Scotland Bill

Pete Wishart Excerpts

Monday 29th June 2015 Commons Chamber

I cannot therefore vote for the amendment of my hon. Friend the Member for Gainsborough (Sir Edward Leigh), because it is only half-fixing the problem. It is fixing the issue of the starting point, not the whole tax base. I sense it would be a bit of a rush to devolve the whole thing now in one amendment, so I am not sure I can vote for either of the two amendments, even though I think I agree with them, because we are starting from the wrong position. We need to look at what sort of federal tax system we could have.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The hon. Gentleman is making a thoughtful speech and he has the ears of those on the SNP Benches. He is right that we have got a halfway house and we have got to get this resolved. That is what the Scottish people thought they were voting for when they voted for us in such numbers. Is there anything the hon. Gentleman can do to persuade his right hon. Friend the Secretary of State to listen to what Scotland has said, and to have the proper solution and ensure we do this right and get what the Scottish people voted for just a few weeks ago?

[Nigel Mills]

I have tried to convince the Treasury Minister, my hon. Friend the Member for South West Hertfordshire (Mr Gauke), of various tax reforms over the last five years with, I would have to say, somewhat limited success, so I am not sure my words will help. If we are to achieve a lasting settlement of our constitution, having these tax rules in the right place with everyone understanding them and believing them to be fair will be extremely important. I do not think my constituents will understand how Scotland can set a different rate of income tax from what they pay if Scottish MPs are still able to vote on the English rate of income tax because it applies to passive income and dividend income. I suspect we will get into a constitutional nightmare, and I can foresee a situation in which Scotland chooses a lower rate of income tax than we have in England, and the English taxpayer will, rightly or wrongly, see a subsidy going from England to Scotland through the Barnett formula and then SNP MPs coming here and voting for a higher rate of income tax than their constituents are paying. That is the nightmare we would hate to see.

We need to have a clear devolution of taxes and responsibility, not what I fear we have here: a halfway fudge that we will have to try to fix in a few years’ time.

--- Later in debate ---

[David Mundell]

As my hon. Friend knows, we had lengthy discussions in the Smith commission on the balance between the respective responsibilities, and it was agreed that while income tax should remain part of the wider UK tax regime, these specific significant powers would be moved to the Scottish Parliament. I believe that that creates the balance we were seeking.

[Pete Wishart]

Will the Minister give way?

[David Mundell]

No, I will not at this stage—[Interruption.] The hon. Gentleman is one of the most frequent contributors to debates in the House, and he does get to have his say, although not as much as his former leader does. The right hon. Member for Gordon (Alex Salmond) is a very frequent contributor.

The SNP’s new clause 54 goes further than amendment 124, tabled by my hon. Friend the Member for Gainsborough (Sir Edward Leigh). However, to go further than the powers set out in the Bill would break the concept of shared tax and be complicated for individuals and employers with activity on both sides of the border, as they would have to understand and comply with two potentially entirely different tax systems. The Law Society of Scotland agreed with us, saying of the proposed change:

“The administrative burden would increase considerably. The complexities regarding the UK savings and investment market may also be particularly problematic”.

That would not be in keeping with a stronger Scotland within the United Kingdom. It is not what the people of Scotland voted for last September, and I cannot accept the new clause.

On new clause 32, tabled by Opposition Front Benchers, I hope that I can provide some reassurance to the House. The new clause is intended to provide the House with a report on the implementation of the Scottish rate of income tax and the further income tax powers in the Bill. That is a laudable aim, but I can reassure hon. Members that current legislation already provides for annual reports on the implementation of devolved tax powers to Scotland.

