The amendment has not been selected.

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

May I begin by offering my warmest congratulations to all new MPs from Scotland on winning their seats? This Government respect the results from Scotland in the general election, just as we respect the result of the referendum last year. As the Prime Minister said, this is a one-nation Government. That is why one of our chief priorities is to bring the four nations of our United Kingdom together. The Bill is an important part of a package of measures that we believe does just that. If the House agrees to give the Bill a Second Reading it will be subject to four days of line-by-line scrutiny on the Floor of the House. I am happy to have my feet held to the fire, and for the Bill to receive full scrutiny, because I am confident that it delivers the Smith commission recommendations in full, but that does not mean that we will not listen carefully to contributions as it is debated.

rose—

Let me progress a little.

Let us not allow bluff and bluster to obscure the fact that there is already substantial agreement on the most significant aspects of the Bill. The UK and Scottish Governments agree on the devolution of income tax, representing £11 billion in revenue, and on the principle, if not yet the detail, of devolving £2.5 billion in welfare.

Has the Secretary of State seen today’s edition of the Daily Record, in which there is an excellent eight-page supplement? The paper, after all, offered the vow, and more than any other newspaper, was influential in securing a no vote in the referendum. In its editorial today, the Daily Record describes the Bill as “unacceptable” for not implementing the promises of the Smith commission. Why does the Secretary of State believe that the Daily Record describes his Bill as unacceptable and accuses him of reneging on the Smith commission’s recommendations?

I am afraid that that is the right hon. Gentleman’s interpretation. There is an excellent piece, which I commend to him, by Professor Adam Tomkins, in that very edition, in which he sets out the argument that the Bill clearly meets the Smith commission recommendations.

rose—

Let me continue. We are going to debate the Bill in full. We are going to scrutinise, over four days, every line and every clause. I am satisfied that the editor and readers of the Daily Record will be confident that the Bill meets the Smith commission recommendations in full when we complete that process. [Interruption.] No, we have dealt with that issue. [Interruption.]

Order. We cannot have argument by gesticulation. The right hon. Member for Gordon (Alex Salmond) is a seasoned observer—he does not have the excuse that he is a newcomer to the House—and he has a sort of cheeky chappie countenance, but I am afraid that it will not wash at this stage. He will have to try his luck later.

I fear there is a lot of cheek still to come.

Over 18 years, 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 changed the constitutional make-up of the United Kingdom fundamentally. I was proud to be elected as a Member of the new Scottish Parliament at its inception in 1999—indeed, I was the first MSP to ask a question in that Parliament on the opening day, so I draw from my experience of the Scottish devolution settlement as I take this Bill forward.

Even though some had doubts at the time, few would now deny that devolution has been a success story for Scotland. It has ensured that decisions affecting our homes and our families, from schools to hospitals to our police service, have been taken closer to the people they affect. As today’s Bill makes clear, the Scottish Parliament is a permanent part of the UK’s constitutional arrangements. The Bill recognises that, and rightly so.

To what extent does the Bill represent a full and final settlement for the future of the United Kingdom? How stable will it be?

I anticipate that the Bill will be a very stable settlement for Scotland as it was signed up to by all five of the political parties represented in the Scottish Parliament, including the Scottish National party.

That does not mean that the devolution settlement is or ever was perfect. From the start the settlement contained an imbalance, with a Scottish Parliament responsible for spending money which another Parliament—this one—was chiefly accountable for raising. It is one of the most important features of the Bill that it seeks to redress that balance. I will go into that in more detail later in my remarks.

With reference to the Minister’s comments on responsibility, can he confirm to the House that this Bill is so inadequate that it does not even allow the Scottish Parliament to raise all the money that it spends?

In my opening comments, I mentioned that there had been a referendum in Scotland last year in which the people of Scotland voted to remain within the United Kingdom as part of this United Kingdom Parliament, but with a strong Scottish Parliament. The Scottish National party was part of the Smith commission which signed up to the tax powers. I find it interesting that the Scottish Government made a 61-page submission to the Committee in the Scottish Parliament about this Bill. How many lines were dedicated to the £11 billion of tax measures? Two lines, because the Scottish Government agree with those measures.

Can my right hon. Friend confirm that the measures that he is putting forward will make the Scottish Parliament one of the most powerful devolved Parliaments in the world?

Indeed. I hope these measures will allow the debate to move from process to action and policy, and that we can finally hear from the Scottish Government how they intend to deploy the significant powers that are provided in the Bill and in the Scotland Act 2012.

The hon. Member for Dundee East (Stewart Hosie) said that the deficiency of the Bill is that it does not allow Scotland to raise all the money it spends. I am confused. I thought the SNP did not want full fiscal and financial autonomy because that would get rid of the Barnett formula. Is the Secretary of State any the wiser?

I think the hon. Gentleman, like me, looks forward to amendments to the Bill being tabled, setting out the SNP position on full fiscal autonomy. I have heard that issue raised on numerous occasions but I am still not absolutely clear what it means in the SNP’s terms. The Institute for Fiscal Studies identifies a black hole of between £7 billion and £10 billion in Scotland’s finances.

With respect—[Interruption.] Actually, I am going to make a point that might be quite positive. With respect to my right hon. Friend’s arguments, what worries me is that this might not be the end of the story, because it does not get to the kernel of the problem, which is that the Scottish Parliament will raise only about 50% of what it spends and, therefore, will be fundamentally a spending Parliament, not a tax-raising Parliament. There is a good Conservative case to be made for full fiscal autonomy, because it would breed responsibility.

I do not believe that there is a Conservative case, or indeed any case, to be made for an outcome that would leave Scotland with a gap of between £7 billion and £10 billion in its finances, which would affect every school, every hospital and every person in Scotland.

The independence referendum on 18 September 2014 was a truly historic moment, and I am proud that the people of Scotland voted decisively to remain part of our United Kingdom. The debates were passionate, as many here today will attest, and extensive, and the level of participation was a credit to Scotland. The result was clear and decisive. It represented the sovereign will of the Scottish people. In voting no on independence, we Scots, for the first time in our history, made the positive, conscious and collective choice to pool our sovereignty with our neighbours in England, Wales and Northern Ireland. We made the positive choice to enjoy the best of both worlds. We chose to continue to share the benefits of being part of a strong United Kingdom while enjoying the benefits of a strong devolved Parliament in Edinburgh delivering Scottish solutions to Scottish issues. However, a no vote was not a vote for no change. The Conservatives, Labour and the Liberal Democrats all published extensive proposals for more powers for the Scottish Parliament in the months before the referendum.

The SNP accepted the result of the Scottish people but, during the referendum campaign, when Gordon Brown spoke on behalf of the Conservative, Labour and Liberal parties, we were promised that we would get as close to federalism as possible; that we would have home rule in the spirit of Keir Hardie. We hear about respect. The SNP won the election in Scotland conclusively. We stood on a mandate of powers for a purpose. Why does the Secretary of State not deliver what the people of Scotland voted for: a powerhouse Parliament with full economic powers?

I have heard the hon. Gentleman make his points before. The facts of the matter are that the SNP took part in the Smith commission after the referendum, signed up to a package of measures set out in the commission’s report and then, during the election, argued that its MPs would come to this Parliament to ensure that it was delivered.

Can the Secretary of State outline whether any of the fiscal arrangements that will be changed as a result of the Bill will affect Northern Ireland in any way?

It will clearly be the case that the Scottish Parliament will have significantly greater powers over income tax and welfare than it has now, but the Scottish Parliament is currently able to introduce policies that are significantly different from policies that are adopted in Northern Ireland. That is the nature of devolution and the devolution settlement.

I will put it the way a Ballymena man would: how much will it affect Northern Ireland?

It will depend on the policies that are pursued in the Scottish Parliament. For example, were my colleague Ruth Davidson to become First Minister of Scotland, we would see taxes reduced in Scotland, which I think would have a positive effect in Northern Ireland, because it would be an incentive to see business done in a compatible manner. But devolution is about taking decisions in the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, and increasingly in different parts of England.

Does my right hon. Friend agree that, at a time when we are devolving more powers to Scotland and other parts of the United Kingdom, we also need a fair and equitable settlement for the people of England, starting with English votes for English laws?

As my hon. Friend is aware, that proposal was in the Conservative party manifesto and it will be brought to this Parliament. [Interruption.] I think we have concluded on the issue of what devolution means throughout the United Kingdom.

The Conservative-led coalition Government passed the Scotland Act 2012—the biggest single transfer of fiscal responsibility to Edinburgh in 300 years. They also oversaw significant further devolution to Wales and Northern Ireland, as well as groundbreaking work on city deals and a step change across England with the work towards the creation of the northern powerhouse. The Bill before the House today represents a further step forward in the governance of Scotland and our United Kingdom.

The settled will of the Scottish people is now that Scotland should remain part of the United Kingdom. As such, this Bill demonstrates the Government’s determination that the Scottish Parliament should be made more powerful, more accountable yet autonomous, and better equipped to serve the people of Scotland. It is the fulfilment of our manifesto commitment that the all-party Smith commission agreement should be implemented in full. The fact that the Bill was introduced on the first day after the Queen’s Speech and that its Second Reading is taking place at the first opportunity since the general election speaks volumes for the Government’s determination to honour that manifesto commitment and get on with the job.

I congratulate the right hon. Gentleman on his new position and on beating off the opposition that he no doubt had in getting it. Does he not have cause to reflect that, whereas the previous Government in which he served as a Minister had the support of about a quarter of the elected Members of this House from Scotland, he is now this Government’s sole representative in Scotland? Does not that place on him a moral obligation to discuss with the elected representatives of the people of Scotland how to take forward this Bill? Is he not concerned that the all-party group in the Scottish Parliament that considered his draft proposals says that they do not equate to the proposals made by the Smith commission?

