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Volume 567: debated on Wednesday 11 September 2013

The Secretary of State was asked—

Scotland Analysis Programme

The Government are committed to ensuring a well-informed debate ahead of the Scottish referendum and have already published five analytical documents covering a range of economic and other issues. Future papers from the Scotland analysis programme will be published over the course of 2013 and 2014.

I thank the Secretary of State for that answer. With the Scottish Finance Minister, John Swinney, admitting in his leaked memo that the affordability of state pensions would need to be examined in the light of separation, does the Secretary of State agree that a future paper should focus on pensions in an independent Scotland?

I certainly agree with the hon. Gentleman that pensions are an issue that people across the country are very engaged in and concerned about, and that includes what an independent Scotland might mean for them. They have heard experts, such as the Institute of Chartered Accountants of Scotland—I declare an interest as a member—put out their opinion, but nothing is more certain than John Swinney’s opinion. The fact that he has said that there is a worry about this should tell us everything we need to know about the pensions issue.

Does the Secretary of State plan to have a word with his right hon. Friend the Leader of the House on making Government time available for the House to discuss the reports and analysis? If he cannot get the time, may I suggest that he allows the Scottish Grand Committee to have those debates?

Without being impertinent to the hon. Gentleman, the old ones are the best. I know how keen he has been on the Scottish Grand Committee, although I think that he is a fairly lone voice in that regard. I agree that it is important that we have proper debates, in whatever forum, about all the issues. The Scottish Affairs Committee is working through the papers and taking evidence from me, my right hon. Friend the Under-Secretary of State and others. The House can decide when we get a chance to debate that, which I hope we will.

Whitehall’s “Project Fear” papers are looking at welfare, so will the Secretary of State confirm whether those working on the paper have listened to any advice from the United Nations envoy, Raquel Rolnik? She says that the bedroom tax is “shocking” and should be scrapped. Does the Secretary of State believe that the bedroom tax is a benefit of the Union?

I have not read the details of the report, but I hope that the hon. Gentleman will recognise that, through welfare reform, we are focused on tackling an escalating welfare bill in very tight financial circumstances. What we are trying to do is tackle the mismatch for different families in different accommodation. We need to look carefully at the implementation, which is what my right hon. Friend the Under-Secretary and I are doing. On welfare, the hon. Gentleman’s party commissioned a report on that earlier this year in relation to an independent Scotland. It complained that it does not have some founding principles for an independent Scotland and so could not really say very much about it. I wonder whether he can update us on any progress.

The views of the UN envoy have been very well reported. She visited both Glasgow and Edinburgh and said that the bedroom tax affects

“the most vulnerable, the most fragile, the people who are on the fringes of coping with everyday life”.

The Secretary of State did not answer my question, so I will ask it a second time: does he believe that the bedroom tax is a benefit of the Union—yes or no?

We will look carefully at the report, but as I said earlier, we are making some very difficult decisions in the context of an escalating welfare bill at a time of real financial stringency. However, we have been looking carefully across Scotland at how this is being implemented. My right hon. Friend the Under-Secretary and I have met or talked with all the councils in Scotland and the main housing associations. We have put additional resources into tackling the spare room subsidy issue and will go across the country again to listen to people, as we will do for the rest of the year.

Rural Economy

Scotland’s rural economy remains a key focus for the Government. In addition to our support for the economy as a whole, we have, among other things, abolished the fuel duty escalator, provided funds for rural broadband and set up the coastal communities fund.

I thank the Secretary of State for that answer. Many of my constituents are expressing concern that a privatised Royal Mail will try to wriggle out of its universal service obligation to deliver mail to every house and collect from every postbox in the country every day at a fair, affordable price. Will the Secretary of State assure my constituents that the Government will never abandon the universal service obligation or allow a privatised Royal Mail to water it down in any way?

The legislation is clear. We have legislated for a six-day universal service obligation and only an affirmative resolution of the House could change that. I highlight to my hon. Friend the fact that the Government have ended the rural post office closure programme. We have introduced a groceries code adjudicator and cut income tax bills for low and middle-income families throughout rural Scotland and the rest of the country. No Government have ever done more for the rural economy in Scotland. We are committed to a stronger economy and fairer society in all parts of the UK.

The Minister of State is well aware that rural east Ayrshire has been devastated, with hundreds of job losses and up to £160 million of restoration work required in respect of the open-cast mines. Only this week, a Scottish Government Minister said that he was not prepared to prioritise funding for the issue. Does the Secretary of State agree that funding will be required for the work and that the Scottish Government have to put their money where their mouth is? Furthermore, do we not need some form of enterprise area for east Ayrshire, to compensate for this national devastation?