Section 33 of the Scotland Act 2012 requires the Secretary of State and Scottish Ministers to lay before both Houses of Parliament and the Scottish Parliament annual reports that broadly cover the areas suggested in the new clause. Three reports have already been produced, the most recent in March, and HMRC’s accounting officer for the Scottish rate and the Comptroller and Auditor General have both given evidence to the Scottish Parliament on the progress of tax devolution to Scotland. Of course, Westminster Committees have the opportunity to call for evidence, too. Alongside that existing requirement and to ensure that Parliament can have confidence in the implementation and operation of the Scottish rate, the Comptroller and Auditor General is required to report annually on HMRC’s administration of the Scottish rate.

I can also tell the hon. Member for Edinburgh South that I am satisfied that adequate resources are being brought forward to deal with the issues relating to the transfer of these powers to Scotland and to HMRC’s involvement in that process. I would further reassure Members that reporting requirements are a feature of the negotiations currently under way between the two Governments on the fiscal settlement that accompanies the Bill.

I have set out the rationale behind the Government’s drafting of the Bill, which, as has been widely acknowledged, fully implements the Smith commission’s recommendations on income tax. The fiscal framework will be an important part of the discussions, and we are giving this exercise the focus and priority that it deserves.

--- Later in debate ---

[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—

[Pete Wishart]

rose—

[Ian Murray]

Let me just finish this point. Those words were echoed by Dave Watson, the head of campaigns at Unison Scotland, who said:

“An incoming Tory government faced with a big number of SNP MPs, saying, ‘OK, if that’s what Scotland voted for, let’s give them Full Fiscal Autonomy.’ The Treasury would be able to dump £7.5bn of the deficit on the Scottish Government and just walk away.”

The fact that the SNP has another fudged amendment this evening shows that it does not believe that full fiscal autonomy would be good for Scotland.

[Pete Wishart]

rose—

[Ian Murray]

Before the hon. Gentleman pops up to say, “Too wee, too stupid and too poor,” as he always does, may I remind the House that that was a phrase coined by the SNP Finance Secretary and no one else? It is worth putting that on the record, given that he always pops up to say that.

Lord Smith of Kelvin said in his report that one of the primary aims of the Smith agreement was to provide the Scottish Parliament with accountability—

[Pete Wishart]

rose—

[Ian Murray]

I said that I would give way, and I will do so when I have made a little progress, given the late hour.

Lord Smith said that the Scottish Parliament was a Parliament that spends resources but does not raise any, so there is no accountability or responsibility. The Scotland Act 2012 resolved that position a little with the devolution of the most immovable taxes and 10p of income tax—

[Pete Wishart]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way to the hon. Gentleman before he bursts a blood vessel.

[Pete Wishart]

I am very grateful to the hon. Gentleman for giving way. This rewriting of history is great and it is fantastic to find out the position of the Scottish National party, but perhaps he can explain the position of Scottish Labour. He abstained on full fiscal autonomy. Is that because he is uncertain, or is he perhaps now unsure about full fiscal autonomy?

[Ian Murray]

I am delighted by that intervention. What I did not want to do last week was rain on the parade of the Scottish National party as its Members went through the Lobby with the Thatcherite Conservatives to deliver full fiscal autonomy for Scotland. That is what seems to be wrong. The SNP is in full agreement with the hon. Member for Gainsborough (Sir Edward Leigh) again tonight on the subject of the devolution of the entirety of income tax. Perhaps the party has a right-wing agenda after all.

As we know, the Bill provides full control of nearly 50% of revenues and more than 60% of spending. According to the Library, that will be 65% if the devolution of housing benefit is agreed tomorrow, making it one of the most powerful devolved Parliaments in the world. The OECD ranked the Smith proposals and came to the same conclusion.

With that accountability and responsibility must come transparency and honesty. During the general election campaign, the First Minister and SNP candidates repeatedly said that they would vote for full fiscal autonomy this year. That was reaffirmed in the television debates. All the impartial and independent expert analysis of full fiscal autonomy shows clearly that that would devastate Scotland’s financial position. That is the genesis of our new clause 1. If the Scottish Government want to dismiss all the independent experts simply because they do not agree with them, let us set up an independent commission to consider the consequences on Scotland’s finances of full fiscal autonomy.