I have to inform the House that I have selected the amendment on the Order Paper.

I beg to move, That the Bill be now read a Second time.

Over the past decade, the devolution of power and decision making from this Parliament to the Assemblies of Wales and Northern Ireland and to the Parliament in Scotland has transformed the constitutional arrangements of the United Kingdom. With this Bill, we begin a new phase of devolution in Scotland—a phase that we enter with cross-party support and the support of individuals and organisations across the country. The Scotland Bill is, of course, an important step in the coalition Government’s programme to modernise and reform the United Kingdom’s constitution, but its origins lie in the Scottish Parliament itself and in the support given by the previous Government, which I am happy to acknowledge. The Scotland Bill will further empower the Scottish Parliament and make it more accountable to those who elect it. In doing so, it will strengthen Scotland’s position within the United Kingdom.

Let us reflect on how we got here. The late Donald Dewar famously said, while quoting from the first line of the Scotland Act 1998:

“‘There shall be a Scottish Parliament’…I like that”.

He was not alone. His sentiments were, and continue to be, widely shared in this House and throughout Scotland. It is important to pay tribute to Donald Dewar for his historic role in shaping modern Scotland. He was a true statesman, serving both as Secretary of State for Scotland and as Scotland’s original First Minister. In the creation of the Scottish Parliament, he has a fine legacy. However, he would have been the first to insist on recognising the countless others, across different parties, and, crucially, from many different backgrounds in Scotland, who patiently built the case for devolution over many years, indeed decades. Likewise, we should acknowledge those in this place, the Scottish Parliament and beyond who supported the early years of the devolved institutions, building their capacity and establishing their credibility. Today, we build on that work.

When taking the original Scotland Bill through this place, Donald Dewar said that the creation of a Scottish Parliament was not just for Scotland. Nor was it just routine tinkering with the detail of our political system. Rather, it was a fundamental, radical reform of the UK’s constitution. After more than a decade of devolution, the Scottish Parliament is firmly established as part of the fabric of Scottish life. More than that, however, devolution—not just in Scotland, but right across the United Kingdom—is now part of our national life too. The Parliament was established to bring power closer to the people of Scotland, to make government more responsive to their needs, and to put their priorities at the heart of Scottish governance. It has succeeded: decision making on education, health and the environment, among many things, is closer to the people whom those decisions affect. The experience of Scottish devolution has changed the terms of the debate. Few would seriously now argue that there should be no Scottish Parliament.

The Bill builds on the achievements of the 1998 Act and on the experience of devolution, and it further strengthens Scotland’s place within the United Kingdom. Just six months after being elected, we introduced the Scotland Bill on St Andrew’s day. In doing so we made good the Government’s formal pledge, in our programme for government and the Queen’s Speech, to implement the recommendations of the Commission on Scottish Devolution—the Calman commission, as it is more commonly known. However, this was not our commitment alone. The Labour party also pledged in its manifesto to implement the commission’s recommendations, and I welcome its ongoing support without seeking to compromise Labour Members’ important role in scrutinising the detail of the Bill. Once again, however, measures brought to the House on a major piece of Scottish constitutional legislation are founded on support from across the Chamber and within Scotland.

After the first decade of devolution, it was right to review the Scotland Act, to assess how devolution was working, and to ensure that the Scottish Parliament had the right powers to deliver for people in Scotland. In December 2007, the Commission on Scottish Devolution was established by a vote in the Scottish Parliament. Chaired by Professor Sir Kenneth Calman, the commission included Conservative, Labour and Liberal Democrat representatives, but it was independent of any political party and embraced representatives from business, education, the wider public sector and across civic Scotland. It gathered evidence from a wide range of sources and engaged directly with people in Scotland and elsewhere in the United Kingdom, through detailed consultation, public engagement events, oral evidence from a spectrum of interests in Scottish public and business life and survey evidence. Let me record my thanks to Professor Sir Kenneth Calman and his commissioners for their thorough, inclusive and well-evidenced work. I would also like to acknowledge the impressive and detailed work of Professor Anton Muscatelli and the independent expert group on finance, which supported the commission.

The commission’s final report was submitted jointly to the Scottish Parliament and the UK Government in June 2009, and was widely welcomed. Based firmly on the commission’s findings, the Scotland Bill seeks to implement its key recommendations. The commission’s first and overarching conclusion was that devolution had been a real success; that it was here to stay; and that the balance between reserved and devolved policy powers and functions was, broadly, in the right place. However, it also concluded that there was a shortcoming in how the Parliament was funded, specifically in terms of accountability. At the centre of the commission’s report and the Bill, therefore, are measures to improve the financial accountability of the Scottish Parliament.

The Scottish Parliament can determine policy on a wide range of subjects and how and where money is spent, but at present it cannot be held effectively to account for raising the money it spends. The commission recognised this imbalance. The Bill addresses that imbalance by providing a package of taxation and borrowing powers that will see the Scottish Parliament become accountable for more than a third of the money it spends. In doing so, the Bill represents the largest transfer of fiscal powers from central Government since the creation of the United Kingdom. It is a radical but responsible step. Most significantly, we will create a Scottish income tax. We will create that tax by cutting 10p off the basic, higher and 50p rates for Scottish taxpayers, adjusting the block grant in proportion and allowing the Scottish Parliament—indeed, obliging it—to apply a Scottish income tax at a level of its choosing to meet its spending plans.

Can the Secretary of State tell me and those who have asked me to probe this point what will happen when companies in my constituency or those across the whole of Scotland are paid from south of the border? How will that problem be overcome?

The hon. Gentleman makes a very fair point. Let me reassure him, first, that we have given a lot of attention to the technical issues of implementation, both in a high-level implementation group and, now, technical groups led by Her Majesty’s Revenue and Customs, which are looking at all the different issues. The good news is that the software systems that were created for employees paying the Scottish variable rate under the original legislation were future-proofed and can identify Scottish taxpayers on the payrolls, wherever the company’s head office is, ensuring that the identification of taxpayers is made as painless a process as possible and that the right amounts of tax are taken.

But what happens—this is the question that has been asked of me—when the person is domiciled both in Scotland and in England?

They cannot be domiciled in both places. A person’s status as a Scottish taxpayer will be determined as set out in the Bill. If the hon. Gentleman looks more closely at the detail, I hope that he will be reassured.

Before the Secretary of State moves on from this point, can he outline to the House what he expects the costs to the Scottish Government to be of the annual adjustment from HMRC? What will the cost of the variable tax rate be to the Scottish process?

I do not know whether the hon. Gentleman is asking what the costs of running the system will be, but if he is, the draft regulatory impact assessment—I do not know whether he has had a chance to look at it yet—sets out our provisional estimates of the marginal costs of creating this functionality in the system. They are £45 million, with annually recurring costs of around £4 million. However, I should say to him—I am grateful for the chance to emphasise this—that a lot of that will depend on the detail that the Scottish Government and other stakeholders wish to see on documentation such as P60s. That will influence where those costs fall.

Following the point that my hon. Friend the Member for Central Ayrshire (Mr Donohoe) made, I can see that there will be formulae for different categories of employees. As a Member of Parliament who is based here in the House of Commons and whose main home is in London, I want to be taxed in Scotland, but will the Bill allow that?

Unfortunately for the hon. Gentleman, he will have to pay the Scottish rate of income tax. Parliamentarians are obliged to pay it regardless of where their main home might be.

As I was saying, the new powers will give Scottish Ministers and the Scottish Parliament a much more significant stake in the performance of the Scottish economy. The level of the Scottish rate will be Scotland’s to decide, and those who set the rates will answer directly to those affected by them. Power will rest with the Scottish people. In addition to income tax, the Scotland Bill will devolve to the Scottish Parliament responsibility for stamp duty land tax and landfill tax. That will complement its policy responsibilities for housing, planning and the environment. The Bill will also allow the Scottish Parliament to propose new devolved taxes, to sit alongside the other powers. However, the fiscal powers are not limited just to tax; they extend to borrowing powers, too. The Bill will allow Scottish Ministers to borrow up to £500 million for current spending when tax receipts fall short of those forecast.

Will the Secretary of State confirm that the UK Government are currently negotiating with the Northern Irish Government about the devolution of corporation tax powers to Northern Ireland? Why would a UK Government consider that appropriate for Northern Ireland but not for Scotland?

I would not characterise those discussions as negotiations per se, but people have certainly been raising possibilities in connection with what taxes might be suitable for other parts of the United Kingdom. As I have said, our proposals in the Bill are founded on careful consideration, and on impressive and important academic research that made it clear that if we wish to preserve the United Kingdom—I understand that the hon. Gentleman does not—we should ensure that, in increasing accountability in Scotland, we focus on income tax rather than corporation tax, and I am satisfied with that.

The Secretary of State says that all this is part of defending the Union. Obviously his colleague Tavish Scott would share his view, but in his submissions to the Steel commission and then the Calman commission he suggested devolving

“income tax; corporation tax; fuel duty…tobacco and alcohol duties; betting and gaming duties; air passenger duty; insurance premium tax; climate change levy and landfill tax; inheritance tax; and stamp duties”.

Surely the Secretary of State does not disagree with his own colleague in the Scottish Parliament, does he?

What I absolutely agree with is the process that we went through as three different parties that came together in the Calman commission, examining the options, scrutinising them and coming forward with a balanced set of proposals. We look forward to seeing fully costed proposals from the hon. Gentleman and his colleagues. They have had months to produce them— indeed, years—but as yet we have seen nothing. That is something that the House will note and that will perhaps reduce the bluster on the part of some.

To supplement the extensive list that my hon. Friend the Member for Dundee East (Stewart Hosie) read out, may I add the power of the Crown Estate being returned to the Scottish Parliament? Indeed, four or five years ago five Liberal highlands MPs supported that very proposal in a ten-minute rule Bill. Is that still the position of the Liberal party? If so, will the Liberals try to use the Scotland Bill to ensure that the Crown Estate is returned to Scotland?

The hon. Gentleman is tempting me to get slightly ahead of myself. He will see the proposals that we have set out in the Bill, taking account of the evidence that was supplied to the Calman commission.

Does the Secretary of State agree that those Scottish National party Members who are getting animated on this issue could easily have made a submission to the Calman commission if they so wished? Instead, they stood for self-interest, rather than Scotland’s interest.

If I may say so, the hon. Gentleman makes the point very neatly. Like him, I await the SNP’s detailed proposals on either fiscal autonomy or the Crown Estate, so that they might be debated. I believe that what we have in the Bill is the right balance, which will give Scotland the powers and accountability that it should have.

On taxation generally, is not the lesson that we have learned, from the original Scotland Act 1998, through many Standing Orders over two Parliaments, that we are involved in an iterative process? What can be devolved should be devolved, but at a gentle pace, so that we can assimilate what has happened. In that regard, the agreement that the three parties have come to is the correct way to proceed at this time, but does not preclude further devolution when appropriate at a later stage.

I quite agree with my hon. Friend, who puts his point in such an elegant way.

I hope that my right hon. Friend is not accusing the Scottish National party of inconsistency. Its attitude towards the Calman commission is entirely consistent with its attitude towards the Scottish Constitutional Convention, which it also declined to join.

Once again, my right hon. and learned Friend puts it very elegantly.

As I was saying before that brief diversion, the fiscal powers included in the Bill are not limited to tax; they extend to borrowing as well.

Will the Secretary of State give way?

I had nearly got back to the point I was at, but I shall give way.

On that point, I listened to the Secretary of State on the “Today” programme this morning, when he spoke eloquently about who would foot the bill if borrowing went—shall we say?—awry. What is to prevent a Government in Scotland from borrowing £500 million just before they lost power, to ensure that the incoming Government were saddled with a bill they could not pay?

I would hate to destroy the cross-party consensus by making any inappropriate reference to a £155,000 million deficit, so I will move swiftly on. On the technical point the hon. Gentleman raises, if he looks again at the Command Paper, he will see that there are provisions to ensure that no Government will be able simply to borrow in order to stack up a capital reserve to spend in the future or to land a subsequent Administration in debt.

On a point of clarification, would the right hon. Gentleman like to see power over the Crown Estate devolved to the Scottish Parliament?

Those provisions are not in the Bill. That case has not been put forward in detail either by the Government of Scotland, of whom his colleagues are members, or by others. If such proposals were to come forward some time in the future, there could be a public debate, but as far as the Scotland Bill is concerned, it is consistent with the Calman commission and will make sure, formally, that we have a Scottish commissioner. That will ensure that Scottish interests on the Crown Estate are well represented in future.

As Secretary of State for Scotland, I am fully aware of my role in ensuring that we keep the Crown Estate focused on its interests across the whole of the United Kingdom. I have had two formal meetings so far and another is planned. That is probably as good a record as most recent Secretaries of State. I assure the hon. Gentleman and others who are concerned about the Crown Estate that we will continue to work to make it more accountable, more transparent and more focused on Scotland’s and the rest of the UK’s interests.

I thank the Secretary of State, who is generous with his time. He keeps on saying that the provisions were in the Calman proposals, but only 35 out of the 63 proposals are in the Bill. Issues such as immigration, benefits, aviation and aggregates are all out. Why is the right hon. Gentleman so negative about so many of the Calman proposals, and why did he not implement those important measures?