Order. Interventions must be brief.

I was intending to cover a number of the points that the hon. Gentleman raises. I have met the Scottish Parliament committee that was set up in relation to the Bill, and I am going to appear before it to give evidence directly on 25 June. I am in ongoing and constant dialogue with the Scottish Government in relation to this Bill. This very morning, I had a very cordial meeting with John Swinney, the Deputy First Minister, who is responsible for constitutional matters. During the four days when the Bill will be debated on a line-by-line basis, I will be very pleased to hear the suggestions and proposals that come forward from the hon. Gentleman’s group and, indeed, from any Members of this House.

What, then, is your observation on the fact that an all-party group of the Scottish Parliament, including members from your own party, has come to the conclusion that the proposals before us do not put into effect the Smith commission proposals? What is your reflection on that?

Order. All these things take some acclimatisation, but debate must always go through the Chair. The concept of “you” does not arise, because “you” means me—and I have no views on these matters.

The hon. Gentleman will see that there have been significant changes to the draft Bill—[Interruption.] There have been. If he goes through the Bill in detail, he will see that there are significant changes. [Interruption.] Well, I do not regard the power to give the Scottish Parliament the right to top up all welfare benefits in Scotland as some minuscule change; I regard it as a very, very significant clause in the Bill. It is one of a number of changes that have been made. We have made it very clear that throughout the Committee stage of the Bill we will look at proposals for changes to it. The Scottish Government published some proposed changes to the Bill yesterday—it was nice to see them—and no doubt we will have a greater chance to debate them in detail.

I do not think that I have ever seen such a shambling Front-Bench performance. Why does the Secretary of State believe he should have a veto over certain issues decided by the Scottish Parliament?

I had thought that being part of a larger number might change the hon. Gentleman’s habits, but he remains as ungracious as ever. The Bill contains no vetoes, as he will be well aware if he has read it in detail. What it contains are mechanisms to allow two Governments to work together on matters of shared interest and application. To me, the meaning of a veto is that when someone says they want to do something, someone else has the capacity to say, “No, you can’t.” Not a single provision of the Bill relates to such a proposal.

Does the Secretary of State fundamentally believe that the decisions of a democratically elected Government sitting in Edinburgh, who have 56 of the 59 Scottish Members in this House, should be challenged by him or any other Government Member with a veto?

I am sorry that the hon. Gentleman did not hear what I said in response to the hon. Member for Perth and North Perthshire (Pete Wishart). There are no vetoes in the Bill. The hon. Gentleman and others will see that clearly when we scrutinise it line by line.

rose—

I need to make a little progress.

Let me turn to the all-party Smith commission agreement, achieved under the chairmanship of Lord Smith of Kelvin. The morning after the decisive no vote in the referendum, the Prime Minister announced that all-party talks should take place to ensure further devolution to Scotland. The remit was defined by the referendum result: keeping the UK together and keeping Scotland a strong part of it. All four parties represented in this House, with the addition of the Scottish Green party, took part in the process, and all five parties signed up to the final agreement without caveat.

Does the Minister not agree that the Prime Minister gambled with the Union to sweeten the SNP, and that that sweetness has now turned sour? The Prime Minister is in chaos over Scotland, as he is over Europe.

I do not quite get the hon. Lady’s multiple metaphors. I am sure that there are some SNP Members who are sweet, and there are certainly some who are sour.

The central aim of the Smith commission was to address a flaw that had existed in the devolution settlement from the outset by making the Scottish Parliament more accountable for raising the taxpayers’ money that it spends. The significance of that point should not be overlooked, and we have alluded to it already: before fully implementing the Scotland Act 2012, the Scottish Parliament controlled almost 60% of public expenditure in Scotland, yet it was responsible for raising only about 10% of the funding. I did not believe that that was sustainable, and neither did the people of Scotland. For Holyrood to be the powerhouse Parliament that it rightly aspires to be and that this Government want it to be, it must be accountable to the people of Scotland for raising more of the money that it spends. The Bill is about ensuring that that missing link is fixed.

A second key aim of the Smith commission was to ensure that more decisions about welfare policy can be taken in the Scottish Parliament, so that specifically Scottish circumstances can be taken into account. The timetable set for the talks was that an agreement should be reached by St Andrew’s day. It was a challenging deadline, but it was met with a few days to spare—another commitment delivered to the people of Scotland on time.

I pay tribute to the 10 members of the Smith commission who represented their parties with skill and tenacity and worked constructively and co-operatively throughout the duration of the commission. They should be proud of what they have achieved for the people of Scotland. Again, I pay particular tribute to Lord Smith of Kelvin, who chaired the talks. He brought to the task his characteristic blend of good humour, insight and hard work. Of course, the occasional bout of strong-arming was also needed, but he says such bouts were mercifully rare.

Key to the success and the credibility of the talks was the fact that Lord Smith made sure that the voice of civic Scotland was heard loud and clear as the negotiations progressed. More than 18,000 people made submissions to the commission on what powers should be devolved to Scotland, and more than 400 individual organisations the length and breadth of Scotland submitted their views on the way forward.

I am sure it will not have escaped the Secretary of State’s notice that the five parties that signed up to the Smith commission are the same ones that are involved in the Scottish Parliament’s Devolution (Further Powers) Committee, which has stated that the Government’s Bill does not live up to either the substance or the spirit of the Smith commission. Why will he not now go back to the drawing board and listen to what was said by the Smith commission, as well as by the 60 organisations that have called for welfare powers to be devolved, and actually deliver it?

I have made it clear, and the hon. Lady is aware, that significant changes have been made to the draft clauses, which were published ahead of the Scottish Parliament committee considering them. I have told the House that we look forward to seeing amendments and proposals. Yesterday the Scottish Government produced some draft clauses, which we most certainly will look at as part of our ongoing discussions with them. If the hon. Lady and others feel that the Smith commission is not met in full by the exact terms of the Bill, there will be plenty of opportunities for debate and discussion in this House. As I have said, there will be four days of line-by-line scrutiny of the Bill.

rose—

I have a quote from the current First Minister, so perhaps the right hon. Gentleman will wait until I have reminded him that last week she said that

“compromise isn’t…the same as concession.”

Compromise was made by all parties in respect of delivering the Smith agreement. This Bill is not about reopening those issues.

I know that the Secretary of State would never knowingly mislead the House, but earlier he said that the Daily Record was behind him in saying that the Bill implemented the proposals of the Smith commission. I have had an opportunity to consult today’s editorial, which says that

“there are serious concerns the proposed Scotland Bill does not fully implement what was proposed…This is an unacceptable situation that must be rectified quickly as the Bill makes its way through Westminster.”

Does the Secretary of State hold to his previous statement, or does he accept the concerns that he has not implemented what Smith proposed?

I do not think the right hon. Gentleman listened to my response, because I made it very clear that I felt that, after today’s debate and four days of detailed scrutiny of the Bill in Parliament, the Daily Record, its readers and, indeed, the people of Scotland will be satisfied that it meets the full recommendations of the Smith commission.

The coalition Government committed to bringing forward draft clauses to implement the Smith commission agreement by Burns night 2015: they did so on 22 January —another commitment met in full and on time. When the Prime Minister went to Edinburgh on that day in January, he gave assurances that he would listen to the views on those draft causes and, as I have set out to a number of Members, we have done so. Since January, the Government have engaged extensively with interested parties in Scotland. Hundreds of people have attended events, from the north-east to the borders, giving their views on the clauses and how they could be refined further.

Of course, work remains to be done during our deliberations on the Bill and we will listen to proposals. The Smith commission recommended, for example, that the Scottish Government should be able to create new benefits in areas of devolved responsibility. We are working closely with the Scottish Government to examine whether new powers, if any, are required to implement that recommendation.

I am proud that the Bill has already benefited from significant input from people and groups across Scotland. This Government will continue to listen to views from all parts of Scotland and from those in all parts of the Chamber as we take forward the Bill and refine its provisions to ensure that the spirit of Smith can be met in full.

The Secretary of State has partially answered my question by saying that he will listen to all angles and to everyone in the Chamber, but will he set up some commission or congress so that the other parts of the Union have the chance to have their say before this all goes ahead and we find we are on a roll into the future that we cannot stop?

This Government are committed to deliver the Smith commission recommendations, and that is what we will do. We are bringing forward a Bill to implement the Stormont House agreement. Proposals that anyone makes in relation to their own parts of the United Kingdom, or indeed their say on other parts of the United Kingdom, will always be capable of being debated in this House. If, however, the hon. Gentleman is asking whether I support the idea of a constitutional convention, the answer is that I do not.

The Secretary of State has now been on his feet for more than half an hour. Will he actually speak about the contents of the Bill today, or will he continue to waffle until he sits down and lets others speak?

As you are well aware, Mr Speaker, the hon. Gentleman would have been equally critical of me had I chosen not to take the numerous interventions. I have done so because I want this to be a debate and for me to be held accountable to Members of the House.

I am grateful to the Scottish Parliament’s Devolution (Further Powers) Committee for its work. I am due to meet its members shortly. In getting us to this point, my officials have worked extensively behind the scenes with their Scottish Government counterparts to listen to their views, and they will continue to engage actively with them throughout the process on this Bill.

I thank my right hon. Friend for taking my intervention. So much of what I am hearing is a lack of trust—[Interruption.]—and my point is that that has to change. There is nothing that we cannot achieve together if we have a little bit of trust. I am very new to politics, as many Members will know, but I would not stand behind a Government who I felt just wanted to play their part and play the game. I think all that Members are hearing is just noise. [Interruption.] My question is: can we not take the Secretary of State at his word, go through the Bill line by line and find a route through this together, rather than assume that there is no trust and no will to give the Scottish people what they want? Unless we are presented with that mindset, we will achieve nothing.

