Scotland Bill

Lord McConnell of Glenscorrodale Excerpts

Tuesday 6th September 2011 Lords Chamber

[Lord McConnell of Glenscorrodale]

My Lords, I suppose that the starting phrase should be, “Follow that!”. In any debate on the constitutional position of Scotland, my starting point is what is best for the people of Scotland and what is best for Scotland—not what is best for the coalition Government, the Labour Party or even the union, but what is best for Scotland and the people of Scotland—whether it is best to be inside or outside the United Kingdom or, indeed, the European Union.

For me, devolution for Scotland, and for Wales and Northern Ireland within the modern partnership of nations that is the United Kingdom, is indeed the best arrangement for Scotland and for the people of Scotland. That is why in my very first vote I cast a yes vote in the 1979 referendum that the noble and learned Lord, Lord McCluskey, mentioned earlier. That is why I campaigned through the 1980s and 1990s and was involved in the convention that the Minister mentioned in his introductory remarks, and why I stood for the Parliament and had the pleasure of serving with my noble and learned friend—I call him my friend even though he sits on that side of the House—as First Minister and Deputy First Minister in that Parliament.

Do I believe that the Scottish Parliament has done everything right in the 12 years since 1999? No, of course not; no Parliament does everything right. Do I believe that the Scottish Government or all First Ministers have done everything right? No, of course not. All Governments and First and Deputy First Ministers will make mistakes from time to time. But is Scotland a stronger and a better place? I would argue that, yes, it is. Did we survive and indeed build on the electronics manufacturing meltdown in the late 1990s to ensure that our economy's growth rate matched that of the UK by 2007? Yes we did. Did we reverse the brain drain that the Minister mentioned in his introductory remarks and increase Scotland's population after years of decline? Yes we did, through policies pursued in the Scottish Government and the Scottish Parliament. Did we lead the rest of the UK in the smoking ban? Yes we did. Did we reform Scotland's land laws and criminal justice service? Yes we did.

Devolution has made Scotland a stronger and better place, but after 12 years it is right to review the settlement agreed by referendum and by this Parliament back in the late 1990s. Was Calman the right way to do that? I think, on balance, yes. I am not a great fan of committees of the great and the good or of trying to seek consensus for the sake of consensus, but on the issue of the constitutional position of Scotland within the United Kingdom I think that the attempt to find consensus and the way in which that was done was broadly the right approach. Do I believe that the proposals have merit? Yes. Initially, I was not convinced by the report of the Calman commission, but over time I have become persuaded that most of the proposals have merit. Are they perfect? Of course not, but I do not believe that perfection should ever be the enemy of progress, as has been said by others more eminent than me.

Do I believe that the Bill deserves scrutiny? Yes, I do, but I also believe that it will ultimately deserve support. It contains proposals that are both radical and reasonable. I will come to the radical ones in a second. Although some of the initial proposals may irk the noble Lord, Lord Forsyth, I believe that, subject to the scrutiny that we need to give them, they will ultimately be supported by this House and Parliament. I am sure that they will lead to sensible decision-making in Scotland and therefore deserve a fair wind.

On finance and taxation powers, the original tax power was conceived at a different time and in a different economic climate. Like the electoral system, it was part of a settlement designed to secure the progress of devolution. The power to increase income tax by plus or minus 3p in the pound has never been used. That is partly because the parties who would have used it lacked the courage to do so. The nationalists lost an election in 1999 because they proposed to use it by increasing income tax and never made that proposal again. I would argue that one reason why the Scottish Conservatives have been in the doldrums since then has been that they have never been brave enough to propose to reduce income tax in the Scottish Parliament. That power has now become redundant because the political parties in Scotland have never felt that it was an appropriate use of the powers of the Parliament.

[Lord Forsyth of Drumlean]

One of the reasons it has not been used is because, when I was Secretary of State, the budget was about £14 billion. It is now about £30 billion. That was a period when there were vast amounts of money coming in. We are now in a period when the opposite is happening.