I understand that the hon. Gentleman will seek to catch your eye later, Madam Deputy Speaker. I am sure that he has studied the Command Paper along with the Bill in great detail, in which case he would have seen what we said about the aggregates levy and aviation duty. We made it clear that there is a difficulty with the aggregates levy because of issues before the courts, so it would be inappropriate to bring forward proposals at this stage. However, we make clear in the Command Paper our intention to devolve that area. Likewise on aviation duty, the Government are reviewing the position, and we still intend aspects of it to be devolved. It is the same with welfare. The Command Paper talks about the major reforms we are introducing and the fact that they will fully take account of devolution and reflect the spirit of what was in the Calman report. I hope that that goes some way towards reassuring the hon. Gentleman, although I suspect it will not.

Beyond the power to borrow up to £500 million for current spending, a Scottish cash reserve will be created so that the Government will be able bank and save money where tax receipts exceed those expected. These provisions will allow for effective financial management to deal with fluctuations in the new revenue stream of tax receipts.

We also set out in the Bill a brand new capital borrowing power of up to £2.2 billion. This will provide the Scottish Government with new means to invest in major infrastructure and other projects. It will be for Scottish Ministers and the Scottish Parliament to decide whether to borrow and, if so, for what purpose—a new Forth crossing, new hospitals, new schools or perhaps even a railway—and it will be for them to account to the Scottish people for those choices.

As a consequence of increasing the financial freedom and accountability of the Scottish Parliament to raise its own revenues, there will be a reduction in the existing block grant. The grant will continue to make up the remainder of the Scottish budget, however. That will ensure financial stability; it will ensure continuity of public service provision; and it will maintain the economic union that is so central to our United Kingdom. I know that views differ—both in this House, and further afield—on the broad issue of the block grant and, specifically, on the Barnett formula that underpins it. I do not expect those differences to be resolved today; indeed, the funding formula is not part of the Bill.

The Government have set out their position on the Barnett formula in their programme for government. While recognising the need to review the arrangements in time, our overriding priority is to tackle the deficit, and we will not consider a review until the public finances are returned to good health.

I welcome the fact that the right hon. Gentleman is dealing with the Barnett formula. Will there be anything in the new proposals to prevent a Scottish Government from receiving funding for one purpose and using it for something completely different?

I am not entirely clear what the right hon. Gentleman has in mind, but it is the essence of devolution that the Scottish Parliament be free to spend the money it receives—either through the block grant or as a consequence of its tax-raising powers—on what it wants to spend it on.

The right hon. Gentleman might have had the opportunity to look at last week’s Sunday Herald, which led on the issue of disabled children in Scotland and their families and carers. It pointed out that £34 million, arising from UK Department for Education funding, had been allocated, but that the money had not been received. In the new approach to these matters, will there be more accountability than can be seen in that case?

First, I pay tribute to the right hon. Gentleman’s distinguished career of campaigning on these issues and to all the hard work and effort he has put into that over many years. The fundamentals of devolution since 1999 mean that the Scottish Parliament and then the Scottish Government are able to decide how to spend all the revenue that comes to them, whether it be directly through the grant or, to use a shorthand term, as a result of the Barnett consequentials. The hon. Gentleman is, of course, entitled to draw a distinction between how the money is spent south of the border and how it is spent north of the border. On occasions, the advantage might be the other way round, but I am afraid that that is the essence of devolution—it is for them to decide. The Bill enhances those principles rather than claws anything back.

The right hon. Gentleman is right that the essence of devolution means that the Scottish Government should not have their funding ring-fenced, as some have suggested it should be. However, the point raised by my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) related to accountability. I do not think that he was suggesting that we should ring-fence the funding transferred to the Scottish Parliament. It is a question of how there can be accountability to the UK Parliament. Perhaps there could be some way of bringing to this Parliament the ability to question the way in which money is spent by the Scottish Parliament. Intergovernmental and inter-parliamentary co-operation should allow such questioning to be pursued and, although my right hon. Friend has been trying to do that, he has not always been successful in getting the Scottish Parliament to respond.

I respect the hon. Gentleman’s interest in these matters and I commend the way he has followed devolution developments over the years. The primary responsibility for accountability is to the Scottish Parliament. Governments of different hues have gone before the committee system and made statements in the Scottish Parliament; there are 129 Members of the Scottish Parliament and that is their primary function. Ultimately, as in this House, all are accountable to the electorate. What we are trying to do with accountability in this Bill is enhance the financial powers so that parliamentarians in Scotland can be made accountable not just for the spending decisions, but for the tax-raising decisions that precede them.

Let me finish my point about the Barnett formula. We do not intend to alter it or review its arrangements at this time. Nothing in the Bill, however, prejudges future changes to the funding formula. Rather, the Bill’s effect will be to make the Scottish Parliament more reliant on its own revenues and less reliant on the block grant to fund public spending in Scotland.

In the Secretary of State’s comments on the Barnett formula—before the interventions—he said that he would not seek to change it until the economy has returned to rude health. I presume by that he means that this Government’s priority is to tackle the deficit. I see him nodding to that. It worries me slightly, then, that the additional capital borrowing powers require a consent per project, so will the right hon. Gentleman confirm that when a good, sensible, costed project comes up looking for additional capital consent, this Government will not use the excuse of the deficit in order simply to say no?

I respect the thoroughness with which the hon. Gentleman usually approaches such matters, and he has clearly spotted the bit in the Command Paper that says that, as of 2013, we will introduce the new capital borrowing powers. In the first couple of years, there will be additional Treasury constraints in relation to the feasibility and appropriateness of projects, as a precursor to those capital powers being fully available, in 2015, to the Scottish Parliament and the Government formed from it.

The Secretary of State has not quite given me the assurance I seek. The Command Paper also says that the powers will be subject to Her Majesty’s Government limits and controls. Will he confirm that the Government will not use their deficit consolidation plan as an excuse to say no to important new capital investment?

I hoped that I had been clear, but I am happy to refer the hon. Gentleman back to the Command Paper, which is crystal clear on the availability of those powers from 2013, on the annualised basis set out. When the right projects are brought forward—as he and I seem to agree on this occasion, such projects will be those that help growth—such consent will not unreasonably be withheld. I hope that that reassures him.

Aside from the Government’s proposals, another set of financial arguments has been put forward as an alternative to the measures in the Bill. In recent months, there has been some discussion in the Scottish Parliament and the Scottish press about other approaches to fiscal devolution, and specifically about the idea of fiscal autonomy. However, its proponents have failed to come up with any credible proposals, or indeed any detailed proposals at all, while the economic arguments advanced in support of fiscal autonomy lack any firm evidence to support them.

This is ludicrous. The Scottish Government have published the document, “Fiscal Autonomy in Scotland: The case for change and options for reform”. Saying that no work has been done is neither helpful nor accurate.

The essence of debates in the House is that we are allowed to have opinions. I carefully used the word “credible”, and credibility is lacking in the Scottish Government’s proposals. The desperate efforts to undermine the proposals in the Bill have now been exposed for what they are.

Have the Scottish Government given an indication of the share of the national debt, and the share of the underwriting of the bankrupt Scottish banks, that the Scottish Parliament would be willing to undertake under fiscal autonomy?

None whatever.

Implementing our new financial arrangements will require detailed work by the United Kingdom Government, the Scottish Government and a range of other stakeholders. We will approach the task in a carefully planned and phased way. The Bill provides the overall framework for the new arrangements, but more than legislation alone will be needed to give effect to the measures set out.

On fiscal autonomy, how is it that tiny places such as the Faroe Islands, with a population of 48,000, and the Isle of Man, with 100,000, have infinitely more power than the Scottish Parliament, which represents more than 5 million people? Does the Secretary of State not see an anomalous situation there? The Scottish Parliament could easily have fiscal autonomy and control our fuel price, which in the Hebrides is £1.45 a litre, but in the Faroe Islands is £1.10 and 94p for petrol and diesel respectively.

If the hon. Gentleman wishes to make his case in that way, people may or may not pay attention to him. What I am suggesting is based on Scotland’s size and where it is within the United Kingdom. I respect the fact that he and I fundamentally disagree about our vision for the future of Scotland. Those of us who are committed to the United Kingdom want a sustainable new financial basis on which Scotland is part of the Union. We believe that the Bill provides that basis, unlike the proposals that his party advocates.

The Bill and the Command Paper are not just about finance. The Calman commission examined the whole of the devolution arrangements and found that the division of policy responsibilities in the original Scotland Act worked well. It did, however, make recommendations to improve it further, which are reflected in the Bill. On justice, we will give the Scottish Parliament the power to legislate on air weapons, and give Scottish Ministers the power to set the drink-drive limit and a Scottish national speed limit. On health, we will give Scottish Ministers the power to decide which doctors in Scotland should be able to use drugs for the treatment of addiction. We will give the Scottish Government a formal role in key appointments to the BBC Trust and the Crown Estate.

On the question of health, will the Secretary of State explain why the power to make decisions on abortion in Scotland will not be devolved?

If I may say so, that is a delicate subject, which was debated carefully in relation to the original Scotland Act. The decision of the House at the time was that the matter would not be included within that Act, and there was no such proposal brought forward by the Calman commission or in any representations that I have received subsequently.

We will give the Scottish Parliament power to administer its own elections, processes and procedures. There are also some areas where, for good and practical reasons, the Calman commission recommended re-reservation of powers to Westminster. These, too, are included in our Bill: for example, the regulation of health care professions and corporate insolvency.

Finally, we have taken the opportunity to address the question of the official title of the devolved Administration: “the Scottish Executive”, as it is currently styled. The term “Scottish Government” has now become broadly recognised. We propose to make that official.

On the Secretary of State’s comments about insolvency, the Bill seems to take responsibility for liquidations back to the UK Parliament, and I support that, but why not do the same for receiverships?

The Bill reflects the balance of the representations that we have seen and the different legal basis on which matters have been approached in Scotland to date. If the hon. Gentleman wishes to make the broader case in Committee, we look forward to hearing that.

On the Secretary of State’s point about the change to the Scotland Act to allow “the Scottish Executive” to become “the Scottish Government”, that term has been quite commonplace since the last Scottish general election. However, if there is no such thing as the Scottish Government in legislation, does he believe that the amendment tabled by the six separatists in the House is competent, as it refers to “the Scottish Government”?

Far be it from me to be drawn into these matters. I can only assume that the amendment is competent, as it is on our Order Paper this afternoon. However, the common parlance is now “the Scottish Government”. It will help if Government Departments no longer feel that, legally, they must refer to the Scottish Executive, when nobody else does. Also, we will be able to refer to “the Scottish Government” in the House, rather than “the Scottish Executive”.

The Bill does not set out every proposal from Calman. In some cases, legislation is not required. For example, the commission recommended much closer co-operation and communication between Administrations and between Parliaments. Many of the proposals require change to working practices, to which the Government are committed. I know that Mr Speaker, the Lord Speaker and the Presiding Officer will determine the appropriate basis on which to develop relationships between our Parliaments.

In fulfilling our commitment to implement the Calman recommendations, there are some cases in which we have deviated from the precise recommendations because the policy content at UK level has changed, for example in relation to air passenger duty, which the Government are reviewing. In other cases, however, we have gone further than the commission, building on and strengthening its recommendations. This is the first time since the creation of devolution that a Government have brought forward legislation with such wide-ranging effect on the current settlement. Indeed, the Bill will fundamentally change the powers and responsibilities of the Scottish Parliament. For that reason, the Government will proceed with the Bill only with the formal and explicit consent of the Scottish Parliament. It is right and proper that the Scottish Parliament should examine the measures that we set out in the Scotland Bill. I welcome the thorough way in which it is going about its business, and I look forward to returning to discuss the provisions with the Bill Committee in the Scottish Parliament next week.

Devolution breathed new life into Scottish politics and Scottish society. It brought government closer to the Scottish people, and it shaped a more confident Scotland in a more secure United Kingdom. The Bill extends that settlement for the future. The first chapter of devolution began with the Scotland Act 1998; the second chapter opened on St Andrew’s day, when we published this Bill. The Bill reflects the work of many across this Chamber and in Holyrood: work that we have undertaken together with consensus, strengthening Scotland’s future within the United Kingdom. I commend it to the House.

On a point of order, Madam Deputy Speaker. I raised this point earlier with the Secretary of State. Is the amendment competent, given that it refers to a Scottish Government who apparently do not exist at the moment?

The amendment is in order, otherwise Mr Speaker would not have selected it for debate.

Now that we have resolved that little matter, I beg to move an amendment, to leave out from “That” to the end of the Question and add:

That this House, while recognising the need to further enhance the powers of the Scottish Parliament, nevertheless believes that the measures the Scotland Bill seeks to devolve are inadequate to meet the ambitions of the Scottish Government for the people of Scotland; considers the measures relating to air weapons, road safety and drink driving to be incomplete; regrets that the Calman Commission’s recommendations to devolve the aggregates levy and air passenger duty, and to devolve responsibility for the marine environment to match the Scottish Parliament’s responsibility for fisheries, as well as its proposal for a Scottish role in welfare benefits, have all been abandoned; regards the proposals for the Crown Estates Commission as inadequate; deplores the proposals in the Bill to re-reserve already devolved responsibilities; concludes that the tax varying provisions would embed a long-term deflationary bias in Scotland’s budget and that the proposed borrowing powers remaining subject to HM Treasury controls and limits render them insufficiently flexible; and therefore considers the Bill as a whole to be unacceptable.

