, however, I see it as a further step along the way to home rule within the United Kingdom. I never thought, any more than others did, that the Scotland Act 1998 was the end of the process; most of us recognise that the constitution is evolving. The first Act, which established the Scottish Parliament, was seminal legislation, but it was always work in progress, and this Bill falls into the same category.

I hope that my right hon. Friend the Secretary of State for Scotland does not find any discomfort in that, but I completely understand that his role in government, operating on an agreed cross-party consensus, is to put forward a Bill that commands the support of the House and the Government and does not prevent any of us from arguing the case for further reform and development. That puts the SNP in a difficult position, but that is precisely where it wants to be.

For many of us who have been through this debate a few times, my previous point might sound ponderous, but we are making history because we are shaping the evolution of the United Kingdom’s constitution, and this stage will be monitored for many years to come as one of the stages along the route. It will represent the foundation of a much more radical and decentralised United Kingdom over time.

[Stewart Hosie]

I respect the right hon. Gentleman’s view that this is a process, and that he wants to reach what he calls home rule within the UK. I suspect that that probably means, in his mind and those of his honourable colleagues, effectively a federal position with full fiscal autonomy. I respect that position, but we do not have that before us, so why is he prepared to settle for a Bill that, while devolving speed limits for cars, will not allow the devolution of speed limits for cars drawing caravans? Why is he prepared to accept something so weak?

[Malcolm Bruce]

If the hon. Gentleman will let me proceed with my speech, he will receive the answer, precisely because I took part in the constitutional convention when it was set up in the 1980s. At that time, we and the Labour party were in opposition, but the Conservative party largely ignored the convention and the SNP boycotted it. Yet that constitutional convention carried out detailed and thoughtful work that laid the foundations for the first Scotland Bill and, in my view, for this Bill and probably the next one. The difference between my party’s approach and that of the SNP is that we, as a single party with an ambition, recognise that we cannot achieve on our own everything that we want; we have to work with others who do not necessarily share all our views. By working with them, however, we can progress towards what we want to achieve; if we refuse to co-operate, we cannot.

[Mr Mike Weir (Angus) (SNP)]

Will the right hon. Gentleman give way?

[Malcolm Bruce]

I shall make a little progress, if the hon. Gentleman will allow me.

At the time when the constitutional convention was established, there was a minimalist position. Many people in the Labour party were prepared to consider an assembly. I accept that many were passionately in favour, but others had reservations, and the minimalist position involved an assembly, elected by first past the post, funded by a block grant and operating with even fewer powers than the then Scotland Office.

The process—this is the real point that the SNP should take on board—of the constitutional convention meant that we finished up with a Parliament, with all the powers of the Scotland Office at that time, with a proportional voting system to make it much more nationally acceptable and, in fact, with non-defined reserved powers attached to the Parliament. That was a much more radical outcome than the original agenda, and one that would not have been achieved if my party and others had not engaged. At the time, I challenged the SNP to take part, because I wanted it to be there, knowing that it wanted independence but accepting that the party probably would not get it. The SNP’s involvement, however, might have helped us to gain more powers than we did. That is why I continually regard its all-or-nothing approach as damaging to Scotland and, ultimately, to the party’s own interests.

We got quite a lot of agreement, and that is relevant to this debate. Indeed, I think we got agreement in the convention on tax-raising powers, but they did not follow through into the original Scotland Bill. I remember that Donald Dewar even renewed his passport to travel to Germany, and Jim Wallace, Ray Michie and I went to Spain to look at that country’s arrangements. On our return, we more or less agreed on the proposal to assign half of all income tax revenues, and VAT and excise duties, to the Scottish Parliament. The fact that those proposals did not carry through into the first Scotland Bill—I think; I suspect—owes a lot to the resistance of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). The convention largely agreed to them, however, so I am particularly pleased that the Bill before us moves in that direction and will allow them to be introduced.

I also firmly believe—the Scottish National party ought to give thought to this—that those of us who have brought forward and will take forward this legislation are working with the grain of majority opinion in Scotland, in terms of wanting both more power and a step-by-step approach. Those of my constituents who are sympathetic to the SNP cause are puzzled as to why it cannot work with other people and take a step-by-step approach. We could all decide at what point we wish to get off, but that does not happen because the SNP knows that the majority of people in Scotland would get off long before it did.