[Lord McConnell of Glenscorrodale]

I was just coming to the issue of the increase in the budget. In the mean time, the budget has increased from about £10 billion when I was the first Finance Minister to about £30 billion. A broad consensus has developed in Scotland over that time that there is not enough responsibility for spending in the Scottish Parliament and the Scottish Government and that there is a need to change taxation powers—the way that the Scottish Parliament receives finance and that the Scottish Government raises finance—to ensure greater accountability of decision-making.

I was not initially convinced by the proposal in the Calman commission but I have become convinced that it could indeed be workable and improve the governance of Scotland. As the noble Lord, Lord Forsyth, has just said, it is wrong to argue that the Scottish Parliament, perhaps alone among legislative parliaments in the world, is not fit to set taxes. As long as a parliament is held accountable for its decisions, it should be free to set some taxes. That opportunity in the Scottish Parliament would lead to more responsible decision-making than has perhaps been exhibited at some times over the last 12 years.

This power is also fundamentally different from the imposition of the poll tax back in the late 1980s. The difference is that income tax is income related whereas the biggest problem with the poll tax was not its gearing—although that was an issue—but the fact that it was correctly perceived to be unrelated to income and provoked a reaction and civil unrest across the country.

We should test the proposal here. The noble Lord, Lord Forsyth, made some important points about the need to test the detail. In my view, the principle is right. The Scottish Finance Minister having to set a budget every year and make a decision to raise taxes would enhance accountability and responsibility in the devolved settlement. However, since the Calman proposals have come forward—

[Lord Reid of Cardowan]

I agree with almost everything that the noble Lord, Lord Forsyth, said—which must be a first. On this point, I am inclined to agree with my noble friend the former First Minister. The reason that the 3p was originally introduced, in about 1980, into our plans for devolution was precisely in order to meet the requirement that a parliament—or an assembly, as it was then called—should not be able to spend endlessly without any obligation to raise its own tax, in answer to the electorate. The reality is that in all of the prior period since the formation of the Scottish Parliament, and precisely because there has been an increasing budget, there was no obligation in practice for it to do that. We may be in a different position now and the question is simply whether we should have a parliament that is allowed to spend tens of billions of pounds but has no obligation whatever to raise any of it or to answer to the electorate for raising that tax.

[Lord McConnell of Glenscorrodale]

I thank the noble Lord, Lord Reid, for that point. It reinforces the argument I am making.

The context in which the Bill is now in front of Parliament has changed since the Scottish election result in May. I would argue that a referendum on Scottish independence is now almost certainly going to happen—I suspect in around late 2014. The next three or four years will be very uncertain for those who want to invest in Scotland as well as for the people of Scotland more generally. At the moment, one side has the absolute power to shape the terms on which that referendum will take place. Unfortunately, it is also true that only one side is even in the park playing in this match.

The Scottish football team had another disaster at the weekend. We have learned in Scotland regularly to take an approach after these games of, “We were robbed”. We are in grave danger here of having a referendum campaign in which, afterwards, potentially a majority of the Scottish population suddenly realise that something has happened and feel, “We were robbed”. It will not be good enough for the mainstream political parties in the UK and other organisations to adopt that “We were robbed” approach afterwards. To use a wider analogy than Scottish football, we cannot give the pacemaker so much of a lead that we end up having too much to do on the last lap in the referendum campaign that will take place between now and, I suspect, 2014.

I believe absolutely that the best future for Scotland is as part of a partnership of nations that is the United Kingdom—not some 1950s Britishness that is part of our honourable and respected past but a modern, 21st century arrangement that is modern, multicultural, multinational and has a different vision for the United Kingdom and for Scotland itself. Some decisions are right to be made at the United Kingdom level and some are right to be made in Scotland. There is a fundamental choice between that vision and that of independence for Scotland. That is a once-in-a-lifetime choice and, perhaps even at this stage in the century, a once-in-a-century choice. It should not be taken lightly.

