Devolved Administrations: Borrowing Powers

Debate between Luke Graham and Hugh Gaffney

Tuesday 9th July 2019 Westminster Hall

[Luke Graham (Ochil and South Perthshire) (Con)]

I beg to move,

That this House has considered borrowing powers for devolved administrations.

It is a pleasure to serve under your chairmanship, Sir Gary. I thank the House for allowing this important debate on the borrowing powers of the devolved authorities across the United Kingdom. People might be wondering, “Why have this debate?” We have a packed audience here to listen to it, which shows the importance of the powers and why they matter so much for our constituents. If people do not realise how much the powers matter, hopefully this timely debate will help them to see that.

Funding is often contested. Speaking as a Scottish MP, and as I am sure colleagues will attest, there is confusion about the powers available for tax raising and borrowing, as well as about where the funding comes from—Westminster, Edinburgh or a local authority. That stands in Wales and Northern Ireland as well. In my constituency of Ochil and South Perthshire, recently a Barnett consequential for the high street and towns fund was denied. Representatives of the devolved Administration in Edinburgh said that there was no Barnett consequential, and that the funding came from Edinburgh. It is important to have this debate to discuss exactly where the money comes from, and the powers that devolved Administrations have throughout the United Kingdom.

There is also some confusion on social media; I am sure cross-party colleagues will agree. When funding plans are welcomed or criticised, there are often such comments as “Scotland has no powers to borrow any funds”. Today’s debate will hopefully be an opportunity to demystify the borrowing powers of the devolved Administrations and some of the funding routes across the United Kingdom. I hope that it will make the situation clearer and will raise the debate to a higher standard right across the UK—in Westminster, Edinburgh and at local authority level.

I start with the facts. All devolved Administrations can borrow. That includes Scotland, Wales, Northern Ireland, and even some of the devolved areas in England, although powers and the amounts vary across the devolved Administrations. I will attempt to make things clear for constituents and those who want to learn more about our financial settlements. Those powers will often be split into two parts: capital, going to assets, and resource spending, which is more cash-based.

My focus is very much on Scotland. I have some live examples, and I am sure colleagues will have interventions to make. In Scotland, local public revenue raises about £60 billion, which is about 8% of UK GDP. Expenditure stands at just over £73 billion, which is about 9.3% of the UK’s spend, so there is a gap of about £13 billion between what we raise in Scotland, including the oil and gas revenue that is often quoted, and what we spend. That gap is bridged by central Government, by other tax revenue raised in Westminster from across the United Kingdom.

What powers does Scotland have for additional tax raising and borrowing? Tax-varying powers have existed since devolution started. We had some flexibility over the penny on income tax. Obviously, our powers increased through the Scotland Acts 2012 and 2016, and we now have powers to vary the income tax bands—powers that the Scottish National party Administration in Edinburgh have used. They have lowered taxes for those earning under £26,990. If someone earns less than that threshold, they are now about £20 better off per year. That is about 38p better off per week—very helpful if someone wants to buy a Tunnock’s Teacake. Someone who is in the higher tax band will be charged about £1,500 more than other taxpayers in the United Kingdom.

[Mr Philip Hollobone in the Chair]

That is a significant point. Not all the higher-rate taxpayers in Scotland—about 14% of Scottish taxpayers—are ludicrously wealthy; the people who fall into that tax band will be teachers, doctors—some will be nurses—and public servants, as well as some very hard-working private sector workers. They should have their hard work rewarded; they should not be penalised for being in Scotland.

We want to attract more people to Scotland. As my hon. Friend the Member for Angus (Kirstene Hair) has brought up many times, this issue is especially important for our armed forces. Everywhere else around the world, they pay the Westminster rate of tax. It is only in Scotland that they are penalised and have to pay additional tax for being based there. Being based in Scotland is, of course, a benefit, and that benefit should not be eroded by the tax system imposed on them by Edinburgh. Thankfully, due to the work of my colleagues and the Government, that tax impact has now been neutralised, and members of the armed forces will now pay no more tax in Scotland than they do in other parts of the United Kingdom.