I very much welcome that contribution, and I hope that that is the spirit in which we can proceed. Many people who saw the Smith commission agreement signed at 8 o’clock on a Tuesday evening were disappointed when, at 8 o’clock the following morning the now Deputy First Minister suggested that there were parts of it that he did not like. I hoped that the agreement could and will be a comprehensive settlement for Scotland.

Why are the Secretary of State and his party denying the people of England the right to have a constitutional convention, given that over the past two decades the Scots have had two referendums and the Welsh, the Northern Irish, the people of London and the north-east have had referendums? Why is he denying the rest of the people of England such a right, and fobbing them off with an idea drawn up by the Chancellor on the back of a fag packet?

We have had a general election in which the issues were debated extensively across the United Kingdom. What the Government are committed to do in relation to Scotland is to deliver the Scotland Bill.

You have not selected the amendment, Mr Speaker, but, as the hon. Member for Perth and North Perthshire (Pete Wishart) stated, it mentioned a veto, and I want to clarify the issue of so-called vetoes. The Smith agreement is clear that matters such as the mechanism for paying universal credit across the UK and the Jobcentre Plus network will remain reserved. That was an important argument during the referendum and was endorsed by the majority of Scots. In order to deliver, we need a system that allows the Scottish Government to take responsibility for benefits, including by being able to top them up, but allows the reserved universal credit payments mechanism to carry on working effectively. That is what the Bill does.

It is wrong to call that a veto—as I said earlier, a veto means that someone can prevent something from happening if they do not like it. The Bill does not give the UK Government that power. In fact, it explicitly says that consent for a change cannot be unreasonably withheld.

But that does mean that it can in fact be withheld, because a Minister here in Westminster will have to give agreement to when a change will take effect. That Minister is not obliged to give any agreement, so consent could be withheld and it is effectively a veto.

I do not agree with the hon. Gentleman’s analysis at all. The provision is not even about agreement to a decision. It is a timing arrangement as part of the systems that need to operate. It will work the other way, too; the UK Government will need to consult the Scottish Government when they want to make changes to devolved universal credit flexibilities that will have an impact on Scotland. Other clauses, such as those on transport and elections, also require the UK Government to consult Scottish Ministers before acting.

It is helpful that the Secretary of State has said on the record in this Chamber what the intentions are in relation to the clauses in question. What will happen in the event of a dispute about the outcome of such a consultation process? Where will disputes be decided?

There are existing dispute reconciliation mechanisms in the Joint Ministerial Committee. There have inevitably been a number of disputes between the Government of the United Kingdom and the devolved Administrations, and most of them have been able to be resolved through that process.

To respond to the hon. Member for Dundee East (Stewart Hosie), I will turn to the provisions of the Bill. It is a wide-ranging Bill that will bring about a transfer of responsibility to Holyrood that will touch just about every aspect of Scottish life, affect every pay packet in Scotland and have the potential to deliver real and tangible benefits to the people of Scotland.

I turn first to the provisions on taxation. Central to the Bill is the devolution of income tax. Although the definition of income tax will remain reserved, the Scottish Parliament will have full control over rates and bands. That builds on the tax devolution set out in the Scotland Act 2012, which provided for significant powers over income tax that will come into effect next April.

One notable change to the Bill, compared with the draft clauses published in January, is the confirmation that the Scottish Parliament will be able to set a zero rate of income tax on earnings if it so chooses. That effectively gives it the opportunity to reduce the individual’s tax burden significantly if it can afford to do so and makes appropriate spending cuts or tax rises elsewhere. Of course, the reverse is true—if the Scottish Government want to spend more, they will be able to do so by taxing more, and they will be accountable to the Scottish taxpayer for it.

Alongside the devolution of income tax sits the assignment of half of Scotland’s VAT revenues. Members will recall that it is against EU law to have differential VAT rates within a member state, so the devolution of VAT would not be legal.

Will the Secretary of State give way?

No, I have already taken an intervention from the hon. Gentleman.

Instead of the devolution of VAT, the Smith commission recommended that half the VAT revenues raised in Scotland should be assigned to the Scottish Parliament, thereby further linking Holyrood’s funding to the performance of the Scottish economy. The more the Scottish economy grows, the greater the revenue from VAT that Holyrood will be able to keep. That is an incentive to achieve growth.

Will my right hon. Friend give way?

No; let me make a little progress.

The devolution of income tax on earnings and the assignment of VAT revenues, when taken together with the devolution of air passenger duty and the powers under the 2012 Act, mean that the Scottish Parliament will have important decisions to make. The Scottish Parliament is now responsible for raising about only 10% of what it spends, but under the Bill Holyrood will be responsible for raising more than 50% of what it spends. It will truly be one of the most powerful devolved legislatures in the world.

May I take the Secretary of State back to the comments made by my hon. Friend the Member for Blaydon (Mr Anderson) and the hon. Member for North Antrim (Ian Paisley) on the impact of changes on the rest of the United Kingdom? Air passenger duty is a case in point. Regional airports in the north of England will undoubtedly feel the impact of any changes to air passenger duty in Scotland. Is that not yet another reason why, as we proceed with devolution arrangements, we need to have a proper constitutional convention so that all measures can be considered across the whole of the United Kingdom?

I have made my views on a constitutional convention known. Other hon. Members have raised the issue of air passenger duty. The Treasury has established a group to look at the impact any changes to air passenger duty in Scotland could have on airports in England.

On welfare policy, there will also be a highly significant transfer of responsibility. While the social security reservation remains in place, part 3 of the Bill means that the Scottish Government will be responsible for welfare, which last year accounted for around £2.5 billion of spending in Scotland. The Scottish Parliament will be able to make provision for a number of types of social security benefit, discretionary payments and employment support. The Bill also contains provision to transfer executive competence to Scottish Ministers to allow them to vary certain aspects of universal credit. It will give the Scottish Parliament more responsibility for benefits paid to carers, disabled people, those who are ill, those who require help with winter fuel costs, funeral payments and maternity payments. As a result of the Bill, when people most require help the Scottish Government will be able to tailor that help to particularly Scottish circumstances.

The new powers are clear. Is it not time we heard what the SNP will do with the new powers?

I absolutely agree with my hon. Friend. As ever, I have been working very closely with the Scottish Government. I am looking forward to speaking tomorrow with Alex Neil, the Cabinet Secretary responsible for welfare matters, and to taking forward the work of the joint ministerial welfare group. I have made it clear, in relation to that group, that we want to put in place transition arrangements to allow the powers to be transferred as quickly as possible. However, we need to know what we are transitioning to and so need clarity on the Scottish Government’s position in relation to the operation of those powers.

On a point of order, Mr Speaker. There is a rumour sweeping the Benches that Conservative Members have been provided with a prompt sheet on questions to ask the Minister. If such a disgraceful thing had happened, would that be within the rules of the House?

rose—

Order. I will deal with the right hon. Gentleman first.

I always enjoy the theatrical performances of the right hon. Gentleman, the last of which was marred only by the sudden emergence of a puckish grin on his face as he was making his point. The answer is that there would be nothing disorderly about that. As the right hon. Gentleman knows, there are very few novelties in this place. There is usually a precedent for everything.

Further to that point of order, Mr Speaker.

I am not sure that a further point of order is required, but let us hear whether the knight has something new to say.

For some reason, my Whips Office has not given me a prompt sheet. [Laughter.]

I think the hon. Gentleman knows the answer to that: they gave up on him some time ago.

On a point of order, Mr Speaker. You are incredibly indulgent.

There have been reports that some Members have been required to sign a piece of paper undertaking not to disagree with those on their Front Bench as a condition of being Members of this House. Would that be in order?

I gather it has been denied. I must say, I would not have lasted long in the House had I been required to sign any such paper. I am innocent of such matters. It is the first I have heard of it and I doubt it will last.

Thank you, Mr Speaker.

The Smith agreement does not stop at powers over tax and welfare. The Scottish Parliament will receive a transfer of legislative competence in a range of significant policy areas. I cannot list each power in detail now—as I have said, the House will have ample opportunity to scrutinise them in Committee—but I will provide some examples. The Bill will enable the devolution of the management of the Crown Estate’s economic assets in Scotland to the Scottish Parliament and of the management and operation of reserved tribunals to designated Scottish tribunals. The Scottish Parliament will also have additional responsibility over roads, speed limits, road signs and the policing of railways in Scotland, as well as powers over onshore oil and gas extraction—

rose—

I have already taken a small speech from the hon. Gentleman.

The Bill provides the Scottish Parliament with powers over gaming in new premises and for additional duties on the UK Government to consult Scottish Ministers on functions carried out by a range of important public bodies. It will also enable public sector bodies to bid for rail franchises in Scotland; provide for the ability to state how schemes related to fuel poverty and energy efficiency are run; and increase the ability of the Scottish Parliament to require certain bodies to give evidence before it. In addition, part 1 will take forward in full the Smith agreement that the permanence of the Scottish Parliament be recognised in UK legislation and that the so-called Sewel convention be put on a statutory footing.

Under the Bill, this Parliament will retain an incredibly broad power to legislate on devolved matters, even without the Scottish Parliament’s permission. Why is that, and will the Secretary of State provide examples of when he thinks such action would be appropriate?

The hon. Gentleman will be aware that since the coming into existence of the Scottish Parliament, the UK Parliament has legislated in devolved areas only with the agreement of the Scottish Parliament, under the Sewel convention, and that the Bill will put that convention on a statutory footing.

On income tax, what will happen if someone is resident in Scotland but works over the border for an English company? If the income tax rates are different, will that not add to the compliance costs for that business? Who will compensate that small business in England for the additional compliance costs of the income tax variation?