Scots deserve a full debate on this, in which both cases are positively put and clearly explained and the result is a clear resolution of the debate once and for all in our lifetimes. Those who support the alternative vision to that of the nationalists are in grave danger of sleep-walking into an irreversible decision. It is incumbent on political leaders, the business community and the civic Scotland that supported devolution 15 years ago to rise to this challenge by coming together to put forward a positive vision—not a fear of the alternative—of where Scotland can be in the 21st century. If we do that, we can make a decisive decision about that future that leads to a more prosperous and successful Scotland with devolution inside the United Kingdom and not the dramatic implication that would come from a decision to go independent.

--- Later in debate ---

[Lord Gordon of Strathblane]

My Lords, I thank the noble and learned Lord, Lord Wallace, for introducing the Bill and sitting so patiently through a very long debate. I am happy to report, as you will all notice, that we are in fact into the second day of the debate—it is just that we have not had a night’s sleep in between.

Administrative devolution in Scotland is over 125 years old. The Scottish Office was set up in 1885. The change that we had in 1999 was to give democratic control over the administrative devolution, and this measure does very little in the way of increased powers, because so much was already devolved. It simply tries to ensure that the elected representatives of the Scottish people in the Scottish Parliament are more responsible for raising some of the money. All my instincts tell me that you will get better government if you make the politician who makes the promises also raise the money for it, be responsible for it and get the opprobrium from the electorate. My instincts would be to let them raise 100 per cent of the money and see whether they want to promise so much. We do not quite go that far—we have the figure of 35 per cent. In fact, I would be happy to go further.

I make one general observation about the Bill as it stands at the moment. If it is only going to be 35 per cent, I would much rather that it was 35 per cent that covered 100 per cent of expenditure in certain clear areas, so that there was clear responsibility and we knew who was responsible, rather than 35 per cent of all areas. Any decent politician, even if he has totally mismanaged his expenditure of his 35 per cent, will blame whatever has gone wrong on the lack of the 65 per cent, or its not being 70 per cent, and so the blaming of Westminster will still continue. It is an end to this blame culture that we have to try to get through in Scotland. As I said in a previous debate, the Scots enjoy blaming other people for their problems: if you can blame the English, you score double; if you can blame English Conservatives, you hit the jackpot.

I take the view that Scotland is already independent. It is entitled to be, and already is, in the sense that nobody is stopping us doing exactly what we want. We are a totally free country. If we decided next year to be a full, autonomous, independent country, the tanks would not roll up from Carlisle to stop us. We are an independent country; we simply chose to live in an economic union with our neighbour to the south. That union has endured, as has already been mentioned, for several hundred years and has been hugely beneficial to both parties. There would not have been such industrial growth in 19th century Scotland had it not been part of the British Empire. As has already been alluded to, the Scots did rather well out of the British Empire, sometimes in a rather unsavoury way. When we are talking about increased tax-raising powers for the Scottish Parliament, any objection to that is based not on issues of entitlement, but rather, I think, on whether it is imprudent, impracticable or would have unfortunate side effects.

Perhaps we should look at practicability first of all. It is very important to recognise that we have a land border with England. I would refer the noble Baroness, Lady Kennedy of the Shaws, to the experience of Northern Ireland and the Republic of Ireland: there was constant smuggling going one way or the other, depending on which economy was doing better at that moment. In my view, if there is a land border, there are three alternatives: either we leave the rate of excise duty, or whatever it might be, to be fixed at Westminster; or we devolve it, with the clear understanding that all the Scottish Parliament will do is mimic what Westminster does, but at least it is apparently deciding this for itself; or we create the possibility that the Scottish Parliament will choose a different route, in which case we have to be quite clear about how we are going to police that. Are we actually going to have a customs post at the border?

For example, the noble Viscount, Lord Younger, mentioned the possibility that Scotland might raise excise duty. That would be very acceptable to the medical profession, but the licensed trade would go out of business in Dumfries, as it has done in ferry ports on the south coast of England, and the M74 would have to be widened still further to cope with the traffic going down to pick up cheap booze south of the border. This is a very small island. People will vote with their feet and buy things where they are cheapest. You can impose whatever taxes you want; I will go elsewhere and buy those goods cheaper unless you physically stop me. A lot of taxation proposals will founder on this test, as it is simply not practicable to enforce them without a customs post at the border.

