Cost of Living and Brexit
Stewart Hosie Excerpts(1 year ago)
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Dr Whitford
No, I am sorry. I have just given way to the hon. Lady.
The Institute for Fiscal Studies’ analysis of the Scottish tax and benefit system showed that it was more progressive, with almost 30% of low-income families £2,000 a year better off in Scotland, but Scotland aspires to something more radical than just mitigating Westminster austerity such as the two-child limit or the six-year benefit freeze. Our vision is to be a fairer, greener nation. The Scottish Government founded the Wellbeing Economy Governments Group in 2018 with Iceland and New Zealand, and Finland and Wales joined later. A wellbeing economy does not just focus on GDP, which includes the profits of damaging sectors such as the tobacco industry, but invests in the physical and mental health and social, economic and environmental wellbeing of every citizen. It is a holistic approach that recognises that our society and economy depend on the success of every individual, every family and every community.
Therefore, in addition to the targeted anti-poverty measures, the Scottish Government invest in the wellbeing of all those living in Scotland, from the baby box that welcomes the birth of a child and university tuition that allows our young people to reach their full potential to the free personal care that allows older people to stay in their own home for as long as possible. However, with the tightening limitations of devolution, the Scottish Government do not have the power over their own economy or the control of taxation and social security that are required to deliver the wellbeing economy we aspire to. We all know that we need a different type of economy by the end of this decade, or we will leave our grandchildren to face climate collapse. The pandemic brought everything to a standstill, which gave us a unique opportunity to decide what kind of economy and society we wanted to rebuild.
Stewart Hosie (Dundee East) (SNP)
Before my hon. Friend goes on to talk about the kind of economy we want to see, will she make the observation that in an important debate on the cost of living and its evil twin Brexit, on the day after an urgent question on the Tories’ mortgage crisis, we have one Tory Back Bencher and two Labour Back Benchers in the Chamber? Does that not tell the Scottish people everything they need to know about how little Unionism really cares for ordinary people?
Dr Whitford
The proposal for this economy, as I said at the beginning of my speech, is not just for the people of Scotland: it is for the people of the four nations of the UK. The review of the TCA will come up in 2026, and while it is not possible to make Brexit work, it is possible to mitigate some of its worst effects. For that, though, we need to understand what Brexit is doing to the UK’s society and economy and have proposals that we can bring to the EU to ask for change.
Unfortunately, the opportunity to change to a different economy and society has not been taken. We already see poverty and inequality rising, and the climate emergency being pushed off the action list—including by Labour, which has just U-turned on its pledge to invest £28 billion in the transition to a green economy. Unfortunately, the climate crisis cannot wait. Scotland is blessed with extensive green energy potential, from wind and tidal power to green hydrogen and pump storage hydro. The current Government have failed to support Scotland’s green energy potential, and sadly there is now little reason to expect much change under Labour, either.
Budget Resolutions and Economic Situation
Stewart Hosie Excerpts(1 year, 3 months ago)
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Stewart Hosie (Dundee East) (SNP)
I thought the Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), was about to launch a ship with her peroration.
If I may, I will make a couple of small observations before I start. The Chancellor mentioned Nigel Lawson and his deregulatory Budgets and spoke about the resolution for Silicon Valley Bank. I hope the Government learned the right lessons from those episodes and indeed from the 2008-09 crash: do not weaken regulation, do not weaken tier 1 capital and do not return the banking system to risk.
I was intrigued by many of the things the Chancellor said about reducing economic inactivity. Some of the measures may well work. To add more brutal sanctions on to universal credit claimants was probably rather unconscionable, given everything else that is happening.
The Chancellor gave the impression of broad, sunlit uplands, and there was lots of cheering and waving of Order Papers at the end. What he actually described, though, was a UK economy that has gone from being the most robust in the G7 to one of the weakest; a UK economy in which Brexit slammed the brakes on UK investment; a UK whose performance deteriorated after the Brexit referendum, in both absolute and relative terms; a country that unilaterally imposed trade barriers with its nearest neighbours; and the only country in the G7 whose economy has not returned to its pre-pandemic level.
One could make a case that this was not all the Government’s fault, but many of the difficulties were, and many were caused by the disastrous fiscal loosening of the Chancellor’s predecessor, the right hon. Member for Spelthorne (Kwasi Kwarteng). We can see the problem the economy faces through the prism of debt interest. The Chancellor is right about the comparison with last November, four months ago, but year on year, debt interest payments are £30 billion, £40 billion, £50 billion, £60 billion higher than they were a year ago. For ordinary working people, the OBR confirmed in November that real household disposable income remains below the 2019-20 level and will do so for the next four or five years, and I have seen nothing in the Red Book or the OBR forecast in the past few minutes to change my mind about November’s assessment.
We had every right to expect that today’s Budget would begin to address more of the long-term issues the economy faces and would contain action to tackle some of the cost burdens on ordinary people. Those long-term issues were addressed by both the CBI and the TUC in their Budget submissions. On growth, the CBI said:
“The UK economy continues to face global and domestic headwinds, with the prospect of several more years of low growth.”
The TUC said that
“the government is arguing once more that the state of the public finances is a reason to restrict economic growth, flying in the face of evidence to the contrary.”
On productivity, the CBI noted:
“Britain has experienced 15 years of low growth and flatlining productivity”.
The TUC called on the Budget to get
“productivity rising by rebooting our skills system.”
On exports and trade, they both said broadly the same thing. The CBI said the Government should
“work with businesses across the UK’s nations and regions to kickstart an exporting boom”.
On the supply of labour, the TUC said that
“acute labour and skills shortages are an albatross hampering UK growth.”
The TUC said
“there is a recruitment and retention crisis in public services”.
On the green economy, the CBI said:
“Going green is essential both for our international competitiveness and our energy resilience.”
The TUC demanded that the Government
“institute the Green Jobs Taskforce with a long-term remit and regulatory capacity to co-ordinate planning for decarbonising our economy.”
Some measures in the Budget are to be welcomed; there always are some. The changes on prepayment meters will help, more support for local charities will help and the replacement for the corporation tax super-deduction is absolutely essential—it could not be allowed simply to fall off the table. The problem is that even a cursory glance at the Red Book and the OBR forecast shows there is little to indicate that the Government have really understood, or are taking seriously, the issues raised.
On growth, the OBR forecast makes clear the impact of Government investment. It is negative in 2025, 2026 and 2027, and it will be a drag on growth for most of the forecast period. Productivity growth, even on the Government’s favoured productivity per hour metric, does not reach 1.5% in any year of the forecast period—it is below the 2% historical rate.
The much vaunted £20 billion of R&D spend by 2024-25 has been announced three or four times, but it was not mentioned today. I assume it is still on the table, alongside the £1 million a year permanent annual investment allowance. I welcome these things, but the problem is that, with the inflation we have had and the inflation that is forecast, the money will not buy the £1 million a year or the £20 billion of R&D spend that was originally anticipated.
On exports, trade and the balance of payments, the current account balance remains negative for the entire forecast period. Being outside the EU single market remains a drag on the ability of firms to trade easily with our nearest neighbours.
To be fair, the Chancellor spoke a lot about the supply of labour. Employment is forecast to rise, but it will barely dent the labour and skills shortages throughout the economy. My view, and my party’s view, is that only reversing Brexit and ensuring the free movement of people will do that. Even the current framework is instructive, is it not? With a 16-plus unemployment rate of 3.1%, an employment rate of 76.5% and an economic inactivity rate down to 21%, Scotland has the best employment, best unemployment and best economic inactivity rate of any UK nation. That demonstrates clearly that a competent and compassionate SNP Government can deliver on employment where the UK Tory Government are failing.
The Chancellor made great merit of going green. Some interesting things were said. The £1 billion a year or so investment in carbon capture and storage is to be welcomed, but we will look very carefully to see where it is spent. There was no mention, for example, of the Acorn project in Peterhead, which of course had £1 billion of funding pulled almost a decade ago. But the Chancellor did mention small modular reactors and nuclear power, which is at the heart of the Government’s energy policy. Given that that is now back on the agenda, it is useful to look at the economics of it. On SMR, remember: this is pipedream stuff. There is not a single small modular reactor design that has even been licensed for use.
The primary mechanism to drive investment in nuclear is either the regulated asset base model or a guaranteed price for electricity with a strike price at almost double that of real renewable energy, linked to CPI for 35 years. There are loan guarantees to transfer project risk, including that of cost overruns, to the Government and then the taxpayer. There is a waste disposal service for spent fuel and other waste. The price of those contracts is set according to the Government’s methodology, but if the prices go above a cap, they too will be passed on to the Government and the taxpayer.
Then there is the commitment by Government to manage decommissioning cost overruns, even though it is impossible to know what they will be, because they do not become apparent until the decommissioning takes place—massive costs to the consumer and a near unlimited contingent risk placed on the taxpayer. But here is the rub when the Government call it “green” or “renewable”: allowing one or two generations to buy expensive, overpriced nuclear energy, nuclear electricity, and then forcing the next 50 generations to decommission, store and guard toxic nuclear waste is not green.