That point was debated in full during the passage of the Scotland Act 2012, which introduced the Scottish income tax rate. In simple terms, for the hon. Gentleman’s purposes, it will be done by way of a tax code generally containing the letter S, allowing businesses to operate the PAYE system as they would normally do and without additional expense. There is a designation of “Scottish taxpayer” that is dependent on residence—and, as a point of fact for new colleagues, all Scottish MPs are resident in Scotland for Scottish tax purposes.

Finally, the Scottish Parliament will find itself largely responsible for how it runs itself, how it is elected and the people who can vote to elect it. I am pleased to confirm that we have already agreed to a request from the Presiding Officer to take action to ensure that the 2020 UK general election date and the Holyrood election date do not clash.

It is clear that a significant range of powers will be devolved to the Scottish Parliament and that the onus is now on the Scottish Government to be clear with the electorate about how they will use them.

My constituents in England will no doubt be listening to what powers are being devolved, but they are also waiting to hear what is happening to the block grant and the Barnett formula, for example. They will be interested to hear how the money is flowing. Will the Secretary of State say something about that?

The hon. Gentleman’s timing is impeccable, because I was just coming on to the so-called fiscal framework that underpins the transfer of tax and welfare powers to Holyrood. Alongside the Barnett formula, the framework will deliver a fair and lasting financial settlement for Scotland and the rest of the UK. The framework will provide the Scottish Government with the means by which they can determine a mix of taxation and spending specific to Scotland, but which fits with the UK Government’s overall fiscal plan.

This means that Scotland will continue to benefit from the pooling of risks and resources across the whole of the UK, but the Scottish Government will soon be responsible for raising substantial amounts of its revenue through taxation. As a result, it will be more accountable to the Scottish Parliament and to the Scottish people. The Scottish Government will in future be responsible for more than 50% of their funding. Changes in the Scottish Government’s funding will therefore be increasingly determined by changes to Scottish taxation.

The detail of the Scottish fiscal framework will be agreed between the UK Government and the Scottish Government on the basis set out in the Smith agreement. Discussions on the framework have already begun with the aim of reaching an agreement alongside the passing of the Scotland Bill. My right hon. Friend the Chancellor of the Exchequer has met the Scottish Government Deputy First Minister, John Swinney, today. This timetable demonstrates the Government’s determination to make quick progress on the fiscal framework.

Will the Secretary of State clarify whether the final say on social security levels will rest with the Scottish Parliament?

The Scottish Parliament will have the capacity to top up welfare benefits. It could be said that it would have the final say on the level of benefit. UK benefits will obviously be determined in this House, but the Scottish Parliament will have the opportunity to top them up, as is clearly set out in the Bill.

Does not the notion of “topping up” benefits suggest that in and of themselves they are deficient?

What I think it suggests is the requirement for responsibility. If the Scottish Government believe that benefits are not at the level they should be, they will be able to ask the Scottish taxpayer for the funds to increase them. That is what I would regard as responsibility within a Parliament.

A few minutes ago, my right hon. Friend described the fiscal framework of the Barnett formula as long-lasting and fair. Surely that would be the case only if the Barnett formula were based on need rather than on a historic anomaly. It is a formula that results in my constituents getting £1,600 less per person per year than they would get if it were based on need, which one would think a progressive party would wish to be the case.

My hon. Friend is a long-standing critic of the Barnett formula, and I acknowledge the point he makes. The Prime Minister, the then Leader of the Opposition and the leader of the Liberal Democrats made it absolutely clear that their parties had no intention of changing the Barnett formula. That certainly remains the position on the Government side.

The Secretary of State has acknowledged the point, but can he justify why English constituents will get £1,600 less?

I did not know that that was the policy of the Labour party. I had understood that it supported the Barnett formula, and I can reiterate the continuing support of Government Members for it.

One issue closely linked to the fiscal framework is the much talked-about issue of full fiscal autonomy. This issue was raised a number of times today and during the general election campaign, and some SNP Members have talked tirelessly about it. My party and the Government have made it clear that we will strongly oppose full fiscal autonomy for Scotland. As the analysis by the independent and respected Institute for Fiscal Studies told us, full fiscal autonomy would leave Scotland with a £7.6 billion black hole in its finances this year and almost £10 billion by the final year of this Parliament. This Government will never support a policy that leaves one part of the UK in such a perilous financial situation: we are members of a social union, too. However, given that the SNP set such store by the issue in its election campaign, I look forward to SNP Members bringing forward amendments on full fiscal autonomy in Committee. That is to be welcomed, because apart from anything else, such amendments would mean the people of Scotland might actually get to see what the definition of full fiscal autonomy is.

Is not the lesson of the euro that fiscal autonomy needs to go with monetary autonomy, and that if Scotland has fiscal autonomy it must also have its own currency?

That is a very good point and I think my hon. Friend and the right hon. Member for Gordon (Alex Salmond) will be able to spend hours debating it.

The Secretary of State is being remarkably generous in giving way—very much like the SNP is with other people’s money. The Secretary of State said it would lie within the power of the Scottish Government to top up—I think that was his expression—welfare benefits. We know how they like being generous with other people’s money, but if they overspent at the end of one year—because of course benefits are demand-led—who will pick up the bill, the British taxpayer or the English taxpayer?

In relation to matters for which the Scottish Parliament is responsible, it will be the Scottish taxpayer who has to pay. So if the Scottish Parliament and Government want additional spending, the Scottish taxpayer will have to pay.

I wish to conclude my remarks, but I have sought to take as many interventions as possible because part of the Bill is about accountability. The Bill represents the fulfilment of a promise to the people of Scotland that a no vote in the referendum was not a vote for no change. It delivers on the all-party Smith commission agreement, as the Law Society of Scotland and many others have already made clear. The Government and the Smith Commission engaged extensively on the agreement, and on the draft clauses since January, and the Bill before us today is all the stronger for that extensive engagement. It will benefit further from four days of full line-by-line scrutiny in this Chamber. The challenge will then be for the Scottish Government to finally set out what they will do with the new powers they will receive. Now is the time for the Scottish Government to stop acting and start doing. I commend the Bill to the House.

May I start by offering my congratulations to you, Mr Speaker? This is the first time I have been at the Dispatch Box since you were elected as Speaker. It is a tremendous pleasure to see you back in the Chair, especially after the events on the last day of the last Parliament.

I also congratulate the right hon. Gentleman the new Secretary of State, and not on his Castroesque speech—he spoke for nearly an hour—but because he has always been helpful, courteous and kind. I hope we will continue in that spirit now he is Secretary of State. The House may not know this, but we share something in common. We both share the distinction of being the most difficult choices that our party leaders had when choosing someone for our respective roles. I hear the Prime Minister mulled over the list of potential candidates for Secretary of State for hours before deciding on the right hon. Gentleman, but I am sure he will be a wise choice.

It would be remiss of me not to extend my congratulations to the Scottish National party Members on their unprecedented result in Scotland. There is a heavy weight on their shoulders—by the looks of it, on the end of their third Bench as well—to deliver the considerable promises that they made to the Scottish people during the election campaign. I say this sincerely to them: the political enemy in this place is on the Government Benches, and I hope that they will remember that in the coming years. Where we agree, I will endeavour to work with them and I hope that they will reciprocate; where we do not, and where scrutiny and principled opposition are required to hold the SNP Government to account in Holyrood, I will be a strong voice in such scrutiny. [Interruption.] The hon. Member for Perth and North Perthshire (Pete Wishart), who is chuntering from a sedentary position, does not seem to be starting off on the right footing.

I want to pay tribute to my many colleagues and friends who lost their seats in Scotland at the general election. They should all be thanked for their unstinting commitment to serving their constituents; they will be a big loss to this place and I wish them all well. No one epitomised that dedication to public service more than my predecessor as the Opposition’s spokesman, Margaret Curran. She worked day and night in this place and beyond to stand up for the interests of Scotland and her constituents. We all owe her a debt of gratitude for that strong voice and for the position we are in today with the Bill.

Today marks a momentous point in Scotland’s devolution journey. Whatever the outcome of the general election, the Bill would have been in the first Queen’s Speech, regardless of who was sitting on the Treasury Bench. In 1997 one of the first acts of the new Labour Government was to present a Bill to the House to deliver the referendum that gave us the Scottish Parliament. That was a promise made then and kept then; we should bear that in mind when debating the Bill today. The Labour party is and always will be the party of devolution.

“There will be a Scottish Parliament”—the words of the father of Scotland, Donald Dewar. When he uttered those words, however, it signified a journey in devolution. That journey has seen Scotland recently travel through an extraordinary democratic process. The referendum was a once in a generation—once in a lifetime, depending on who is speaking—experience, marking a defining choice about Scotland’s membership of the United Kingdom. It was a no vote, but it was not a vote for no change. We can draw a constitutional lesson from that: Scotland wants to be in the United Kingdom, but it wants to be unique and able to make its own political choices.

Labour argued passionately for Scotland to remain in the UK and we won the argument. Perhaps we sacrificed our own party’s interests in doing so, but it was certainly the right thing to do. It is important to understand what the agreement was, why Scots chose to stay in the UK and why it is so important for the Bill to deliver for Scotland. It is therefore worth putting the Bill in its constitutional context.

Over the past year we have had a debate about Scotland’s place in the world and how, in an uncertain international environment, Scotland’s interests are best served as part of a larger country and stable Union; a debate about Scotland’s economic interests, with more opportunities for jobs, for businesses and for investment as part of the wider UK; a debate about sharing economic and financial crisis risks, whether in the rebuilding of the Scottish-domiciled banks or the shared risks from the ups and downs in the oil price; a debate about shared tax and spending resources, about how Scotland can take greater control over tax and spending while maintaining the UK-wide pooling and sharing of resources that guarantees pensions and benefits, and safeguards Scotland’s public services; and, most importantly from a Labour point of view, a debate about social solidarity, about sharing across the territory of the United Kingdom so that together the nations of the UK can work together for the benefit of everyone who lives here.

