Scotland Bill
Debate between Stewart Hosie and Baroness Primarolo(12 years ago)
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Stewart Hosie
I am desperately looking forward to the hon. Gentleman explaining when a Viking decided to leave Denmark to come and be part of the British state. I like the hon. Gentleman, but I think his history is rather askew.
Madam Deputy Speaker (Dawn Primarolo)
Order. Actually, I would not like the hon. Member for Penrith and The Border (Rory Stewart) to explain that in the context of these amendments, and I am sure he is coming back to what is relevant to them.
Scotland Bill
Debate between Stewart Hosie and Baroness Primarolo(13 years, 2 months ago)
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Stewart Hosie
I beg to move amendment 51, page 24, line 20, leave out from ‘which’ to end of line 22 and insert—
‘are required by them to meet current expenditure because of a shortfall in receipts from the Scottish rate of income tax or devolved taxes.’.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 52, page 24, line 22, at end insert—
‘(1ZA) In borrowing sums under subsection (1), the Scottish Ministers must have regard to any code of practice agreed by them and the Treasury.
(1ZB) A code of practice agreed under subsection (1ZA) may include provision as to—
(a) how the Scottish Ministers are to determine and keep under review how much they can afford to borrow,
(b) the terms and conditions on which sums may be borrowed,
(c) limits on the aggregate at any time outstanding in respect of the principal of sums borrowed.’.
Amendment 54, page 24, line 23, leave out from ‘may’ to ‘any’ in line 24 and insert ‘borrow’.
Amendment 55, page 24, line 28, at end insert—
‘(1C) In borrowing any sums under subsection (1A), the Scottish Ministers must have regard to any code of practice agreed by them and the Treasury.
(1D) A code of practive agreed under subsection (1C) may include provision as to—
(a) how the Scottish Ministers are to determine and keep under review how much they can afford to borrow,
(b) the terms and conditions on which sums may be borrowed,
(c) limits on the aggregate at any time outstanding in respect of the principal of sums borrowed.’.
Amendment 53, page 24, line 31, leave out subsections (6) to (8) and insert—
‘(5A) Subsections (2) and (3) are omitted.’.
Amendment 56, page 24, leave out line 38 to line 5 on page 25.
Amendment 57, page 25, leave out subsection (10).
Clause 32 stand part.
Stewart Hosie
The borrowing powers in the Bill are at the heart of devolution. On Second Reading, a number of serious questions were raised on both revenue and capital borrowing powers. I shall come to the detailed issues in the main part of my comments, but, fundamentally, I am seeking to put in place a code of practice for the Treasury and the Scottish Government to address limits, restrictions, thresholds, maximum amounts and the nature of borrowing, be it through bonds or direct loans from the consolidated fund. That is a sensible way to amend the Bill. To make such provisions otherwise would require draft orders to be tabled, but amendments to Bills cannot be made with draft orders. Much of the narrative on this matter is in the Command Paper, but it is likewise impossible to amend by amending the Bill.
The amendments are pretty self-explanatory but I would like to detail the reasons for them. The revenue-borrowing powers are fundamentally linked to the wider taxation proposals in the Bill. Both the Scottish National party and the Scottish Government have previously made clear their concerns about the tax proposals. If a full range of fiscal policy levers were available to the Scottish Government, it would have to include a borrowing regime with sufficient flexibility to allow public spending profiles to be managed across entire economic cycles, not simply four-year forecast periods. The UK Government’s proposals, however, fall far short of that, yet by exposing the Scottish Government and the Scottish Parliament to cyclical fluctuations in income tax they embed a high degree of volatility in Scotland’s public finances, which cannot be right when we are seeking to protect public services and find means to grow the economy.
The Bill proposes to allow for annual borrowing of up to £200 million in any one year, and for a maximum limit of £500 million to finance current expenditure where there are differences between forecasts and the outturns of Scottish tax revenue under the Bill’s income tax proposals. Loans must be made within four years of being taken out. I understand that these provisions are additional to the provisions of the Scotland Act 1998, which allows revenue borrowing for the purposes of providing cash balances and maintaining cash flow. The aggregate limit of the Act is also £500 million, so the additional purpose proposed in the Bill, plus the passage of the 13 years since the original limit was set, has apparently not been considered sufficient reason for lifting the limit. We do not believe that that is credible.
The Bill also lacks flexibility to deal not necessarily with forecast errors, but forecast falls identified in advance. I will return later to the reason that that is a problem. More crucially, the provisions in the Bill are insufficient to manage volatility in tax receipts that might reasonably be expected to occur. Importantly, over the past decade, UK Government income tax forecasts have, on average, been overly optimistic, and the annual cap of £200 million would have been insufficient to offset deviations in income tax receipts relative to forecasts in recent years.
Scotland Bill
Debate between Stewart Hosie and Baroness Primarolo(13 years, 3 months ago)
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Madam Deputy Speaker (Dawn Primarolo)
Order. Mr Hosie, I think that is my business, not yours, and I would be very grateful if you did not shout across the Chamber.