You will recall, Madam Deputy Speaker, that the Government introduced their new fiscal charter last year: net debt to fall as a share of GDP in the fifth year of a rolling programme and public sector net borrowing not to exceed 3% of GDP in the same year. When the OBR reported in the autumn, those targets were due to be met in 2027-28, with the figures being, if memory serves, 0.3%, 0.6%, £9.5 billion and £18.6 billion. They are forecast today still to be met but, interestingly, the net debt measure is now showing a margin of only 0.2%. That tells us, because the debt figure is different, that there is probably a little more headroom than was anticipated only four months ago.
Therefore, the expectation should have been that the Treasury did more to tackle domestic and business energy costs, particularly for small and medium-sized enterprises; that it continued to act to squeeze inflation down, where it had the power to do so; and that it ensured things within its control, such as public sector pay, the minimum wage, the state pension and social security rises—it did this in November—did not leave people any worse off. If it does not do that, energy price hikes, inflation and weak pay rises will continue to erode people’s standard of living.
We know from the November OBR forecast that inflation was set to peak at a 40-year high and that wages and living standards were still set to be squeezed by about 7%, wiping out all the growth from the past eight years. What do we know today that we did not know then? We know that telecoms prices are due to rise; BT is putting its costs up by 15% at the end of this month. Grocery prices continue to rise —if you can get fresh produce at all. Grocery inflation rose in February to a record high of 17.1%. That will add the best part of £1,000 to the average family shopping basket throughout the year and we know that families are really beginning to feel the pain of increased mortgage costs.
So it is obvious that the Government had three urgent tasks today, all of which ought to have been designed to deal with the things that matter to the public. The first was to continue to support businesses that are struggling with high energy costs—not simply to freeze the “cap”, although it is not a cap at all, but to reduce it. They needed to recognise that this “cap” is an average and to pay attention to the fact that a UK average energy bill of £2,500 will mean one of £3,000 or £3,500 in Scotland. The Government should have supported the reduction to £2,000 and maintained the £400 energy bill support scheme.
Secondly, the Government ought to have continued to bear down on inflation. Forcing down energy prices would have helped with that, as it did last year—3.5% was the impact last year, and we would be talking about another 2% this year at the current rates. The Government could have gone further by mandating the regulators to stop the blatant price gouging and profiteering by energy and telecoms companies.
Thirdly, as I have said, the Government needed to ensure today, or even to signal their intention, that when it comes to the things under their control—the next round of public sector pay, benefits, the minimum wage and pensions settlements—nobody falls behind. They could have gone further to introduce real fairness and raise more cash to really support the economy and boost trade. They could have ended non-dom status, but that was not mentioned today. They could have taxed share buy-backs, but that was not mentioned today. Instead of doing costly vanity nuclear power projects, they could have been scrapping them and investing in real, green renewables. And fundamentally, they could have been rejoining the EU single market, to give our exporters and our economy a fighting chance to recover.
Several hon. Members rose—
Scotland Act 1998: Section 35 Power
Stewart Hosie Excerpts(1 year, 5 months ago)
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Mr Jack
It is not the last resort. What I said to the shadow Secretary of State was that we have 28 days in which to take legal advice and act. Failing that, the Bill goes for Royal Assent. That is the timeframe we operate in. There is then the opportunity for further discussions with the Scottish Government to see if we can get the legislation in scope. We made the same offer with the UNCRC (Incorporation) (Scotland) Bill, which we took to a section 33 order, and that offer still stands. We are happy to discuss with the Scottish Government what amendments could be made to the Bill to get it in scope so that it does not have adverse effects on UK-wide legislation. There is never quite a last resort when you can go on talking, discussing and trying to resolve your differences.
Stewart Hosie (Dundee East) (SNP)
It is true that under section 35, UK Ministers have the right to interfere in Scottish legislation on the grounds of defence, national security or international obligations, or if the Scottish legislation modifies or has an adverse effect on UK reserved law—that much is clear. But given that the Tory Chair of the Women and Equalities Committee, the right hon. Member for Romsey and Southampton North (Caroline Nokes) said that the GRR legislation
“doesn’t change the Equality Act”,
and that the Scottish Secretary has been signally incapable of giving a single example of where it might do so, this is not a debate about process; it is a debate about principle. Would it not be better, instead of interfering and engaging in a rather crass culture war, if the Scottish Secretary apologised to trans people, apologised for trampling over Scottish democracy, folded up his little red folder, and removed the threat to interfere?
Mr Jack
I say again: let us take the heat out of this debate. This is about the Equality Act 2010, which is a GB-wide piece of legislation. The legal advice we have is that there are adverse effects to that law—that is entirely what it is—and it will be published this afternoon in the statement of reasons.
Scottish Independence and the Scottish Economy
Stewart Hosie Excerpts(1 year, 7 months ago)
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Mr Perkins
A number of people want to intervene. I will accept interventions, but I will not accept one from the hon. Member for East Renfrewshire (Kirsten Oswald), because she misrepresented me previously. She said that I had said that I had apologised for the Government’s record. I have not; I have done the opposite. [Interruption.] I will check the record very carefully. She misrepresented me and if she wants to correct the record I will let her, but if she does not want to correct the record I will hear from the right hon. Member for Dundee East (Stewart Hosie).
Stewart Hosie (Dundee East) (SNP)
The hon. Gentleman is perfectly entitled to make the case he is making, but given that in Scotland we voted to stay in the European Union and given that in his constituency 34,000 voted to leave and only 22,900 voted to remain, would it not have been better, instead of wasting his time in Scotland, if he had done his job in Chesterfield, instead of having that act of economic self-harm that is Brexit?
Several hon. Members rose—
Stewart Hosie (Dundee East) (SNP)
Several very interesting things have been said today. I have never taken a single vote for the SNP in Dundee East for granted. However, I heard the hon. Member for Edinburgh West (Christine Jardine)—she is no longer in her place—talk about Orkney and Shetland, and if I lived on one of those island groups, I would be very cross indeed that the Liberal Democrats took them so much for granted and considered them so much of a personal fiefdom.
We had the Secretary of State for Scotland talk about funding delivered by the UK Government. Indeed, the hon. Member for Banff and Buchan (David Duguid) spoke about several other UK policy decisions and read out their cost. I thought that was interesting because it was almost like it was discretionary largesse from Whitehall, almost ignoring the fact that Scottish individuals and businesses pay tax. It is almost as if they do not realise that almost every penny is borrowed and that Scottish taxpayers contribute their full fair share to the debt repayment costs. I find that extraordinary.
We have heard other talk during the day about the debt Scotland might have. The Scottish Government cannot borrow. They have no debt. All the debt comes from the UK. The UK borrows all the money, no matter where it is spent. When there is a £500 million overspend on a single tube station, we pay our share of that debt. There is no Union dividend.
We then heard the Secretary of State make some extraordinarily disparaging remarks about education. Scotland has the highest proportion of people with a tertiary education—the best educated country in Europe. Instead of talking it down, why do we not celebrate the pupils and the students, the teachers and the lecturers, and the schools, colleges and universities? He then went on—he must have been having a really bad day—to talk about crime. We have the lowest crime—[Interruption.] Ah, he has come in. Welcome, Governor-General; take your seat. Scotland has the lowest crime rate since 1974. It was reported in the last week that barely 5% of reported crimes in England even have somebody charged. To talk down the criminal justice system in Scotland while allowing the utter failure of the criminal justice system in England to go by the book is absolutely disgraceful.
We then had the bizarre sight of the Better Together parties—the Tory-Labour coalition party—pretending to dislike each other, but when I see Labour’s immigration mugs and the “Make Brexit Work” slogan, all I see is a red Tory. Whether they are red Tories or blue Tories, it does not matter. They are exactly the same.
We then had—I might not even get to my speech proper, Madam Deputy Speaker—some straw men thrown up about how much Scotland’s foreign currency reserve would have to be when we become independent. I checked and the UK’s foreign currency reserve is 6.4% of GDP, Ireland’s is 2.7% and Finland’s is 7%. To be fair, Denmark’s is higher at about 20%, but how can it be that a modern advanced economy with huge natural resources and a balance of trade surplus, such as Scotland, would somehow uniquely be expected to hold 50%, 60%, 70% or 80% of GDP in foreign currencies?
Stewart Hosie
I think my right hon. Friend spoke enough earlier on, but of course I will give way.
Ian Blackford
I am very grateful to my right hon. Friend—I will see him later. He is making a powerful speech. It is worth pointing out to the House that the UK has a current account deficit of more than 8% of GDP. If there is a country that cannot pay its way, it is the UK.
Stewart Hosie
That is absolutely true. There will come a time, when we have the referendum next year, to enter into proper, calmer and sensible debates about the minutiae and the technical detail regarding all that—long may that continue.
