Scotland Bill

Natascha Engel Excerpts

Monday 29th June 2015 Commons Chamber

[Ian Murray]

I beg to move, That the clause be read a Second time.

[The Second Deputy Chairman of Ways and Means (Natascha Engel)]

With this it will be convenient to discuss the following:

New clause 21—The Scottish Office for Budget Responsibility—

‘(1) Part 2 of Schedule 5 to the Scotland Act 1998 (specific reservations) is amended as follows.

(2) In Section A1 (fiscal, economic and monetary policy)—

(a) For the heading “Exception” substitute “Exceptions”—

(b) After that heading, insert—

“The creation of a body corporate, called The Scottish Office for Budget Responsibility, for the independent scrutiny of Scotland‘s public finances, including all tax and spending in areas for which the Scottish Government has legislative competence.””

This New Clause would provide for the creation of a Scottish Office for Budget Responsibility to exercise fiscal and budgetary oversight over Scottish Government competencies. The Smith Commission recommended that the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.

New clause 23—Local Discretionary Taxation—

Individual local authorities in Scotland shall have the discretion to raise additional income by levying a tax, in addition to Council Tax and Non-Domestic Rates, on either residents, occupiers, property owners or visitors in the local authority or within a discrete area of the local authority.”

The power will enable local authorities to introduce tax(es) without the need to seek approval from Scottish Government, with the rates and reliefs being determined locally and the local authority being both granted powers to ensure that those on which the tax is levied have a legal obligation to pay and the local authority having the discretion to determine how the additional revenue is expended.

New clause 24—Tax and Economy Forum—

‘(1) The Secretary of State shall appoint a Tax and Economy Forum to conduct an analysis of the impact of the changes in legislative and executive competence resulting from this Act on the economy, labour market and public finances in Scotland and in the other parts of the United Kingdom.

(2) The Tax and Economy Forum may make recommendations for fiscal reforms within Scotland, to be considered by the Secretary of State.”

The new Clause would require the appointment of a Tax and Economy Forum to assess the impacts of fiscal devolution proposed within this Bill on Scotland and on the rest of the United Kingdom.

New clause 25—UK Commission on fiscal powers—

‘(1) Within 6 months of the day on which this Act is passed, the Secretary of State shall appoint a commission to examine the deployment of fiscal powers at local, devolved and United Kingdom levels.

(2) The commission shall comprise between 4 and 6 representatives of any of—

(a) the Scottish Parliament,

(b) the National Assembly for Wales,

(c) the Northern Ireland Assembly,

(d) local government,

(e) the House of Commons, and

(f) the House of Lords.

(3) The bodies mentioned in subsection (2) shall select their representatives in any way they see fit and the chief executive or presiding officer of each of those bodies shall inform the Secretary of State of the names of the representatives of those bodies, which may replace their representatives whenever the body concerned has determined to do so.

(4) Subject to subsection (5), the commission may determine its own quorum and methods of working and must publish a protocol setting out its own terms of reference.

(5) The commission shall keep the operation of fiscal powers under review, making reports and recommendations as it deems appropriate.

The purpose of this New Clause is to ensure that there is proper consultation between the different parts of the United Kingdom to ensure that new Scottish fiscal powers are deployed in a way that does not undermine the cohesion of the UK. The proposed Commission could also make recommendation regarding the future of devolved fiscal powers.

New clause 33—Full fiscal autonomy for Scotland—

‘(1) The Scottish Government and the Government of the United Kingdom must enter into an agreement (the “Economic Agreement”)—

(a) setting out a plan for implementation of full fiscal autonomy for Scotland, and

(b) establishing a framework within which the two Governments are to coordinate their economic and fiscal policies in the context of full fiscal autonomy for Scotland.

(2) Full fiscal autonomy for Scotland means that—

(a) the Scottish Parliament and Scottish Government have competence for determining revenues raised in or as regards Scotland through taxation and borrowing,

(b) the Scottish Parliament and Scottish Government have competence for determining levels of public expenditure in or as regards Scotland,

in accordance with the amendments made by this Act.

(3) The framework mentioned in subsection (1)(b) must in particular include arrangements for—

(a) facilitating fiscal coordination,

(b) overseeing economic cooperation,

(c) joint responsibilities in areas of mutual interest,

(d) safeguarding fiscal sustainability.