In the end, this is about our sense of belonging: we are not simply Scots on our own, but part of a wider family of nations in the United Kingdom. The lesson of the referendum campaign is that those links remain powerful and valued by most Scots. However, it is clear that securing Scotland’s place in the UK is simply not enough. That is why the Bill really matters, because it guarantees not only economic benefits and UK social solidarity, but the scope under devolution to do more, to make different choices and to set a different course for Scotland, distinct from a UK agenda that might not always be—today certainly is not—in accordance with the public opinion of Scotland.

The Bill will make the Scottish Parliament one of the most powerful devolved Parliaments in the world—not my research, but that of the Scottish Parliament itself—with responsibility for more than 40% of tax revenues and more than 60% of public spending. Critically, the Bill provides more accountability. Lord Smith said that the agreement had the potential to increase financial discipline, promote greater budget transparency and enhance the debate on fiscal policy in Scotland. That is important, because the Scottish Parliament already has devolved responsibility for many of the areas that are critical to the day-to-day life of Scots: health, education, housing, justice, transport, economic development, local authority and business rates, 10p of income tax and all immovable taxes, borrowing powers and much more besides.

The problems in Scotland with accident and emergency waiting times, lower educational attainment and a crisis in housing show that the more important debate in this House is about how powers are utilised, rather than where they lie. After this Bill is passed, the Scottish Government, as the most powerful devolved Government on earth, will have immense power to change our society for the better—to create a fairer Scotland and a fairer country—but the Bill will also ensure that Scotland continues to benefit from the pooling and sharing of resources across the United Kingdom.

What is required now is the imagination and political will to deliver on that potential. That political will has always been a Labour priority, as demonstrated through the Calman and Smith commissions, to deliver progressive change for Scotland. The question becomes: will it be the SNP’s priority to start using new powers as a responsible Government or will it continue with a politics of grievance and blame? It appears to me from today’s exchanges that the SNP is desperate to be disappointed before the Bill has even started its passage through this House.

Labour has always been committed to ensuring that the infamous vow, negotiated by the cross-party Smith commission, was delivered in full. May I take this opportunity to thank Lord Smith of Kelvin and the 10 commissioners for their sterling work in getting us to where we are today? The Bill meets the commitment on the timetable and Labour will ensure, through the Bill’s passage in this House, that the legislation promises are also met in full, both in substance and in spirit. The original purpose of devolution was to keep the social solidarity that comes from being part of something bigger while recognising the uniqueness of Scotland’s role in the UK.

Does the shadow Secretary of State agree that one secret of devolution, and of this kingdom, has been parity for all of our peoples across all of the nations that share this kingdom and that the break-up of parity in social welfare payments alone has had the most destabilising impact in Northern Ireland? Indeed, more interest is given to the levels of disability living allowance than to the levels of IRA activity in Northern Ireland. Will the change to welfare payments affecting Scottish people also have a destabilising impact, not only on Scotland’s place in the Union, but on our place together as a people?

I am grateful for the intervention, because the hon. Gentleman is describing devolution—that is how it works. It is up to individual Parliaments to make the choices, within the powers they have, on how they want to serve. Under a democratic system, the people will decide at the ballot box whether or not those decisions are ones they wish to vote for. Unfortunately, when there is devolution there will be disparities across the nations of the United Kingdom, but the important point is that the United Kingdom stays together.

I do not want to fall out with my hon. Friend, but it feels like the people of England will not get the choice to take any position in a democratic vote, because we are being told, “If you want devolution, you have to sign up to a regional mayor, whether you like it or not.” Without any debate, we are told, “If you don’t do that, you can’t get any money.” That is not devolution. He has talked often about social solidarity, but where is the social solidarity for us in England when this is being done without our chance to have a real debate in this country?

I am grateful for that intervention. The Scottish referendum debate demonstrated that when there is a proper constitutional debate, under a framework for proper constitutional debate, the results are there for all to see. The overall position of the constitutional convention that we were proposing in our manifesto would have been the way to take some of these issues forward. Colleagues across England would be significantly upset to see that the devolution structure across the UK is progressing quickly while they are being hamstrung with what is being offered to them. The Government really do need to get a grip of this whole constitutional settlement across the UK, so that England does not seem as though it is losing out.

On that point, does my hon. Friend think it bizarre that this Government are giving Scotland the right to increase and decrease its income tax, while legislating so that England and Wales cannot increase income tax? Is that not a bit strange?

I am grateful for my hon. Friend’s intervention, because one key question for the Treasury Minister wrapping up today’s debate will be: if the Government legislate for not increasing VAT, national insurance or income tax, what are they going to increase to cover the £23 billion of promises they made during the general election? I suppose the direct answer to my hon. Friend’s question is to say that that is the way devolution works and it is up to the different legislators to decide what they wish to do. This Bill allows Scotland a settlement where the responsibility and the accountability goes straight to the heart of politics in Scotland.

I was saying that as this Bill makes its passage through the House, Labour will ensure that legislation promises are fully met both in substance and in spirit. The original purpose of devolution was to keep the social solidarity that comes from being part of something bigger while recognising the uniqueness of Scotland’s role in the United Kingdom. But we in the Labour party want to go further. We have been calling for more powers for some time and included most of them in our manifesto, so this is not a knee-jerk response to the general election result as some would say, but a continuation of the devolution commitment.

I have been listening carefully to the hon. Gentleman, and he is not saying anything that was not said by Labour during the general election campaign. In many other areas, the Labour party is undergoing fundamental reassessment of policy. Having lost 40 out of 41 seats in Scotland, is there any new policy with which the hon. Gentleman wants to enlighten this House and Scotland?

If the right hon. Gentleman wishes me to make some progress, I will come on to those very issues. Let me remind him that the devolution settlement was agreed to by all five parties on the Smith commission. The Bill that is in front of us is to ensure that the Smith agreement is put forward in full, and we want to ensure that it is put forward in full both in spirit and in substance, as I have said twice already. [Interruption.] I hear someone chuntering, “It doesn’t” from a sedentary position. Well, we are going through this parliamentary process and will seek to amend the Bill precisely because we want to ensure that it does fulfil everything in the Smith agreement, but we also want to go further.

We will seek to amend the Bill to go beyond the Smith agreement without compromising on the pooling and sharing of resources across the UK that guarantees the Barnett formula and the UK pension system for Scots. On welfare, we will ensure that the final say on benefit levels remains in Scotland by giving the Scottish Parliament a wider power to top up all reserve benefits. We will ensure that the Scottish Parliament can introduce new benefits in devolved areas funded from Scotland to meet Scottish circumstances; bring employment and welfare policy together with a positive vision for tackling the low skills, numeracy and literacy problems that hold back adults trapped in long-term unemployment; fully devolve housing benefit; and ensure double devolution by devolving job creation powers to local communities, providing real opportunities, as my private Member’s Bill demonstrated at the tail end of the previous Parliament.

My hon. Friend is making a very good speech. Will the ability to top up social security payments enable the Scottish Parliament to get rid of welfare vouchers that were introduced earlier this year?

That goes to the heart of some of the discussions that we will have in this Chamber during the five days we will spend considering this Bill, as some of the choices that the Scottish Parliament have made fly in the face of its rhetoric both of being anti-austerity and of looking after the most vulnerable. With the £444 million underspend in the Scottish Parliament budget last year, many of the questions just raised by my hon. Friend will be asked by ordinary Scots up and down the country.

I am delighted to see that at least my hon. Friend is in his place. Sadly, all too many of our colleagues are not. On the devolution Bill and these proposals, is there not a danger that if things go really well, the SNP will take all the credit, but if things go badly, Westminster will get the blame?

My hon. Friend raises the fundamental principle of nationalist politics. I remember the former First Minister, the right hon. Member for Gordon (Alex Salmond), taking great credit when unemployment fell in Scotland, and then blaming everyone else when unemployment rose, and that was a regular trend throughout the time of his premiership in Scotland. [Interruption.] I can hear him chunter “Shameful” from the Back Benches. People just have to look at the record and determine the facts for themselves.

I would go further than my right hon. Friend the Member for Gordon (Alex Salmond). The result for Labour a few weeks ago was catastrophic, and we have heard nothing thus far from the hon. Gentleman’s contribution that suggests that he is addressing those problems. What will he do? Will we hear a new story from Labour? Will it work with us on a progressive agenda across Scotland so that we can take on the Tories, address austerity and deal with the menace of Trident?

Well, if my mathematics is correct, I have been on my feet for 15 minutes, and it is quite obvious that the hon. Gentleman has not listened to the first eight pages of my speech. It was about social solidarity and some of the changes that we want to see in this Bill. Let me put it on the record that I have just seen a tweet from him claiming that Labour will not vote on the SNP amendment tonight. Well, I understand that the amendment has not been chosen, so perhaps he would like to correct the record on his Twitter feed rather than yet again spreading mistruths in this House for political gain. This is a serious Bill that is trying to develop the constitutional settlement for Scotland.

The point made by my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) was that if things go right in Scotland, the SNP will claim credit, but if things go wrong it will always be Westminster’s fault—[Interruption.] If this Bill is not good enough in terms of what the Scots Nats want, why are they not going down the route proposed in their “Stronger for Scotland” document, which was a move to full fiscal responsibility?

When my hon. Friend made his point about the SNP claiming credit when things go well and blaming others when things go badly, the right hon. Member for Gordon shouted, “Sounds like a good narrative.” We are talking about people’s lives, and if we rule our country simply on a narrative we are in trouble.