Basically, what we saw today was a rerun of Project Fear: Project Fear 2. I was struck by the comments of the hon. Member for Chesterfield (Mr Perkins), who is also no longer in his place. At one point, he genuinely seemed to suggest that the determination as to whether Scotland should have a referendum should be based on opinion polls rather than real votes. I will take seven, eight, nine or 10 mandates in a row over an opinion poll any day of the week.
Project Fear 2 took me back to the 2014 independence referendum. The yes campaign was characterised by one thing: the absolute determination to answer every question and provide as much information as possible to the people of Scotland. We did that in the face of the constant refrain from Unionism that there was not enough information. Even when detailed answers to every question were tripping off people’s lips, we were still asked for more.
We tried to ensure that the answers we gave about the future shape of the Scottish state and policy for an independent Scotland were, to the best of our ability, in the best interests of the people of Scotland and those in the rest of the UK. Nowhere was that clearer than in our proposals for what was then a formal shared currency and our determination to service a negotiated share of the UK’s national debt. Both those plans were designed to protect sterling and stop the rest of the UK falling victim to a technical default on its debt obligations. To provide that certainty, clarity and detail, we drew, if not exclusively, certainly heavily, on the 670-page “Scotland’s Future” White Paper.
We need to recognise the way in which Unionism behaved and campaign differently and smarter this time. The first thing to recognise is that no matter how detailed and precise our answers were, Unionism continued and will continue to ask the same questions over and over again to give the impression that there are no answers. It was false then and it is false now.
Secondly, we need to recognise that Unionism acted and continues to act irrationally. Next time, next year, whatever policy decisions are finally determined to be best for Scotland, they must be not only technically robust, but politically bomb-proof, so that no indyref2 policy area can ever be held hostage by a Westminster veto.
Thirdly, while we must of course answer every single question that the public put to us, we should make our fundamental case on principle, not detail. That is why the first three papers published by the Scottish Government are first class. A mix of democratic principle and a vivid picture of what Scotland could be is hopeful, upbeat and takes yes campaigners away from the miserable drudge of Unionist whataboutery—we have seen it in spades today—that so characterised the 2014 referendum campaign.
I have one final thought at this point. We know how successful Scotland can be. Is it not time that Unionism was finally challenged? Beyond Brexit, is this really as good as it gets? The first thing we have to do is deliver Scottish independence, and the second, and in many ways more important, is to describe the kind of Scotland we seek. We have laid out the mechanism by which we will deliver it, we have gone to the Supreme Court to test the legality of the referendum and we have the wonderful fall-back position that the next Westminster election will be a de facto referendum, meaning that the Scottish people’s voice will be heard one way or another.
The answer to the second question—what sort of Scotland will we deliver?—is implicit in the motion. Our critique of the botched experimental, Tufton Street economics that crashed the economy in the mini-Budget is stark, and our demands for action to help those most in need are clear, but let me end by answering the question of what sort of Scotland we seek in a slightly more succinct way. The Scotland we will deliver will be the one that the people of Scotland want and choose, because it is with independence and only with independence that Scotland will always get the Government and the policies it votes for.
Oral Answers to Questions
Stewart Hosie Excerpts(3 years, 9 months ago)
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Angela Crawley (Lanark and Hamilton East) (SNP)
Stewart Hosie (Dundee East) (SNP)
Ruth Jones (Newport West) (Lab)
Mr Jack
The hon. Lady points towards frameworks, which is exactly what we are doing. For standards, frameworks will be by consent across the United Kingdom. There is the opportunity for parties to opt out. As a safety net for business, we are introducing mutual recognition, which underpins the European single market, and we are introducing non-discrimination.
Stewart Hosie
The gravity analysis published in the internal market Command Paper suggests that a border effected between Scotland and the rest of the UK would have an impact of about 1.1% of Scottish GDP. Brexit will have an impact seven times greater—a loss of GDP growth in Scotland of about 8%. When the Secretary of State has discussions with the Scottish Government, will he commit to bring forward another Command Paper insisting that Scotland remains part of the European Union single market?
Mr Jack
We are leaving the EU—I do not know if that point has been wasted on the hon. Gentleman. When we were on the Treasury Committee, we saw many projections about what would happen if the UK voted for Brexit, and all those projections had one thing in common: they were wrong. I do not recognise his figures. I believe that with good trade deals and this UK legislation, we will strengthen the Scottish economy.
Public Finances: Scotland
Stewart Hosie Excerpts(8 years, 4 months ago)
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Stewart Hosie (Dundee East) (SNP)
I beg to move an amendment, to leave out from “accompany the Scotland Bill” to end and add:
“notes that the Smith Commission recommended that a fiscal framework be agreed between the UK and Scottish Governments on the basis that the Barnett Formula be maintained and that Scotland would be no worse or better off simply as a result of the transfer of additional powers; notes the clear statement by the Scottish Government that it will not recommend any fiscal framework to the Scottish Parliament that breaches the Smith Commission recommendations and which locks in a long-term financial disadvantage to Scotland; supports the efforts of the Scottish Government to secure a fair arrangement; and urges the UK Government to commit to the principle of no detriment so that a fair framework for the transfer of powers can be agreed and that the people of Scotland can benefit from the additional devolution of powers that they were promised by the UK Government following the referendum on Scottish independence in September 2014.”
Before I turn to the amendment and the motion, I will make a comment or two about the Scottish Secretary’s entertaining contribution. He said that his glass was half full—unlike the Benches behind him. Before he makes jibes about invisible SNP MPs, who are here in rather considerable numbers, he might like to have a glance around him.
The motion is entitled “Public finances in Scotland”, although it is not about the public finances in Scotland. At best, it can be described as being about the fiscal agreement, although in truth it is about the negotiations around the fiscal agreement. There is no reference in the motion to the continuation of the Barnett formula, which is a key point of the negotiations, although it was referenced in the speech. Neither is there any reference in the motion to “no detriment”, an important principle from Smith around which the negotiations are taking place, although it was referenced in the speech.
That does not take away from the fact that the fiscal agreement is vital. As Lord Smith said,
“it is fundamentally important to making Scotland’s new powers work…It is the final interlocking piece of the jigsaw.”
We could not agree more.
Stewart Hosie
I will give way in a moment. The shadow Secretary of State laid out the context for potential new powers, and I will do the same for the current state of play of Scotland’s public finances, and the situation in which we are negotiating the fiscal agreement. The UK Government’s cuts to Scotland’s fiscal departmental expenditure limits between the start of the last Parliament and the end of this one will be almost £4 billion, which represents a 12.5% real-terms cut. Almost half of that—£1.5 billion—will be between now and the end of the Parliament. That is, to put it another way, a 4.2% cut to Scotland’s fiscal DEL.
Even on capital, notwithstanding the Government’s assertion that it is being increased, Scotland will see a reduction of £600 million between the start of 2010 and the end of the Parliament. That is before we even get to the possibility of in-year cuts to the Scottish block grant, as we have seen in the past, having a real, immediate and direct impact on budgets that the Scottish Parliament has already set and agreed.
Stewart Hosie
I am conscious of the time, but I will take an intervention from the hon. Member for Stockton North (Alex Cunningham).
Alex Cunningham
The hon. Member for Perth and North Perthshire (Pete Wishart) said that the SNP knew what it wanted. If that is the case, will the hon. Member for Dundee East (Stewart Hosie) tell us what the SNP wants and where the Tory Government’s offer falls short?
Stewart Hosie
I will certainly speak to our amendment and comment on the motion tabled by the hon. Gentleman’s Front Benchers. I may even touch on what I think would be the best possible outcome for Scotland. I hope that will make him happy.
The cuts I have described are vital to the context in which the fiscal agreement is being negotiated. The cuts are not driven by a fiscal agreement or by the Scottish Government, but by the UK Government’s fiscal charter. The fiscal charter is a requirement to run a budget surplus of enormous proportions—a £10 billion absolute surplus and a £40 billion current account surplus by the end of this Parliament. The framework is being negotiated in the context of this Government’s cutting £40 billion a year more than is required to run a balanced current budget. That means we are negotiating on it in the context of being in the middle of a decade of UK austerity.
The alternative is clear: a modest rise in public expenditure. That would still see the deficit fall, the debt as a share of GDP fall and borrowing come down. A modest 0.5% real terms increase in expenditure would release about £150 billion for spending and investment, and make the cuts we are seeing, which are partly driving the fiscal agreement discussion, absolutely redundant.
Mr Jones
I would say this to the hon. Gentleman, whom I consider a friend. He is talking about percentage cuts to the Scottish budget, but he should look at areas, such as the north-east, that have had far bigger cuts proportionally. Unlike him, his party and his Government, people in those areas do not have the ability to raise taxes. Why have the Scottish Government not used the tax-raising powers they already have to fill some of the gap he is describing?
Stewart Hosie
That question is important, and I will come on to the use of tax-raising powers. We often hear such an argument from members of the Labour party but let us be under no illusion, because it is wrong. The Scottish Government use their tax powers daily. A council tax freeze to protect families for eight years was the use of a tax-raising power. The small business bonus to protect 100,000 businesses, which now pay no or lower business rates, was a good use of a tax-raising power. The power to mitigate the entire effect of the bedroom tax was a good use of such a power. The idea that powers are not used is simply wrong.
