Scotland: Block Grant

Lord Lang of Monkton Excerpts

Monday 15th June 2015 Lords Chamber

[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.

[Lord Lang of Monkton (Con)]

My Lords, I congratulate my noble friend on the way in which he managed to imply fairness to a block grant calculation system that bears no relation to, or has any connection with, any needs assessment relating to the other parts of the United Kingdom. Can he tell the House how he expects the no-detriment principle enshrined in the new Scotland Bill to apply in a way that does not inhibit the viability of individual parts of the United Kingdom from pursuing policies and expenditure that depart from the UK norm?

[Lord Dunlop]

I thank my noble friend for that question. The simple overarching principle is that neither Scotland nor the rest of the United Kingdom should gain or lose financially as a direct consequence of implementing the Smith agreement. There are two aspects to this. First, at the point of devolution, the tax and spending block grant adjustments made to reflect the transfer of powers should of themselves leave funding for Scotland and the rest of the UK unchanged. Secondly, post devolution, both the UK Government and the Scottish Government should bear the risks and reap the rewards of their own policy choices. That will strengthen fiscal responsibility and accountability. How these principles work in practice must be discussed and agreed by the UK Government and the Scottish Government, but the fact that the principles are agreed by all five of Scotland’s political parties is a helpful starting point.