[Stewart Hosie]

The right hon. Gentleman makes the interesting assertion—it is only an assertion—that he believes he is working with the grain of Scottish public opinion. I doubt that a single person has said to him, “That’s right Malcolm, we want 50% of the basic rate of income tax, 25% of the 40p rate and 20% of the 50p rate—that’s the grain in my street.” I do not think he is right when he says that.

[Malcolm Bruce]

No, but people have said to me, “I want independence, as long as I can still be a British citizen.” There is confusion in the minds of many people about what independence is. Two facts are clear: the majority of people vote for Unionist parties, and the majority of people say repeatedly that they want more power, but that they want to take it in an orderly and measured fashion. It is up to the politicians, to some extent, to work through what the priorities are and how they should be worked up. That is precisely what this legislation does.

In the end, the SNP’s position is anti-democratic, because it does not represent the majority. More to the point, it is unproductive. Frankly, it is downright lazy, because many of us have done an awful lot of work to bring these proposals forward. Having done nothing to create the Scottish Parliament, the SNP is happy to use it and abuse it. It takes a similarly curmudgeonly approach to this legislation. Of course it will not provide fiscal autonomy, which is, of course, a technical term for separation from the UK, as was pointed out by the Steel commission, of which I was a member. There is no mandate for that. The proposals do not go as far as I want them to go, but I have no hesitation in welcoming them as a constructive step forward that will allow us to test how greater responsibility and accountability will work. In my view, as and when that does work, it will justify future extension.

The Bill will give Scotland control over about 35% of its budget, which I hope will increase over time. It will ensure that Scotland has the capacity to demonstrate responsibility and accountability to justify more devolution. In an ideal world, I would like each tier of government to have access to part of the taxes that broadly finance its operations. In other words, each tier should be able to get more or less all its revenue from its own tax base, subject to the recognition that the UK Government have fiscal transfer responsibilities. Perhaps on a smaller scale, the Scottish Government should have some internal fiscal transfer responsibilities. That would be my ideal in the long run, but one has to take these things a step at a time and by negotiation.

I want to pick up on the point on which the Secretary of State has intervened two or three times. On a few occasions, I have heard the assertion—stated as a matter of absolute fact—that had this arrangement already been in place, Scotland would have lost £8 billion. As has been pointed out, if that were true—which it is not—it would be a clear demonstration of the benefit of being part of the United Kingdom, because that £8 billion would have been a transfer from the UK taxpayer to Scotland. Of course, the assertion is perverse nonsense. It is also retrospective, at a time when the balance is changing. It showed that, at a time of rising public spending, the Barnett formula delivered for Scotland at a faster rate than the rate at which incomes rose. Of course, at a time of public spending constraint, the reverse will be the case—the income tax take will rise faster than the Barnett formula consequentials. Over time, that can be averaged out—that is what the cash borrowing is for. That is the way that we should look at it.

The proposals give the Scottish Government the capacity to benefit from economic success, which grows the tax base and can potentially grow the revenue base. If they use their powers well, they will benefit from the buoyancy of the revenues. Of course, if they mismanage the economy, the reverse will be the case. The advantage of the Bill is that the transitional arrangements and the cash borrowing adjustments will provide a cushion to minimise the extremes of that effect. However, they will not deny a bit of pain if it goes wrong and a bit of benefit if it goes right. Over time, one hopes that that will become a more substantial amount.

[Stewart Hosie]

The right hon. Gentleman is simply wrong about this matter. Although the Scottish Government will control 15% of the taxes raised in Scotland, if GDP rises and the tax take rises, the rise in the income tax take will be lower than the average. That will have a deflationary effect on the Scottish budget and will not allow the Scottish Government to benefit in the way that he describes.

[Malcolm Bruce]

On the models that I have seen, the reverse is the case, particularly at a time of public spending constraint. The point is that it will depend on changes over time—some years it will be up and some years it will be down. However, the proposals provide the potential for successful economic management to provide genuine benefit.

I would give more credibility to the SNP claims that the measures are inadequate to grow the Scottish economy if its record in government showed that it was using the powers it currently has in ways that will grow the Scottish economy, but it has not done that. We have seen a succession of populist consumer gimmicks; almost a complete collapse in public investment; and the slow strangulation of local autonomy. Local councils have less and less control and more and more centralised management through the freezing of council tax. There is effectively less flexibility across Scotland to gear responses to meet local needs.