Stewart Hosie
For the hon. Gentleman’s benefit, I will come on to the specific issue of raising tax in a just a moment.
Before I leave the context of the UK fiscal charter, let me say that we all recall the vote on 13 January 2015 on the implied £30 billion of cuts, when we made many of the same points we are making today. The great tragedy then and now is that the Labour party supported £30 billion of extra Tory pain and austerity.
Ian Murray
Let us just dispel this constant nonsense from the Scottish National party. The hon. Gentleman’s own First Minister said, when she launched the Scottish business partnership at Tynecastle stadium in June, that the framework on which there was a vote on 13 January 2015 gave Governments enough flexibility to do as they wished. It was very similar to the fiscal framework or charter that he promoted back in November. He refuses to use such powers; he would rather demolish and demoralise Scottish public services.
Stewart Hosie
As the arguments are complicated, it is so much easier simply to quote in full from the 15 January issue of the new Labour leadership’s favourite newspaper, the Morning Star:
“Labour MP Diane Abbott accused her party’s leaders yesterday of doing working people a ‘great disservice’ by backing Tory plans for permanent austerity.”
The hon. Gentleman keeps getting it wrong.
The key thing is that Scotland’s budget has been cut and will continue to be cut by this Government, which makes the achievements of the Scottish Government all the more remarkable. That makes it all the more important not simply that we get any old fiscal agreement, but that we get it right. We must ensure that the Smith commission principle of “no detriment” is adhered to and that we do not embed unfairness in the system, so that we are not subject to possible additional cuts of about £350 million a year. We need to avoid that outcome so that we can continue to do good things and build on the progress we have seen in health spending, which is up to £12.3 billion this year and will be £13 billion next year, and in education.
The Chief Secretary to the Treasury (Greg Hands)
May I bring the hon. Gentleman back to the fiscal framework? I am interested in the amendment that he has tabled, because it seems to quote from the Smith commission—particularly paragraph 95(3) on no detriment, which states that
“the Scottish and UK Governments’ budgets should be no larger or smaller simply as a result of the initial transfer of tax and/or spending powers”.
The amendment carefully deletes some important parts of the Smith agreement. It states that
“Scotland would be no worse or better off simply as a result of the transfer of additional powers”.
Why has he deleted the word “initial”, which is very important in respect of the transfer of powers, and any reference to fairness to the UK taxpayer?
Stewart Hosie
For the sake of brevity. Let me be very clear that the negotiations that are under way are founded on a number of principles, including no detriment as a result of the devolution of further powers initially and no detriment as a result of the policy decisions of the UK Government or Scottish Government post-devolution. I would have thought that the Chief Secretary might have known that.
The whole point of getting this right is to avoid a potential cut of an additional £3.5 billion over a decade, so that the Scottish Government can continue their good work. We do not want those additional cuts to be made, because they would weaken our ability to internationalise the economy; hinder our support for businesses seeking to innovate and to do research and development; suck vital resources out of our plans to invest in education and infrastructure; and undermine all the work being done by the Scottish Government to deliver the fall in unemployment and the highest employment rates in the UK.
We understand the trajectory that Scotland’s public finances will take if the wrong block grant adjustment is chosen. As I say, it will perhaps mean the loss of £3.5 billion over a decade.
Maggie Throup (Erewash) (Con)
Given how the hon. Gentleman is speaking, it almost sounds as if the SNP MPs are having second thoughts about the new powers in the Scotland Bill. Is that because they are afraid of taking them on board?
Stewart Hosie
No. The hon. Lady is absolutely wrong; we are not having second thoughts about the powers. We want the powers—indeed, we want more powers—but the agreement that is reached must deliver a Scotland Bill in line with the Smith commission principles, in particular that of no detriment.
We want to avoid a potential additional cut of £3.5 billion over a decade.
Stewart Hosie
Not at the moment.
What is remarkable is that the motion does not talk about public finances or the impact of getting the fiscal agreement wrong. It is almost exclusively focused on the process of negotiating a formula—a formula that, of course, must deliver no detriment, which was one of the key principles identified by Lord Smith. Although fairness for Scotland is recognised in the motion, many other drivers of Scotland’s public finances are not.
Stewart Hosie
Not at the moment.
There was a cursory passing reference to Labour’s plan, which was announced yesterday, to make Scotland the highest-tax part of the UK. That has a bearing on the public finances. It is a Labour plan to add to the tax burden of half a million Scottish pensioners. It is a plan to add to the tax burden of 2.2 million taxpayers. In essence, it is a plan to change the public finances by taxing Scots more to pay for Tory cuts. That is the weakness in Labour’s plan.
Stewart Hosie
No, I am conscious of time and it would not be fair to give way.
It is absolutely right that the negotiations are done privately. Imagine if there was a running commentary and slight snippets of information, out of context, became the fodder for a new “project fear” campaign run by Labour. We do not want that. We want a Labour party that, instead of sniping from the sidelines, is determined to support fair play, and a fair settlement that delivers on the principle of “no detriment”. Instead, we have this thin motion, combined with Labour MSPs who last week backed the Tories and refused to back the per capita index deduction block grant adjustment mechanism, which would deliver the “no detriment” principles that Labour signed up to in the Smith agreement.
In my view, that is economic and political madness from Labour, but it is not a surprise. After all, in advance of the fiscal agreement, before agreement is reached on an LCM, and before powers are transferred, the Labour party has spent many times over the modest cost of a reduction in air passenger duty—a policy that will create 4,000 jobs and put £200 million of economic activity into the economy—by committing to spend £650 million of Scotland’s public finances from a pot that does not yet even exist. No wonder Labour Members are more interested in talking about process than policy.
As the First Minister has said, the Scottish Government are negotiating the fiscal agreement in good faith, but they will not sign up to a deal that systematically cuts Scotland’s budget, regardless of anything that they, or any future Scottish Government, might do. That message has been reiterated many times by the Deputy First Minister, who said a few moments ago that the reason why we do not have a fiscal agreement right now is that there is no basis to be agreed that is consistent with the Smith commission, and we will not sign up to any document that is not consistent with the Smith commission report.
Let me conclude by being even clearer on behalf of my party: we will not agree to a fiscal agreement that abandons the principle of “no detriment” and embeds unfairness into the Scotland Bill. We will not support Labour tonight. This is a silly motion about publishing minutes that does not address the core substance of the fiscal agreement. We have tabled an amendment to that motion, and I commend it to the House.
Several hon. Members rose—
Scotland Bill
Stewart Hosie Excerpts(8 years, 7 months ago)
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Alberto Costa (South Leicestershire) (Con)
It is a pleasure to follow the right hon. Member for Moray (Angus Robertson)—[Interruption.] I apologise for my pronunciation—I have lived in England for over 15 years and one’s accent does change. It was also a pleasure to listen to the hon. Member for Perth and North Perthshire (Pete Wishart). I agree that this is an important constitutional Bill. We are hearing today about how the Bill will make the Scottish Parliament not just a permanent institution in the United Kingdom’s constitutional arrangements, but one of the world’s most powerful devolved Parliaments.
Crucially, the Bill will allow more decisions that affect Scotland to be taken in Scotland. It will increase the financial responsibility of the Scottish Parliament and its accountability to the Scottish public. Perhaps that is a word that SNP Members do not wish to hear, because accountability is something that has been lacking these last eight years in Scotland, when gripes and grievances have constantly been thrown to London about decisions and powers that already rest with the SNP Scottish Government.
The package that has been brought before the House today by the Secretary of State and his team contains substantial financial powers, including over income tax and VAT, the devolution of substantial elements of the welfare system and a range of other powers, including constitutional powers and powers over transport, such as responsibility for air passenger duty.
Stewart Hosie
That was a very generous way of giving way. The hon. Gentleman said that there will be substantial powers over VAT. Half of VAT will be assigned. There are precisely no powers over VAT. I fear that he has misspoken in his excitement to prove his loyalty to his Front Bench.
Alberto Costa
The hon. Gentleman already has extensive powers over income tax. We should ask why, in the past eight years, the SNP has failed to use any of the substantial powers it has, instead blaming London and England for all the problems that it creates back in Scotland.
Along with a powerful and accountable Scottish Parliament—there is that word “accountable” again—Scotland will retain the huge benefits of being part of our United Kingdom of Great Britain and Northern Ireland. The people of Scotland voted for those benefits. Remember those people? That’s right—the democratic majority that voted to stay part of our United Kingdom last year. Sadly, that fact has been lacking.
Scotland Bill
Stewart Hosie Excerpts(9 years ago)
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Stewart Hosie (Dundee East) (SNP)
It is a pleasure to serve under your chairmanship, Sir David, and to speak to amendment 89, tabled in my name and the names of my hon. Friends.