My hon. Friend the Member for North Durham (Mr Jones) is absolutely correct, because it was in the SNP manifesto that they would deliver full fiscal autonomy for Scotland. In fact, the First Minister said that all the MPs elected to Westminster under the SNP banner would vote for it this year. It seems to me that there is back-pedalling on that at the first opportunity. Perhaps we will get some enlightenment on their current position on full fiscal autonomy when the hon. Member for Moray (Angus Robertson) speaks, but it certainly was not mentioned in the amendment.

Is my hon. Friend not concerned and confused by the fact that the incoherent amendment tabled by the Scots Nats contains no mention whatsoever of what has just been suggested?

Nothing in the amendment addresses the question of full fiscal autonomy, but perhaps during our consideration of the Bill we will find out whether that is a goal that the SNP wants to promote—[Interruption.] I hear chuntering again from the right hon. Member for Gordon from just behind my left shoulder. The level of public respect for politicians is pretty low and we are only a few weeks away from everyone having voted in the general election. When the party that won 56 out of the 59 seats in Scotland—as it consistently trumpets—dumps its manifesto just a few weeks afterwards, there is little wonder that there is so little respect for politicians in this country.

The SNP remains committed to a situation in which the Scottish Government will have full financial control over their own affairs and be able to raise their own revenues. We want that to be done in a responsible way that does not disadvantage the people of Scotland. During the election campaign, we were treated by your party to a grotesque caricature of our proposals. I point out to you and ask you to reflect on the results of that election campaign, when people rejected what you said. You said that if they voted SNP they would bring on themselves some sort of economic Armageddon. The people did vote SNP and rejected your view.

Order. I do not have a party and I did not say any of the things that have just been attributed to me, but I know that the hon. Gentleman will become a seasoned practitioner before very long.

I certainly hope that the hon. Member for Edinburgh East (Tommy Sheppard) becomes a seasoned practitioner very quickly, because he might have forgotten that I went through the general election campaign as well. At hustings all over the Edinburgh South constituency, the SNP candidate was consistently asked his position on full fiscal autonomy and, as I have just said, the answer was that the SNP would vote for full fiscal autonomy in this Parliament. This is a legislative opportunity to bring that manifesto commitment forward and if we do not see it, people will rightly ask why.

We are promoting the additional powers on welfare because more devolution can protect the most vulnerable in Scotland from the worst of the Conservative Government. The major new powers coming to Scotland give us the chance to do things differently so that never again can a Government impose things such as the bedroom tax on Scotland’s most vulnerable.

We will also seek to strengthen the Bill in other areas. I shall not give an exhaustive list. This might be a Scotland Bill, but it has implications for other parts of the UK so we will look for a UK-wide constitutional convention as part of it. Equalities are a significant part of it and we shall look to strengthen the relevant clauses to improve on gender equality in Scotland. Lord Smith heavily underlined the importance of improving relationships between the Scottish and UK Governments to provide greater scrutiny of Scottish Ministers and the need to devolve powers from the Scottish Parliament, so we shall seek amendments in that regard. The Bill offers an opportunity to deal with outstanding issues with employment tribunals and the permanence of the Scottish Parliament. Let me re-emphasise that we will ensure that Smith is delivered in full, to the letter, in both substance and clauses.

We must be vigilant as the Bill makes progress through the House, as the worst case scenario for Scotland would be an SNP asking for its top manifesto priority of full fiscal autonomy and a majority Conservative Government delivering it for them. There will be common ground on amending the Bill, and we will work together to achieve that, but I will defend Scotland night and day from the plan to cut Scotland off from UK-wide taxation and spending with full fiscal autonomy. Some people may not recognise the policy, because the SNP does not really want to talk about it now that the general election is over. First it was full fiscal autonomy; then it was full fiscal retention. It was adapted to full fiscal responsibility, and yesterday on Sky the hon. Member for Moray called it full fiscal manoeuvre. Indeed, this lunchtime, the hon. Member for Dundee East (Stewart Hosie) confirmed that the SNP may amend the Bill to demand full fiscal autonomy. The picture is not clear, and Scots deserve an answer on this fundamental broken promise in their manifesto.

The SNP is uncomfortable with the name, because it is uncomfortable with the policy. It knows that the consequences of such a policy would be severe for Scotland. It is a source of great shame that it simply is not honest about it, and it has five days on the Floor of the House to explain it. Recent analysis by the impartial experts at the Institute for Fiscal Studies showed that by the end of the debacle the black hole in Scotland’s finances could be as much as £10 billion, which would mean spending cuts or tax rises to fill the gap. That is over and above the cuts already imposed by this Government. That means austerity max.

I will not shirk from holding the Government in Scotland to account for their policies at the Dispatch Box regardless of how much SNP Members chunter. If there was no pooling and sharing of resources across the UK, there would be no secure extra spending coming north—extra spending that has built the schools and hospitals that educate our children and care for our grandparents. It would mean an end to the UK pensions system at a time when the proportion of pensioners in Scotland is set rapidly to outgrow the proportion of people in work, paying the taxes that fund the pensions system. It would mean an end to the UK welfare state—the idea that if someone has paid into the UK system they get at least the same basic minimum back regardless of where they live. In short, it would mean an end to the social solidarity that makes Britain what it is today. That is not a left of centre or even a progressive case. It is a recipe for disaster.

Does the hon. Gentleman not agree that this is the place where we hold the UK Government to account?

We are debating the Scotland Bill on Second Reading, and I am making the Labour party’s position clear. We will fight night and day to prevent full fiscal autonomy because it would be bad for the Scottish people. That is our job as a credible Opposition, and we will amend the Bill to make it better for Scotland, regardless of what other parties want to do in this place. If the hon. Lady is so confident about full fiscal autonomy I look forward to her tabling an amendment so that we can debate it on the Floor of the House.

Only last year, we were told that independence could be delivered in just 18 months. A 300-year old Union could be disentangled in a year and a half. We could apply to be an EU member state in 18 months. [Interruption.] I am sure that we received legal advice on that from the person who is chuntering behind my left shoulder again. We could set up our own treasury and foreign office; establish our own navy, army and air force; create intelligence and security services.; develop a separate welfare state; and write a new tax code. All of that, we were told, could be achieved in just 18 months, but we are now being told that full fiscal autonomy is not achievable in the short term. [Interruption.] Again, the chuntering says, “Oh yes, it can be achieved”. Well, if it can be achieved in the short term, we look forward to amendments being tabled, and we can debate them on the Floor of this political House.

There is another danger: the Conservative Government having a clumsy and short-sighted approach to the wider constitutional issues of the United Kingdom. They talk of one nation, but I am not sure which nation they are talking about. As the sun was rising over Downing Street on the morning after the referendum, the Prime Minister linked the question of English votes for English laws with the referendum result. He said that just as the Scottish Parliament would vote separately on issues of tax and spending, so too would England. Linking these two issues could have unintended and undesirable consequences, weakening the very Union that Scotland voted to maintain. Devolution of power to England and its regions is essential, and we proposed a radical approach during the election. However, we must make sure that reform is coherent and that we understand the consequences.

It was rash and unwise of the Prime Minister to use the referendum result in Scotland, not to reach out, but to continue to divide the nation. It was equally dangerous for the Prime Minister to stoke division and grievance between the nations of our United Kingdom during the election campaign.

My hon. Friend is making the case for a UK-wide constitutional convention, which is important for my constituents in Greater Manchester, where we are being offered a form of devolution by this Government. Is it not also about the city regions in Scotland? Should there not be devolution from Holyrood to the cities and regions of Scotland?

My hon. Friend is right. Over the past eight years or so we have seen the Scottish Parliament become one of the most centralist Parliaments in the world, sucking up power from local authorities and ensuring that local authorities cannot raise their own taxation. What we want to see—we will table amendments to this effect—is double devolution so that we will devolve powers from Westminster to Holyrood and ask Holyrood to devolve those powers out to local communities, which are best placed to deal with the problems facing Scottish communities.

I was talking about the clumsy way in which the Prime Minister has dealt with the UK constitutional settlement. In our manifesto we called for a full and proper constitutional convention which would be able to examine some of these issues so that we could have a more coherent and sustainable approach to the way that the UK operates.

We will not oppose Second Reading today. We will seek to improve the Bill in Committee and I have set out some aspects of it where we will try to do that. This is a real opportunity to provide a stable and durable devolution settlement to create a fairer, more prosperous Scotland. When this Bill is passed and these new powers make their way to the Scottish Parliament, we look forward to the debate moving on to how the powers will be used, rather than who will use them. That is the real debate and the one that the Scottish Labour party will relish in its historic fight for social justice, fairness and equality both in Scotland and across the United Kingdom.

rose—

Order. The House will be aware that there are a great many colleagues who seek to catch my eye and that we have limited time available. I am therefore obliged to put a limit of eight minutes on Back-Bench speeches.

I congratulate my right hon. Friend the Secretary of State not only on his appointment as Secretary of State, but on surviving his election, with some glory to himself.

I commend the hon. Member for Edinburgh South (Ian Murray) for his performance at the Dispatch Box because he did the House a great service just now: he put the Scottish National party on the spot. Let SNP Members put down that amendment in favour of full fiscal autonomy. The hon. Gentleman may oppose it, but he may find quite a number of Conservative Members voting for it. It might go through. We know that the SNP is calling for what it does not really want because it would leave the Scottish Government with a deficit in their budget of at least half the health service spending in Scotland. We want less of that kind of dishonest politics in the House. I commend my new hon. Friend the Member for South Cambridgeshire (Heidi Allen), who called for more trust in this debate. That needs to come first from the SNP, whose whole purpose is not to trust but to promote distrust so that it can break up the Union.