I welcome the Second Reading of this Conservative-led Government’s Scotland Bill, and, like my hon. Friends, look forward to debating the further transfer of powers and responsibilities to the Scottish Government. The House will find the Scottish National party a willing and diligent partner in ensuring that the Bill is debated properly. What we have seen today, however, is remarkable. We have seen a Liberal Secretary of State for Scotland lead, on behalf of a Conservative-led Government, a debate on a Conservative-led Scotland Bill that was initiated in the Scottish Parliament by a former leader of the Scottish Labour party. This is cross-Unionist consensus in all its Conservative-led glory. I believe that, given the consequent lack of scrutiny that will be offered by Her Majesty’s Opposition, along with the disappearance of what remains of independent thought on the Liberal Benches, the task of scrutinising the Bill will be left to the Scottish National party. It is we who will scrutinise the Bill in the interests of the Scottish people, and we will do so most diligently and sincerely.

If that is the attitude of the Scottish National party, why have its members taken no part in the constitutional convention or the Calman commission over the years, and then appeared at the last minute, in a grudging and curmudgeonly fashion, to take part in a debate that they have not entered into for 25 years?

It is a matter of principle. I know that the right hon. Gentleman knows very little about principle in the context of the Liberal Democrats, but we happen to believe in independence. It may have escaped his attention, but that is what our party is all about. The fact that a reference to independence was not included in—indeed, was intentionally excluded from—the wording of the Calman report meant that if we were to retain our principled position, we could not participate. That is what we call principle, and perhaps that is a little lesson for the right hon. Gentleman.

The hon. Gentleman has criticised the Calman process, which involved three parties working together. We rarely agree on much, but we did agree on Scotland’s future. The SNP, however, had the “national conversation”, which cost almost £1 million, asked only seven questions, received a grand total of 222 responses, and has not resulted in a single new power for Scotland. It was nothing more than a vanity project for the SNP. It was not a national conversation, but a national waste of money.

I thank the hon. Gentleman for his intervention.

rose—

I will take interventions in a minute, but, if hon. Members do not mind, I will make a little progress first.

As I was saying, scrutiny will be left to the Scottish National party. Throughout the Bill’s passage, we will support measures that will effectively transfer power from the House of Commons to the Scottish Parliament. We will offer solutions to the inconsistencies and problems that have been identified. We will strenuously oppose the parts of the Bill that suggest the re-reservation of certain matters such as the regulation of health professionals and insolvency. We will also strenuously oppose financial measures that would mean a cost to the Scottish people of £8 billion since devolution.

Will the hon. Gentleman give way?

I will certainly give way to the Secretary of State.

I want to nail this nonsense about the £8 billion. Of course it is possible to take one particular year, which happens to be the worst year in the middle of the worst recession since the war, and to make assumptions about a 20-year period on the back of it, but that is complete and utter nonsense. It is not the way the figure should be calculated. I refer the hon. Gentleman to the figures from the Scotland Office, which show a £400 million surplus.

I am grateful to the Secretary of State for that correction. He has conceded that it is possible that this could have happened. However, I heard him say on the radio this morning that the figure was not £8 billion, but £700 million. That makes it all right, does it? That is all that Scotland would have lost over the past 10 years.

The hon. Gentleman is usually fair, and I should hate him to miss the opportunity to be fair on this occasion. [Interruption.] Okay, I am being generous.

What I was doing was correcting the hon. Gentleman’s colleague in the Scottish Parliament, who had suggested that the figure could be £700 million. Again, it would depend on where the line in the sand was drawn. Conveniently, in this instance the line was drawn in 2010-11. When we roll forward to 2014-15, we arrive at a £400 million surplus rather than the nonsense of the £8 billion that the hon. Gentleman is talking about.

And the Secretary of State accuses me of being selective! It is not possible to be more selective than he has just been.

We will never agree on these issues. What we have seen as a result of the work of the Scottish Government is an £8 billion loss to the Scottish budget since devolution in 1999. The Secretary of State, making the same assumption, said that £700 million would be lost to the Scottish people over the past 10 years. That is unacceptable to us, and we will have nothing to do with it.

I think that the Secretary of State is confused. He has talked of basing the figure on a single year, which was the worst year, and has said that there would not be an £8 billion shortfall. Of course he is right, but no one has ever said that. We are talking about the cumulative impact had the Bill been in operation between 1999 and 2011-12, not 2014-15. I am disappointed, because the Secretary of State is normally fair, but on this occasion he has failed even to understand the argument that has been advanced against him.

I am grateful to my hon. Friend, who knows about these issues and understands the difficulties that the Bill would create.

Why are we giving the Scottish Parliament new fiscal responsibilities that would damage it? That is one of the proposals that we will seek to correct during the Bill’s passage. We will be making suggestions about how it could be dealt with. We are prepared to work with the Government, because we want to improve and strengthen the Bill. We want to make it a powerhouse Bill that will serve our nation and be a credit to the communities that we serve.

As we have heard, the Bill has already been debated in the Scottish Parliament, and has been subject to what has been described as an independent Bill scrutiny Committee. I certainly hope that the proceedings in the House of Commons will be a bit more useful and relevant than what we have seen in the Scottish Bill Committee thus far. We have seen a Labour convener haranguing and harassing independent witnesses, as a result of which several have decided not to take part in the proceedings because of what they feel is an in-built bias. The Scottish Bill Committee seems to be more interested in considering options that are not even in the Bill than in examining the dangerous tax plans that it contains. I hope that we can do a bit better than that down here, Madam Deputy Speaker. As you know, and as we are already observing, Scottish debates in the House of Commons are always characterised by their good nature and conviviality.

The hon. Gentleman cannot have it both ways. He cannot say that he wants rigorous scrutiny, and then say that we were too hard on people who provided false information in support of his case.

I do not know what the hon. Lady is referring to. I have never said anything about false information.

In a spirit of consensus and co-operation, let us start with the issues on which we all agree, for obviously there are such issues. We all agree with the Secretary of State and with our Labour colleagues that devolution is, in the words of Donald Dewar, a process and not a one-off event, and that is important. We may disagree on the conclusion of that process—we believe in independence, and my Labour colleagues believe in something else—but we all agree that devolution is a process, and that we will continue to see a transfer of powers from the House of Commons to the Scottish Parliament.

A point was made earlier about the reference to the Scottish Government in the amendment. When I first came to the House 10 years ago, Labour Members were appalled at the prospect of a Scottish Government. The Secretary of State probably remembers the debates in which they expressed their view. They helpfully said, “They can call themselves ‘The White Heather Club’ if they want, but they will never be a Government.” We are a Government now, thank goodness, and the Labour dinosaurs, some of whom I see in their places, will never go back to having an “Executive” running Scotland. That is a good thing too.

An important new development is that we all agree now that some financial powers—fiscal powers—should be devolved to the Scottish Parliament. We never had that important source of agreement before. We fundamentally disagree on the measures in the Bill, but we agree that financial responsibility should be a feature of the Scottish Parliament. I look forward to that, and that is another area of agreement. We will oppose measures in the Bill, but it is good that we now all agree that financial powers are required for the Scottish Parliament.

The most important thing that everyone in this House can agree on—this ran through everything to do with Calman—is that the Scottish Parliament has been an overwhelming success. The Secretary of State is of course right to say that there is no question—only people on the fringes of politics in this House would even suggest this—of ever going back to having no Scottish Parliament again. What typifies that more than anything is the fact that a Conservative-led Government are legislating for more powers and responsibilities to be given to the Scottish Parliament, because only 12 short years ago the Tories campaigned so energetically against the Scottish Parliament. That shows the progress that we have made, and there will be areas of agreement as we go through the Committee stage in this House.

Although we agree on many things in the Bill, there are many things with which we fundamentally disagree.

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This is probably one of them.

The hon. Gentleman’s contribution seems to contain an inherent contradiction, because he is saying that he welcomes the Government’s introduction of this Bill, yet it is widely observed that they are doing this because of the work of the Calman commission and his party has criticised and refused to participate in its work. The Calman commission has led to great progress for Scotland but, yet again, the Scottish National party has opposed the Calman commission and held it back.

That was an unfortunate intervention, because I give the hon. Lady more credit than that. I was trying to think of issues on which we agreed and I thought that we would hear a more helpful intervention. It was just the Labour party resorting to type and it was unfortunate that we had to hear it.

Although we agree on much, there are a few areas where we disagree.

Then give us some.

I will oblige the hon. Gentleman. The Bill is a massive wasted opportunity for Scotland, because so much could have been included in it and we could have done so much to improve the position of Scotland. The Bill could have included measures to help our economic performance and increase growth. The Bill seems to contain a wee modest set of proposals that lack any real ambition to propel Scotland forward; it offers few solutions to provide Scotland with what it needs to take our nation forward; and, as I have said, it offers nothing in the way of a framework to increase economic growth in Scotland.

Will the hon. Gentleman give a direct answer to something? Why did the SNP not make a submission to the Calman commission?

The Calman commission was proposed by the three Unionist parties, and discussions have gone on all the time with the Scottish Government about implementing the Calman proposals. Who put two of the main Calman proposals—on airguns and speed limits—before the Scottish Parliament? We could have legislated on those last year. The SNP said that it was prepared to take forward the Calman proposals where they were useful and helpful to the people of Scotland. Who refused to allow us to take those proposals forward? It was the Labour party, so I will take no lessons about trying to ensure that the Calman proposals are taken forward.

Does the hon. Gentlemen agree that had the SNP been more engaged with Calman and taken part in the coalition building that was necessary to come forward with the Scotland Bill, it might have got more of its views reflected in the Bill? By not taking part in that process, the SNP ensured that those views were inevitably not considered.

Why was independence excluded in the setting up the Calman commission? Why could we not have included everything? Had we done so, everyone would have taken part and put forward their own proposals to move Scotland forward. But, with their legendary cunning, the oh-so-clever Unionists said, “How do we trap the Nats when it comes to looking at how devolution continues?” They resorted to type, as they did on the constitutional commission. These cunning Unionists sitting around the table said, “What we’ll do is exclude independence from any discussion about the future of Scotland,” and that is what they did.

May I ask the hon. Gentleman what happened to his party’s cunning plan: the referendum on independence?

The right hon. Gentleman asks a fair question, and he will find out the response in May, when a Conservative-led Government attempt to secure and save their seats in Scotland. Then we will have a debate about full powers for the Scottish Parliament and then we will see the result in his constituency and area.

I shall try to get back to what I was discussing. Believe it or not, I was still talking about areas of agreement, although I was moving on to areas of disagreement. As I said, the Bill contains modest ambition for Scotland but it also contains a range of very dangerous tax plans that could significantly hurt the Scottish economy and short-change the Scottish people. As we have seen in today’s exchanges, the tax plans are the most hotly contested, keenly debated and contentious part of these proposals. As I have said to the Secretary of State, by way of figures that he keenly and hotly disputes, this approach would have cost the Scottish people some £8 billion since the establishment of Scottish devolution in 1999. I heard him on the radio saying, “It would only have been £700 million”, but what we are starting with is devolving a series of measures—

rose—

I think we have been through all this before, but the Secretary of State might want another shot.

On a point of order, Madam Deputy Speaker. May I suggest, Madam Deputy Speaker, that you gently remind the hon. Gentleman that he should speak to his amendment? He has been talking for some 15 minutes and I have not heard anything about the amendment.

I am grateful for your assistance in this matter, Mr Donohoe. I will decide whether the hon. Gentleman is in order. At the moment he still is and he is taking interventions. I am listening to all the contributions keenly, and I believe that the Secretary of State was about to give a response.

Thank you, Madam Deputy Speaker. The hon. Member for Perth and North Perthshire (Pete Wishart) cannot keep repeating this figure of £700 million. I was pointing out how it was slightly unfortunate that his colleague in the Scottish Parliament, Fiona Hyslop, chose to use one figure and ignore the £400 million surplus, which is the more relevant figure.

I am grateful to the Secretary of State for finally clearing that up.

I was talking about a measure that is actually a Tory budget cut to the Scottish Parliament and, unfortunately, the nodding dogs of the Labour party are supporting the Conservative-led Government’s cuts and assault on the Scottish budget. Why have they taken us into this measure, which is to the great detriment of the Scottish budget? The SNP will not accept a Tory cut of this magnitude.

May I try to bring the hon. Gentleman back to his amendment, or even encourage him to start discussing it? Does he intend to vote against the Bill? After all, his amendment states that he

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

Is he going to support new powers for Scotland or rule against them?

Hon. Members seems to want to hear so much about our amendment. It states that the Bill is unacceptable; a cut of this magnitude to the Scottish budget is unacceptable. As I said, the SNP will scrutinise the Bill as it goes through Committee. I am not expecting any scrutiny of the Bill from Labour Members; I just expect them to sit there agreeing, complicit with the Conservative-led Government. We have tabled a reasoned amendment and, thankfully, Mr Speaker has accepted it. However, we will allow the Bill to proceed to Committee and seek to improve it there. Right now, the Bill is a broken Bill that needs to be fixed. There are serious difficulties with it and we will try to improve it. The challenge for the Labour party is this: will it support us in trying to improve the Bill?