If amendment 89 is passed, it will deliver full fiscal autonomy for Scotland. That means that Scotland will collect all her own taxes, fund all her own spending—all the spending that is the responsibility of the Scottish Parliament—and pay a subvention for shared spending on Scotland’s behalf, primarily on defence and foreign affairs, by the UK Government. This is not simply about responsibility for taxation; it is about responsibility for all spending outwith limited and agreed areas.
On the question of why we need this, the answer is clear. We need and deserve important decisions to be taken as close to the people as possible and, more importantly, we need those decisions to be taken in line with the aspirations and democratic choices of the Scottish people.
The next question is what we would do with the powers. The answer depends very much on the view of the Scottish Government of the day, the prevailing economic conditions, and the most up-to-date economic forecasts. I will describe what an SNP Government might do with the powers of full fiscal autonomy to grow the economy, improve conditions for business investment and job creation, and start to make society fairer—all of which are vital for Scotland’s economy and future.
We believe in the transfer of more powers to Scotland not as an end in itself but because through it the Scottish Government can exercise those powers to the benefit of Scotland’s economy and society. For example, we would not merely have control over income tax rates and bands for earned income but have responsibility for all tax on income, including definition, the basic rate starting threshold, and tax rates on dividend and investment income. That would allow for every possible policy choice, delivering to future Scottish Governments the flexibility to craft an income tax system. Likewise, the devolution of corporation tax would allow for a comprehensive tax regime, including an intelligent use of allowances to assist business in investing for the future.
Ian Paisley
Does the hon. Gentleman desire air passenger duty to be included in the remit of the amendment? Does he accept that to be fair to all the component parts of the United Kingdom, any change to APD should affect Northern Ireland as well as the north of England?
Stewart Hosie
Air passenger duty is to be devolved to Scotland, as it has been to Northern Ireland, albeit in a limited way. I very much welcome that. It is for each of the component parts that have responsibility for a tax to use it wisely in the interests of the people. I think we would agree that serious, proper and justifiable tax competition to grow our economy and attract investment would be a good thing, and I hope the hon. Gentleman agrees that it is always odd to hear Government Members purport to support tax competition except, of course, when it begins to affect them.
Wayne David (Caerphilly) (Lab)
It is interesting to hear the hon. Gentleman setting out some of the economic and fiscal priorities of a future SNP Government. Would they increase or reduce corporation tax?
Stewart Hosie
Yes, a future SNP Government would increase it, decrease it, keep it the same and use the amount raised in an intelligent way. I know the hon. Gentleman thinks he has asked a really clever question, but we have just had the 2015 election and I am not going to write the 2016 manifesto today.
To answer a little more clearly, we have argued for targeted reductions in corporation tax in order to promote investment in key industries. We have highlighted for many years the relatively low private sector research and development spend in Scotland. However, given that R and D tax credits can be claimed only by companies liable for corporation tax, in order to develop a comprehensive, joined-up approach to encourage more innovation, we need to move to full fiscal autonomy, including the devolution of corporation tax and all related allowances, in order to be able to use that lever.
Mr Rees-Mogg
The hon. Gentleman said that Government Members are not in favour of tax competition, but I am thoroughly in favour of tax competition. It would be an excellent idea for both Scotland and Northern Ireland to have control of their corporation tax, because I think they would suddenly discover the virtues of the Laffer curve and reduce taxes quite sharply.
Stewart Hosie
Our friends in the Labour party have criticised us for understanding the Laffer curve just a little too well.
We also want to see continued downward pressure on the cost of employing people. That is one of the reasons the SNP proposed in our manifesto to increase the employment allowance from £2,000 to £6,000 per business a year. We cannot do that at present, but we would be able to do so with the devolution of national insurance as part of a package delivering full fiscal autonomy.
Stewart Hosie
I will give way in a moment, if the hon. Gentleman keeps calm.
Finally, as I have said, the issue of specific powers and what we might do with them is not all about tax: it is about other decision making, such as the minimum wage. We support a rise in the minimum wage to £8.70 by the end of this Parliament: that is the right thing to do. We do not currently have the power in Scotland to do that. Although we will table amendments to transfer that specific power, the last two examples demonstrate why we need full fiscal autonomy—to deliver a comprehensive, joined-up approach, which would allow us to increase the minimum wage to help those in employment who earn the least, while increasing the employment allowance to help support businesses to pay it.
Alberto Costa
How many times in the past eight years have the SNP Scottish Government exercised their powers to increase or decrease income tax? The hon. Gentleman keeps complaining that this place is restricting them from using powers, so could he please remind Scottish people and this Committee how many times they have used their existing powers?
Stewart Hosie
I welcome the hon. Gentleman to Parliament, but he does not need to jab his finger and point. The small business bonus has cut or reduced business rates for 80,000 people. At £640 million, the Scottish Government are delivering the most effective business rate tax relief across the whole of the UK. One could make a very strong case that we have ended a tax on ill health by removing prescription charges. The hon. Gentleman’s failure to know what he is talking about was why he was defeated in Angus by my hon. Friend the Member for Angus (Mike Weir).
So far, we have not heard a single speech as to why we should not have full fiscal autonomy. I am sure that one will come, but let me focus on that matter now. The objections that we have so far heard are rather odd and almost entirely without principle. In essence, in order to say no, our opponents fall back on one or two flawed analyses of the Scottish economy, which are basically snapshots of one particular point in time.
Mr MacNeil
Was that not an extraordinary intervention from the hon. Member for South Leicestershire (Alberto Costa)? The Conservative party wants to handcuff itself and not use any of its tax powers at all, as we heard from the Chancellor only last week. Does that not show the deep malaise of understanding? When we have tax powers, they are not used all the time. For instance, in the last Parliament, VAT was changed only once. Let us hope that the Conservatives do not use that power again. The point about having tax powers is to use the power that is necessary or important to use at a particular time. Tax powers are not used willy-nilly, as the hon. Gentleman’s own Chancellor has conceded.
Stewart Hosie
I fear that my hon. Friend was intervening less on me than on Conservative Members, but he is absolutely right. There is no argument too odd for them to deploy.
On the opposition to full fiscal autonomy, basing an argument on one or two flawed analyses is using a snapshot in time in order to say no. It is less a case of analysing all the facts to come to a considered view, and more one of finding any reason to oppose for opposition’s sake.
Ian Murray
I have tremendous respect for the hon. Gentleman, but he is letting himself down by how he is conducting this debate. If he is saying that the Institute for Fiscal Studies is wrong, why has the same figure come out of the Scottish Government’s own accounts?
Stewart Hosie
The chief of the snapshot analyses I have just described is the one from the IFS that our opponents pray in aid. They claimed in April that Scotland would face a relative deficit of £7.6 billion, which may rise to £10 billion by 2019-20, and that in itself is enough for them to say no. I also like and respect the hon. Gentleman—I will not finish the rest of that sentence. I would tell him that his argument is fundamentally flawed. In essence, our opponents’ argument is that even if the IFS figures were true, UK Government economic policy has failed Scotland and we should therefore keep economic policy in the hands of a UK Government who have failed. That simply is not credible.
It is of course true that Scotland has a deficit, and so does the UK—borrowing £75 billion this year, almost four times what the Chancellor promised borrowing would be. The majority of advanced economies run deficits, particularly in difficult times. The UK deficit in 2013-14 was £98 billion. Over the five years to 2013-14, the cumulative deficit was £600 billion. The UK was in deficit for 43 of the past 50 years, and 28 of the 34 members of the OECD were in deficit in 2013. If the deficit alone was a reason for a country to surrender its financial independence, the UK economy would be run from Berlin.
Mr Kenneth Clarke (Rushcliffe) (Con)
The hon. Gentleman’s desire for independence of taxation seems to be to lower taxation, while he contemplates raising expenditure and he is fairly indifferent to deficits. Does he contemplate any kind of fiscal discipline? Our neighbours across the channel started a single currency, and they—as we would—have a single currency and a single central bank. Had they stuck to their rules on fiscal discipline, the Maastricht criteria, and to their no bail-out clause, they might have done rather better. What fiscal discipline does he propose, or does he think the English will pick up the bill whatever decisions the Scottish Government make?
Stewart Hosie
We were very clear in our manifesto that there would be increased tax yield, perhaps from a 50p rate of tax at a UK level, from a bank bonus tax, from the bankers’ levy and from a mansion tax. We supported a number of policies in our manifesto that clearly would have increased yield. We were also very clear on what we wanted to do about borrowing. We laid out explicitly that borrowing would rise, but that it would fund £140 billion of extra investment across the UK throughout this Parliament, as opposed to the cuts in the order of £146 billion that have been proposed by the Chancellor.
Stewart Hosie
In a moment.
If all the IFS and Treasury analyses do is project forward “Government Expenditure and Revenue Scotland” figures, they do not provide a meaningful description of the fiscal position in a fiscally autonomous Scotland. Whether Scotland’s budget deficit—or surplus—would be larger or smaller under full fiscal autonomy depends on a huge number of factors, not least the transition process that my hon. Friends referred to earlier; the negotiated fiscal framework between Scotland and the rest of the UK; Scotland’s contribution to UK-wide public services, such as defence, debt interest and international aid; the interaction with the UK macroeconomic framework; and, most importantly, the decisions made by the Scottish Government about borrowing, economic policy and public spending.