I sympathise with the hon. Lady and her constituents about the devastating blow for her and other hon. Members, including the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), some of whose constituents are affected. He will meet representatives of East Ayrshire council later this week. We have to make sure that, when levers are available to the Scottish Government, they use them to help the hon. Lady’s constituents and others.

What would be the impact on the rural economy of my neighbours in southern Scotland if Scotland went independent and we had a border with Scotland?

As one of my hon. Friend’s neighbouring MPs, I recognise the importance of Hexham and north Northumberland. As he knows, in a farming context and in so many other ways, any kind of legal border between Scotland and England would be an absolute disaster—not just for our constituents, but for all the United Kingdom.

Is the Secretary of State aware of the recent report on the effect of the Irish Government’s reduction of VAT on tourism-related businesses to 9%, creating around 10,000 jobs and a €40 million boost to the Exchequer? As 24 other EU countries already charge less VAT on hotel accommodation than the UK, will he press the Chancellor to take similar action and give a real boost to the rural economy?

The hon. Gentleman always makes serious points on behalf of his constituents. I appreciate that what he has asked about is a consistent theme of the tourism sector, and the Chancellor will no doubt regard it as an early bid for next year’s Budget measures. However, the hon. Gentleman would be more convincing if he brought along a costed example of how an independent Scotland would do such a thing.

My right hon. Friend will be aware that a major contributor to the rural economy is the ability to send goods around the country. In the north highlands, sending packages by courier services comes at extreme cost; the companies charge more than for the rest of the mainland. My hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) will present his excellent private Member’s Bill on Friday. What more can the Secretary of State do to ensure that courier charges for remote areas are in line with those for the rest of the mainland?

My hon. Friend and my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) have been campaigning sensibly on the issue and raising important points. We certainly want to engage with my hon. Friend the Member for West Aberdeenshire and Kincardine on his private Member’s Bill, which addresses a serious issue. We support the principles that underpin the Bill and want to see how we can use existing arrangements, through trading standards and other facilities, to make sure that nobody in remote or rural areas suffers from those excess delivery charges.

The average wage in my local authority area is 24% beneath the national average. Figures out this week show that 23.8% of households there are workless, almost 3% above the Scottish average. Does the Secretary of State believe that the Government, perhaps in conjunction with the Scottish Government, should be doing much more for rural economies?

I hope the hon. Gentleman recognises that these are structural problems that have persisted for a very long time, including when his party’s Government were in power. I share his desire to ensure that low-wage economies, particularly in rural areas, get the support they need. The very heart of our economic policy is to rebalance the country as a whole and move from the rescue to recovery phase. As we do that, the measures we are taking to support the economy as a whole by keeping interest rates and corporation tax down and investing in infrastructure will help rural and urban Scotland alike.

Independence (Currency)

3. What discussions he has had with his ministerial colleagues and Ministers of the Scottish Government on the continued use of sterling in a separate Scotland. (900185)

Earlier this year, as part of the Scotland analysis programme, we published a paper on currency issues that makes the strong case for Scotland staying in the United Kingdom. There have been no discussions with the Scottish Government about the use of sterling by an independent Scotland.

Does the Secretary of State recognise the democratic deficit that is on offer whereby under nationalist plans Scotland would keep the pound but the rest of the UK would still set our interest rates, our borrowing limits and our spending limits, while at the same time we would lose our influence and our representation? Does he agree that that is not more or less independence, but worse independence?

The hon. Gentleman puts the points very neatly. People do not need to rely on his words or mine; they can listen to experts such as the Cuthberts, who said this week that they would like an independent Scotland to have its own currency and that to stay part of a currency union is no independence. Similarly, Brian Quinn, the highly respected former deputy governor of the Bank of England, observed in his recent report that the idea of a currency union is to replicate all the problems of the eurozone. The nationalists fail to answer all the points from both sides of the argument.

Does my right hon. Friend share my concern that should a separate Scotland become a member state of the EU, a condition of membership will be an obligation to join the euro, with the further risk that that would expose Scotland to being part of a future bail-out of eurozone members? [Interruption.]

Notwithstanding the heckling from the nationalist Benches, which hides the fact that they do not have answers to these very important questions, the point is that they used to be in favour of the euro but now they have back-tracked; they used to be in favour of a separate currency but now they have back-tracked; and they are currently saying that a currency union would be the best starting point. I think Scotland deserves to know what the end point would be.