In the interests of clarity, will the hon. Gentleman tell the House whether he intends to divide the House on his amendment?

We would not table a reasoned amendment if we did not intend to divide the House. Of course we are going to divide the House. The Bill is unacceptable, as we have said. If the right hon. and learned Gentleman wants to go home, he can do so, although I would suggest that he hang around.

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I am going to make a bit of progress because, to be fair, I have taken a number of interventions from the hon. Gentleman.

Will the hon. Gentleman give way?

No, I am going to try to make progress, if the hon. Lady will allow me.

rose—

I will give way to the right hon. Lady later, but I now wish to get through my speech.

Parts of the Bill are unacceptable to us, but, in other ways, it is merely perplexing. We shall, thank goodness, finally get devolution on the regulation of airguns. I have campaigned on that issue, as have colleagues in the Scottish Parliament. Airguns cause such a blight to so many communities.

Will the hon. Gentleman give way?

I want to make some progress.

Airguns blight so many communities in Scotland, but it is perplexing that we shall get devolution on all airguns except the most dangerous ones. I am sure that the less dangerous ones also have an impact on communities, but surely, by definition, the most dangerous ones must cause most of the damage. Similarly, we are going to get devolution on speed limits.

Will the hon. Gentleman give way?

I am going to try to make a bit of progress, even though it is the Minister’s good self who wishes to intervene.

Thank goodness we are getting devolution on speed limits, because we have long argued for that. Some of my colleagues in the Scottish Parliament have campaigned hard for it. However, we find that we are not going to get control over freight, heavy goods vehicles or anything that is towing a caravan. The most perplexing thing of all—you will like this one, Madam Deputy Speaker—is that the regulation of activities in Antarctica are to be reserved to this House. Just in case anyone was in any doubt, Antarctica is now listed as being reserved to the Westminster Parliament. Colonies of penguins are already pulling down the saltire and hoisting the Union Jack in joyous celebration of that fact. Thank goodness for the Scotland Bill letting us know that fact about Antarctica!

Will the hon. Gentleman please explain what the Scottish Government would do in their relationship with Antarctica if he had his way and the matter remained devolved to Scotland?

I know that it has been a feature of the Labour party in Scotland, particularly through its leader, to upset and antagonise friendly nations around the world. If you will excuse me, Madam Deputy Speaker, I will refrain from making any more comments about Antarctica.

How has the Bill been met in Scotland? There has been a curious sort of disappointment about it, and an “Is that it?” shrug of the shoulders. There has been no bunting hung out in the streets of Edinburgh, and no images of the Secretary of State emblazoned from the flagpoles of the nation. There is a real sense of frustration that civic Scotland has effectively been excluded from any proceedings on the Bill. We have heard many people ask why they were not consulted on it and brought on board. There has been very little consultation on the Bill, and there is a great deal of frustration about that.

This Bill is what happens when a cross-Unionist consensus gets put through the wringer by a Tory Government in Westminster. It was a Labour Government who initiated the Calman proposals, and it will be a Tory-led Government who will conclude them. In that process, the stuffing has been knocked out of some very good Calman proposals. As I have said, only 35 of the 60 proposals have survived.

The Calman report proposed that air passenger duty should be included in the provisions, but it has been excluded for very good reasons. Can the hon. Gentleman give an estimate of the amounts that would be raised through air passenger duty from Scottish airports? And, just as an aside, can he tell us what the level of duty is at the moment for people travelling from Scotland to England?

The Secretary of State said in response to an intervention that air passenger duty could not be considered because it is being considered by Europe just now, but it was being considered by Europe when Calman was looking at these matters as well. There is no real difference between then and where we are now.

I am not just talking about aviation duty. I am talking about the fact that only 35 of the 60 Calman proposals have survived. This is a question not so much of Calman-plus, as the Secretary of State and the Liberals like to say, as of Calman-half. Useful Calman proposals such as those on the devolution of welfare measures—including much-needed measures on immigration—on the marine environment and on taxes on aviation and aggregates have been left out of the Bill. Other Calman proposals have been significantly watered down. They include the proposals on the administration of elections, which will still effectively be reserved to this House, on appointees to the BBC and on the Crown Estate, about which we have growing concerns.

We will be constructive in trying to get this Bill through, but I really hope that the Tory-led Government will take seriously our attempts to improve it. I do not know whether Labour Members will continue to be nodding dogs as the Bill goes through, or whether they will join us in trying to improve and strengthen the Bill to ensure that we get better legislation for the people of Scotland. It most definitely needs improvement if it is to meet the aspirations and ambitions of the Scottish people.

The hon. Gentleman is making an important point about the aspirations of the Scottish people. He also made an important point about the financial position. Is he arguing that £800 million—or a similar figure, whatever it might be—was spent in Scotland over the past decade and that, had the provisions of the Bill already been in place, it would not have been spent in Scotland? If that is his argument, where did that money come from?

Scottish taxpayers.

As my hon. Friend has just said, it came from Scottish taxpayers. I am grateful to the hon. Lady for asking that question, because that is exactly what would have happened: we would have been deprived of that budget if these proposals had been in place. That is why we are saying that they are so dangerous, and why they should be considered once again.

When the 1998 Scotland Bill went through, the then Labour Government were prepared to accept only one amendment. It related to the devolution of the regulation of stage hypnotists. I am sure that stage hypnotists were delighted that they were going to be regulated from Scotland. As we take this Bill through the House, let us try to do a bit better than that. The fact that we are having this debate at all shows that we are on a journey down the road of constitutional reform. We will be having the debate in the run-up to May this year, and I know where I want it to conclude. We have the opportunity to strengthen the Bill.

The hon. Gentleman has said repeatedly that he agrees with parts of the Bill, and he accepts that 35 new powers are being devolved to Scotland, but his amendment ends by proposing that the House

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

Will the hon. Gentleman, who believes in independence, be voting against new powers for Scotland?

Of course we will not be voting against new powers for Scotland. We will be raising, throughout the Committee stage of the Bill, the dangerous proposed tax powers and the £8 billion that would have been lost to the Scottish people over the past 10 years had they been in place.

Surely the big question for Labour Members is whether they want a strong Scottish Parliament to protect Scotland from any cuts that will come from the Tories and the Liberals. In the 1980s, we saw the Conservatives preferring Margaret Thatcher to independence; this time, we see Labour preferring a Tory Government to an independent Scotland. That is the reality.

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Order. Perhaps we could now return to the amendment, Mr Wishart.

Thank you very much, Madam Deputy Speaker. My hon. Friend has made his point in his typical and obligatory forthright manner.

I am not sure whether the hon. Gentleman understands the procedures of the House. Does he not realise that, if his amendment were successful, these 35 new powers would not be transferred to the Scottish Parliament? He and his colleagues are trying to prevent the Scottish Parliament from getting the new powers.

This is a reasoned amendment. We are inviting the House to look at the many difficulties in the Bill and to consider how it might be improved.

rose—

rose—

I will not give way because I am about to finish my speech.

We have the opportunity to strengthen the Bill, and I want Labour colleagues to work with us to—

Will the hon. Gentleman give way?

I am about to conclude, if the hon. Gentleman will allow me.

This is clearly an insufficient Bill, a broken Bill, a Bill that does not serve the interests of the Scottish people. There are many things that we could do if we could work together, but we have to hear from Labour Members that they accept that the proposed tax powers are dangerous and that we have to do something about them. We cannot have this Tory-led Government bringing forward a budget cut in disguise. We need Labour’s support if we are to try to prevent that.

On a point of order, Madam Deputy Speaker. Before the hon. Gentleman concludes, may I point out that I do not feel he has spoken about the amendment? I wonder whether he will do that before he concludes.

Fortunately, it is not for the Chair to remind Members that they have not necessarily referred to every point in their amendments. Members of the House can draw their own conclusions.

Thank you very much, Madam Deputy Speaker. I am sure that the hon. Member for Glasgow Central (Anas Sarwar) will get to make his own point in his own forceful way if he catches your eye.

I was about to conclude, Madam Deputy Speaker, and I shall conclude on the subject of the reasoned amendment. I want right hon. and hon. Members to support our amendment. We want to try to improve this Bill. It is a broken Bill; it is a Bill that does not serve the people of Scotland. The tax powers will be dangerous if they are implemented. I hope that hon. Members will support our approach as the Bill goes through. Let us strengthen it and make it a powerhouse Bill that serves the people of Scotland. As it stands, it is a broken Bill that cannot serve the people of Scotland because of the financial powers in it. I urge everybody to support our reasoned amendment.

It is always a pleasure to speak after the hon. Member for Perth and North Perthshire (Pete Wishart)—and sometimes at the same time as him. I always admire his passion and his genuine belief that he is doing the best thing for Scotland. I hope he does not mind me saying that his heart is in the right place, but unfortunately his head and his fiscal understanding are not.

The hon. Gentleman made some important points, particularly about tax-raising powers and the effect of this Bill. I was much perplexed by his response to my intervention a few moments ago. Whether the amount is £800 million or £600 million—or whatever the very large sum is that he and his party argue was spent in Scotland over the past decade but would not have been if the Bill had been in place—his answer was that that money came from the Scottish taxpayer. That is not correct: the money came from the UK taxpayer.

With equal passion, the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who has unfortunately just left the Chamber, begged a few moments ago that the people of Scotland should be protected from cuts. The people of Scotland cannot be protected any more than the people in the rest of the United Kingdom from the effects of 13 years of bad financial management of our country’s economy by the Labour Government.

Oh come on now, Eleanor.

The hon. Gentleman seeks to disagree with me, in a mild way and from a sedentary position, but the facts speak for themselves. The country’s finances are in a mess. Yes, we all want to protect people in all parts of the country, but there is no argument for protecting Scotland to a greater extent than the rest of the United Kingdom.

Does my hon. Friend agree that the operation of the Barnett formula in its strictest sense will protect the Scottish budget at times of reduction in the overall UK level of public spending? A population change is taken on the basis of a higher-than-average base line, so in times of public expenditure reductions, that will protect the Scottish block.

I entirely agree with my hon. Friend and I am grateful to him for making that point at this stage in the debate. I am glad to say that he is something of an expert on this subject, having been steeped in it for many years. He is absolutely right; it is also very important, for the reasons he has just stated, that we keep the Barnett formula. That is the way to protect the people of Scotland not from the effects of the Conservative-led coalition but from the effects of 13 years of Labour mismanagement of the economy.

I am grateful to the hon. Lady, who is sadly wrong, as is her hon. Friend the Member for Milton Keynes South (Iain Stewart). Barnett is of course a convergence formula and, far from protecting in the way that the hon. Gentleman suggests, it squeezes. More importantly, the hon. Lady was making the case that we should not do things differently, but of course that is the nature of devolution. If the Scottish Government had proper fiscal and economic control, they could well take steps different from those taken throughout the UK to protect and grow the economy. What would be so wrong with that?

That is exactly why the provisions of this Bill, which give more accountability and power to the Scottish Parliament, are absolutely right. The hon. Gentleman makes a good argument in favour of the Bill.

Until a few moments ago, I was going to say that it is good to see such cross-party consensus on the Bill. Of course, we have cross-most-party consensus, but not consensus with those in the Scottish National party. We understand that however much they seem to be stepping back from their long-held belief that we ought to move towards an independent Scotland—I do not understand why they do not have the courage of their convictions and go ahead and ask the people of Scotland—they want to go on a different path from the rest of us on protecting and helping Scotland, and giving it the best chance for the future.

I want to pay tribute to Donald Dewar, who did a wonderful job in setting up the Scottish Parliament. That was not what I said in 1997 and 1998 as we debated the original Scotland Bill for hour after hour, day after day and week after week. It was strange that the hon. Member for Perth and North Perthshire said at the beginning of his speech that this Bill would not be properly scrutinised. I can assure him that those of us who spent weeks and months scrutinising the Bill that became the Scotland Act 1998 will find this nice little Bill a piece of cake in comparison. Of course it will receive proper scrutiny.

Back in 1997 and 1998, we properly scrutinised the Scotland Bill. Many of us said over and over again that the devolution settlement that was being created would not work in the long term and would have to be amended and improved. I am very pleased to see this Bill make the improvements that some of us have thought necessary for a long time.

I am one of the campaign veterans from those long days and nights spent scrutinising the Scotland Act 1998. Will the hon. Lady remind us of the position of the Conservative party at that time? I am not sure whether it was so much about scrutiny as about opposition.

It was; the right hon. Lady is right. As I said when I paid tribute to Donald Dewar a moment ago, that was not what I said in 1997 and 1998. The position of the Conservative party at that point was to oppose devolution. Of course it was; it is no secret. I for one thought that that was the best settlement for Scotland. I appreciate, however, that the Scottish Parliament has grown in stature and become an important part of the lives of the people of Scotland. It is there, it performs an important duty and it defends the law of Scotland—the right hon. Lady will agree that I always defend that. The Scottish Parliament performs an important function in our new constitutional settlement in the United Kingdom.