There would have to be agreement on the past contributions and tax receipts from Scottish taxpayers and corporates, and the shared liabilities that have accrued in terms of entitlements for individuals—for example, pensions that people have paid into through the national insurance system—to maintain the free movement of labour and an integrated single market. On liabilities, it is worth pointing out, in case anybody thinks I have forgotten about this, that we think there would have to be an adjustment to reflect UK-wide costs, such as the decommissioning costs in the North sea, because the UK Government have received the full benefit of all the tax revenue associated with that economic activity so far.
In short, the current economic situation is not a reason to say no to full fiscal autonomy; rather, it is vital, in tackling the deficit, to avoid further cuts by giving Scotland the economic levers that it needs to boost growth and increase revenues.
Ian Blackford
Does my hon. Friend agree that the key reason the UK deficit is sitting at close to £1.5 trillion is the failure to deliver sustainable economic growth over the past few years? The clear agenda behind our attempt to deliver fiscal autonomy to Scotland is that the Scottish Government are focused on innovation and skills, on driving investment into the Scottish economy, on driving productivity growth, on driving up tax receipts and on driving prosperity for the Scottish people. That is why we need these powers.
Stewart Hosie
That is absolutely right. Trend growth in the UK over decades has not been sufficient, and private sector investment and innovation have been lamentable. My hon. Friend is absolutely right that we need these powers for a reason.
Notwithstanding what has been said, it is important to remember that Scotland is a prosperous economy. It is about far more than oil, although to listen to some of our political opponents, one would think that that was all the Scottish economy consisted of.
Ian Murray
Will the hon. Gentleman enlighten the Committee about what level of economic growth he thinks Scotland would require to balance the budget?
Stewart Hosie
We need to get trend growth up and we need to operate within a framework that will see the deficit begin to come down. I do not remember the previous Labour Opposition ever coming up with a cast-iron figure—2.75%, 3%, 3.25%, 4% or 5%—for trend growth. No one would be so silly as to put a figure on it, when it is dependent on so many external criteria.
Our political opponents dismiss the Scottish economy, saying that it is all about oil. They seem to forget that in two of the past four years our deficit was smaller than that of the UK. In the past 34 years, tax revenue per person has been higher than in the UK. Indeed, in the last full year, including our geographic share of the North sea, it was more than £10,000 per head compared with £9,700 in the UK. Even without North sea oil, output per head is almost identical to the UK. We remain the third most prosperous and productive of the 12 so-called regions of the UK, and, including a geographic share of oil and gas, our output per head is higher than the UK average, even today.
Andrew Gwynne
I am listening carefully to the hon. Gentleman’s argument. It is clear that amendment 89, which is in his name and the names of his colleagues, would enable the Scottish Parliament, at some stage, to legislate to allow for those powers to be drawn down, either in part or whole. What timescale does he envisage for the Scottish Parliament to move to full fiscal autonomy, rather than, perhaps, partial fiscal autonomy? What does he envisage being the interim arrangements were it to draw down only some of those powers?
Stewart Hosie
I would like the Scottish Government to be in a position to draw down the powers as quickly as possible. Obviously, to draw them all down and use them would require transitional arrangements to be in place.
Stewart Hosie
I will come back to that in a moment.
It would require the tax system to be fully functioning and for there to be an agreed macroeconomic fiscal framework across the whole of the UK. That would require agreement between the Scottish Government and the UK Government—that is to say, there would be other people at the table who had to say yes to things—so it is not possible to put a hard and fast timetable on the powers. If, however, we can agree on full fiscal autonomy tonight, and the Scottish Government’s ability to draw down the powers at the right time, then with good will we can get agreement on the fiscal agreement and the overarching framework, and we can all get to work.
Ian Murray
The hon. Gentleman is being incredibly generous with his time. Will he tell the Committee why, if full fiscal autonomy is so good for the Scottish budget, he will not support new clause 3, tabled by the hon. Member for Gainsborough (Sir Edward Leigh)?
Stewart Hosie
I want maximum power for Scotland. I want it as quickly as possible. I am not like the British Labour party, which keeps saying no and, in the absence of no, says delay with yet another commission. If the hon. Member for Gainsborough (Sir Edward Leigh) presses new clause 3 to a vote, we will support it. Here is the thing: I hope the hon. Member for Edinburgh South (Ian Murray), who is grinning like a Cheshire cat, will now get to his feet and tell us whether he intends to back the Government tonight in opposing powers for Scotland. The silence is deafening.
Let me continue with more of the arguments our opponents deploy against full fiscal autonomy. When they argue against more powers they say that they would require further cuts, but that argument is completely flawed. It would suggest that the Scottish Government are protected from Westminster cuts at present, which simply is not true. Cuts in the previous Parliament actually took place at a time of rising North sea revenues.
Alberto Costa
I thank the hon. Gentleman for his generosity in giving way to me a second time. In the lead-up to the Scottish referendum, he very articulately and eloquently put all those points to the Scottish electorate, yet the Scottish electorate resoundingly rejected them. Had the referendum gone his way and there was a yes vote, he would have had to have been in a position today to set a timescale for everything he is arguing for.
Stewart Hosie
The hon. Gentleman is right about one thing: we did not win the referendum. There was, however, an election that we did win, so we are not bringing forward another mandate for independence; we are bringing forward provisions for full fiscal autonomy. I hear Tories pontificate right, left and centre about responsibility, but when it comes to full fiscal responsibility for Scotland, all of a sudden there is silence. They just sit on their hands and say no.
David Mundell
Why then did the SNP not table the new clause in the name of my hon. Friend the Member for Gainsborough (Sir Edward Leigh)? If the hon. Gentleman wants that full-blooded proposal, why did he leave it to the Tory Benches to propose what he claims is an SNP policy?
Stewart Hosie
I can almost hear Professor Adam Tomkins, the Tory adviser to this Tory Minister, coming up with that daft question. I say this to the Minister: our amendment 89 would deliver full fiscal autonomy in a way that makes sense.
Our opponents argue that full fiscal autonomy would lead to more cuts to the Scottish budget, which is ridiculous when one considers that between 2009-10 and 2013-14, at a time when the North sea was generating £32 billion in oil revenues, the Scottish Government’s budget was cut by about 9%. According to the Institute for Fiscal Studies, prayed in aid by Tories and Labour alike, the cuts of more than 5% implied in 2016-17 and 2017-18—in this Parliament—will be twice the size of any cuts over the last Parliament. The UK Budget showed that implied cumulative cuts to day-to-day spending on public services in Scotland over this Parliament could amount to £12 billion in real terms compared with 2014-15. In the absence of full fiscal autonomy, therefore, we are not protected from cuts. Rather, we suffer a double blow: continued austerity and an inability to grow the economy and increase tax yields in the way that Scotland requires.
Chris Philp (Croydon South) (Con)
The hon. Gentleman mentioned that tax receipts in Scotland are on average 3% higher per head than in the rest of the UK. Public spending in Scotland, however, is more than 10% higher. The reason, of course, is the Barnett formula. Will he confirm that under his proposals the Barnett formula would be done away with, and will he explain where the extra money would be found? Would it be tax increases or spending cuts? If so, where from?
Stewart Hosie
It is extraordinary! UK debt is £1.5 trillion and the Government are borrowing £75 billion more this year than UK tax revenue would allow, and they have the audacity to question whether the Scottish Government, who have balanced the books every year, could do so in the future. If we have the right tools and levers, of course we can do the job. The hon. Gentleman’s argument is fundamentally that there would be a cost to Scotland of full fiscal autonomy. As we have seen, our opponents tend to quote figures for this financial year, whereas we would move to full fiscal autonomy only over the medium term.
The second key issue, as the IFS has said on many occasions, is that our opponents fail to take account of the potential positive impact on Scotland’s economy of full fiscal responsibility. The entire point of FFA is to empower our Parliament to take decisions for the benefit of Scotland’s economy to deliver full tax and investment powers and to enable Holyrood to make better spending decisions.
Wayne David
This is an important point. The hon. Gentleman says he is in favour of moving towards fiscal autonomy, but only in the medium term. How long is the medium term?
Stewart Hosie
I support moving to full fiscal autonomy because, as the N-56 think-tank said, it produces an opportunity, not a threat. There was a time when there were 40 Scottish Labour MPs sitting behind the Opposition Front Bench shouting their heads off, but now there is barely a whimper, barely a squeak—not a cogent, credible argument from a party about to get into bed with the Tories to say no to Scotland.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
The hon. Gentleman said that he will increase the deficit to spend to invest—where have I heard that phrase before?—but while Scotland is a member of the sterling area, would he expect the Bank of England to guarantee whatever sterling debt his party incurs?
