Scotland: Block Grant

Lord Foulkes of Cumnock Excerpts

Monday 15th June 2015 Lords Chamber

Asked by

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what changes they propose to the calculation of the block grant to Scotland, in the light of the recent and proposed increased tax-raising powers of the Scottish Parliament.

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, as set out in the cross-party Smith agreement, the Scottish Government’s block grant will be reduced to reflect their increased tax powers. The UK and Scottish Governments have agreed to work to finalise the new fiscal framework by the autumn, alongside the passage of the Scotland Bill. The Barnett formula will continue as part of these arrangements, but as the Scottish Government will become more than 50% self-funded, changes in their funding will increasingly reflect changes in Scottish tax.

--- Later in debate ---

[Lord Foulkes of Cumnock (Lab)]

My Lords, it is good to see a Scotland Office Minister answering on behalf of the Treasury. Will he agree with me that, as long as any part of the expenditure of the Scottish Government is covered by a block grant, they will find a way of blaming Westminster either for cuts in expenditure or increases in taxes? Therefore, is it not time that the Government thought seriously about setting up a constitutional convention—or commission or convocation, whatever they would like to call it—which would look at all aspects of the governance of the United Kingdom, including full fiscal responsibility for every Parliament within the United Kingdom?

[Lord Dunlop]

My Lords, the noble Lord may well be right that the SNP Government will seek to continue to blame the United Kingdom Government, but the people of Scotland would certainly blame the UK Government more if we landed them with a £10 billion funding gap, costing every family in Scotland £5,000 in higher taxes or spending cuts. That would be the price of full fiscal autonomy. The Government cannot support such a plan because we do not believe that it would be good for Scotland. We want a balanced settlement fair to all parts of the UK and our priority is to deliver the Scotland Bill, which will make Holyrood one of the most powerful and accountable devolved Parliaments in the world.