Although I would originally have preferred to have seen an enormous amount of taxpayers’ money saved by our not setting up the Scottish Parliament, I now appreciate—I speak only for myself, not for my party—that it performs an important duty. As I have said for more than 12 years, however, it is essential that the constitutional settlement be improved. Donald Dewar, to whom I am still in the middle of paying tribute, worked for decades to achieve the Parliament and I am sure that all hon. Members will agree how sad it is that he did not live to see the complete fruition of his labours. Had he done so and remained the First Minister for a longer term, I believe the standing and status of the Scottish Parliament would have grown more quickly. However, it is where it is now.

I might not agree with the hon. Lady’s view of the economic situation, but does she share my view that the difference between the parties in this House that back the Union and those on the nationalist Benches is that we want to finesse the devolution settlement to make it better, while they see this as a foot in the door to move further towards independence?

I am very pleased to agree entirely with the hon. Gentleman—this is an unusual debate.

During the passage of the original Scotland Act, many of us argued that it would work in that form only if one made the assumption, as the then Government understandably wanted to, that there would always be a Labour Government in Westminster and a Labour majority in the Scottish Parliament. That is how the settlement was set up. Now that the situation has, happily, changed, it is important that the whole constitutional settlement should be updated to take account of that.

I respectfully suggest to the hon. Lady that that was not how the settlement was established. I do not think that any Labour or Liberal Democrat Member at that time would have expected that, for ever and a day, there would always be a convergence of the same political parties in both Westminster and Scotland. I would have hoped that the hon. Lady would give us credit for having established a far more robust devolutionary settlement than that. I think the past few months have vindicated the work that was done at that time.

It would be wrong to go back over arguments that we had more than a decade ago, but I stick to my point: it is necessary to make updates because of assumptions that were made then.

Will the hon. Lady explain why, if the Labour party was so self-centred at that time, we allowed proportional representation?

I have never understood that and it is not for me to give the answer.

The hon. Lady’s memory has been clouded through the years because at no point was the Scotland Act set up for a time when there would be solely Labour government at Westminster and Holyrood.

We are going back over old arguments now. I merely make the point that we always said that the devolution settlement would have to be improved and I strongly welcome the Bill, which does improve it.

The Calman commission is to be praised for the many years of work that were undertaken and for the careful and studied way in which its proposals were brought forward. This has not been a rushed job; I pay tribute to the previous Labour Government for setting the commission up and to the current Government for taking its recommendations forward. It has produced the right answers. By giving greater power to the Scottish Parliament, the Bill also gives a greater say to the Scottish people about how our democracy works. That is the most important point. It is right that greater power should require greater accountability and responsibility, as the Secretary of State has eloquently explained. If democracy is to work properly and if the people who vote and choose a Government are to be treated responsibly and have their opinions properly translated into action, it is very important that a Parliament such as the Scottish Parliament should not only be responsible for spending taxpayers’ money, but be held responsible, at least to some extent, for raising it.

I welcome the better clarification of the balance between devolved and reserved policy matters—those which ought to be taken at Holyrood and those which ought to be taken in this House. If we do not have that clarity, the whole constitutional settlement will lack the gravity I would like it to acquire, so the new clarity that comes from the Bill is very welcome.

I promise that when we scrutinise the Bill in Committee, it will, contrary to the assertions of the hon. Member for Perth and North Perthshire, be properly scrutinised, and I look forward to our scrutinising it in great detail. The best thing about the Bill and the changes it will make to the constitutional settlement is that it strengthens and entrenches Scotland’s position within the United Kingdom, which most people in the House and, I fervently believe, in Scotland want to see entrenched, protected and encouraged. Although this is 27 January and not 25 January, I hope I will be forgiven for invoking the bard, as this is the week that we celebrate our national poet, Rabbie Burns. I shall not quote his best-known works, which are often so badly misquoted south of the border.

On a point of order, Madam Deputy Speaker. I must correct the hon. Lady. Rabbie Burns was never known as Rabbie Burns. Rabbie, in Ayrshire parlance, is the village idiot: Robert was never known as Rabbie.

We will take that as a point of clarification rather than a point of order.

I entirely take the hon. Gentleman’s point—I was being far too familiar and colloquial. Let me be more formal. This week, we celebrate the anniversary of the birth of our great Scottish national poet Mr Robert Burns, and one of his best poems makes the point that he was a true Unionist. “The Dumfries Volunteers” says clearly, at the end of its second verse:

“Be Britain still to Britain true,

Amang oursels united;

For never but by British hands

Maun British wrangs be righted!”

Long may it continue, Madam Deputy Speaker. We welcome the Scotland Bill because it totally strengthens Scotland’s position within the United Kingdom.

It is now more than 12 years since the then Labour Government guided the pioneering Scotland Act 1998 through this House. I was proud to join thousands of fellow Scots of different political persuasions and of none in campaigning for its creation. It was undoubtedly one of Labour’s most important achievements. It has strengthened our democracy and brought government closer to the people and it works well in practice.

However, we recognised the need to review the challenges that the Scottish Parliament had faced in almost 10 years in operation—first, in how it could meet people’s desire to strengthen its functions, and secondly, in how to increase its financial accountability to the people of Scotland. The resulting Calman commission report was a serious, balanced and thorough analysis of Scotland’s constitutional arrangements. I would like to take this opportunity to commend Sir Ken Calman and his fellow commissioners for their work and the manner in which it was conducted. Despite the fact that the call for the establishment of the commission was initiated by a clear majority at Holyrood, it was rejected by the SNP Government, who preferred instead to engage in a costly, unpopular and one-sided so-called “national conversation” on a wholly independent Scotland.

Will the hon. Lady remind us how much the Calman commission cost?

The hon. Gentleman will no doubt remind us how much his national conversation cost, which resulted in not one piece of legislation and no change for the betterment of Scotland, whereas the Bill, we recognise, will strengthen our democracy and will be to the benefit of the people of Scotland.

The Calman commission cost £614,000, which is an extraordinary amount of money. It is what David McLetchie called “unionists talking to unionists”.

Sadly, the hon. Gentleman has not informed the House that his national conversation—the big blether with Alex—cost more than £1 million, and we have not had one single benefit as a result. That is a test that the very sensible people of Scotland will apply. They deserve better.

The Caiman commission agreed with our fundamental view, set out in our 2009 White Paper “Scotland’s Future in the United Kingdom”, that together the nations of the United Kingdom are stronger and that together we share resources and pool risks. Nowhere was that more apparent than in 2008 with the vital bail-out of our major banks by the Labour Government, which included two major Scottish institutions. The cash injected to salvage our Scottish banks was the equivalent of £10,000 for every man, woman and child in Scotland. Without the Union and the intervention of the UK Labour Government, Scotland would have been plunged into the depths of economic despair that smaller countries such as Iceland and Ireland, the previous poster boys of independence for the SNP, are sadly still suffering from.

Will my hon. Friend tell the House what would have happened had Scotland at that point been part of an “arc of prosperity”?

SNP Members have made no mention today of an analysis of what would have happened under fiscal independence during the period from 2007 to 2009. In fact, the SNP has produced no governmental analysis for that period. Recent estimates by experts indicated that Scottish tax income would have dropped by nearly £2.5 billion—and that includes a per capita share of North sea oil, before the Secretary of State and his colleagues on the Front Bench ask about that. The SNP Government have continually failed to produce detailed modelling of their case for separation. The analysis has to be done not only in the good times but in the bad times as well.

Indeed, the SNP’s case for fiscal autonomy is so weak and unconvincing that its Ministers in Holyrood are now accused of having had to resort to playing fast and loose with the facts of economic research to substantiate any case at all. We are firmly of the view, based on sound, independent evidence, that the economic union is Scotland’s greatest economic opportunity and that together we are stronger.

Let us be clear that the Scotland Bill was born of consensus and consultation and is a model example that Government should always follow, whether here in Westminster or at Holyrood, before laying legislation on such fundamental constitutional reform. While in government, we sought political consensus from the start. We initiated independent commissions and reports, embarked on a robust consultation with the public, civic society and experts, and we listened carefully when those people spoke. There is no such consensus and there was no such consultation prior to the Parliamentary Voting System and Constituencies Bill or, indeed, the Fixed-term Parliaments Bill, and the result has been rushed and biased legislation, which insults our democracy. The Tory-led Government have steamrolled those Bills through this House of Commons and into the House of Lords, showing scant regard for proper scrutiny and completely disregarding the opportunity to engage with interested parties and experts or the electorate whom they serve.

However, the Bill we are debating today is the antithesis of the Government’s other shoddy constitutional efforts. On the whole, it reflects most of the Calman commission’s recommendations, and accordingly there is much that we agree on. As the official Opposition, however, we will rigorously scrutinise the Bill to ensure that it represents the best deal for the people of Scotland. There are some areas of concern and issues that will require further clarification and amendment as we continue into the Committee stage, although I can assure the Secretary of State that we will not press the Antarctica clause to a vote. I am astonished that the dogma of the SNP is such that this one simple clause, which was clearly a mistake in the original legislation and has now, I understand, been corrected, will enable one of our finest universities to mount an expedition to Antarctica. Instead, the hon. Member for Perth and North Perthshire (Pete Wishart) seems to be more concerned about where the First Minister might spend his summer holidays.

I am relieved that we will see no Labour amendments on Antarctica. I am grateful that the hon. Lady said that the Labour party will be engaged in scrutinising the Bill, which is good news. What sort of amendments can we expect to see tabled in Committee?

Unlike the hon. Gentleman, who wants to stop this process in its tracks this evening, I believe that the Bill requires a proper period of thorough examination. There will be amendments that we believe are appropriate on technical issues and on the substance of the Bill.

Will my hon. Friend confirm that any amendments that we table in Committee will have more bearing and substance than the amendment that has been spoken about by SNP Members today?

I am happy to provide my hon. Friend with that assurance. Unlike some other parties, we are already listening carefully to and speaking with people and bodies in Scotland, as we have done throughout this process, which has already lasted three years.

There has been much discussion, both in the Scotland Bill Committee in Holyrood and beyond, of the effect of the proposed devolution of the fiscal powers set out in the Bill to the Scottish Parliament. We urge the Secretary of State to set out and make transparent at the earliest opportunity the precise plans that the Government intend to introduce to ensure operational stability during the transition and the measures he intends to put in place to control the costs incurred during those changes. In particular, it is imperative that the Scotland Office, the Scottish Government and Her Majesty’s Revenue and Customs are in full and frank consultation and that operational systems are put in place to ensure that changes are fully effective so that Scottish taxpayers do not see public moneys wasted during a period of difficult financial constraint. What discussions has the Secretary of State held with HMRC and the Scottish Government on the initial planning required to implement those substantial changes, and will he undertake to report regularly to the House on progress during the preparation period leading up to the next general election?

We also seek clarity on the definition of “Scottish taxpayer”, which experts have already highlighted could lead to a series of what we suspect are unintended anomalies. According to the Institute of Chartered Accountants of Scotland, a worker who spends 101 days in Scotland, 99 days in England and 165 days working overseas, for example, will still be deemed to be a UK resident and a Scottish taxpayer, despite spending less than half the calendar year in Scotland. A person who lives in Scotland but works in England would derive all their income from their activities in England but still be classified as a Scottish taxpayer because that is where they end their day. As the Secretary of State and his No. 2, the Under-Secretary of State, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), both represent border constituencies, that issue might be of direct relevance to their constituents. We understand that HMRC currently has no intention of introducing a concession to split the tax fiscal year to deal with the movement of workers across the border. None of those consequences seems particularly sensible, so we urge the Government to look carefully at the definition.

We are disappointed that the Government have not taken the opportunity to tackle the problems caused by the different approaches to the definition of “charitable purposes” and “charity” in the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Act 2006, which applies to England and Wales. They have failed to use this opportunity to introduce measures to reduce the regulatory burdens on UK charities that operate in both Scotland and other parts of the UK —particularly in difficult times when charities are already affected by the spending review cuts and bearing the brunt of the economic downturn. The Bill is the ideal place to address the issue, and to quote the Secretary of State’s right hon. Friend the Prime Minister, “If not now, then when?”

Let me conclude by reminding the House that the Bill is intended to preserve the political and economic union that has benefited both great countries over the past three centuries. The case for fiscal autonomy has disintegrated around the SNP, and its vision for Scotland is small, isolated and weak. Conversely, the Bill is designed to ensure that Scotland’s future in the United Kingdom is strong, enabling the Scottish Parliament to flourish further and to carry on improving the lives of people in Scotland.

A large number of charities are headquartered in my constituency, and they regret the fact that the opportunity has not been taken to deal with this anomaly. Does my hon. Friend agree that, to allow the point to be dealt with, the Government could well consider tabling amendments in Committee? I myself am a director of a Scottish charity, but it is a local one that is unlikely to be affected by the provisions.

I am grateful to my hon. Friend. On that point, I agree that it would be helpful if the Government reconsidered their response to that recommendation by the Calman commission, because there is an additional burden on many very good charities that operate not only in Scotland but in other parts of the UK. They face two licensing processes and two sets of regulatory burdens, and, for a Government who always lecture people on reducing the regulatory burden, this is a good opportunity, working with the consensus among charities, to try to alleviate the amount of time they have to spend on paperwork and to increase the amount of time they have to spend on charitable purposes.

