Scotland Bill

Lord Lamont of Lerwick Excerpts

Tuesday 24th November 2015 Lords Chamber

[Lord Dunlop]

As I said, we are working very hard to get this fiscal framework agreed as quickly as we can. This House considered the tax provisions of the previous Scotland Bill on their merits but, when it did so, aspects such as the block grant adjustment had not been agreed, so there is a precedent here. However, as I said, these two processes need to come together, and that is what we are working hard to achieve.

This House will be involved in the normal way if legislation is needed to implement aspects of the framework. To help the House fulfil its scrutiny role, the order of consideration for Committee will ensure that Parts 2 and 3 of the Bill—its tax and welfare clauses—are scrutinised at the end of Committee, giving more time for the negotiations to progress. As I have already said, it is the firm intention of the UK Government that the fiscal framework should be available to both the Scottish Parliament and both Houses of the UK Parliament before the passage of the Scotland Bill is completed. I shall be happy to say more about the fiscal framework in my closing speech and I particularly look forward to listening to what the noble Lord, Lord Hollick, has to say.

The Government believe that the new powers contained in the Smith agreement provide the basis for a stable devolution settlement for Scotland. Both Governments will need to work together to ensure that the powers are used effectively. The powers in the Bill are substantial and offer real opportunities to develop Scottish solutions to Scottish issues. This is not devolution in isolation but part of a broader process that recognises the need to reflect changes in other parts of the UK and that one size does not fit all.

[Lord Lamont of Lerwick (Con)]

I get the impression that the Minister is getting towards the end of his speech. If I heard him correctly, he said that he would give an explanation of the second no-detriment principle, and I very much hope that he is going to do that.

[Lord Dunlop]

I need to make progress, as a lot of noble Lords want to speak. I have a closing speech and will say more about the fiscal framework in response to points made during the debate.

At this stage, let me conclude by saying that I am confident that the settlement agreed by the Smith commission, as set out in the Bill, will show itself in time to be durable. I beg to move.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, I am not sure what, if anything, was said in the House of Commons about the lack of the fiscal framework when the Bill was being debated there—in fairness, I am sure that it was discussed—but what I have said is that the Government should be seeking to negotiate for the whole of the United Kingdom: there should be fairness all round with regard to this.

Crucially, we should make it very clear that Scotland should bear the full fiscal consequences of its own decisions. There has been some suggestion somewhere that there has been a bit of “cake and eat it”: that somehow or other, if things go wrong, Westminster will top it up. There are those of us who believe that the important rationale for more tax powers is accountability, but that goes out the window unless—for better or worse—the Scottish Parliament accepts responsibility and accountability for the consequences of its decisions.

In conclusion, the important thing that many of us want is to get on and use the powers. From next April, there will be the Scottish rate of income tax. We look forward, once this Bill is implemented, to more than £15 billion-worth of tax powers and £3 billion-worth of welfare.

[Lord Lamont of Lerwick]

I am most grateful to the noble and learned Lord for giving way and apologise for having hesitated for a moment; I was just reflecting on what he had said. I strongly agree with him about the Scottish Government accepting responsibility when they have the power to make individual decisions relating to rates of income tax. He said they must be accountable because they have the responsibility, but is that not utterly inconsistent with the idea of the second no-detriment principle which seeks to safeguard them and does it not make a nonsense of the responsibility that they have?

[Lord Wallace of Tankerness]

I look forward with interest to what the Government have to say on the second no-detriment principle. If I may say so, one of the shortcomings of the Smith commission report—I am sorry, this will have to take up a bit more time—is that it just gives a heading on page 26 that says:

“No detriment as a result of UK Government or Scottish Government policy decisions post-devolution”.

It then says:

“Where either the UK or the Scottish Governments makes policy decisions that affect the tax receipts or expenditure of the other, the decision-making government will either reimburse the other if there is an additional cost, or receive a transfer from the other if there is a saving. There should be a shared understanding”.

Scotland has powers over the threshold and rates of income tax. As I understood it—no doubt the noble Lord, Lord Smith of Kelvin, will be able to tell us—if for example, as was indicated, the United Kingdom Government were to change the definition of an income tax payer, that could have an impact on Scottish tax rates. I see that as the other detriment that would have to be addressed. It is certainly how I understood it—but more important is how the Government understand it. Thank goodness I do not have to answer for that any longer.

This should actually be an exciting time. The two most exciting elections I fought in Scotland were in 1999 and 2003, when we had got the constitutional settlement and were debating how we would use the powers we had. That made for real political debate. We should be able to use the powers imaginatively. Parties should be able to debate how we set out an agenda for an enterprising Scotland, a more socially just Scotland, a greener Scotland and a fairer Scotland, and how we can benefit all its communities—not just in the central belt but from the islands down to the Borders. This Bill is not an end in itself. It is a means to try and improve the governance of Scotland and the accountability of that governance, give the Scottish people an opportunity to take more decisions into their own hands and build the kind of Scotland we want to see. The Bill has our support.