Currency in Scotland after 2014

Debate between Stewart Hosie and Cathy Jamieson

Wednesday 12th February 2014 Westminster Hall

[Cathy Jamieson]

Again, my hon. Friend makes an important point. Perhaps the Minister will shed light on whether there has been any discussion on these issues. The SNP’s current argument seems to be that, in an independent Scotland, it will not take any of the difficult decisions that go along with that. It is not entirely clear yet what will happen to all the benefits and pensions arrangements, and all the rest of it, for some time into the distance. The idea that it will be all right on the night is simply not good enough, as was said earlier.

People have lined up to criticise the SNP’s scenario, including Brian Quinn, former executive director of the Bank of England, Owen Kelly of Scottish Financial Enterprise, Iain McMillan, director of CBI Scotland, the chair of political economy at the university of Glasgow, and the chief European financial economist, who is from a key financial institution. All those people—I do not have time to quote them—have criticised it.

I was told, although I did not hear it personally and will look closely at the transcript, that the Deputy First Minister implied, on “Good Morning Scotland”, that if an independent Scotland did not get its own way on the currency union, it would simply default or walk away from a debt. My hon. Friend the Member for North Ayrshire and Arran said that she never thought that she would see a referendum in her lifetime. In all the years I was in the Scottish Parliament, during some of which time I served as a Minister, I never thought I would hear a Deputy First Minister of Scotland shirk responsibility and say that they would walk away from a debt and put Scotland’s economy at risk. I hope that that report from this morning is not entirely accurate. If it is, I hope that the Deputy First Minister now regrets those remarks and looks again at them.

[Stewart Hosie]

Will the hon. Lady give way?

[Cathy Jamieson]

I will, briefly, just to show that I am a fair person.

[Stewart Hosie]

One of the few who is fair. In relation to the assertion that the hon. Lady and many of her colleagues have made about the Deputy First Minister—who, of course, cannot defend herself here—I am sure that the hon. Lady would agree that, if we are talking about negotiating a share of assets, which includes the central bank, we need to talk about negotiating a share of the liabilities, so we can take our responsibility for them. The UK Government and their allies cannot have it both ways. They cannot expect Scotland to take on a share of the liabilities while refusing even to negotiate on a share of the assets. Surely, as a reasonable person, the hon. Lady would agree that that makes no sense.

[Cathy Jamieson]

I have listened closely to what the hon. Gentleman says. Again, I gently suggest that if it is so important to have those parts of the United Kingdom that the SNP seems to want to retain, why on earth are we looking to break it up in the first place? Why are the Scottish Government and the Scottish Parliament not spending more time looking after the issues for which they have responsibility? Only at the weekend, there were reports about what was happening in the health service in Scotland; about the justice system—we have a proud record of a different legal system in Scotland—being dismantled, bit by bit, by the Scottish Government; and about a range of issues to do with social justice that are simply not being tackled by that Government. It would be better for the hon. Gentleman to reflect on that.

We have had an important debate. There has not been enough time, perhaps, to consider all the issues in detail, as we would have liked. I am sure that there will be further opportunities to do so. I wish to hear what the Minister has to say on this occasion; I am sure that I am more likely to agree with some of it than on other occasions, when I would be looking to put him under the kind of scrutiny that the hon. Member for Dundee East should be under today.

Finance Bill

Debate between Stewart Hosie and Cathy Jamieson

Monday 1st July 2013 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

Before the hon. Lady comes to that principle, she will be aware that the 2012 Red Book confirmed that, according to the Government’s own figures, the change would cost £450 million. At the most basic level, whether we agree with that number or think it is too low, if there is £450 million going spare, it would be better to do something socially productive with it than to give it back to people who are already wealthy.

[Cathy Jamieson]

I thank the hon. Gentleman. He and I do not always agree on every matter that is discussed in the Chamber, but on this occasion I accept what he says.

