Scotland Bill

Roger Mullin Excerpts

Monday 29th June 2015 Commons Chamber

[David Mundell]

I would like to make a little progress.

Since the Committee last met, I have had the opportunity to appear before the Devolution (Further Powers) Committee—to give it its full title—and to listen to its views and explain the Government’s stance. I can assure the hon. Member for Dundee East (Stewart Hosie) that that Committee will continue to play a full part in my consideration of the Bill as it progresses through the House, and I have assured the convener of that.

I had a very useful meeting with the Deputy First Minister to look at how we move forward, particularly in relation to the fiscal framework, and I am going to disappoint the hon. Gentleman, but in a good way, because the criticism that was forthcoming from the Committee to both me and the Deputy First Minister was that we both said the same thing to the Committee, which was that we are not going to give a running commentary on the negotiation of the fiscal framework. What I can say is that the list of issues that the hon. Gentleman referred to in his contribution will be part of the discussion of the fiscal framework. We will of course keep this House updated from a UK Government perspective, but it will be for the Scottish Government to keep the Scottish Parliament updated.

I am pleased to start with the clauses on income tax in today’s debate. These are often overlooked, meriting only a few lines in the comments received on the Bill from both Parliaments and from the Scottish Government, but that is because, as has been said, they command widespread support as delivering the central aspect of the Smith agreement in full.

The changes made by clauses 12, 13 and 14 will give unprecedented flexibilities to the Scottish Parliament on income tax and are a significant milestone in Scotland’s devolution journey within the UK. The Scottish Parliament will be able to set income tax rates and thresholds for earned income. This includes the ability to introduce new bands.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Is the right hon. Gentleman aware of the most recent analysis by the Fraser of Allander Institute, written by Dr Jim Cuthbert? This is not an issue about the individual devolution of income tax; it is about the interaction that will occur between the way in which income tax is proposed and the Barnett formula and the Government’s proposal with the Holtham index, and the conclusion of that analysis is that, when likely shifts in relative population and shifts in relative tax base are taken into account, this will create significant negative dynamic effects. In other words, it will be all over the place and lack consistency, and it will be a source of conflict down the years. Surely, that needs to be avoided by taking a stronger look at making sure the right income tax powers are devolved?