Scotland Bill

Lord Kerr of Kinlochard Excerpts

Wednesday 28th March 2012 Lords Chamber

[Lord Kerr of Kinlochard]

My Lords, I do not want to repeat what I said in Committee on this. Although I am sure there is much force in some of the points made by the noble Lord, Lord Lang, they are no doubt points that the Scottish Parliament would have in mind, were it minded to exercise the power that this clause would confer upon it. I do not agree with the noble Lord, Lord Forsyth of Drumlean, that there is some constitutional impropriety. I do not understand his constitutional argument.

The constitutional principle in regard to taxation is that those paying the tax—those on whom it will be levied—should have voted for it. I see no constitutional objection to the Scottish Parliament having the power to levy another tax, given that only Scots or people resident in Scotland will be paying it. As I said before, I see no difficulty about them having the power to vary an existing tax, for example the rate of VAT. I do not see a constitutional principle there. I referred in Committee to the example of differential sales taxes across the United States of America. There are many taxes that are different between states.

I conclude my remarks by saying that I see a lot of sense in the amendment we will come to in a moment, which suggests a procedure and safeguards that could be built into the system, which I could support. I also understand the economic arguments that the noble Lord, Lord Lang, advanced and it is very important that they should be in the minds of the Scottish Parliament when it chooses whether to exercise the power conferred on it here, but I cannot see the constitutional principle. I do not follow the ship money argument.

[Lord Forsyth of Drumlean]

It is very straightforward. We are talking about devolution here, not about establishing a federal system. As someone said, although I cannot remember who, power devolved is power retained. The ability to create a completely new tax—a window tax, or whatever—has to reside with the other place down the Corridor. Within our constitution, in order to create a new tax, you have to have a finance Bill. It used to have to be on the Floor of the House of Commons when it came to Committee, and there is a set of procedures that needs to be followed. It is completely different from devolving the power to set a rate of tax, which this Bill purports to do and is the commitment made in the manifesto.

My constitutional problem is that that ability of the House of Commons to discuss, through a long-standing procedure, the imposition of taxation is being undermined because all that it requires now is an Order in Council, which by convention cannot be voted on in this House and cannot be amended. That is no basis upon which to create new taxes on the people. It is the nature of the procedure that is the constitutional outrage as far as I am concerned, not the nature of giving the Scottish Parliament the ability to raise a particular tax.

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[Lord Kerr of Kinlochard]

I support the amendment in the name of the noble Lord, Lord Browne of Ladyton, for the first and last reasons he gave. Like the noble Lord, Lord Forsyth, I very much agree with the last reason, but also the first. I hope that the prediction of the noble Lord, Lord Forsyth, is not true. It is unsatisfactory to have these criteria only in a Command Paper. They should be in the Bill, so I very much hope that the prediction is wrong.

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[Lord Sassoon]

No, I am not specifically worried about judicial challenge. I just think that it is reminiscent of debates I am becoming increasingly used to in your Lordships’ House. I am sure many noble Lords are much more familiar than I am with these arguments that regularly come up: if it is so obvious, we do not need to put it in because everybody understands it; or, if it is so clear and everybody accepts it, let us put it in. I have suggested to your Lordships that the criteria, based on the limited discussion that we have had here, are widely accepted. They should be debated if your Lordships want to debate them properly.

We do not have the opportunity here, and have not had it in Committee, to debate the criteria in detail because we have a “take it or leave it” provision to put them in. I believe that the proportionate, appropriate and sensible way forward is to set them out in the first report that we will require, if the House agrees, under Amendment 29. At that point, if your Lordships want it, there could be a specific debate on the criteria.

[Lord Kerr of Kinlochard]

The trouble with that is that it is retrospective. It is about things that have happened and the use that has been made of powers. That is what reports are about. The safeguards in the amendment tabled by the noble Lord, Lord Browne, and in the Command Paper are about affecting the procedure prospectively when the Parliament in Scotland wishes to introduce a new tax and the Government in London are considering an Order in Council. I see a huge difference there, and it would be very good to have these in the Bill. I have not heard a convincing argument against that from the Minister.

[Lord Sassoon]

I believe that the noble Lord, Lord Kerr of Kinlochard, has not quite got the construction right. The report proposed under Amendment 29 will be on the implementation of the Bill. The first report will come forward 12 months after the Bill is passed and will be about implementation matters. One of those implementation matters, which I am making a commitment to include in that report, is around the Command Paper criteria. It will be a report on implementation and will include things that have been done in the period since Royal Assent, which will include confirmation of the criteria. They will then be debated. It will have prospective effect in the sense that it is most unlikely that in that time any new proposals will have come forward for the devolution of further tax powers. Therefore, the debate on the criteria will happen before they take effect when any further proposals for devolved taxes come forward. The noble Lord shakes his head, but in that sense it is looking forward and is entirely consistent with the nature of the report that we envisage. I hope that reassures him on that point.

The second commitment around this issue, which it is important to get on the record, is that the Government are happy to commit to publishing an assessment on any occasion that the power is used. That report will confirm how any order brought forward under the new tax provision meets the criteria. Again, this information will not just be used by the Government in their assessment of the criteria coming forward, but will be wholly transparent to your Lordships’ House and be part of what your Lordships will have available to them to satisfy themselves that the Government are properly considering the criteria when they come to exercise this power and put an order forward.

The information will clearly need to cover all the relevant criteria included in the Command Paper. It will do so in a proportionate level of detail. I repeat for the avoidance of any doubt, by my noble friend in particular, that the Government have already been clear—I have said it this afternoon—that a number of tax proposals from the Scottish Government have already been made without the provision of sufficient evidence and requests have been declined a result.