We have heard disagreement on the Government Benches with the point that I was making, but the reality is that as of this April, 13,000 people earning more than £1 million a year are receiving a tax cut equivalent to £100,000. Another 254,000 people earning more than £150,000 a year are also seeing their income tax bills go down. At the same time, if we take into account the changes that the Tory-led Government have made to tax, tax credits and benefits, households in the UK will be an average of £891 a year worse off. That is the reality that people face. As I have said in a number of previous debates, that may not seem a lot of money to the millionaires who are getting a tax cut from the Government, or to those on the highest wages, but it is a lot of money for my constituents and, I am sure, for the constituents of other hon. Members. I see some heads nodding on the Government Benches. It is a huge amount for constituents throughout the country, who are being ruthlessly squeezed to pay for the Chancellor’s economic failure.

Scotland Bill

Debate between Stewart Hosie and Cathy Jamieson

Thursday 27th January 2011 Commons Chamber

[Stewart Hosie]

I now see what the Minister is asking. I have every confidence that, when we coalesce in Committee, the common sense of Members from all parties will lead to a number of successful amendments that will improve the Bill, perhaps by addressing the weaknesses in the financial powers, for example, to which the hon. Member for Kilmarnock and Loudoun alluded. We will wait until the subsequent stages before deciding on the Bill, which might have been changed substantially by then.

[Cathy Jamieson]

Will the hon. Gentleman give way?

[Stewart Hosie]

I will take one more intervention before starting line 1 of my speech.

[Cathy Jamieson]

My understanding was that the hon. Gentleman indicated earlier that he would divide the House on the amendment, the last line of which states that the House

“considers the Bill as a whole to be unacceptable.”

Given the spirit of consensus that appears to be breaking out, will he now consider withdrawing the amendment so that we can move forward on the basis of consensus?

[Stewart Hosie]

The arguments in favour of the reasoned amendment will be made and they will explain, I hope with some support, why there are flaws in the Bill.

The Bill contains two fundamental fiscal measures: first, the reduction in the basic higher and additional rates of income tax by 10p, and the setting of a Scottish rate to compensate for that; and secondly, the availability of limited revenue and capital borrowing powers. Revenue borrowing will fill a part of the gap left when revenue decreases and a limited increase in capital borrowing will enhance direct capital investment.

However, the income tax powers are inadequate and include an in-built, long-term deflationary bias in the Scottish budget. The borrowing powers, particularly the revenue powers, are so tightly controlled that they are unlikely to be effective in delivering the sensible outcomes that many of us want. It is also worth noting that even the devolution of the income tax, the small stamp duty land tax and the landfill tax means that the Scottish Parliament will still have direct control of only 15% of the taxes raised in Scotland, with the remaining 85% accruing directly to London. I do not intend to talk about full fiscal autonomy, which there has been some talk of, but as a comparator we can look to the Basque country, which has been mentioned. It controls around 86% of its revenue.

I want to concentrate on the specific problems with income tax provisions. Receipts are sensitive to changes in economic circumstances and might fall dramatically in a downturn, as I will explain later. That presents an instability to the budget in Scotland, because we are talking mainly about income tax and the shortfall that would not be matched by the Bill’s provision of very limited borrowing powers. Growth in income tax revenue is low when compared with that of total tax revenue, and that is obviously deflationary, because only the modest growth in income tax will accrue to the Scottish Parliament, with the higher growth in total tax accruing still to London.

The figures between 2004-05 and 2008-09, for example, show that total tax revenue increased by £13.7 billion, but under the proposed plan the Scottish Government, although they control 15% of the tax, will receive only 9% of the increase. That automatically begins to squeeze the Scottish budget. Even within income tax, the most significant growth comes from the higher rates, and most of that growth will not be available to Scotland.

Historically, higher rate taxpayers account for a larger share of the growth in tax receipts, and therefore most of the growth in income tax receipts will accrue directly to Westminster, not to Scotland. We might, in fact, receive a declining share of Scotland’s income tax yields, because we are assigned half the basic rate, one quarter of the 40% rate and only 20% of the 50% rate. The impact of that deflationary bias can best be demonstrated by assuming that the powers had been in place since 1999-2000. Since then, the impact of the shortfall against forecast departmental expenditure limits would have represented an accumulative cut of about £8 billion.