Scotland Bill

Lord Sassoon Excerpts

Tuesday 28th February 2012 Lords Chamber

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, this is proving to be an education, not least because we have another debate in which there are some points on which I can see the direct relevance to the clause we are discussing and a number of other points on which I am struggling a bit. They are all important points; I am just not quite clear what the connection is with a clause that has to do with the powers of HMRC.

Of course, the football question is directly relevant, and we must deal with football. I declare an interest here as a season ticket-holder of Arsenal Football Club —things are looking very good.

[Lord Maxton]

The noble Lord might be aware that Mr Ally McCoist, the manager of Rangers, was complaining bitterly because one of the things the new owner of Rangers had done was to sell the shares in Arsenal Football Club which apparently Rangers had held for a very long time.

[Lord Sassoon]

There is another thing I have learnt this evening. I am very grateful to the noble Lord.

I appreciate that this is very dangerous territory. The important point about the football is that this is a clause about the powers and duties of HMRC in relation to Scottish affairs. I do not know whether the noble Lord, Lord Foulkes of Cumnock, was trying to set a trap for me by getting me drawn into the tax affairs of an individual taxpayer, because of course the powers we are talking about here define, among other things, where information can be shared and what the limits are. If he was setting me a trap, I am doing my best not to walk into it—he was not setting me a trap, good. He will understand that I cannot possibly comment on the tax affairs of any individual taxpayer. I will simply say that there is nothing in the Bill that would change the circumstances of an individual—or a company—who is overdue in paying taxes to HMRC.

My noble friend Lord Lyell asked whether there was a difference between preferred creditor and ordinary creditor status between Scotland and the rest of the UK. I must confess that it is not an issue I have in the front of my mind, and I will write to him. I am sure it is a very important question, not only for football clubs.

[Lord Lyell]

Hear, hear!

[Lord Sassoon]

I think that probably deals with all the football questions, and with probably just about everything else that was directly relevant to this clause. I will try to deal with some of the other things.

We came back to the big picture question of the legislative consent Motion. It is of course for the Scottish Parliament to choose to bring forward the Motion at any time; it is in its discretion. It must be in the Scottish Parliament’s interest to bring forward an LCM before the last amending stage in this House to allow the House and the Government to reflect on the LCM, and if it wanted to it could choose to pass the legislative consent Motion tomorrow.

[Lord Foulkes of Cumnock]

Would the Minister like to speculate on why it is not doing that? Why is it deliberately delaying it? My speculation would be that it is playing a cat and mouse game with us, and that it wants to see us move ahead without having to reveal its hand fully. Maybe a better analogy would be a game of poker. This is not something that should be the subject of a gamble. It is a very serious matter. Would he not join me in encouraging the Scottish Parliament to consider the legislative consent Motion at a very early opportunity?

[Lord Sassoon]

My Lords, I will certainly not be drawn into speculation. I have already said that it must be in the Scottish Parliament’s interest to pass the legislative consent Motion in time for the Government and this House to consider possible amendments in response to anything it comes forward with, and, as I said, it could pass the Motion any day. However, beyond that there is nothing more useful that I can add.

[Lord Forsyth of Drumlean]

On the point of legislative consent, could my noble friend help me by explaining why we are proceeding with a Bill in the absence of a legislative consent Motion? If the Scottish Parliament decided not to pass it, we would all have been wasting our time.

[Lord Sassoon]

We have a Bill; it is important that we press on, and the legislative consent Motion could come at any time. This is idle speculation. It is important that the Motion gets passed, and we look forward to it, but it is in the hands of the Scottish Parliament. There is really nothing more I can usefully say. I certainly do not believe for one minute that we are wasting our time considering the important provisions in this Bill.

Let me move on to the question asked by the noble Baroness, Lady Liddell of Coatdyke, about the cost of all of this. The major cost will be to the systems that would support the tax changes and the possible new tax rate in Scotland. It is all set out in the impact assessment that is published alongside the Bill. However, for the Scottish rate of income tax, HMRC’s initial estimate is of £40 million to £45 million over a period of years up to the introduction in 2016-17. Clearly the final cost will be dependent on a number of decisions to be made at the implementation stage; and HMRC, HM Treasury, the Scotland Office, with the Scottish Government, will continue to work to determine the optimal implementation approach. The costs may vary in some way as those decisions are taken, but the indicative estimate at the moment is £40 million to £45 million.

[Baroness Liddell of Coatdyke]

I thank the noble Lord for giving us that figure. Does that figure include the 31,000 civil servants in reserve departments who operate in Scotland, and the impact of the HMRC element of those 31,000? Will they continue to be in Scotland? Could he also perhaps give an indication of where that cost will be levied? Will Scottish taxpayers or UK-wide taxpayers take up the cost of disaggregation?

[Lord Sassoon]

My Lords, on the first point, this will be the cost in isolation of the changes necessary to enable the introduction of the Scottish income tax provision. Of course, for fully devolved taxes, the cost will depend on decisions taken by Scottish Parliaments on the design of those taxes, and of course who should administer them. It is therefore a cost estimate that relates essentially to income tax. It assumes that nothing changes in the deployment of other people. It is the necessary cost related to the introduction of the new Scottish income tax regime. As the noble Baroness will know, it is a principle of devolution that costs that are to the benefit of the devolved Administration fall on the devolved Administration, so that is where these costs will fall.