Stewart Hosie
First things first: the central bank does not guarantee debt. It sets the base rate, but the gilts are issued by the UK Government. It would be UK debt, which is precisely why we need an agreed fiscal framework within which we operate. I would have thought that that is just common sense.
Stewart Hosie
No. I have been very generous. I think I will stop being generous now.
In order to deliver full fiscal autonomy, amendment 89 would allow the Scottish Government to remove the reserved status of certain key areas, and allow that Government to have legislative competence over them. It would do so at an appropriate time, ensuring that the systems and the framework under which full fiscal autonomy would operate are fully in place.
We know we need full fiscal autonomy. We know how full fiscal autonomy will work. The Scottish people have voted for maximum powers, and we are here representing that view. Amendment 89 is the way forward to deliver the fairness, the justice and the economic levers that the Scottish Government need. I hope there will be huge support for it tonight. I commend the amendment to the Committee.
Mr Kevan Jones
It is a privilege to serve under your chairmanship, Sir David.
We have seen a remarkable event tonight—I never thought I would see such an event. The Scottish National party is having a love-in with the hon. Member for Gainsborough (Sir Edward Leigh) and the right hon. Member for Wokingham (John Redwood). Love does not come to mind very often when we think of the right hon. Gentleman, but tonight he is the darling of the SNP. The hon. Member for Dundee East (Stewart Hosie) has just lectured the Labour party about voting with the Conservatives. If he supports new clause 3, tabled by the hon. Member for Gainsborough, he will vote with them.
The hon. Member for Dundee East should cut the general election rhetoric and get down to the details. The debate is a serious one, as my hon. Friend the Member for Nottingham North (Mr Allen) has said. It is not just about Scotland, but about the devolution of powers and how we settle them for the rest of the United Kingdom. The hon. Member for Gainsborough put the SNP behind the eight ball. His is a clear proposal for moving to full fiscal autonomy or responsibility. I notice that the hon. Member for Dundee East changes things—he goes from “autonomy” to “responsibility” whenever he wants—but the hon. Member for Gainsborough is very clear that he is proposing full fiscal autonomy.
The argument being put forward is that that is what the Scottish people said at the general election. I do not accept that. In the referendum, the Scottish people said that they wanted to be part of the United Kingdom. A responsibility of being part of the United Kingdom is that certain things will be done across the four nations of this great nation of ours.
It is difficult for Scottish National party Members. If something is said by Scottish nationalists, it has to be true, and no one dare ever say that something they are saying is not true. The hon. Member for Dundee East argues that amendment 89 is a movement to full fiscal autonomy or responsibility, but it is not. It would give the power to the Scottish Government to draw down those powers. Why is amendment 89 not framed as clearly as the proposal of the hon. Member for Gainsborough? His proposal would give the powers straight away, with the consequences for the Barnett formula and the support that that gives to the Scottish Government.
It is nothing new for the Scottish nationalists to want to have their cake and eat it, but many of my constituents—and, I am sure, those of other Members—will not accept an arrangement that would allow the Scottish Government to legislate for full fiscal autonomy for which they were expected to pay. That would be not only wrong, but totally unfair on the rest of the United Kingdom.
Ian Murray
It seems to me that the SNP, in its fantastic victory, on which I have congratulated and complimented its Members on a number of occasions from this Dispatch Box, does not want any scrutiny at all. Just because the SNP has made a proposal for full fiscal autonomy does not mean that we should not scrutinise that proposal. In fact, if it was not for the hon. Member for Gainsborough (Sir Edward Leigh), we probably would not even be discussing full fiscal autonomy today. He forced the hand of the Scottish National party so that it brought forward its manifesto commitment, which it was rowing back on incredibly quickly.
Ian Murray
Let me make a little progress and then I will give way, as the hon. Gentleman was generous in giving way to me.
In the past couple of years it has become increasingly apparent that devolution is a matter not just for Scotland, Wales and Northern Ireland, but for England and the United Kingdom as a whole. The Labour movement has always been an engine of reform and the party of devolution. People want to see power devolved and exercised at local level, affording greater decision making and enhanced accountability.
Ian Murray
I am not sure of the entire detail of the proposal that the hon. Gentleman refers to, but there is a general consensus across Scotland that the Scottish Parliament has been one of the most centralist Parliaments in the world by grappling power away from local government. What we are trying to do as part of this Bill, which I think is a major positive, and I hope the Government—
Ian Murray
Will the hon. Gentleman allow me to answer the previous intervention first? He is a seasoned professional in this Chamber, so he should allow me to get at least halfway through the response to his hon. Friend’s intervention.
One of the key questions—I hope the Secretary of State and those on the Treasury Bench look at some of these principles in the context of the Bill—is whether those principles go further towards double devolution. There is no point in sending powers from one Parliament to another. [Hon. Members: “Give way!”] Those powers also have to be spread across Scotland from Holyrood to local authorities. Without that process, hon. Members cannot take power closer to the people they seek to represent.
I will give way to the hon. Member for Dundee East (Stewart Hosie) and then to the hon. Member for North Ayrshire and Arran (Patricia Gibson). [Interruption.] The hon. Lady can blame her boss if she likes; he wants to come in first.
Stewart Hosie
The hon. Gentleman suggested about 10 minutes ago that the Scottish National party was not going to table an amendment to deliver full fiscal autonomy, and he suggested that it happened only because of the amendment tabled by the hon. Member for Gainsborough (Sir Edward Leigh). That is completely false. Amendment 89 is on the amendment paper to deliver full fiscal autonomy. Will the hon. Gentleman withdraw that daft allegation from the Labour Front Bench and, more importantly, confirm that Labour Members intend to go through the Lobby with members of the Tory Front-Bench team to stop power coming to Scotland?
Ian Murray
The Bill before us will transfer nearly 50% of tax and 60% of spending to the Scottish Parliament. We promised to make it the most powerful devolved Parliament in the world, and that is a promise we will keep. As I have always said, we will ensure that the Bill is delivered in full, both in spirit and in substance. We will go further, as we will debate in Committee in due course.
Let me return to the £7.6 billion deficit—[Interruption.] I know that SNP Members do not like to talk about the £7.6 billion deficit, but it is important to get it on the record. It is unfortunate that they have consistently misquoted the figures from the Institute for Fiscal Studies, and indeed it has had to ask them to retract what they have said about its figures.
We have also heard no mention of the Office for Budget Responsibility’s oil report, which was published last week. It showed that the reliance on oil as an underpinning of the Scottish economy is no longer a viable projection. The collapse of revenues from oil will see the tax take from that source drop from £37 billion to just £2 billion over the 20-year period to 2040. That would be catastrophic for Scottish public finances. The question, then, is this: will SNP Members vote with the Tories to deliver what they want, as they have said they will do, or will they finally admit that their flagship policy of full fiscal autonomy is economically illiterate?
Ian Murray
And there is no better time to go to the hon. Member for Dundee East.
Stewart Hosie
The hon. Gentleman is extremely generous. He mentioned the OBR. He will want to confirm, for the sake of completeness, that the OBR itself has said that the forecasts were very uncertain, even over the short term. It implies 8 billion barrels of oil extracted, rather than the normal industry 14 billion to 24 billion, and of course the figures it uses are contradicted by other expert groups that have higher prices and higher forecast extraction figures.
Ian Murray
Well, the hon. Gentleman is wasted in this House; he should be in the City, buying and selling futures in oil price shares. I think that is the best way for him to go. The three points that fall from the OBR report are the unpredictability of the oil price, the difficulty of extraction in the North sea and the fact that, whatever way we look at it, oil revenues will be declining sharply over the next 20-year period. It would appear that the hon. Gentleman—[Interruption.] I am happy to take other interventions, but it is quite clear that SNP Members cannot defend their policy for full fiscal autonomy. Indeed, they should listen to their hon. Friend, the hon. Member for East Lothian (George Kerevan), who said that it would be economic suicide. He is an experienced journalist and economist, so they would do well to listen to him.
In conclusion, we will push amendment 38 to the vote because we feel that the permanency of the Scottish Parliament should have the underpinning of the Scottish people by any means that would be appropriate, including a referendum. We will push to a vote new clause 2, which proposes a constitutional convention to resolve some of the larger issues on a constitutional settlement across the country. We will oppose full fiscal autonomy in all its forms, because it would be bad for the Scottish people, bad for the Scottish economy and bad for the future of Scotland.
David Mundell
I said at the start of my remarks that I was listening to the Scottish people. The only people who are playing games are those who threaten another referendum in Scotland every time they do not get what they say they want.
The principal issue raised in relation to full fiscal autonomy is that it would mean Scotland having almost £10 billion less to spend by the last year of this Parliament. That is not good for Scotland, and that is why this Government will not support it. I am afraid that the only argument we have heard in support of these proposals was that heard during the referendum campaign—basically, “It will be all right on the night: trust us.” The people of Scotland decided on 18 September last year that they did not trust that argument, and I still do not trust it. Full fiscal autonomy would mean an end to the Barnett formula. It would mean that the Scottish Government had to fund all public spending in Scotland from their own resources. The Scottish Government would therefore be fully responsible for raising all the tax from Scottish taxpayers required to fund all spending in Scotland on public services, benefits and pensions.