We will support the Bill’s Second Reading, not the Scottish National party’s amendment, if it is put to a vote. That does not mean we will not scrutinise the Bill carefully and closely, but, after almost three years of study and engagement with the Scottish public and with experts, and given the express will of the Holyrood Parliament, whose Committees are currently considering the matter in close detail, it is now important to get on with business and to put the Calman commission into legislation.

I am very happy to follow the hon. Member for Glasgow North (Ann McKechin), who made a fair analysis of the co-operation and consensus that have characterised the process over many years. She presented a constructive role for the Opposition, as is right and proper, in scrutinising and trying to improve the legislation, and in addressing some of the issues. I certainly hope that matters are proceeded with in that spirit.

I am very happy also to welcome the Bill, as someone who has been involved in the process since its very early days—indeed, for 25 or more years. Frankly, however, I see it as a further step along the way to home rule within the United Kingdom. I never thought, any more than others did, that the Scotland Act 1998 was the end of the process; most of us recognise that the constitution is evolving. The first Act, which established the Scottish Parliament, was seminal legislation, but it was always work in progress, and this Bill falls into the same category.

I hope that my right hon. Friend the Secretary of State for Scotland does not find any discomfort in that, but I completely understand that his role in government, operating on an agreed cross-party consensus, is to put forward a Bill that commands the support of the House and the Government and does not prevent any of us from arguing the case for further reform and development. That puts the SNP in a difficult position, but that is precisely where it wants to be.

For many of us who have been through this debate a few times, my previous point might sound ponderous, but we are making history because we are shaping the evolution of the United Kingdom’s constitution, and this stage will be monitored for many years to come as one of the stages along the route. It will represent the foundation of a much more radical and decentralised United Kingdom over time.

I respect the right hon. Gentleman’s view that this is a process, and that he wants to reach what he calls home rule within the UK. I suspect that that probably means, in his mind and those of his honourable colleagues, effectively a federal position with full fiscal autonomy. I respect that position, but we do not have that before us, so why is he prepared to settle for a Bill that, while devolving speed limits for cars, will not allow the devolution of speed limits for cars drawing caravans? Why is he prepared to accept something so weak?

If the hon. Gentleman will let me proceed with my speech, he will receive the answer, precisely because I took part in the constitutional convention when it was set up in the 1980s. At that time, we and the Labour party were in opposition, but the Conservative party largely ignored the convention and the SNP boycotted it. Yet that constitutional convention carried out detailed and thoughtful work that laid the foundations for the first Scotland Bill and, in my view, for this Bill and probably the next one. The difference between my party’s approach and that of the SNP is that we, as a single party with an ambition, recognise that we cannot achieve on our own everything that we want; we have to work with others who do not necessarily share all our views. By working with them, however, we can progress towards what we want to achieve; if we refuse to co-operate, we cannot.

Will the right hon. Gentleman give way?

I shall make a little progress, if the hon. Gentleman will allow me.

At the time when the constitutional convention was established, there was a minimalist position. Many people in the Labour party were prepared to consider an assembly. I accept that many were passionately in favour, but others had reservations, and the minimalist position involved an assembly, elected by first past the post, funded by a block grant and operating with even fewer powers than the then Scotland Office.

The process—this is the real point that the SNP should take on board—of the constitutional convention meant that we finished up with a Parliament, with all the powers of the Scotland Office at that time, with a proportional voting system to make it much more nationally acceptable and, in fact, with non-defined reserved powers attached to the Parliament. That was a much more radical outcome than the original agenda, and one that would not have been achieved if my party and others had not engaged. At the time, I challenged the SNP to take part, because I wanted it to be there, knowing that it wanted independence but accepting that the party probably would not get it. The SNP’s involvement, however, might have helped us to gain more powers than we did. That is why I continually regard its all-or-nothing approach as damaging to Scotland and, ultimately, to the party’s own interests.

We got quite a lot of agreement, and that is relevant to this debate. Indeed, I think we got agreement in the convention on tax-raising powers, but they did not follow through into the original Scotland Bill. I remember that Donald Dewar even renewed his passport to travel to Germany, and Jim Wallace, Ray Michie and I went to Spain to look at that country’s arrangements. On our return, we more or less agreed on the proposal to assign half of all income tax revenues, and VAT and excise duties, to the Scottish Parliament. The fact that those proposals did not carry through into the first Scotland Bill—I think; I suspect—owes a lot to the resistance of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). The convention largely agreed to them, however, so I am particularly pleased that the Bill before us moves in that direction and will allow them to be introduced.

I also firmly believe—the Scottish National party ought to give thought to this—that those of us who have brought forward and will take forward this legislation are working with the grain of majority opinion in Scotland, in terms of wanting both more power and a step-by-step approach. Those of my constituents who are sympathetic to the SNP cause are puzzled as to why it cannot work with other people and take a step-by-step approach. We could all decide at what point we wish to get off, but that does not happen because the SNP knows that the majority of people in Scotland would get off long before it did.

The right hon. Gentleman makes the interesting assertion—it is only an assertion—that he believes he is working with the grain of Scottish public opinion. I doubt that a single person has said to him, “That’s right Malcolm, we want 50% of the basic rate of income tax, 25% of the 40p rate and 20% of the 50p rate—that’s the grain in my street.” I do not think he is right when he says that.

No, but people have said to me, “I want independence, as long as I can still be a British citizen.” There is confusion in the minds of many people about what independence is. Two facts are clear: the majority of people vote for Unionist parties, and the majority of people say repeatedly that they want more power, but that they want to take it in an orderly and measured fashion. It is up to the politicians, to some extent, to work through what the priorities are and how they should be worked up. That is precisely what this legislation does.

In the end, the SNP’s position is anti-democratic, because it does not represent the majority. More to the point, it is unproductive. Frankly, it is downright lazy, because many of us have done an awful lot of work to bring these proposals forward. Having done nothing to create the Scottish Parliament, the SNP is happy to use it and abuse it. It takes a similarly curmudgeonly approach to this legislation. Of course it will not provide fiscal autonomy, which is, of course, a technical term for separation from the UK, as was pointed out by the Steel commission, of which I was a member. There is no mandate for that. The proposals do not go as far as I want them to go, but I have no hesitation in welcoming them as a constructive step forward that will allow us to test how greater responsibility and accountability will work. In my view, as and when that does work, it will justify future extension.

The Bill will give Scotland control over about 35% of its budget, which I hope will increase over time. It will ensure that Scotland has the capacity to demonstrate responsibility and accountability to justify more devolution. In an ideal world, I would like each tier of government to have access to part of the taxes that broadly finance its operations. In other words, each tier should be able to get more or less all its revenue from its own tax base, subject to the recognition that the UK Government have fiscal transfer responsibilities. Perhaps on a smaller scale, the Scottish Government should have some internal fiscal transfer responsibilities. That would be my ideal in the long run, but one has to take these things a step at a time and by negotiation.

I want to pick up on the point on which the Secretary of State has intervened two or three times. On a few occasions, I have heard the assertion—stated as a matter of absolute fact—that had this arrangement already been in place, Scotland would have lost £8 billion. As has been pointed out, if that were true—which it is not—it would be a clear demonstration of the benefit of being part of the United Kingdom, because that £8 billion would have been a transfer from the UK taxpayer to Scotland. Of course, the assertion is perverse nonsense. It is also retrospective, at a time when the balance is changing. It showed that, at a time of rising public spending, the Barnett formula delivered for Scotland at a faster rate than the rate at which incomes rose. Of course, at a time of public spending constraint, the reverse will be the case—the income tax take will rise faster than the Barnett formula consequentials. Over time, that can be averaged out—that is what the cash borrowing is for. That is the way that we should look at it.

The proposals give the Scottish Government the capacity to benefit from economic success, which grows the tax base and can potentially grow the revenue base. If they use their powers well, they will benefit from the buoyancy of the revenues. Of course, if they mismanage the economy, the reverse will be the case. The advantage of the Bill is that the transitional arrangements and the cash borrowing adjustments will provide a cushion to minimise the extremes of that effect. However, they will not deny a bit of pain if it goes wrong and a bit of benefit if it goes right. Over time, one hopes that that will become a more substantial amount.

The right hon. Gentleman is simply wrong about this matter. Although the Scottish Government will control 15% of the taxes raised in Scotland, if GDP rises and the tax take rises, the rise in the income tax take will be lower than the average. That will have a deflationary effect on the Scottish budget and will not allow the Scottish Government to benefit in the way that he describes.

On the models that I have seen, the reverse is the case, particularly at a time of public spending constraint. The point is that it will depend on changes over time—some years it will be up and some years it will be down. However, the proposals provide the potential for successful economic management to provide genuine benefit.

I would give more credibility to the SNP claims that the measures are inadequate to grow the Scottish economy if its record in government showed that it was using the powers it currently has in ways that will grow the Scottish economy, but it has not done that. We have seen a succession of populist consumer gimmicks; almost a complete collapse in public investment; and the slow strangulation of local autonomy. Local councils have less and less control and more and more centralised management through the freezing of council tax. There is effectively less flexibility across Scotland to gear responses to meet local needs.

Will the right hon. Gentleman comment on the Scottish Futures Trust? Does he see that as a model for using the levers appropriately to grow the Scottish economy?

My next paragraph relates to my constituency, and I am sure the hon. Lady can predict the answer to that question. I did not have a problem with the SNP saying that there were weaknesses in the public-private partnership method of financing, and that it wanted to look for a better method. I had a big problem with it abandoning all those projects and failing to come up with a better method, leaving us in total limbo. That has been catastrophic for investment in Scotland—catastrophic, not just seriously bad.

I am fortunate, privileged and honoured to represent the dynamic economy of the north-east of Scotland, which is probably the most dynamic economy in the whole of the United Kingdom at the moment. I and my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) represent the constituencies with the lowest unemployment rates in the United Kingdom. I appreciate that other hon. Members face serious problems of unemployment in their constituencies, so I am not boasting about this; I am simply acknowledging it. The point is that Scotland has a region with the capacity to deliver economic growth, yet the Scottish Government have conspicuously failed to deliver what they should have been doing to facilitate that growth.

There is no Aberdeen bypass. The Scottish Government today announced the go-ahead for an upgrade of the A90 north of Aberdeen. I am glad about that, but all they have done is to announce, a year after the public inquiry, that they intend to go ahead with it. There is no date, and it is dependent on the resolution of the western peripheral route, which is still subject to legal argument. When the SNP loses office in May, not one stretch of tarmac will have been laid and not one ditch will have been dug—nothing will have happened on the ground.

What did the right hon. Gentleman’s colleagues in the previous Scottish Administration do to progress the Aberdeen western peripheral route? When did they make a decision to go ahead with it?

They published the line of route for both that and for the A90. It took the SNP four years to make no progress at all. It has not indicated how it will find the money or when the scheme will ever start.

I do not know what it is about the SNP, but it has a total hostility to railways. It either scraps, delays or fails to take forward every rail project. Part of the transport needs of Aberdeen, and part of the proposal for our bypass, was a commuter rail service to restrict the growth of road traffic and give people choices. Progress was being made with that, but not even the provision of one additional station has progressed under the SNP, in spite of cross-party support from all other quarters. We have had an SNP Government for four years, and they have had the powers to do things to grow the Scottish economy—limited those powers may be, but they have had them—and they have not done so. They should prove that they can do that before they demand more powers that they do not appear competent to use.

The right hon. Gentleman has just made an outrageous attack on the subject of rail. He should ask the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) about the reopening of Laurencekirk station, for example. What about the Bathgate rail line? What about the Alloa-Stirling line stations? All those things happened under the SNP Government. What he said is simply incorrect.

Withdraw! You said “no new stations”. Withdraw now!

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.

I acknowledge that some of those things have happened, but the SNP has been very good at cutting the ribbons on projects that were announced, organised and set in motion by previous local or national Administrations.

The hon. Member for Angus (Mr Weir) mentioned the Sterling-Alloa railway line. The right hon. Member for Gordon (Malcolm Bruce) is exactly right—the SNP came and cut the ribbon, but the hard work was done under the previous Administration, not the current one.

Order. Many speakers have gone very wide of the subject in illustrating the points that they wish to make. Mr Bruce, I would be grateful if you came back to the subject of the Bill in responding to the intervention.

I will of course observe your strictures, Madam Deputy Speaker, but when we are talking about powers, it is important that we also discuss our capacity to use those powers effectively. My contention is that the points I have made show why we need to take a step-by-step approach and demonstrate how well we can use our powers, and then hopefully take more of them.

Those who want to go faster have to acknowledge that Scotland’s capacity to take on the full responsibility for its own financial affairs is beyond credibility in the present circumstances. The UK is struggling to tackle a massive financial problem, and Scotland has a disproportionate share of that problem in its needs, its share of the national debt and its share in the underwriting of the banks, which has brought us to this pass. The reality is that Scotland’s future lies absolutely within the UK, but it is important that we have the power to take appropriate decisions, accountable to the people of Scotland, in ways that can help us make our own contribution to solving those problems in our own way.

As one or two Members have mentioned—it was alluded to by Calman—the transfer of benefits policy to Scotland has been suggested. That might happen in the longer term, but most people would acknowledge that the administration of certain aspects of benefits could be devolved or shared. At the moment, however, Scotland’s benefits bill is disproportionate, so the matter is much better shared across the UK, especially during these particularly difficult times.