(4) In determining the terms of the Economic Agreement the two governments must seek to ensure—

(a) the maintenance of monetary stability throughout the United Kingdom,

(b) the maintenance and promotion of the single markets in the United Kingdom and the European Union,

(c) that they cooperate in the exercise of their respective functions relating to the administration and collection of taxes,

(d) an equitable and transparent approach to consequences, resources and rewards,

(e) that the Scottish Parliament and the Scottish Government retain the benefits of increased tax revenues delivered by successful policies pursued by them,

(f) that the Scottish Parliament and the Scottish Government have the powers necessary to manage the consequences of full fiscal autonomy for Scotland,

(g) that full fiscal autonomy for Scotland is implemented over a period of time, as the Scottish Parliament and the Scottish Government acquire capacity to carry out their additional competences.

(5) The Economic Agreement is to be entered into as soon as possible and the two governments must cooperate in good faith with a view to achieving that.

(6) As soon as possible after the Economic Agreement is entered into—

(a) the Scottish Ministers must lay a copy of it before the Scottish Parliament, and

(b) the Secretary of State must lay a copy of it before both Houses of Parliament.

(7) The two governments must from time to time review the Economic Agreement and make such amendments to its terms as they may agree with a view to ensuring that it continues to meet the requirements of this section.

(8) Subsection (6) applies to the Economic Agreement as amended as it applies to the Agreement as entered into.

(9) The Secretary of State may, with the agreement of the Scottish Ministers, by regulations modify this section.

(10) A statutory instrument containing regulations under subsection (9) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require the Scottish and UK governments to reach agreement on the delivery of full fiscal autonomy for Scotland.

Amendment 3, in clause 63, page 67, line 30, leave out subsection (3) and insert—

‘(3) Part 2 of the Bill comes into force at the end of 2 months beginning with the publication of the report of the Independent Commission on Full Fiscal Autonomy appointed under section (Independent Commission on Full Fiscal Autonomy).”

This amendment provides that Part 2 (Tax) will not come into force at the end of two months beginning with the day on which the Act is passed, in order to link the commencement of the tax provisions of the Act with the work of the Independent Commission on Full Fiscal Autonomy, appointed under New Clause NC1, which would be required to report by 31 March 2016.

[Ian Murray]

It is great to see you in the Chair, Ms Engel. Congratulations on your elevation to Deputy Speaker. It appears that in tonight’s debate there is a sense of déjà vu, as we debated full fiscal autonomy a few weeks ago. Given that the Committee stage of this Bill has been dominated by the SNP manifesto commitment to deliver full fiscal autonomy and bringing forward its watered down promise to deliver it this year, it is good that we have the opportunity to try to put it into this Bill. In fact, as we witnessed last week, the SNP’s hand had to be forced by its arch Thatcherite colleagues, when its Members went into the Lobby with the hon. Member for Gainsborough (Sir Edward Leigh). I said at the time that the worst possible scenario for Scotland would be the SNP demanding full fiscal autonomy and its being delivered by a majority Conservative Government. Those words were echoed—

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[Alex Salmond]

On a point of order, Ms Engel. I am not sure that I heard the hon. Gentleman correctly, but he seems to be redrafting his clause during his speech. Would it be in order for him to redraft his new clause to include the House of Lords during his speech? Can he be that uncertain of his arguments?

[The Second Deputy Chairman of Ways and Means (Natascha Engel)]

The right hon. Gentleman knows that that is a matter of debate, so let us continue with that debate.

[Ian Murray]

The problem with the right hon. Member for Gordon (Alex Salmond) is that he does not want to debate full fiscal autonomy, as he knows that it is a bad policy. Let me emphasise that if the Secretary of State wants to accept the new clause, I would be more than happy to ensure that Members of the House of Lords were not on the commission. Let us be transparent and accountable in this place, rather than nitpicking about parts of the clause. The SNP do not want the scrutiny and that is the key to this argument.

Let us consider some of that scrutiny. The much-quoted IFS analysed full fiscal autonomy in Scotland and said that it would cost £7.6 billion next year and up to £10 billion by 2020. It has made it clear that that is over and above the deficit of the UK at the moment and the spending profile of the current Conservative Government. Let me emphasise again, as this has been misquoted by the hon. Member for Moray (Angus Robertson) on a number of occasions, that that figure is in addition to the current UK deficit.

The impartial analysis has been dismissed by the Scottish Government, so let us turn to another source of information, Her Majesty’s Treasury, which analysed these figures with results broadly in line with the analysis of the IFS. According to Treasury costings that I obtained through a freedom of information request, full fiscal autonomy would leave Scotland with an additional cash terms deficit of £7.7 billion in 2015-16, rising to £8.4 billion in 2019-20.

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The Committee proceeded to a Division.

[Madam Deputy Speaker (Natascha Engel)]

I ask the Serjeant at Arms to investigate the delay in the No Lobby.