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Volume 519: debated on Wednesday 1 December 2010

4. What recent discussions he has had with the First Minister on the relationship between the UK Government and Scottish Executive with regard to economic policy under the devolution settlement. (26710)

I have had a number of exchanges with the First Minister in recent weeks. Yesterday, the Scotland Bill was introduced in this House. If enacted, the Bill will strengthen devolution by giving the Scottish Parliament a financial stake in the Scottish economy while maintaining the economic strength we all desire from being in the United Kingdom.

Now that we know that the Scottish nationalist party—[Hon. Members: “National party.”] It put Holyrood’s tax-raising powers out of commission for two years without telling the Scottish Parliament. Does the Secretary of State agree that the Scottish Government should be made more accountable for their financial management to such an extent that there should be a closer relationship between economic growth and how much money is spent?

My hon. Friend makes some interesting observations. I can confirm that the Scotland Bill, if enacted, will provide exactly what he asks for. It will empower the Scottish Parliament, increase its financial accountability and secure Scotland’s place in the United Kingdom.

Where the Scotland Bill makes a real difference to the lives of people in Scotland and to the Scottish economy, it will have the support of the SNP. During the passage of the legislation in this House, will the Secretary of State and his Tory colleagues accept improvements that will deliver additional powers that will give the Scottish economy a competitive advantage?

I welcome the hon. Gentleman’s initial comments. As he is aware, the Bill introduced yesterday and the Command Paper that goes with it are the result of the work not just of the Conservative party and the Liberal Democrats but of the Labour party and others across Scotland. I hope that we will get proper engagement. I am confident that the measures in the Bill get the balance right for Scotland. They are right for this time and I am sure that they will pass the test of time.

The Secretary of State knows that many of Scotland’s leading businessmen and women issued a statement this week, in which they said that there must be

“real economic levers to help sustain recovery and grow the economy.”

Will the Secretary of State and his Tory colleagues reconsider their plans and consider improvements to the legislation, such as devolving corporation tax to help business grow?

I listen carefully to a range of opinion from business and elsewhere about the future of Scotland’s—

Order. I apologise for interrupting the Secretary of State. I do not know what the hon. Member for Blyth Valley (Mr Campbell) had for breakfast this morning, but I am not sure that it has had the desired effect. [Interruption.] Order. The hon. Gentleman must not rant at the Government Chief Whip or anybody else. He must calm himself—it is better for his health if he does.

If I can repeat what I was saying before your intervention, Mr Speaker, I listen carefully to a range of opinion from across business and different sectors of Scottish society. The business community was well represented in the Calman commission, which produced and supported the proposal. We will continue to listen to a range of opinion, but we have no intention of devolving powers over corporation tax.

In 1997, the Scottish people voted to give the Scottish Parliament tax-varying powers, but in a disgraceful and secret decision, the SNP Government gave up those powers. I welcome the Scotland Bill. Will the Secretary of State assure us that those tax-varying powers will remain with the Scottish Parliament and that the Bill will be phrased in such a way that, were the SNP ever elected again, it would not be able to give up those powers in a secret decision?

As my hon. Friend knows, the consequences of the Scottish Government’s decision not to maintain the Scottish variable rate have been debated in the Scottish Parliament in recent days. The fundamental difference between the existing arrangements and what will follow if the Bill is enacted is that the Bill will create a Scottish income tax that sits alongside United Kingdom income tax, and there will be a requirement to set that rate every year. That is a fundamental change, and it will bring the accountability and empowerment that I discussed earlier, which will be a good thing for Scotland.

It is shocking that both the UK and Scottish Administrations are failing to prioritise job growth. While there was a slight fall in UK-wide unemployment last month, the jobless total for Scotland continued to increase. The latest figures show that in Campbeltown an astonishing 13 claimants are chasing every available job. Our youngest people are suffering the most, and if Labour wins in 2011, we are committed to continuing the future jobs fund to help them into work. Why is the Secretary of State set on removing that vital support, while at the same time supporting tax cuts for our biggest banks, which are at the root of our economic problems?

That was an interesting insight into the Opposition’s economic policy, although I realise that Opposition Front Benchers are divided on exactly what it should be. I remind the hon. Lady that we are dealing with the consequences of the largest deficit in peacetime history—£155,000 million. We took urgent action to deal with that, which has drawn us back from the danger zone. We will announce proposals in due course on the Work programme which will replace the future jobs fund. We are dedicated to ensuring that we create the conditions for growth and for a private sector-led recovery to deal with the problems that we inherited.

Unfortunately, yet again Scotland’s youth are not the Secretary of State’s priority. His party does not think twice about dancing on the head of a pin. In its autumn edition of “Scottish News Extra”, which is turning out to be one of Scotland’s better reads, his colleague, the Business Secretary, is described as

“launching a scathing attack on the previous government’s unfair tuition fees which still have to be paid by Scottish students studying elsewhere in the UK. He likened tuition fees to the infamous poll tax.”

Now that his colleague has said that he may abstain on the forthcoming vote to increase tuition fees in England to £9,000, will the Secretary of State confirm whether he will support the increase, whether he will vote against it in support of the 3,000-plus Scottish students who are directly affected, or whether he will be absent again from the vote?

Order. In replying, the Secretary of State must bear in mind that we are referring to economic policy rather than higher education policy.

It is interesting that the hon. Lady interpreted the question by seeking to get away from anything that might focus attention on Labour’s record on the economy and on our determination to create the conditions that will get us back to sustainable growth for Scotland and the United Kingdom.