I am bound to ask the Secretary of State whether this Bill is really “it” for the future of Scotland. Is this the full and final settlement that will stabilise the Union of the United Kingdom? I hae ma doots. I will certainly support the Bill, but it comes with a number of problems. It is based on the vow during the closing stages of the referendum. We read that vow on the front page of the Daily Record, which, I say to the right hon. Member for Gordon (Alex Salmond), hardly represents the fount of learning and wisdom from which we would expect him to learn. Would he commend The Sun in England, for example, as our Bible, any more than I would commend the Daily Record as his Bible? [Interruption.] The right hon. Gentleman should not be provoked.

What did that vow mean? Interpreting that extraordinary vow has been part of the difficulties of the Smith commission.

rose—

I will give way in a moment.

We already have a devolution settlement that is pretty opaque, and this Bill will make it yet more opaque, more difficult to hold to account, and more difficult to explain to voters who does what. On the question of spending, the situation is now perverse. We have SNP Members, who do not think that they should be in this House because they want a separate country, seeking to use the funding mechanism—the outdated Barnett formula—as a pretext for interfering in decisions that should now be wholly determined by MPs representing English constituencies.

rose—

I will give way to the right hon. Gentleman if he will declare his unwavering and unflinching support for full fiscal autonomy for Scotland.

I have done that many times. On the subject of the Daily Record, the Prime Minister seemed very happy to use it last September, so is it not quite reasonable to quote what it is saying today? Also, if I remember correctly, the hon. Member for Harwich and North Essex (Mr Jenkin) once stood for election in Scotland. Will he remind the House how he got on?

I beat the SNP candidate into fourth place—[Hon. Members: “Hear, hear.”]—and Tommy Sheridan into fifth place. At least I stood in a Scottish general election, unlike the current SNP leader. She seemed to take part in the general election as if she were a candidate, even though she was not; it was a rather odd way of conducting a general election campaign. I noticed that the right hon. Gentleman did not call for full fiscal autonomy. He is now in retreat from that demand, because he knows that it is not what he wants.

rose—

I have given way to the right hon. Gentleman once already. On the question of taxation—[Interruption.] I am tempted, so I will give way.

The acoustics of the House must require attention. I did, I do and I will continue to call for full fiscal responsibility. With regard to the First Minister, is it not remarkable that she emerged as the unanswered star of the general election campaign without contesting a seat?

I hope that the House noted that the right hon. Gentleman has retreated from full fiscal autonomy to full fiscal responsibility. People do not like politicians playing with words, which is exactly what he is doing. The fact is that he does not want full fiscal autonomy because he knows that it would result in dramatic cuts to public spending in Scotland.

On the question of taxation, the hon. Member for Edinburgh South ought to reflect on the fact that one of the problems identified by his hon. Friend the Member for Swansea West (Geraint Davies) is that Scotland would be setting tax rates and having effects that English voters do not have for their own tax rates, which is exactly the same argument that we made against the Scotland Bill in 1997-98. He might reflect on how we have got into that situation. [Interruption.] Oh yes, because the Scotland Act 1998 allowed the Scots a 3% variation in income tax. They never used it, but it set up the very anomaly that the hon. Member for Swansea West complained about.

rose—

The hon. Gentleman will forgive me, but I have given way several times and used up half my time already.

The point is that more than one intervention from the Opposition Benches has underlined what a mistake it was to believe that setting up a Scottish Parliament would resolve the grievances of people in Scotland. We now know—we can see it very graphically in this House—that it has just been a platform for those grievances, and it explains how we have got to this point today. I say to my right hon. Friend the Secretary of State that to describe the referendum, with its promise of yet more powers, as truly historic is almost an understatement; it was a near-death experience for one of the most successful nation states the world has ever seen. I do not think that we should describe the devolution process, which has become never-ending, as a great success.

What we need first of all is an atmosphere in which we can build more trust, instead of fuelling mistrust. How can we generate that trust? We need some cross- party forum, outside the hurly-burly of daily politics, in which to start building up a consensus on what a full and final settlement for the whole United Kingdom might look like. We need a cross-party agreement, in principle, that we are going to establish such a full and final settlement and put an end to this never- ending process of instability and uncertainty about the relationships between the four parts of the United Kingdom.

I would go so far as to suggest that we need a new, 21st-century Act of Union to be ratified by a referendum in all four parts of the United Kingdom that the SNP would be quite free to campaign against if it wished—and if it won, then Scotland would be an independent country; let the SNP dream that dream. We ought to conduct that referendum on the basis of a coherent and agreed offer, not a rush job published on the front page of a tabloid newspaper after a failed ex-Prime Minister has been shouting down the phone at the Prime Minister in Downing Street, as occurred with the previous referendum. Such a new Act of Union would aim to provide a balanced and equal settlement of powers across the four parts of the United Kingdom—with respect to my hon. Friends on the Northern Ireland Bench—and a mechanism such as a new council for the Union for distributing UK tax resources on the basis of need and unanimous agreement rather than an outdated formula that was designed to equalise spending between England and Scotland but has actually determined precisely the opposite.

The House should not carry on like this, as though we have not suffered the near death of one of the most successful nation states the world has ever seen, and without an atmosphere of contrition and seriousness about what we have all got wrong in the relationship between our four great nations in this great country. Unless we approach this in a new spirit, I fear for the future. I am standing for the chairmanship of the Public Administration and Constitutional Affairs Committee, and I promise that I will approach these matters with the utmost seriousness and determination—[Interruption] —and with a mind to seeking the maximum consensus, even from those who are now scoffing and laughing at such an idea.

I am pleased to follow the hon. Member for Harwich and North Essex (Mr Jenkin) and his unique job application for the votes of the 56 Members from the Scottish National party.

Let me begin by thanking the voters of Scotland, because it is they who have put so much pressure on this place to deliver further devolution. The lesson of history about Scottish devolution is that when the SNP does well, Scotland’s powers are strengthened.

I congratulate the Secretary of State, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell). In the previous Parliament he was one of 12 Government Members out of 59 Members from Scotland; now he is the only Government Member from Scotland, so he is uniquely qualified to speak on behalf of the Conservative party in Scotland. The hon. Member for Edinburgh South (Ian Murray) is similarly qualified to speak for the Labour party.

In the spirit of co-operation—it is sometimes not fashionable to say this in politics—we will make common cause on many matters, perhaps even on this Bill, and I would welcome that. I look forward to the amendments on full financial autonomy, which SNP Members will be voting for. I suspect that the hon. Member for Edinburgh South will be voting with the Tories as he worked so closely with them through the two years of the referendum campaign.

If the hon. Gentleman is committed to full fiscal responsibility, why is there no mention of it in his ham-fisted attempt to amend the Bill?

The hon. Gentleman is usually assiduous in his research on these matters, but he has obviously not read to the end of the reasoned amendment tabled by the SNP, which I commend to Members across the House. It proposes that we would move

“to a position in the medium term where the Scottish Parliament and Government are responsible for all revenue raising”.

Clearly the Labour parliamentary research unit overlooked that point when sending round its briefings earlier.

Will the hon. Gentleman give way?

I would like to make a bit of progress, and then I will be delighted to give way to the hon. Gentleman, whose interventions thus far have been tremendously helpful to the SNP.

I feel a sense of déjà vu as we discuss the contents of yet another Scotland Bill driven once again by the success of Scotland’s independence movement and party. The previous Bill, now the Scotland Act 2012, was the Government’s response to the Calman commission recommendations; the Calman commission, of course, was a response to the SNP’s first election victory in the Scottish Parliament in 2007, which enabled us to form an historic first minority Government. In 2011, though, the SNP had an even more dramatic and significant victory in Scotland. As Members will be aware, we broke the electoral system, gaining a majority in a proportional representation system designed explicitly to prevent that eventuality.

The constitutional response to the first majority pro-independence Government in Scotland in more than 300 years was the agreement to hold last September’s referendum. That is how we have got here today. The Bill’s genesis was in the referendum, and it flows from the desperate promises of the final few days of the campaign. The legislation before us comes from the vow made then, which was followed by the Smith commission and the five-party Smith agreement, albeit in watered-down form.

Does the hon. Gentleman agree that the UK Government have met every single deadline imposed during the process of delivering power to Scotland? The Bill must be viewed in the context of the no vote that the SNP finds it so difficult to accept.

First, to correct the record, the SNP recognises the result of the referendum. We were in favour of a yes vote, and we did not secure it, but 45% of the electorate voted for Scottish independence, and a considerable number of those who voted no did so on the basis of the vow that was given. That is why this discussion is so important.

The interventions and heckling from Conservative Members—and, sadly, from Labour Members as well—throughout this debate will inform the voters of Scotland of one thing: those Members have learned absolutely nothing since the general election, in which the Conservative party suffered its worst defeat in 100 years, making it, as far as I am aware, the worst performing centre-right party in the industrialised world to date. If Conservative Members took cognisance of that fact, they might not intervene in the way that the hon. Member for Plymouth, Moor View (Johnny Mercer) did a moment ago.

On the issue of full fiscal responsibility, a lot of the SNP’s economic prospectus was based on an increasing oil price and the much vaunted arc of prosperity. How did the hon. Gentleman get on with that?

How we got on with it is that we won 56 out of 59 seats.

indicated dissent.

The hon. Gentleman shakes his head, but it is a statement of fact. The Scottish National party won almost every single seat in Scotland, and it did so on the basis of the argument conducted during the general election. I advise Conservative Members, who apparently are in favour of the maintenance of the Union, that they should respect the views of the electorate that returned SNP Members in such great numbers.

Will the hon. Gentleman give way?

I would like to make some progress, and then I will give way to the hon. Lady.