Devolved Administrations can borrow. Scotland can borrow about £3 billion for capital and about £1.75 billion for resources. What does “resources” mean? Breaking it down, it means that if we are a bit short in our cash flow in Scotland, we can borrow up to £500 million for cash. About £300 million is for forecast errors, and we see some of those coming through at the moment. There is a fantastic National Audit Office and Public Accounts Committee report on devolved income tax collection in Scotland. It makes for fantastic night-time reading; it clearly outlines some of the difficulties and costs of having additional income tax rates in Scotland.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

The hon. Gentleman is making a good point about the limited borrowing powers in the Scottish Parliament, which do not match the growing taxation powers. Yesterday, the Foreign Secretary ruled out more economic powers for the Scottish Parliament in his Tory leadership bid. Would the hon. Gentleman agree that the Scottish Parliament needs greater borrowing powers to invest in the Scottish economy?

[Luke Graham]

In short, no. We should use the borrowing powers that we already have. The SNP Administration underspent by a reported £450 million in the last year; that shows that the proper economic programme is not being put forward for Scotland. They are not delivering for us. We have the power to vary tax rates, we have additional borrowing powers, and we do not have half the risks and responsibilities that the Treasury in London has to bear, yet in each of the next four years, we are forecast to underperform, compared with the rest of the UK. Going back a year, we were the lowest performing economy in the OECD and out of the G20 advanced economies.

Personal Independence Payments

Debate between Luke Graham and Hugh Gaffney

Tuesday 11th September 2018 Commons Chamber

[Hugh Gaffney]

Talking about compassion, the introduction of PIP, which was supported by the Tories—we should not forget that the Liberals backed it, too—was meant to lead to a fairer, more transparent and more consistent system. It has been anything but. We should not forget that the overarching aim was to slash public services—in other words, saving money on the backs of the most vulnerable in our country. They are the people who are suffering. Has it worked? No, it has not worked for those who want a fairer, transparent and consistent system.

Despite all the Tory and Lib Dem cuts, the Office for Budget Responsibility has continued to downgrade its estimate of the savings from the introduction of PIP. So the Government’s aims have not been achieved. At the same time, we have seen many people and families hurt in the process. That hurt is made worse by the fact that despite the DWP being responsible for handling PIP claims and making the decision on entitlement to benefits, private companies such as Capita and Atos have been doing the assessments. Perhaps we should not be surprised by what we see and hear every day. It is time for change.

[Luke Graham (Ochil and South Perthshire) (Con)]

The hon. Gentleman is talking about cuts, but does he recognise that the welfare reforms have led to an increase in welfare spending? If cuts were the Government’s desire, then yes, we have failed. However, if that means we are providing more funding for those most in need, that is where my right hon. Friend the Secretary of State has succeeded.

[Hugh Gaffney]

I am sorry, but I do not agree with the hon. Gentleman. I do not know who goes into his surgery to talk to him, but I certainly do not hear that from the people who come in to talk to me.

Many colleagues have consistently raised PIP with the Government over recent months and years. My hon. Friend the Member for North West Durham (Laura Pidcock) is one and I congratulate her on the birth of her baby boy and I hope that they are both doing well.

Representation of the People (Young People’s Enfranchisement) Bill

Debate between Luke Graham and Hugh Gaffney

2nd reading: House of Commons
Friday 11th May 2018 Commons Chamber

[Luke Graham]

As my hon. Friend’s point proves, age and wisdom do not necessarily go hand in hand—[Laughter.] The UK Youth Parliament and Scottish Youth Parliament representatives from my constituency have strongly advocated for votes at 16 and 17, and I applaud them for their representations. I am fortunate to have visited schools across my constituency, from Morrison’s Academy to Lornshill Academy, and the support for votes at 16 and 17 is there in the schools. Young people are engaged with the debate, and they are not only engaging within their age group, but challenging their parents and grandparents. We have a richer democratic discourse as a result.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

As a new MP visiting schools, I know that 16 to 18-year-olds are angry that they are not getting a vote. The election last year could mean no vote for five years, which has changed the age gap. These kids are upset, and I fully support the hon. Gentleman.

[Luke Graham]

I could not agree more. Colleagues across the House need to remember that today’s 16-year-olds will be reaching 20 come the next election, and they will probably have a bearing on our own electoral successes.