[Margaret Curran]

Will the right hon. Gentleman comment on the Scottish Futures Trust? Does he see that as a model for using the levers appropriately to grow the Scottish economy?

[Malcolm Bruce]

My next paragraph relates to my constituency, and I am sure the hon. Lady can predict the answer to that question. I did not have a problem with the SNP saying that there were weaknesses in the public-private partnership method of financing, and that it wanted to look for a better method. I had a big problem with it abandoning all those projects and failing to come up with a better method, leaving us in total limbo. That has been catastrophic for investment in Scotland—catastrophic, not just seriously bad.

I am fortunate, privileged and honoured to represent the dynamic economy of the north-east of Scotland, which is probably the most dynamic economy in the whole of the United Kingdom at the moment. I and my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) represent the constituencies with the lowest unemployment rates in the United Kingdom. I appreciate that other hon. Members face serious problems of unemployment in their constituencies, so I am not boasting about this; I am simply acknowledging it. The point is that Scotland has a region with the capacity to deliver economic growth, yet the Scottish Government have conspicuously failed to deliver what they should have been doing to facilitate that growth.

There is no Aberdeen bypass. The Scottish Government today announced the go-ahead for an upgrade of the A90 north of Aberdeen. I am glad about that, but all they have done is to announce, a year after the public inquiry, that they intend to go ahead with it. There is no date, and it is dependent on the resolution of the western peripheral route, which is still subject to legal argument. When the SNP loses office in May, not one stretch of tarmac will have been laid and not one ditch will have been dug—nothing will have happened on the ground.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

What did the right hon. Gentleman’s colleagues in the previous Scottish Administration do to progress the Aberdeen western peripheral route? When did they make a decision to go ahead with it?

[Malcolm Bruce]

They published the line of route for both that and for the A90. It took the SNP four years to make no progress at all. It has not indicated how it will find the money or when the scheme will ever start.

I do not know what it is about the SNP, but it has a total hostility to railways. It either scraps, delays or fails to take forward every rail project. Part of the transport needs of Aberdeen, and part of the proposal for our bypass, was a commuter rail service to restrict the growth of road traffic and give people choices. Progress was being made with that, but not even the provision of one additional station has progressed under the SNP, in spite of cross-party support from all other quarters. We have had an SNP Government for four years, and they have had the powers to do things to grow the Scottish economy—limited those powers may be, but they have had them—and they have not done so. They should prove that they can do that before they demand more powers that they do not appear competent to use.

[Mr Weir]

The right hon. Gentleman has just made an outrageous attack on the subject of rail. He should ask the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) about the reopening of Laurencekirk station, for example. What about the Bathgate rail line? What about the Alloa-Stirling line stations? All those things happened under the SNP Government. What he said is simply incorrect.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Mr Hosie, I think that is my business, not yours, and I would be very grateful if you did not shout across the Chamber.

[Malcolm Bruce]

I acknowledge that some of those things have happened, but the SNP has been very good at cutting the ribbons on projects that were announced, organised and set in motion by previous local or national Administrations.

[Gordon Banks]

The hon. Member for Angus (Mr Weir) mentioned the Sterling-Alloa railway line. The right hon. Member for Gordon (Malcolm Bruce) is exactly right—the SNP came and cut the ribbon, but the hard work was done under the previous Administration, not the current one.

[Madam Deputy Speaker]

Order. Many speakers have gone very wide of the subject in illustrating the points that they wish to make. Mr Bruce, I would be grateful if you came back to the subject of the Bill in responding to the intervention.

[Malcolm Bruce]

I will of course observe your strictures, Madam Deputy Speaker, but when we are talking about powers, it is important that we also discuss our capacity to use those powers effectively. My contention is that the points I have made show why we need to take a step-by-step approach and demonstrate how well we can use our powers, and then hopefully take more of them.

Those who want to go faster have to acknowledge that Scotland’s capacity to take on the full responsibility for its own financial affairs is beyond credibility in the present circumstances. The UK is struggling to tackle a massive financial problem, and Scotland has a disproportionate share of that problem in its needs, its share of the national debt and its share in the underwriting of the banks, which has brought us to this pass. The reality is that Scotland’s future lies absolutely within the UK, but it is important that we have the power to take appropriate decisions, accountable to the people of Scotland, in ways that can help us make our own contribution to solving those problems in our own way.