We must also consider the fact that, if we are not going to have a separate currency, passport controls or customs, there are severe limitations on what we can do differently from our near neighbour. That has led most people so far to think that we are much better off being part of that larger neighbour as a unit, so that we can at least influence the rates of taxation and the policies reached, rather than being outside it, and so simply having to copy our neighbour and imitate what it is doing.

There is another consideration which I think on grounds of prudence would give us pause before we introduced a different form, which is the question of Scotland’s size and relatively sparse population. We are, after all, about 30 per cent of the UK land mass but only 10 per cent of the population or slightly less. That would make me, frankly, very worried about going it alone on anything involving transport, broadcasting, rolling out broadband or anything else. It stands to reason with those costs—the cost of broadband rollout, for example, would be a lot higher proportionately in Scotland than in London, which has two and a half times the population but could do it at a fraction of the cost.

There are other issues of unintended consequences. Reading the Scottish media during recent months, you get the impression that we are looking for a variation in the rates of corporation tax and income tax so that we can be lower than the rest of the UK and attract all the high-flyers. Who are we kidding? Scotland has a higher dependency on public services than any other part of the UK. If you raise less in taxation, you have less to spend on public services so that is another area where we have to be cautious.

All I really look for from this Bill is that, while nobody can say that anything is a final settlement, let us at least hope that it can be a stable one, because uncertainty is bad. My noble friend Lord Foulkes has already referred to things such as the green bank. Would any UK Government prudently site any UK activity in Scotland over the next few years? You might as well site it in Dublin. If it is going to be an independent country, you cannot take the chance and we are in danger of losing out on some things unless we get some certainty.

The final point I would make is that in many ways this debate is a bit unreal—and not just because it is well past my bedtime. The fact is that the real action is taking place offstage. This Bill is out of date; the sea change took place last May. I am well aware that, in the past, support for the SNP has fluctuated quite wildly and it may well do so again. I do not think that it is downhill all the way or anything like that, but it is a pity that there is no representation of the SNP in the House of Lords. I think that is the fault of the SNP and I would genuinely like to have heard its voice answering in the debate and explaining why some things that some of us have been saying are, in its view, wrong. I would be genuinely interested in that debate.

[Lord McConnell of Glenscorrodale]

Would the noble Lord want to comment on the fact that this whole debate, which has taken some several hours this evening, has been filled with speeches from Members on all sides who are here at the nomination of, or at least have a connection with, the political parties in the Chamber? In fact there was only one Cross-Bench speech, right at the beginning, from the noble and learned Lord, Lord McCluskey. Perhaps there is an issue being highlighted here about the geographical spread represented in the House by the Cross-Bench Peers—an issue that might be for the commission to look at in terms of future debates about Scotland in this House.

[Lord Gordon of Strathblane]

I genuinely disagree with that observation. It is not a question of the overall representation of Scotland but the nature of the political representation. The SNP has chosen to set its face against the idea of anyone taking a seat in the House of Lords. That has disadvantages for the nationalists, because the honest truth is that they would get a fairer hearing in this Chamber than in any other because we are not up for re-election and running the risk of losing seats to them. That is a mistake.

My final plea would perhaps come from recognising that I know some quite sensible people in the SNP. I disagree with them but they are not madmen; they are people who immediately realised, with the huge majority that they got last May, “Hold on—this independence thing—what are we going to do?”, so they have now dreamt up independence-lite. I fully accept the strictures that have been made already. They have not spelt out what it is, because the honest truth is I do not think that they know but they perhaps recognise that what might be traditionally thought to be independence is neither possible not desirable. We have to help them reach a conclusion which the rest of us would find acceptable. Independence-lite and devo-max, to use chattering-class lingo, are probably not all that far apart. I am quite happy to have a sensible dialogue with the SNP and listen to a reasoned case for further devolution of tax-raising powers. I do not think it possible but I am very happy to listen.