On sterling, Alex Salmond says he is in and the chair of the yes campaign says he is out; it is a bit like the currency hokey cokey. The serious point is that this morning a report says that if the UK had a formal currency union with an independent Scotland, in the event of another financial crisis London would provide the lender-of-last-resort functions, whereas if Scotland was in the euro it would be Brussels, and if Scotland had its own currency it would probably be the International Monetary Fund in Washington. Is it not true that in the event of separation all roads lead to Scotland having less control over its own financial affairs?

I agree with the hon. Gentleman. The best arrangement for Scotland is to stay part of the United Kingdom, where we get all the benefits of the currency but also the hugely integrated single market, which is enormously to our benefit, and a platform in the world that is great for all our businesses and those they employ.

The Scottish Secretary prayed in aid one of the Treasury’s analysis documents on Scotland in relation to currency. However, given that his own Chancellor is unable to get his economic growth forecasts correct six months to a year out, how can he possibly expect us to believe an analysis that is supposed to forecast the Scottish growth rate for the next 30 years? It is not serious, is it? It is just more “Project Fear” scaremongering designed to talk Scotland down.

I have to admire the front that the hon. Gentleman puts up. He simply does not answer any of the big issues on this. To take an example of forecasting, in our documents we take very sensible, reasonable proposals and look at how they would apply over many years to come—unlike when the Scottish National party forecasts oil revenues, when it takes all the best-case scenarios and then makes up numbers indicating that about £1.5 trillion of resources are available to Scotland. It is more like a tenth of that, but we never hear that from him.

Zero-hours Contracts

5. What discussions he has had with Ministers of the Scottish Government on the use of zero-hours contracts in Scotland. (900187)

There is no single legal definition of zero-hours contracts and it is not possible to get reliable estimates. The issue was discussed at the Scottish employability forum last week by my right hon. Friend the Secretary of State for Scotland, the Scottish Cabinet Secretary for Finance, Employment and Sustainable Growth and a range of Scottish stakeholders.

Many employers in Scotland insist that employees on zero-hours contracts be available for work even if work is not guaranteed. The Labour party has pledged to outlaw this practice and the Scottish Affairs Committee, under the chairmanship of my hon. Friend the Member for Glasgow South West (Mr Davidson), has initiated an inquiry. When will this Minister and this Government put themselves on the side of working people?

It is important that our work force remain flexible, but it is also important that they are treated fairly. Officials from the Department for Business, Innovation and Skills have undertaken work over the summer better to understand how the contract works in practice, with a view to taking action if widespread abuse is found.

In June, the Scottish Trades Union Congress and the Scottish Government published, following an analysis, a report saying that more than 250,000 people in Scotland are underemployed. Many of them are on zero-hours contracts and the overwhelming majority of them do not want to be. What are the Government doing to address this scandal? As an afterthought, perhaps the Minister could tell us how many people in his Department are on zero-hours contracts.

The hon. Gentleman will know that the Scotland Office does not directly employ any members of the Department, as I have already confirmed in response to a parliamentary question about zero-hours contracts. As I have just indicated to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), we take this issue seriously. That is why BIS officials have been reviewing the operation of the contracts, and I very much welcome the Scottish Affairs Committee inquiry, which will perhaps provide greater illumination on the specific situation in Scotland.

Zero-hours contracts are undoubtedly misused and abused by many employers but, equally, I have spoken to many employees for whom the contracts fit their lifestyle well. Does my right hon. Friend agree, therefore, that reform is necessary, not abolition, and that nothing shows this better than the number of Labour councils using these contracts?

I do not know whether my hon. Friend is aware of the statement by Labour’s shadow Business Secretary, the hon. Member for Streatham (Mr Umunna), who said:

“We’re not actually advocating an entire ban…sometimes people quite like to use them.”

I think that that is something with which we can all agree.

If I may, I would like to express my condolences and pay tribute to those who lost their lives in the terrible Super Puma crash that happened while the House was in recess.

Until recently, Kyle McLean from Airdrie worked in a sports store. Like thousands of people across Scotland, his zero-hours contract meant that he could not take on other work and some weeks he earned less than £20. What does the Minister plan to do about the exploitative use of zero-hours contracts?

The hon. Lady is right to highlight the Super Puma crash and pay tribute to those who were involved in it.

The hon. Lady has a blind spot when it comes to understanding what her own Government did. She seems to suggest that zero-hours contracts suddenly materialised recently, but they were in existence under the Labour Government, who took no steps to review or do anything about them. I explained in my previous answer that BIS officials are reviewing the contracts, because while we want the employment market to be flexible we also want it to be fair.