We have embarked on a fundamental and radical welfare reform, which, leaving aside any controversial aspects, many people recognise has merit if it can deliver responsive benefits, value for work and so on. In the longer term it might be possible for Scotland to take a role in administering welfare, but now would hardly be the right moment to do so, as we are in the middle of a major funding deficit and a major reform programme. We must make common-sense decisions, taking on board what can practically be done now and acknowledging that further transfers could happen in the short term, when we are good and ready. Consideration at a later date can take us further forward.

I should like clarification on two questions that have been raised with me. One relates to the progressive commitment that the coalition Government have made on the threshold level of tax. As a former Treasury spokesman for my party, our commitment to raising the level at which people pay tax to £10,000, starting with £1,000 in the current year and progressing during this Parliament, is dear to my heart. I wonder whether the Under-Secretary in his reply can explain how that will be accommodated in calculating the tax revenues that would accrue to Scotland, or compensated for so that it does not create a disadvantage out of a good and progressive reform.

My second question relates to some aspects of charity law, which are not just peculiar to Scotland. When public authorities are looking to charities and the voluntary sector to take on more responsibilities for delivering public services, it raises questions about their status, and particularly their VAT liabilities. If a local authority or a health board provides services, there is no VAT, whereas if such services are provided by a voluntary organisation, there may be VAT liabilities. That may inhibit the transfer arrangements, which might otherwise be welcome. I acknowledge that that probably involves the Treasury and the Scotland Office, but I would appreciate some clarification if possible.

In the past 20 years, we have embarked on a process of restructuring the UK in a radical and decentralised way. As has been said in the past, devolution is a process, not an end product. No piece of legislation ends it. The Scottish National party wants the end to be independence. That is a perfectly respectable position, but for that, it has to win the support of the people of Scotland, which it is conspicuously failing to do. In the meantime, for those of us who want a stronger Scotland, with more control over its affairs and playing its full part in the United Kingdom, the Bill represents a major and significant step forward. It will, in my view, strengthen the United Kingdom, strengthen Scotland’s role and accountability, and perhaps enable the people of Scotland to look to their destiny and say, “We cannot always blame London and other people, we have to use the instruments that we have to help ourselves, and co-operate with others to ensure that we tackle the bigger problems together.” That is what the United Kingdom is about, and also what the devolution home rule settlement is about. They are not incompatible; both are essential. The Bill is a positive step forward, and will be beneficial to Scotland and the United Kingdom.

I pay tribute to the right hon. Member for Gordon (Malcolm Bruce) for an illuminating and useful contribution to today’s debate. I am afraid that mine will not be as lengthy, but I humbly hope that it will also illuminate the debate.

I am sorry that the love of Scotland of the hon. Member for Epping Forest (Mrs Laing) could not hold her in the Chamber longer, because she expressed disappointment that today’s debate is not taking place on the birthday of Mr Robert Burns. However, I can confirm that it takes place on my birthday, and I can think of no better way to celebrate than to speak in support of the Scotland Bill.

How sad!

I expect that it is a reflection of what has happened to my life since coming to this place.

I begin, rather unusually, by apologising to the hon. Member for Perth and North Perthshire (Pete Wishart) for my rather bad-tempered intervention. It makes me angry when I hear the SNP, given its record, complaining about the process that has brought us here today, and the Calman commission. It also makes me angry when the hon. Gentleman questions whether the Bill will receive due scrutiny. I hope that, now he has heard the comments of my hon. Friend the Member for Glasgow North (Ann McKechin), he realises that Labour will give the Bill due scrutiny, and that he will also welcome the inquiry by the Scottish Affairs Committee, on which the hon. Member for Banff and Buchan (Dr Whiteford) serves. That will give us further opportunities to examine the Bill.

I remind the hon. Member for Perth and North Perthshire that the Calman commission consulted the public, experts and interested groups at 12 local engagement events all over Scotland. It received 300 written submissions, and held 50 public and 27 private evidence sessions. That compares more than favourably with the national conversation. The hon. Gentleman asked my hon. Friend the Member for Glasgow North how much it had cost. A conversation among Unionists is a far bigger conversation than one just among nationalists.

I am particularly pleased to be speaking in today’s debate because I follow in the footsteps of John P. Mackintosh. His approach was one of integrity and commitment, and he wanted genuine constitutional reform and the flourishing of the democratic expression of the Scottish people. I should like to remind Members who have visited the Scottish Parliament, and to inform those who have not, that the Donald Dewar room at Holyrood carries this quote from John P. Mackintosh:

“People in Scotland want a degree of government for themselves. It is not beyond the wit of man to devise the institutions to meet these demands.”

Labour finally devised the institution to meet those demands and delivered on Keir Hardie’s original aim of home rule. Another of my predecessors, John Home Robertson, not only believed in home rule, but lived and breathed it as he served East Lothian in both the House of Commons and the Scottish Parliament.

Constitutional reform should rise above party politics. The SNP has shown throughout today’s debate not only that its politics are separatist, but that its approach to politics—the way it does politics—is separatist. The Labour way is to work with other parties to achieve consensus, which is what it has done through the Scottish Constitutional Convention and the Calman commission. SNP representatives were absent from both, which must make theirs the longest political huff in history. They are less outside the tent than squatting on a different campsite altogether. Indeed, they have not been happy campers, although there have been an unusual number of references to caravans.

We today take Scotland forward to a new era. It is right and it is time that the Scottish Parliament takes greater responsibility for its expenditure and matches that with accountability. Of course, the Bill goes further than that in giving substantial borrowing powers to Scotland. I hope that we can now move away from a time when the SNP Government used every capital building programme as an opportunity to fight at Westminster, rather than as an opportunity to fight for Scotland.

SNP Members have still to tell us whether they will vote for the Bill or seek to wreck it today. They have an opportunity to see Scotland move forward, but they appear to be unwilling even now to rise to give us clarity on that question—[Interruption.]

I just got bored listening to this. I’ve heard it all before.

If the hon. Gentleman is bored, he could make the debate more interesting by intervening to answer that question, but he remains silent.

The SNP has argued for full fiscal autonomy for Scotland, but that is not what Scotland needs. Scotland needs the security that is offered by remaining part of the Union, which is what the Bill gives it.

What would the SNP have done with the banks in an independent Scotland? [Interruption.] Yes. I am afraid that it is all fantasy and Brigadoon on the SNP side. I urge SNP Members to think again—in the words of another Scottish poet—and to consider giving their support to the Bill. I also I urge them not to press to a Division an amendment that seeks to deprive Scotland of an opportunity to move forward.

I thank the House for the short time that it has indulged me, and urge hon. Members to support the Bill.

I am grateful for the opportunity to participate in this debate. My contribution will be modest, given that I am not versed in the intricacies of the politics of Scotland, although I am learning quite a lot this afternoon. As a Scot who has family in Scotland, I have a great interest in what happens there and I would like to see Scotland succeed. I am also interested in the continuing relationship between the devolved Government and the national Government. Most importantly, I represent a constituency on the border, so I want to be aware of the implications of the Bill for my constituents.

I appreciate that the Bill is primarily relevant to Scotland, but it does have a potential impact in England, and that impact will be most pronounced in the border area, affecting seats such as Berwick-upon-Tweed, Hexham, Penrith and the Border, Workington and, of course, Carlisle. Indeed, in my part of the country, we have an unusual relationship with Scotland in that we were not in the Domesday book because we were part of Scotland at the time. Subsequently, we had the “Debatable Lands”, the reivers, and the movement of the border to Hadrian’s wall and so on. Indeed, that continues to this very day with the invasion of Carlisle every Saturday by people coming over the border to shop and for entertainment. I therefore have a slightly different perspective on this debate from that of many hon. Members north of the border.

There will no doubt be some concern in my area about the Bill and the impact, in particular, of the tax-raising powers. In reality, many of the issues already exist: there are separate laws on housing, inheritance and planning. In some ways, the planning laws have been beneficial to parts of Scotland, with Gretna being an example. Traditionally, licensing laws were different. I remember when I moved to Chester from Scotland, I got a shock when the pub closed at 10.30 rather than 12, but England has since progressed. Scotland was also ahead of the curve on the smoking ban, to its credit. At times, Scotland can be more progressive and innovative. Indeed, those who live on the border are often more aware of the differences between the two countries and the various laws that affect them.

I welcome the Bill and its proposals. They are very much in line with the recommendations of the Calman report, which has broad support in this Chamber. It is also in line with my own philosophical viewpoint and that of the Conservative party—and of the Liberal Democrats—including a belief in localism, decentralisation and financial accountability. Devolution is now an accepted part of our political culture and is generally accepted by most people. Therefore, the issues that we now have to debate are the workings of devolution, how to make it better, how to achieve the right balance and the powers that we give to the devolved Assembly. Giving powers away is very much in line with the localism agenda, including the need for responsibility and the link between spending and taxation. Indeed, in many respects, that link has been missing in the English local government debate as well as in the Scottish one, but I am delighted that the Government are starting to address that issue for English councils just as they are for Scotland in this Bill.

The aim of the Calman commission was to recommend changes to the present constitutional arrangements in three ways—to serve the people of Scotland better, to improve the financial accountability of the Scottish Parliament and to continue to secure the position of Scotland in the UK. It is in terms of those three key points that we must consider the Bill.

As Calman said, the devolution settlement is a “real success” and “works well in practice”. In many respects, that outcome is supported by the Bill, which does not dramatically rewrite the devolution settlement, but fine-tunes and adds to it. As hon. Members have said, the key aspect of the Bill is the changes on tax, but it also includes drink-driving limits, speed limits and other measures. I suspect the drink-driving limits and speed limits will be of more interest to those of my constituents who travel over the border.

One omission from the Bill is welfare and social security. It will be interesting to see how the Government approach that in due course, but I appreciate that a national debate on that subject is going on. The reforms that the Government are proposing nationally must have priority.

Income tax is the obvious area that could have an impact on cross-border relationships. There are people who live in Scotland and work in England and vice versa. However, I believe that there is nothing wrong in having different tax rates between different places—we see it at local government level with domestic rates—and allowing the Scottish Parliament to be able to set its own income tax rate creates accountability, responsibility and transparency.

The tax that I am probably most interested in, and the one that gives Scotland a real opportunity to be innovative, relates to old-fashioned stamp duty land tax and how it could be applied to commercial and residential property. If the Scottish Parliament is innovative, that will give it the opportunity to gain a commercial advantage, which could be beneficial to the local economy. However, the Bill is not just about transferring powers; it is also about providing the tools for Scotland to improve itself. The really exciting part of the Bill is that the Scottish Government and Parliament will receive incentives and control over their own economic destiny.

In my view, the Scottish economy needs to have a smaller public sector and a much larger private sector. Scotland needs to grow its private sector, and by doing that it needs to increase its population, build more houses and create more businesses. It will now have some of the tools to achieve that, via business rates, SDLT and income tax. This is a real opportunity for Scotland. If it can grow its tax base, it can reap the benefits. So I welcome the Bill. It achieves the key objectives of the Calman commission. It gives Scotland a greater opportunity to do things differently and, perhaps, better, and interestingly enough, the 2015 election will give the political parties an opportunity to offer different visions of a future Scotland. That is healthy for Scottish democracy and the Scottish Parliament, and will help to strengthen the Union.

I welcome the hon. Gentleman’s comments and am pleased that he supports the Bill. I just want to highlight the irony of a Tory Back Bencher supporting more powers for Scotland, but the Scottish National party voting against it.

There is certainly a degree of irony in that. I welcome the Bill.

I congratulate my hon. Friend the Member for East Lothian (Fiona O'Donnell) on her excellent and entertaining contribution. I would also like to congratulate her—on behalf of the whole House, I am sure—on it being her birthday. She tells me that she is 21. That is 21 plus VAT at a rate of 30%—do the math! [Interruption.] She is the same age as me—well, slightly younger.

I am grateful for the opportunity to speak in this debate. There can be no matter of greater importance to Scotland than the question of how we strengthen the devolution that has helped to improve the lives of our constituents over the past 11 years. Nor should we forget that it was a Labour Government who brought devolution to Scotland, through the creation of a Scottish Parliament with a significant and comprehensive range of statutory powers. Now, after more than a decade of devolution, the time is right to take the next steps in developing Scotland’s democracy and its relationship with the other nations of the United Kingdom.

That opportunity was provided, of course, only through the establishment by the previous Labour Government of the Calman commission. The proposals in the Bill, which are rooted in Calman’s cross-party work, reflect the overwhelming desire of the Scottish people to anchor Scotland’s future firmly in the United Kingdom. On that basis, I support the principles in the Bill. There are differences of detail, of course, between Labour’s approach and the plans in the Bill. For instance, the aggregates levy, food labelling and charity registration have been omitted from the Bill. Matters of considerable detail will need to be thrashed out, but the principles are the right ones. Greater magnitude of fiscal autonomy and improved accountability and transparency will ensure that Scotland’s stability and her place in the United Kingdom remain strong.

There are those who say that the Bill is part of the slippery slope to independence. There are those who said the same thing about creating a Scottish Parliament, but 10 years on, support for independence is at an all-time low. Strengthening devolution does not undermine the United Kingdom; it makes it stronger. The importance of that strength could not have been demonstrated more acutely than by the economic events of the past three years, yet the SNP still preaches separation. Rescuing the Scottish banks could never have transpired under independence, and the turmoil in the Irish economy demonstrates how vulnerable independence would have left the Scottish people.

