6. What further plans he has for a Scottish constitutional settlement. (905363)

Lord Smith of Kelvin has agreed to oversee the process to take forward devolution commitments to Scotland. He will publish his proposals by the end of November, and the Government will publish draft clauses by 25 January.

My constituents are very much in favour of the direction of the settlement, but they fear that it may enshrine the £1,600 per annum public sector differential between England and Scotland. Can the Secretary of State assure us that that will be reviewed as part of the process?

One of the express elements in the vow that was delivered to the people of Scotland was an assurance that there would be no change in the Barnett formula. I should add, however, that once we have delivered the extra tax-raising powers that I believe will go to the Scottish Parliament, the formula will obviously account for a lesser proportion of the Scottish Government’s income than is currently the case.

Does the Secretary of State accept that if fundraising powers such as the power to tax income are transferred to the Scottish Parliament to a greater extent, adjustments will have to be made to the Barnett formula to take account of fluctuations, just as account will have to be taken of fluctuations in the oil price?

Adjustments will certainly have to be made to the way in which the Barnett formula operates in detail. That is already being undertaken by Treasury officials and Ministers in relation to the powers that are going to Scotland under the Scotland Act 2012.

Any future constitutional settlement must make it easier to build a fairer society in Scotland. According to a report published by Oxfam, inequality should be measured in terms of welfare, housing, health, education, justice, and employability. Five out of those six have already been devolved to Scotland. Does that not demonstrate that we have two Governments who are failing the people of Scotland?

What it shows is that these are complex problems that will require close working by Scotland’s two Governments in order to tackle them. I very much hope that, now we have got the referendum behind us, we will be able to see the cross-party and cross-government working that the people of Scotland need and demand.