Scotland Bill

Lord Cormack Excerpts

Tuesday 6th September 2011 Lords Chamber

[Lord Forsyth of Drumlean]

My noble and learned friend has been here too long if he thinks that the electorate reads the manifestos of the political parties and bases its votes on that. As for the point that the power could be used to bring tax down, the Government are asking the Scottish Parliament to find deficit reduction expenditure of about £3 billion. On my calculations based on his figures, that would amount to a 7p increase in the rate of tax just on deficit reduction. While we are on the subject of Calman, my noble and learned friend says that it is not being implemented now, so that is all right because it will be not in his term of office but in 2016; someone else will have to explain the consequences of this policy.

My noble and learned friend says that the deficit will have been dealt with by then. He cannot have it both ways. He has told us that there is a great consensus for Calman. Calman says that we should move to a needs-based system of funding for the Scottish Budget. Furthermore, from the work of Professor Bell and others we know that that would result now in a reduction of £4.5 billion in the Scottish Budget, which is a lot to find in income tax. That is the Government’s policy for the longer term, so we are going to have to have a higher rate of income tax in order to stay exactly where we are. I do not think that this has been thought through.

There are very few things that I agree on with the First Minister, Alex Salmond, but when he says that you cannot run an economy on a narrow tax base like income tax and that you need to have wider tax powers, he is correct. I am against having wider tax powers for the reasons that I will give shortly. I say to my noble and learned friend—and I will table some amendments in Committee—that he should consider whether it might not be right to have a referendum before these proposals on income tax can be implemented and, certainly in line with our policy on local government, to have a referendum if the Scottish Parliament chooses to set a rate of income tax that is higher than it is for the rest of the United Kingdom.

There is another aspect of taxation in this Bill that absolutely terrifies me; it gives the Scottish Parliament the power to invent new taxes altogether with no reference to anyone—not to the voters or to anything else. My noble and learned friend is shaking his head. Am I wrong about that? If they decide to introduce a local income tax, which is their declared policy, as I thought on these Benches—I am not sure what the coalition Government’s position is on local income tax, but the Conservative Party has always been opposed to local income tax because we would have all the problems that we have just been hearing—we could be faced not only with having the highest rate of income tax in the United Kingdom but with having a local income tax on top of that. I see that my noble and learned friend is reading the Bill. I hope he realises that the Bill actually provides for the creation of new taxes. It specifies particular taxes in respect of land and landfill.

On top of all that, we have powers of borrowing, which are described as positive—and here I did disagree with the noble and learned Lord, Lord Davidson. I think that the Scottish Government must be the only Government legislating on the planet that thinks that now, with a huge financial crisis and huge economic problems, is the moment to have higher taxes and higher borrowing. That is what this Bill provides for. When my noble and learned friend says that the powers might be used to cut taxes and cut borrowing, what planet is he living on? I do not know a single serious politician looking at the Scottish Budget, at the problems and at all these goodies that the nationalists have provided—such as free prescriptions, free healthcare and free transport, all of which are desirable but none of which are affordable—who could believe that the result of these powers would not be that Scotland would become the most highly taxed part of the United Kingdom. As the noble and learned Lord said, at the moment Scotland is suffering the worst rate of growth and the biggest threat to employment in the public sector because of the size of the public sector. It just seems plain daft to do this.

Having dealt with taxation, I turn to the issue of referenda. I see that the Bill has sections on elections, on presiding officers, on deputies, on the Supreme Court, on Members’ interests and even on Antarctica. I am delighted to see that Antarctica is not going to be in the province of the Scottish Parliament, having spent my Christmas there. Every corner of the world is covered except vires on referenda, which is the central issue in politics today in Scotland.

Why have the Government not taken the opportunity to clarify the point made by the noble and learned Lord, Lord Davidson? It is perfectly clear to me, from reading the previous Scotland Bill, and as the noble and learned Lord pointed out, that the Scottish Parliament does not have the power to run a binding referendum on the issue of independence for Scotland. The Scottish Parliament now has a majority of Members who are committed to doing so. We know that there is going to be a referendum. How can it be in anyone’s interests not to ensure that that referendum is held on a proper basis with a proper campaign and with proper notice? Why on earth are the Government dealing with every other issue, including the name of the Government, but not dealing with the central issue, in my view, and providing the machinery for a referendum on independence? Of course, I am a bit of an extremist on some of these subjects, so I would prefer the Bill to say that the referendum is to be in October next year, because I think that it is deeply damaging to have this uncertainty.

[Lord Cormack]

A fixed-term referendum.

[Lord Forsyth of Drumlean]

A fixed-term referendum, as my noble friend says. Of course, I have always been a person who has sought out consensus, and I see no objection to putting the machinery in place. Then the First Minister can decide whether or not to use it. In my opinion, he will be absolutely terrified to use that machinery because he knows that he will lose. Then we can get on to discussing the real business in Scotland, which is how we are going to deal with the reduction in the public sector, the creation of jobs and the protection of services. To be fair to my noble and learned friend, the May election was a surprise, so the Government may not have thought of this and there is still time for him to come forward with amendments that reflect the new political reality.

I have one other point about my reading of the Bill that may interest your Lordships. The Bill is ludicrous because of its income tax powers. It creates non-doms within the United Kingdom. I thought, “Am I a Scottish taxpayer or not?”. There are conditions A, B and C, which are a hugely complicated set of proposals. The Bill states that if you have a property in Scotland and a property in London, which I have, you have to count up the number of days for which you stay in each property to decide whether you are a Scottish taxpayer. Then I read another bit that states that if you are a Member of the House of Commons, a Member of the Scottish Parliament or an MEP, whatever the number of days you are automatically up for the Scottish income tax. There is no mention of the House of Lords, so the good news is that Members of the House of Lords will be able to become non-doms if they spend more time in London than in Scotland. Who writes this stuff? Are we all to be counting our days? Wait for it. The Bill also states that the Scottish rate of income tax will not apply to you in respect of dividend or savings income, so the good news is that Scotland will be a great place to retire, because if you have only dividend and savings income you will not pay the tax. If you want to set up, grow or expand a business, go to England. What sort of message is that to send to people who are concerned about our economy in Scotland?

I understand the politics of the Bill, but why are we giving the Scottish Parliament the power to have a different speed limit from that in England, or a different level for drink-driving? What is life going to be like in the Borders? You cross a bridge and suddenly you are illegal. Are you allowed two drinks or one drink? I am no great Euro fanatic, but if anything, I would say that we should have a common European view on speed limits and drink-drive limits if for no other reason than that everyone would know what they are. The idea that we should change it in Scotland and have something different in England only adds to bureaucracy and confusion and is being done for political reasons. I do not know anyone in Scotland who says, “We really ought to be able to decide our own speed limits, and it is an absolute scandal that we have to be stuck with what is being decided by Westminster as to the number of drinks that we can have in the pub before we go off in a car”.

In conclusion, I am not really very happy with the legislation. I am not happy that we have had no time to discuss it. I look forward to an extended and interesting Committee.