As one or two Members have mentioned—it was alluded to by Calman—the transfer of benefits policy to Scotland has been suggested. That might happen in the longer term, but most people would acknowledge that the administration of certain aspects of benefits could be devolved or shared. At the moment, however, Scotland’s benefits bill is disproportionate, so the matter is much better shared across the UK, especially during these particularly difficult times.

We have embarked on a fundamental and radical welfare reform, which, leaving aside any controversial aspects, many people recognise has merit if it can deliver responsive benefits, value for work and so on. In the longer term it might be possible for Scotland to take a role in administering welfare, but now would hardly be the right moment to do so, as we are in the middle of a major funding deficit and a major reform programme. We must make common-sense decisions, taking on board what can practically be done now and acknowledging that further transfers could happen in the short term, when we are good and ready. Consideration at a later date can take us further forward.

I should like clarification on two questions that have been raised with me. One relates to the progressive commitment that the coalition Government have made on the threshold level of tax. As a former Treasury spokesman for my party, our commitment to raising the level at which people pay tax to £10,000, starting with £1,000 in the current year and progressing during this Parliament, is dear to my heart. I wonder whether the Under-Secretary in his reply can explain how that will be accommodated in calculating the tax revenues that would accrue to Scotland, or compensated for so that it does not create a disadvantage out of a good and progressive reform.

My second question relates to some aspects of charity law, which are not just peculiar to Scotland. When public authorities are looking to charities and the voluntary sector to take on more responsibilities for delivering public services, it raises questions about their status, and particularly their VAT liabilities. If a local authority or a health board provides services, there is no VAT, whereas if such services are provided by a voluntary organisation, there may be VAT liabilities. That may inhibit the transfer arrangements, which might otherwise be welcome. I acknowledge that that probably involves the Treasury and the Scotland Office, but I would appreciate some clarification if possible.

In the past 20 years, we have embarked on a process of restructuring the UK in a radical and decentralised way. As has been said in the past, devolution is a process, not an end product. No piece of legislation ends it. The Scottish National party wants the end to be independence. That is a perfectly respectable position, but for that, it has to win the support of the people of Scotland, which it is conspicuously failing to do. In the meantime, for those of us who want a stronger Scotland, with more control over its affairs and playing its full part in the United Kingdom, the Bill represents a major and significant step forward. It will, in my view, strengthen the United Kingdom, strengthen Scotland’s role and accountability, and perhaps enable the people of Scotland to look to their destiny and say, “We cannot always blame London and other people, we have to use the instruments that we have to help ourselves, and co-operate with others to ensure that we tackle the bigger problems together.” That is what the United Kingdom is about, and also what the devolution home rule settlement is about. They are not incompatible; both are essential. The Bill is a positive step forward, and will be beneficial to Scotland and the United Kingdom.

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[Iain Stewart]

I am grateful to my hon. Friend. I am not sure whether his birthday is coming up, but I will happily send him a copy of my book, which goes into the matter in some detail. The baseline funding for Scotland is an important point, but whether to have a needs-based assessment is not part of the Bill, although the Bill opens up the possibility that that will be reviewed in future.

[Malcolm Bruce]

No one can deny that these are legitimate issues for debate, but does my hon. Friend not acknowledge that when we look at the matter detail by detail—my right hon. Friend the Member for Yeovil (Mr Laws), when he was adviser to my party, did some work on this—we see that a high proportion of the spending differential is justified by remoteness, the different balances, benefits and so forth? A part of it is not accounted for, but the gap is nothing like as big as my hon. Friend the Member for Warrington South (David Mowat) suggests.

[Iain Stewart]

My right hon. Friend makes an important point. The whole subject is difficult and complex, given the shorthand of Barnett and the vast difference between public spending in Scotland and England. In some areas, however, for the reasons that he has set out, there is a big difference, and those reasons will also be found in England. For instance, in remote parts of Cumbria or Devon, spending per head will be higher than in central London or Manchester.

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[Iain Stewart]

The hon. Gentleman has a more detailed knowledge of the current state of the Basque economy than I do, but our research showed that there were specific problems there. I shall discuss them in a moment, as they are directly relevant to the example in Scotland.

[Malcolm Bruce]

Does my hon. Friend acknowledge that joining the inland revenue contribution club is not a popular sport in Spain? The Spanish have found that devolving this responsibility results in the tax collection rate increasing substantially. No comparison can be made with the situation in this country, because one cannot escape the Inland Revenue.

[Iain Stewart]

My right hon. Friend makes a powerful point.