Stewart Hosie
Can the Secretary of State confirm that in terms of the principles underlying Smith, we have no detriment and no advantage simply because of devolution itself, and that there will be a negotiated financial framework between the Scottish and UK Governments for the devolution in this Bill? Of course, we already have limited borrowing consent under the Scotland Act 2012 to fill holes in revenue, notwithstanding that the repayment terms were too short. Can he confirm that under the “no detriment, no advantage” principles there will be a negotiated financial framework for this Bill, and that there are already revenue-borrowing powers in statute?
David Mundell
I can confirm that the Scottish National party signed up to the Smith commission agreement, this Government are committed to delivering the Smith commission agreement, and the hon. Gentleman will therefore get what he is looking for in respect of the Smith commission agreement. There is not a shadow of a doubt about that.
Full fiscal autonomy would mean the end of Scotland pooling resources and sharing risks with the rest of the United Kingdom, and an end to Scotland being part of the UK’s hugely successful single market, which generates jobs, growth and prosperity. To all intents and purposes, the fiscal union between Scotland and the United Kingdom would end entirely, and the lesson of the eurozone is that it is extremely difficult to have a successful currency union without fiscal union.
Scotland Bill
Stewart Hosie Excerpts(9 years ago)
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David Mundell
I anticipate that the Bill will be a very stable settlement for Scotland as it was signed up to by all five of the political parties represented in the Scottish Parliament, including the Scottish National party.
That does not mean that the devolution settlement is or ever was perfect. From the start the settlement contained an imbalance, with a Scottish Parliament responsible for spending money which another Parliament—this one—was chiefly accountable for raising. It is one of the most important features of the Bill that it seeks to redress that balance. I will go into that in more detail later in my remarks.
Stewart Hosie (Dundee East) (SNP)
With reference to the Minister’s comments on responsibility, can he confirm to the House that this Bill is so inadequate that it does not even allow the Scottish Parliament to raise all the money that it spends?
David Mundell
In my opening comments, I mentioned that there had been a referendum in Scotland last year in which the people of Scotland voted to remain within the United Kingdom as part of this United Kingdom Parliament, but with a strong Scottish Parliament. The Scottish National party was part of the Smith commission which signed up to the tax powers. I find it interesting that the Scottish Government made a 61-page submission to the Committee in the Scottish Parliament about this Bill. How many lines were dedicated to the £11 billion of tax measures? Two lines, because the Scottish Government agree with those measures.
David Mundell
This Government are committed to deliver the Smith commission recommendations, and that is what we will do. We are bringing forward a Bill to implement the Stormont House agreement. Proposals that anyone makes in relation to their own parts of the United Kingdom, or indeed their say on other parts of the United Kingdom, will always be capable of being debated in this House. If, however, the hon. Gentleman is asking whether I support the idea of a constitutional convention, the answer is that I do not.
Stewart Hosie
The Secretary of State has now been on his feet for more than half an hour. Will he actually speak about the contents of the Bill today, or will he continue to waffle until he sits down and lets others speak?
David Mundell
As you are well aware, Mr Speaker, the hon. Gentleman would have been equally critical of me had I chosen not to take the numerous interventions. I have done so because I want this to be a debate and for me to be held accountable to Members of the House.
I am grateful to the Scottish Parliament’s Devolution (Further Powers) Committee for its work. I am due to meet its members shortly. In getting us to this point, my officials have worked extensively behind the scenes with their Scottish Government counterparts to listen to their views, and they will continue to engage actively with them throughout the process on this Bill.
Stewart Hosie
The hon. Member for North East Somerset (Mr Rees-Mogg) talks about reasonableness, but how on earth can we trust this Government or any Secretary of State to be reasonable when they have just implemented £177 million-worth of in-year cuts to the Scottish budget?
Angus Robertson
My hon. Friend makes a very good point. I was struck by the fact that the hon. Member for South Cambridgeshire (Heidi Allen), who is not in her place, made an appeal for trust in this process. I totally agree with her. I look forward to the Government delivering everything that was promised in the Smith commission and more, because we all—every party—stood on manifestos of constitutional change, and the three UK parties were all defeated.
The Prime Minister has said that he will listen to what the Scottish Government have to say on more powers. I will take him at his word. The Secretary of State for Scotland has said that he is open to ensuring that the wording of the Bill is optimal to deliver on the Smith commission proposals. It is absolutely crucial that that takes place and that the trust mentioned by the hon. Member for South Cambridgeshire is delivered on. When a committee of our colleagues in the Scottish Parliament concludes, on a cross-party basis, that the Government’s Bill does not fulfil that, the Government must listen.
David Mowat
I have not taken any money from anyone, or given any money to anyone. The hon. Lady’s constituents in Oldham receive roughly £1,600 a year less from public spending than they would receive if they had the same demographic profile and lived north of the border. That is an anomaly, and it is an anomaly that causes a potential risk to a settlement that is necessary and right.
Conservative Members do not question the fact that there is a Scottish Government now, and that that Government have entitlements.
Stewart Hosie
The hon. Gentleman is knowledgeable about this matter, and he was right to say that no subsidy is implied by Barnett. Unlike most of his colleagues, he looks at both sides of the balance sheet. However, he spoilt that by talking about a needs-based assessment. Does he recognise that that would imply a £4 billion cut in Scottish funding, right now?
David Mowat
I recognise that a needs-based assessment —that is, an assessment that will result in public money being spent where it is most needed—is fairer. However, I am not saying that it should be introduced immediately, as it would be with full fiscal autonomy, and as it would have been had the hon. Gentleman’s party won the referendum. Such things can be done over a period of, say, 10 or 20 years. There can be a target for the achievement of fairness.
As I was saying, no one questions the right of the Scottish Government to provide free prescriptions and free tuition—if that is their priority—and to make different arrangements for social care. However, if such provision is predicated on a baseline of funding that is unfair and wrong, it is reasonable for us to question it, and not to let the Scottish Government get away with saying that they can take such action because it is progressive. That is neither fair nor right.
We are talking about a formula that is based on need, and a formula that the late Joel Barnett was desperate to get rid of. A House of Lords Select Committee made the position very clear. Moreover—this is not mentioned often enough—the Holtham commission identified the serious underfunding of Wales as a consequence of the Barnett formula. That problem will have to be addressed in Scotland. It is true that public spending must reflect sparsity, and must reflect the fact that Scotland’s population is more spread out. However, it also needs to reflect relative ageing and relative measures of deprivation.
Smith Commission
Stewart Hosie Excerpts(9 years, 7 months ago)
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Mr Carmichael
I could not agree more with the right hon. Gentleman on the importance of honouring the vow that was made, and that is what we are about today. As I have acknowledged, there is currently an imbalance within the UK constitutional framework. As a federalist, I have long believed that that needs addressing. I do not think anything should be kicked into the long grass. He has been involved in the management of this House in various capacities for many years now, so he will be as aware as I am that once these things are changed it is difficult to change them back if we get them wrong. There is a need for constitutional reform and it goes far beyond the Standing Orders of this House.
Stewart Hosie (Dundee East) (SNP)
I thank the Scottish Secretary for his statement, and Lord Smith and the commissioners for their work. The substantive parts of this are the devolution of less than 30% of Scotland’s tax base and of less than 20% of welfare, and the assignation of a share of VAT. Although that is interesting as far as it goes, I note the absence of other substantive job-creating powers. The Scottish National party will not stand in the way of these powers; it is important to put that on the record, and I do welcome the report as modest progress. However, will the Scottish Secretary confirm that however they are dressed up, these proposals do not reflect the powerhouse Parliament that many in Scotland believed they had been promised before the referendum?
Mr Carmichael
First, let me try to adopt a more appropriate tone than the hon. Gentleman has perhaps just done and congratulate him on his recent election to the position of deputy leader of his party. It is unfortunate that he did not use the word “welcome”; there are significant job-creating powers in this package and the Scottish Parliament already holds significant job-creating powers. If Nicola Sturgeon is sincere when she says that she wants to govern for the whole of Scotland, she should get on and use the powers that she has, welcome the ones that she is getting and use them for the benefit of the people of Scotland.
The hon. Gentleman predictably and depressingly seeks to suggest that this is not a fulfilment of the vow. Well, the vow is on the front page of the Daily Record. For the benefit of the House, I have brought that paper with me today. The front page says, “The vow delivers.” Let me draw the House’s attention to the article itself. On page 3, it says that
“it’s is now clear that they”—
David Cameron, Nick Clegg and Ed Miliband—
“have stood behind this agreement to deliver change. Lurid claims to the contrary by some pro-Yes commentators”—
it must have known what the hon. Gentleman was going to say—
“have been shown to be false.”
That is the assessment of one of Scotland’s leading papers. It is more to be relied on than the views of the hon. Gentleman.