Youth Employment

Debate between Luke Graham and Hugh Gaffney

Wednesday 6th December 2017 Westminster Hall

[Luke Graham (Ochil and South Perthshire) (Con)]

It is a pleasure to serve under your stewardship, Mrs Moon. I congratulate my hon. Friend the Member for Chichester (Gillian Keegan) on securing this debate and I am grateful for the opportunity to speak on an issue that is so important to my constituency and to the UK as a whole.

According to Eurostat, at 12% the UK has one of the lowest youth unemployment rates in the European Union, ranking us ninth out of 28. Indeed, youth unemployment is a major issue in much of the EU. By comparison, Greece has a youth unemployment rate of 44%, Spain 39%, Italy 35%, Portugal 24%, France 23% and Belgium 22%. As my hon. Friend said, however, that does not happen by accident.

A great deal of work has been done by this Government and the coalition to drive down youth unemployment, because under the previous Labour Government it rose by 45%, creating something of a lost generation. Although this UK Government have made concerted efforts to tackle youth unemployment, it is still higher than we want it to be.

Since May 2010 the UK Government have created more than 3 million apprenticeships, which are keeping more young people in education and giving them the skills needed to excel and make progress in their careers. As a result, youth unemployment has been steadily decreasing and, at a time when so much of Europe is suffering from substantial youth unemployment, I am particularly pleased that the UK is bucking the trend.

That is a record to be proud of, but we cannot simply rest on our laurels. My hon. Friend has referred to those not in education, employment or training. On those 18 to 24-year-old jobseeker’s allowance and universal credits claimants required to seek work, the most recent ONS figures available to the House of Commons Library show that the UK rate is 2.8%. In Scotland the figure is higher, at 3.3%, while in Ochil and South Perthshire that rate of youth unemployment is 3.8%, which is higher still. I am concerned that Scotland has a higher rate of youth unemployment than the rest of the UK. The rate is higher still in my constituency, which is why it is such a big issue for me.

Since being elected I have met youth groups across my constituency, including the Logos project in Crieff and Developing the Young Workforce in Clackmannanshire, to understand the challenges young people face and how employers and politicians can work together to remove barriers to youth involvement in the labour market. When I speak to youth groups, I ask them what the barriers are, and young people identify transport, the range of jobs available and employer recruitment processes as obstacles to employment.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

The hon. Gentleman is talking about employment. We all welcome seeing young people go up the ladder—although I do not welcome zero-hours contracts—but a trend has started in the places in Scotland that he is talking about of young people taking jobs in return for work experience. One youth has worked 13 hours for three weeks, but he has not been paid for it because employers know that people want to put such experience on their CVs and job applications. What are the Government doing to prevent that from happening?

Universal Credit Project Assessment Reviews

Debate between Luke Graham and Hugh Gaffney

Tuesday 5th December 2017 Commons Chamber

[Luke Graham]

And I hope universal credit, with these changes, will too.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

Will the hon. Gentleman give way?

[Luke Graham]

I am sorry. I am going to make a little more progress.

Quite rightly, Conservative Members—I have been one of them—have made criticisms of universal credit. I have written to Ministers, as have many other colleagues, and issues have been raised on all Benches throughout the debate.

The criticisms that have been raised include concerns about the seven-day waiting time, advances and paying landlords. Well, the seven-day waiting time is being removed. On the concerns about paying landlords, we have the offer to pay them directly, and we have the landlord portal to make sure they have the right information. On the concerns about advances, we know that those can be settled within five days or even on the same day. On those issues, therefore, I would ask Members to make sure we are giving the right information to our constituents so that they can access the advance they are entitled to and no one faces any hardship over Christmas.

The Opposition also say that universal credit and some of the hardship I have seen first hand are down to some sort of ideological Tory austerity. Yet, the changes that have been pushed forward mean that there has been an extra £65 billion in spending on welfare, which is the cost of all these changes since 2010. So if we are trying to do these things just to save money, we have done a pretty poor job.

Changes have been made to universal credit; it has been improved. There has been a nine-year roll-out. I still have concerns about universal credit.