The noble Lord, Lord Browne of Ladyton, asked important questions relating to the Scottish Government’s readiness for implementation, the high-level implementation group and the joint Exchequer committee. I very much agree with him that these are important issues about the capacity of all sides, particularly the Scottish Government, to carry out what is necessary. I have already addressed the mechanics of the processes. We have the high-level implementation group, as the noble Lord has set out, and below that the technical groups established by HMRC to work out the detail.

The Scottish Government have focused on pressing for further powers in the Bill. Of course, while one respects their different views on other matters that they might want in the Bill, we would welcome greater attention on implementation from them. I appreciate the point that the noble Lord is making. Close attention has been shown to issues, such as the block grant adjustment mechanism. There is work to do and we should like to see the Scottish Government set out how they will use the powers provided to them in the Bill. My right honourable friend the Secretary of State for Scotland yesterday called for clarification in particular of the stamp duty land tax, and I very much agree with him on that point.

The high-level implementation group was established by the UK Government. It is chaired jointly by the Secretary of State for Scotland and the Exchequer Secretary to the Treasury. It has met four times since July 2010 and the role of the group is to oversee the implementation of the financial provisions of the Bill. As I have just said, the technical groups established by HMRC report to the high-level implementation group, and they provide detailed consideration and advice to inform implementation.

On the progress that has been made, the high-level implementation group is a UK Government group. It is entirely within the capacity and the direction of Ministers in London to press on with the work of that group. It is clear that the Scottish Government want their powers increased. To do that, clearly we would welcome more progress to begin setting out how the powers will be used. From that, many more questions will flow about implementation. That is where things stand at the moment.

[The Duke of Montrose]

On a slightly peripheral question, I am getting very worried that we are setting a precedent here. This may not be quite the moment to raise it with this Minister at the Dispatch Box but I still think that it is extremely relevant. The first indication of a legislative consent Motion was taken when the Scotland Bill was going through this House. It was dubbed the Sewel Motion thereafter. That was to allow Westminster to legislate on devolved matters.

We were told that a legislative consent Motion would be required not when the Bill started here or in the other House but when it reached the “second House”. We could not progress further until the legislative consent Motion was in place. Now we are dealing with a convention that was established outwith Parliament whereby Westminster is asking for a legislative consent Motion for a reserved matter, which this is. Are we establishing a precedent that Westminster goes ahead and produces legislation without legislative consent Motions—admittedly it is quite within its powers to do so because this is the sovereign Parliament—because it appears that the legislative consent Motions are getting slightly out of sync with each other. There is a danger that this is a precedent.

[Lord Sassoon]

My Lords, we need the legislative consent Motion. I am not sure I can help my noble friend much further on this. As I have said, it is in the interests of the Scottish Government to get on with the legislative consent Motion if they want consideration of any possible amendments to be taken in this House. I am repeating myself, but that really is as far as it goes. I do not think that these are questions of precedence so much as of practicality. As I said just now, there are a number of matters on which the Scottish Government would wish the provisions of the Bill to go further, so it is in their interests to bring forward the Motion.

[Lord Forsyth of Drumlean]

I am grateful to my noble friend. So that we are clear about this, am I not right in saying that we do not need a legislative consent Motion? It may be that the courteous convention is that we take account of legislative consent, but that is a courtesy. This House is sovereign, and that is one of the reasons I asked my noble friend whether we were wasting our time. I was hoping that he would say that we are committed to this policy and that whether the Scottish Parliament passes the legislative consent Motion is not relevant. It would still become law and that is where we are or, alternatively, as part of our respect agenda we would not proceed without a legislative consent Motion. We seem to be in a rather fuzzy position where we are not really saying what our position is in respect of legislative consent, but when my noble friend said that we need a legislative consent Motion, that is clearly not correct.

[Lord Sassoon]

I am grateful to my noble friend for picking me up on that because the technical position is just as he states. However, in substance I stand by the remarks I made because just as we respect the conventions here, I would expect the Scottish Parliament and the Scottish Government to respect them as well, and we look forward to receiving the legislative consent Motion in due course and ahead of Third Reading. However, my noble friend has set out the constitutional position perfectly correctly.

[Lord Forsyth of Drumlean]

Perhaps I may add to that one other point that we will come to at a later stage in the Bill. There are clauses that deal with the issue of the referendum. The Scottish Parliament has set a date on its consultation period that falls after the likely date when Parliament will be prorogued, so it will not be possible to take account of the consultation process because of the timetable it has chosen.

[Lord Sassoon]

My Lords, I really cannot comment on the date for Prorogation. We will see it when it comes, so that is pure speculation. Perhaps I may get back to the clause, albeit that that is an important matter. I want to finish my response to the questions about implementation put by the noble Lord, Lord Browne of Ladyton. Earlier I touched briefly on his questions about the joint Exchequer committee, but to complete the picture in the context of this discussion, as I said, the committee met on 27 September. It was a useful first meeting, which agreed the principles relating to the mechanism for the block grant adjustment, as I think the noble Lord knows. It is important to stress again that discussions continue, outside the meetings of the joint Exchequer committee, on a bilateral basis on a range of issues across the Bill including the block grant. I repeat again that, although there are certain aspects on which we would like more progress and more focus, we are making good progress and I remain confident that we will agree on the measures set out in the Bill.

In conclusion, I believe that the provisions in Clause 29 are necessary and sensible as part of further tax devolution. I move that this clause stand part of the Bill.

Clause 29 agreed.