On Amendment 16, I hope that I have responded to the specific request of the noble Lord, Lord Browne of Ladyton, to come forward with a new and positive proposal, which I hope addresses the substance of his amendment. I respectfully ask him to withdraw it.

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[Lord Robertson of Port Ellen]

My Lords, I was never a Secretary of State for Scotland but I was the shadow Secretary of State for Scotland. I was to be relieved of the great burden of being Secretary of State by being moved to deal with wars, conflicts and troubles between states in the world. I found that an immense relief after nearly four years of looking after the Opposition in Scotland, against the noble Lords, Lord Lang and Lord Forsyth. This is the first time I have dipped my toe into the piranha-filled rivers of Scotland, but I do so because this is a particularly important issue. I hope that my noble friend Lord Barnett, with whom I have had some exchanges over the years on this subject, withdraws the amendment tonight. This is not the time and not the place for looking at this subject.

I was one of those who did not think that we should be having these debates at all, and that the Calman commission should have stayed on a shelf until the great debate that is now taking place in Scotland was completed. This is an ingredient of that debate which, sadly, has not really been debated widely in Scotland at all. My noble friend Lord Elder, who was a member of the Calman commission, perhaps disagrees with me but I do not remember anybody mentioning the Calman report during the last election in Scotland. Ludicrously, when we were all fighting the SNP, nobody mentioned the fact that there was this report which was to give the Scottish Parliament extra powers. Devo-plus was on offer but, strangely enough, nobody mentioned it.

Given that the SNP won the election, against the odds—and against the expectations of the noble and learned Lord, Lord Wallace, and myself, who drew up the electoral scheme in the first place—and got the majority in the Parliament, we needed to reassess at that point what the alternative was to be to the separatism of the SNP. However, we are here. We are where we are, but this is not the right way to go about it. If we are to have a needs-based assessment—and I have been through the same briefings that were involved in this—it has to be one for the whole of the United Kingdom.

I am interested that the noble Lord, Lord Deben—or whatever he is calling himself at the moment; I can see why he wanted to disguise himself in this new iteration, but I just do not remember the name itself—goes on about this great redistribution within the union. It is strange to hear this pure form of redistribution coming from a Conservative ex-Minister.

The issue needs wider debate and that should take place, but not at the moment in the context purely and simply of the Barnett formula and only in relation to Scotland. That is unhelpful at present. In Scotland today we have a bigger debate going on that will determine what sort of country we and future generations are going to live in. We therefore need to be very careful with the language that we use, the facts that we use and how those facts are deployed. Sometimes we fall into the same trap as those on the other side of the argument, the separatists, who manipulate the figures and move them around.

In the last analysis, the discussion will not be about identifiable public expenditure on its own—because if it is then that, unfortunately, is an argument that the nationalists will take to us. Expenditure is only one part of the balance sheet; income is another, and they can make their argument about that. Number-crunching, as I know only too well from many other contexts, can produce the numbers that the statistician wants to produce at the time. Let us have the broader and wider debate within which we will have to consider how the UK’s finances will be managed, but I do not see why, this evening, on the eve of an Easter Recess in an ill attended House, we should start using arguments that may well be used against us.

[Lord Kerr of Kinlochard]

My Lords, I disagree with the noble Lord, “Lord Barnett of Formula”. I have never disagreed with him before. I used to write briefs for him and he never paid the slightest attention to them. He was a brilliant Chief Secretary who did not bother about the arguments but simply explained that there was no money, which was a much better argument than any of the ones that I produced.

I disagree with putting this new clause in the Bill for the reasons that have just been given. I disagree with looking at it in a Scottish-only context. I confess that I had forgotten the report of the committee of the noble Lord, Lord Richard, but I disagree with the kind of criteria that the noble Lord, Lord Lang, was reminding us of. That on its own is not enough. Periphery and distance matter. I do not know of any state that I have lived in—France, America—where distance is not a factor. The purity of the position taken by the noble Lord, Lord Deben, does not really work. If you have an extremely sparse population on highlands and islands, the cost of communications and that sort of thing is much higher. That sort of need may well be built in to the formula that the noble Lord, Lord Richard, is talking about, but it is not just criteria such as poverty: it is the problem of dealing with poverty, which is more difficult if people are on a distant island. I do not know who to give way to first.

[Lord Deben]

As my purity has been called into question, I would like to say that it is a purity that demands that we do something that recognises sparsity and the difficulty of reaching people. The trouble is that this new clause recognises it in Scotland but not in Wales; that is what is wrong with it.

[Baroness Rawlings]

My Lords, I remind your Lordships that on Report a Member may speak only once, excepting for a short question of elucidation to the Minister, as I have said.

[Lord Kerr of Kinlochard]

I understand the noble Lord’s point. My principal argument would be about timing. I do not think that the politics of this in Scotland would play well. Personally, I go with the prediction made by the noble Lord, Lord Steel, about what is likely to happen—perhaps rather more slowly than he suggested, but that is the direction of travel. That direction is not objectionable, but my worry about it is that it does not make sense to wait until after 2014, as he was implicitly accepting, to define what this further devolution of tax-raising power is. I think that one ought to do this in advance. That was my twofold worry about the Prime Minister’s speech in Edinburgh. It is unwise to offer the measure; it is certainly unwise to offer it undefined and suggest that it can be defined only in the light of a referendum result. To me that is the greatest worry about this matter.