Perhaps if the Minister looked at Labour’s policies he would get some ideas. The truth is that while the Government have sold off workers’ rights and made it easier to fire rather than hire, they have no plan to address the circumstances of people such as Kyle. Will the Minister follow Labour’s lead and outlaw the use of exploitative zero-hours contracts? Will he also confirm that the Secretary of State for Scotland is on a zero-hours contract so that he can do the Tories’ dirty work in Scotland?

There is one person in this Chamber who is on a zero-hours contract: the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). I will take no lessons from the hon. Lady, because Labour did nothing about zero-hours contracts. I have set out clearly that BIS officials are reviewing the matter, because our policy is to have a flexible work force and fair employment policies.

Independence (Pensions)

The “Scotland analysis: Financial services and banking” paper considered private sector pensions. We will be examining state and public pensions in later papers in the series.

The Institute of Chartered Accountants of Scotland highlighted that, on independence, cross-border defined benefit pension schemes would have to be fully funded, which would leave a deficit of some £230 billion. That was dismissed by the First Minister, who said that he would merely call for a derogation from the EU. Given that the Czech Republic has not only been refused that, but has been fined, what does the Minister think will happen to Scottish pension arrangements now and in the future?

Spending on state pensions and public sector pensions is driven by demographics and is set to rise. The UK Treasury and the Department for Work and Pensions absorb the risk of growth in demand and there would be more volatility in spending in an independent Scotland. Those are not my words, but the words of John Swinney. It is a pity that he said them in private, not in public.

10. Does the Minister agree that the ability of the Scottish economy to support the pensions that the people of Scotland depend on will be greater and better if Scotland remains part of the United Kingdom? (900192)

I absolutely agree with my hon. Friend, not least because the Scottish Government and the Scottish National party have set out no coherent plans for a sustainable pensions system in an independent Scotland.

The Minister must think that people in Scotland are buttoned up the back. He knows as well as I do that in terms of both revenue and GDP, Scotland spends a lower percentage of its money on pensions than other parts of the UK. Does he accept that the lower life expectancy in Scotland and other demographic trends make it important that decisions on pensions are made in Scotland by Scotland for Scotland?

I know that the people of Scotland are not buttoned up the back. They understand that the Scottish Government and the SNP say one thing in private and another thing in public. In private, John Swinney has made it absolutely clear that the affordability of pensions would be a serious issue in an independent Scotland. That is a fact. [Interruption.]

Order. Far too many noisy private conversations are taking place in the Chamber. I am sure that they will now end so that we can hear Mary Macleod.

Oil and Gas Industry

As the shadow Secretary of State and my right hon. Friend the Under-Secretary of State for Scotland acknowledged a few moments ago, the whole House will want to pay tribute to those who lost their lives in the tragic helicopter incident in the North sea and to the vital work of the rescue services. That is a reminder of the risks that are faced by those who work in the oil and gas industry, and, indeed, of their bravery. The Government remain committed to working with the industry to ensure the highest levels of health and safety for all its workers.

Does my right hon. Friend agree that work force engagement is crucial in restoring the confidence of offshore workers in the light of the recent helicopter crash off the coast of Shetland, which resulted in the deaths of four offshore workers?

My hon. Friend is entirely right. The industry has been quick to engage with all the stakeholders and, most importantly, with the work force. The Government will engage with all partners to ensure that the lessons of this tragic accident are learned properly.

12. I hope that the Secretary of State is aware of the agreement that has been reached between the offshore unions and Oil and Gas UK to ensure that offshore work force representatives have more access to installations. Will he join me in welcoming that example of the progressive and positive way in which the unions are helping to ensure that health and safety measures are enhanced in the North sea? (900194)

Trade unions, employers and everybody else who is involved in the North sea have worked closely over many decades. Recently, as we commemorated the tragedy of Piper Alpha 25 years on, we were reminded of the importance of having the right health and safety regime. The trade unions, along with everybody else, have an important part to play in ensuring that we always have the right regime.

The tragedy with the Super Puma helicopter was a reminder that, for all the heavy engineering and high-tech industry in the North sea, it is, at heart, a people business. The families and friends of the victims and of those who travel offshore every week need to be reassured that all is being done to ensure their safety. To that end, will my right hon. Friend meet the air accidents investigation branch to see what can be done to ensure that the lessons are learned from such tragedies quickly, so that people can be reassured that all is being done to ensure the safety of the operation?

Like many hon. Members on both sides of the House, my hon. Friend has for many years campaigned on North sea safety issues. Like our predecessors, this Government are committed to the highest possible standards. Of course, we want to see what lessons are learned from the tragedy, and ensure that they are shared with the whole industry, across the whole North sea and beyond.