The question of devolution is settled; how we make it work better for Scotland is the challenge that the vast majority of Scottish people want us to address. It is perverse that the SNP, which stands on a platform of autonomy, has refused to engage with the Calman commission to create and shape new powers for Scotland. There is an incredible irony at the heart of the SNP position. It rejects the Calman commission because it exposes Scotland to falling tax receipts. The SNP talks about full fiscal autonomy as an answer to Calman, but exposure to falling tax receipts would apply to Scotland’s budget whatever the degree of financial powers it acquired. Far from improving, the position under independence would be considerably worse.

The hon. Gentleman is wrong. Any country will see its tax revenues fall or rise with the economic cycle—the one that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) said he had ended. The difficulty with the proposals in the Bill is not that tax revenues may go up or down, but that they embed a deflationary bias in the Scottish budget.

I am obviously aware of the objection to the Bill from the SNP—it is an objection that we often hear—which is that it would mean less money for the Scottish Parliament. Indeed, the First Minister claims that the Scottish budget would have been considerably worse under Calman, compared with the current regime, yet Alex Salmond refuses to publish the numbers setting out what his plans for fiscal autonomy would have meant for the Scottish budget in the last 10 years.

It is not just the First Minister who has said that there is a fiscal drag with the current plans— £7 billion is what we argue—but the Secretary of State, who said that the figure would be £700 million, so we are in pretty good company. If that was the loss to the Scottish budget, would the hon. Gentleman object to these tax proposals?

The reality is that Government expenditure in Scotland is considerably greater than the sums raised in taxes. In fact, in 2008-09, the last year for which figures are available, total public sector revenue in Scotland was £43.5 billion, whereas total public sector expenditure was £56.5 billion. Under the separation that Mr Salmond wants, that would lead to a fiscal deficit of £13 billion. Let us turn to the fallacy peddled by the SNP that only under a system of full fiscal autonomy would Scotland’s economy be able to generate growth. There is little evidence to suggest that this is the case. Professor Lars Feld, one of the world’s leading authorities on decentralisation, has concluded:

“We do not find any robust significant effect of decentralisation on economic growth”.

Professor Anton Muscatelli of Glasgow university has said that

“there is absolutely no statistical relationship between fiscal autonomy and growth, nor can there be.”

The Scottish Parliament’s competencies are already substantial, but we need to do more to increase accountability. Unlike the funding of most devolved regions by national Governments around the world, Scotland’s block grant is unconditional and can be spent in whichever way chosen. Voters in Scotland and Members of the Scottish Parliament are therefore not exposed to the choice between public expenditure and additional taxation. The Bill ensures that those choices are made. More shared taxes; new devolved taxes; greater borrowing; greater transparency; a fair balance of shared risk across the United Kingdom—that is a fair balance of new powers to create the accountability that the Scottish Parliament needs. The Scottish Parliament will be answerable to the Scottish people for the money that it raises and spends. That is what the vast majority of Scottish people want. They do not want separation, but they do want a Scottish Parliament that is responsible for the decisions that it takes, and that is why I am supporting this Bill.

I welcome the opportunity to speak in this debate. Although I represent a seat south of the border, I have a long-standing interest in devolution matters. I not only spent my formative years in Hamilton, but when the original Scotland Bill passed through the House in 1998, I acted as an adviser to the then shadow Front-Bench team, which included my hon. Friend the Member for Epping Forest (Mrs Laing). I have thus gained a probably unhealthy level of detailed knowledge of the Scotland Act 1998, and I hope to draw on it a little in my contribution.

I trust that the House will not object if I draw on a book on the Barnett formula and fiscal autonomy, which I co-authored in 2003 with the eminent Scottish lawyer, Professor Ross Harper. For the avoidance of doubt, let me say that I am not seeking to advertise the book: it is no longer for sale and I received no royalties for it at the time. Let me just say that it was not troubling “Harry Potter” for the No. 1 spot on the best-seller list. Nevertheless, I hope that the research we did for the book will help our deliberations today.

I want to put on record the fact that I was sceptical about devolution at the time of the referendum in 1997. I campaigned and voted against the devolution measures. I am happy to say that many of the doubts I had at that time have not been borne out by events. I believe that the Scottish Parliament reflects the settled will of the Scottish people and that, on the whole, it has been a success. Our job today is to improve and strengthen it, thereby strengthening the Union. The Scottish Parliament is not perfect, however, as there are some deficiencies, but I believe that the Bill goes a long way towards improving them.

I want to focus, as much of the debate has, on the transfer of fiscal powers. It is right that the Scottish Parliament is more accountable for the money it spends—a flip of the old adage, “No taxation without representation”. It is right for the Scottish Parliament to be held accountable to its electors for its own spending decisions. Going back to the 1997 referendum, I was intrigued by the option that did not get much coverage at the time, when the debate centred on the “yes/yes” or the “no/no” campaign. Some people believed in the “no/yes” option—they did not want a Scottish Parliament, but thought that if there was to be one, it should have proper fiscal powers and be held accountable.

I hope that the Bill will improve participation in Scottish Parliament elections. Although the turnout is higher than for local government, it is lower than for elections to this place, in which turnout is in no way at a particularly high level. Part of the reason for that lower turnout is that Members of the Scottish Parliament can make spending decisions without being directly accountable to their taxpayers and electors for them. I strongly support the Bill’s principles in addressing that point.

Speaking as an English Member, I want to put on record the fact that I often hear representations from constituents about why Scotland has free tuition, free prescriptions and so forth, which people do not have in England. I explain that the financial relationship between Scotland and England is much more complicated than the Barnett formula, which people often use as a shorthand to explain the whole fiscal relationship between Scotland and the United Kingdom. The point is nevertheless an important one, because if that concern is left unchecked, the Union will suffer. If people in England think that Scotland is getting an unfair advantage from the financial arrangements, the Union will suffer. As a Unionist, I make no apology for saying that; as a Unionist, I say that the Union suffering is the last thing I want to see. If Scotland wants to increase spending in a particular area, or introduce free care, tuition fees or whatever, the Scottish Parliament will now have to find more of that money, and that is an important point for strengthening the Union.

I am listening carefully to the hon. Gentleman. He talks about the financial responsibility of the Scottish Parliament, but why does he feel that that should be confined to income tax? Does he not agree with Lord Forsyth, a former Tory Secretary of State for Scotland, who said:

“The SNP quite rightly argues that you can’t just limit it to income tax and stamp duty if you want to manage the economy. You can’t play golf with just one club”?

The point is that if the Scottish Parliament is to have responsibility, it must have responsibility not just for varying income tax, but for managing the economy.

I beg the hon. Gentleman’s patience, as I will turn to those points in a moment.

My hon. Friend makes a powerful point about the threat to the Union posed by a perception of unfairness in relative funding, and giving Scotland control over its tax revenue raising will partially address that. However, it is widely accepted that the baseline, under the Barnett allocation, is 15% to 20% higher than it would be in equivalent places in England, and that is an issue for the Union.

I am grateful to my hon. Friend. I am not sure whether his birthday is coming up, but I will happily send him a copy of my book, which goes into the matter in some detail. The baseline funding for Scotland is an important point, but whether to have a needs-based assessment is not part of the Bill, although the Bill opens up the possibility that that will be reviewed in future.

No one can deny that these are legitimate issues for debate, but does my hon. Friend not acknowledge that when we look at the matter detail by detail—my right hon. Friend the Member for Yeovil (Mr Laws), when he was adviser to my party, did some work on this—we see that a high proportion of the spending differential is justified by remoteness, the different balances, benefits and so forth? A part of it is not accounted for, but the gap is nothing like as big as my hon. Friend the Member for Warrington South (David Mowat) suggests.

My right hon. Friend makes an important point. The whole subject is difficult and complex, given the shorthand of Barnett and the vast difference between public spending in Scotland and England. In some areas, however, for the reasons that he has set out, there is a big difference, and those reasons will also be found in England. For instance, in remote parts of Cumbria or Devon, spending per head will be higher than in central London or Manchester.

If the hon. Gentleman looks at the study by Oxford Economics, he will find that London secures more public spending than any region or nation in the UK. If he and the hon. Member for Warrington South (David Mowat) are concerned about grant formula and Scotland’s spending relative to England’s, I have good news for them: they can vote to change that in the next few weeks and allow Scotland to have full fiscal responsibility. That would allow all the Barnett issues to disappear. If we were allowed to have the economic levers to grow our economy, we would be self-reliant on taxation.

As I said to the hon. Member for Angus (Mr Weir), if the hon. Gentleman allows me to make a little progress, I will come to the issue of full fiscal autonomy in a moment.

Clearly, the existing Scotland Act contains some fiscal powers for the Scottish Parliament: principally, the ability to vary the basic rate of income tax by 3p higher or lower than the UK rate. That has never been used, partly because the SNP Administration in Edinburgh has allowed the levy required each year for the mechanism to stay in place not to be paid. There is a more fundamental point, however: the administrative and set-up costs for making that small change in the income tax rate are disproportionate to the revenue that would be raised.

When the House was considering the Bill that became the Scotland Act 1998, it was calculated that it would raise, at the most, an additional £450 million. Given a total Scottish Office budget of over £22 billion, it was a tiny measure and would involve considerable start-up and administrative costs and not generate enough revenue. I can understand why it has not been introduced so far.

The hon. Gentleman talks of the amount that might be raised if the tax rate were put up. There is, however, a built-in perverse disincentive to lower the tax rate. If the income tax rate, for example, were lowered and that stimulated economic growth, and if the benefit were paid from higher corporation tax receipts, the Scottish Parliament would take the hit of reduced income tax, while the United Kingdom Government would gain the advantage of enhanced corporation tax.

I am explaining why I do not think the provisions in the current Scotland Act are sufficient, and why I welcome the measures to increase substantially the power of the Scottish Parliament to raise a significant chunk of its own revenue. There are still concerns about how they will be implemented, and I raised that point during Scottish questions yesterday. I have been reassured that proper consultation is taking place with members of the business community in Scotland, who will have to administer many of the new arrangements, but I urge my colleagues on the Front Bench to keep a close watch on the increased regulatory burden on businesses at a time when they can ill afford much additional bureaucracy.

I think the HMRC bodies should consider the possibility of certain unintended consequences. There is, for instance, the question of how payments into personal pension plans which attract the adding back on of basic or higher-rate tax contributions should be treated. If in the past contributions have been made at the United Kingdom rate and added back on, a different Scottish rate will create potential anomalies when it comes to how that income is treated. I suspect that a fairly small amount is involved overall, but it is an important detail that ought to be clarified before the Bill is implemented.

I welcome the move to devolve some taxes, and I hope that more can be devolved in time. I hope that, for instance, the issues surrounding the aggregates levy and air passenger duty issues will be resolved. I do not believe that this is the end of the story; I trust that those two taxes will eventually be devolved, and that the Scottish Parliament will be given greater fiscal autonomy.

I referred earlier to the book that I co-authored. Part of our research involved international comparisons.

I hesitate to interrupt my hon. Friend, but he has just demonstrated that he is one of the few people who understand, and have carried out an in-depth study of, the relationship between United Kingdom and Scottish finance. He is being modest about his book, but I need not be modest on his behalf. It is an excellent publication, which I have consulted on many occasions. May I ask him to show the House his book and tell us its title, so that every Member in the Chamber—[Interruption.] I do not think he will make any money from it. However, some Members might be better educated in future if they knew more about it. I believe that it is called “It’s Our Money! Who Spends It?”

Order. That was a very long intervention. I think that the hon. Lady has given the hon. Gentleman his advertisement; perhaps we can now return to the debate.

Thank you, Madam Deputy Speaker. I sense a rising demand for my book. Next Christmas is a little way off, but I have a couple of boxes of back copies which I will happily distribute.

As I was saying, part of our research involved examining the way in which other countries—Australia, Germany and Canada—operated financial relationships between state Governments and federal Governments, or provincial Governments, or whatever the term was in those countries. What struck us was that each of those countries has a system that comes close to what the Scotland Bill is proposing to introduce. Certain taxes are levied at the federal level. The example in each country varies, but some taxes are levied at the provincial level—the state level—and sometimes the state level has the power to introduce specific taxes of its own. That is balanced by a form of fiscal transfers between the federal level and the state level. There are perpetual arguments in all those countries about what the right level of spending, taxes, transfers and so on is—we will never get away from those—but on the whole the arrangements are stable. We can draw some comfort from the fact that the lessons from abroad point to the sort of system that the Bill is trying to introduce.

Conversely, there are few examples of a federal or devolved system of government where the lower level has full fiscal autonomy. Our research encountered only one example that came quite close to such an arrangement, which was in the Basque part of Spain. Since we did our work Catalonia has also adopted such an arrangement, but it is still fraught with difficulties. I do not believe that there is sufficient evidence from abroad to warrant the type of policy that the Scottish nationalists wish to introduce.

The hon. Gentleman says that the approach of the Basque country and others may be fraught with difficulties, but that country’s gross domestic product growth is now 30% higher than that of Spain as a whole and its credit rating is stronger than that of Spain as a whole. Although that sort of model may need to overcome obstacles, it clearly has had some success.