I will return in much more detail to the watering down of the Smith agreement in the Bill, because righting that wrong will be a central priority for the SNP. As we know, the vow was a direct response to the growing momentum of the yes campaign, in which the Better Together parties—Labour and Tory, which had worked closely for two years—descended into breathless panic and promised the earth. More accurately, they promised “home rule” and as close to federalism as possible. At least they had the nous not to carve those particular promises on an eight-foot block of stone. There is no doubt whatever that the Bill does not match the pledges of the campaign or the spirit and letter of the Smith deal. On that issue, I give way to the hon. Member for Islington South and Finsbury (Emily Thornberry).

As I understand it, the Scottish National party’s position is for full fiscal autonomy. There is a difference between autonomy and responsibility, as I am sure the hon. Gentleman would agree. Autonomy means a great deal. The amendment that was not selected states

“as Scotland moves to a position in the medium term where the Scottish Parliament and Government are responsible for all revenue raising”.

Does he agree that that is not full fiscal autonomy?

That is interesting. A moment ago, Labour Members intervened to say that there was no mention of our support for fiscal autonomy; now we are told that we did mention it, but the hon. Lady is not happy with the wording. I opened my contribution by saying that I look forward to the SNP amendment on full fiscal autonomy; I expect to see Labour Members trooping through the Lobby and voting with the Tories yet again on governance in Scotland. I suggest that if they want to retain their only seat there, they should think twice about pursuing that course of action.

rose—

I want to make some progress, but I will give way to the hon. Member for Edinburgh South.

To be clear, can the hon. Gentleman confirm that he is saying that the SNP will introduce an amendment to deliver full fiscal autonomy for Scotland, and that the Labour party should support a measure that would put a £10 billion black hole in Scotland’s finances? It is not about walking through the Lobby with anyone; it is about standing up for Scotland’s interests.

I am grateful to the hon. Gentleman for letting me intervene in his second speech in this debate. He needs to consider closely the impact of his party’s collaboration with the Tories for two years on the independence referendum campaign. He can say whatever he likes about full fiscal autonomy, which the SNP supports and which the other parties oppose. They have this in common: they are unbelievably unpopular in Scotland, and it will take a while for them to learn the lessons from that.

The hon. Gentleman had the opportunity in his speech from the Front Bench to outline any new thinking, new ideas or anything else that the Labour party did not say in the Smith commission proposals. There was not a peep; not one new idea. That, along with his party’s ongoing co-operation with the Conservative party, will consign Labour to the opposition position that it deserves in Scotland.

Will the hon. Gentleman give way?

I have taken many interventions, and I will now make progress. There is no doubt that the Bill does not match the pledges of the campaign or the spirit and letter of the Smith deal. The Bill falls short and, more importantly, it has also been overtaken by another election—the general election of a few weeks ago—in which the SNP had overwhelming and unprecedented success.

Will the hon. Gentleman give way?

For the second time, I will not. I want to make progress.

Order. The hon. Gentleman is not giving way. We must not waste time arguing about it; there is much to be said this evening.

Thank you, Madam Deputy Speaker. The people have spoken, and it is clear that they want more power for Scotland than the Bill offers. I ask the Secretary of State: will the Government listen?

I am not usually given to quoting the traditionally Labour-supporting Daily Record, but I recommend that the Secretary of State and other Members look at today’s issue. Across the front page is a headline that reads, “Failure to fully deliver all the new powers promised to Scotland will seriously damage your Union”.

Will the hon. Gentleman give way?

No, I am making progress. The editorial that follows states:

“there are serious concerns the proposed Scotland Bill does not fully implement what was proposed…This is an unacceptable situation that must be rectified quickly as the Bill makes its way through Westminster.”

Much of what we have heard so far today has been an attack on the SNP by both the Government and Labour. As the effective Opposition in this Parliament, we will ensure that we make progress with the Bill. The Government can be assured that strengthening the legislation so that it begins to satisfy the aspirations of the people of Scotland and organisations across Scotland will be another priority for SNP Members.

Both the convenor of the Scottish Parliament’s Devolution (Further Powers) Committee and the Law Society of Scotland have urged the UK Government to ensure that the Bill proceeds in a way that will enable the Scottish Parliament to influence and shape it.

I endorse their view and ask the Secretary of State to confirm today that the Government will accept the cross-party changes proposed by the Scottish Parliament’s Devolution (Further Powers) Committee to bring the Bill into line with the Smith agreement.

It might help colleagues who have not read the report if I highlight the fact that the committee’s conclusions were reached unanimously on an all-party basis. The committee’s deputy convenor is one Duncan McNeil of the Scottish Labour party and it also includes one Alex Johnstone of the Scottish Conservative and Unionist party, Alison Johnstone of the Scottish Green party and Tavish Scott of the Scottish Liberal Democrats.

Will the hon. Gentleman give way?

I want to make some more progress.

This is a cross-party committee, and as its convenor Bruce Crawford MSP said when launching the interim report in May,

“the current proposals do not yet meet the challenge of fully translating the political agreement reached in the Smith Commission into legislation.”

This is really important. If all the political parties in this House believe that this Bill should deliver on Smith, and if all our colleagues in the Scottish Parliament say it does not fully do so, the Government must listen and they must act.

The errors that those in the Scottish Parliament seek to address go to the heart of what was agreed in the Smith commission. First, on welfare, the Bill as it stands retains a UK veto over changes to universal credit, among other things. That is unacceptable. The Secretary of State denied that there is a veto right in the Bill. I do not know how many Members present have read the Bill, but I invite them to turn to clause 24(4) on page 26, which states:

“The Scottish Ministers may not exercise the function of making regulations to which this section applies unless…they have consulted the Secretary of State about the practicability of implementing the regulations”.

The veto rights are there in black and white. [Interruption.] I hear someone from the Labour Benches say, “So?” Do they think it is a problem or not? Their colleagues in the Scottish Parliament think it is.

rose—

Does the hon. Gentleman agree with his colleagues in the Scottish Parliament that the Smith proposals should be delivered?

I am not giving way at this point.

There was I being hectored and accused of being frit and not taking interventions, but when Members are put on the spot as to whether they support their own colleagues in the Scottish Parliament, they run away.

I am very grateful to the hon. Gentleman for giving way on the extremely important issue of a veto. An ordinary reading of clause 24(4) shows that it clearly says that “such agreement” is

“not to be unreasonably withheld.”

That means that it is not a veto and that it would be justiciable in front of the courts if an unreasonable decision were made by the Secretary of State.

The key point is that it does not have to be given. The hon. Gentleman will no doubt make contributions during the Bill’s Committee stage, but I ask hon. and right hon. Members across the House: have they read what their colleagues in the Scottish Parliament have concluded, and will they act on it or not?

The hon. Member for North East Somerset (Mr Rees-Mogg) talks about reasonableness, but how on earth can we trust this Government or any Secretary of State to be reasonable when they have just implemented £177 million-worth of in-year cuts to the Scottish budget?

My hon. Friend makes a very good point. I was struck by the fact that the hon. Member for South Cambridgeshire (Heidi Allen), who is not in her place, made an appeal for trust in this process. I totally agree with her. I look forward to the Government delivering everything that was promised in the Smith commission and more, because we all—every party—stood on manifestos of constitutional change, and the three UK parties were all defeated.

The Prime Minister has said that he will listen to what the Scottish Government have to say on more powers. I will take him at his word. The Secretary of State for Scotland has said that he is open to ensuring that the wording of the Bill is optimal to deliver on the Smith commission proposals. It is absolutely crucial that that takes place and that the trust mentioned by the hon. Member for South Cambridgeshire is delivered on. When a committee of our colleagues in the Scottish Parliament concludes, on a cross-party basis, that the Government’s Bill does not fulfil that, the Government must listen.

Does it follow from what the hon. Gentleman has just said that, if the amendments that SNP Members will inevitably table are voted down, they will accept the consequences of the amendments not going through and their not getting the massive powers they seek?

I am not entirely sure whether the hon. Gentleman is suggesting that he and his colleagues should vote against his party colleagues in the Scottish Parliament. Is that what he is suggesting? The point I am trying to make is that all our political parties signed up to the Smith commission and all of our political parties in the Scottish Parliament have concluded that the Bill does not fully deliver on it. Is the hon. Gentleman suggesting that his party should not support our colleagues in the Scottish Parliament?

I am asking a very simple question about this House. The SNP has won a victory in Scotland and its Members have come here, so they are obviously bound by the circumstances that apply within the Westminster Parliament. If they are voted down, will they accept that?

I asked the hon. Gentleman for clarification, but unfortunately he did not give it. There is a central point—[Interruption.] I am getting heckled by Labour Members in relation to Tory interventions—again! We are very used to this in Scotland. We are used to “project fear”—the Labour party and the Tories working together.

rose—

No. I have given way very generously, both to Labour and to Tory Members, and I will now make some progress.

In addition to the points that have been raised thus far, the Smith recommendation for a power to create new benefits in devolved areas has not been adequately reflected in the Bill. Similarly, the ability to top up reserve benefits has been watered down. The Scottish Parliament would also be prevented from creating additional benefits to mitigate the impact of welfare sanctions and conditionality, which, as Members will know, are among the main causes of poverty. Their use has seen tens of thousands of people forced to rely on food banks, a scandal that should make Government Members hang their heads in shame. As the Devolution (Further Powers) Committee pointed out, the Bill contains unwarranted restrictions on the payment of carers’ benefits.

Secondly, on the constitution, the Bill as it stands fails adequately to guarantee the permanence of the Scottish Parliament. As the Devolution (Further Powers) Committee made clear, this Parliament should not be able to abolish Scotland’s Parliament against the wishes of the people. The consent of the Scottish Parliament and the Scottish people is a necessary addition to fulfil the Smith agreement’s promise of permanence.

Equally, as the Bill stands, the Sewel convention will not be translated effectively into law. It is not given full statutory footing in the Bill, as the Smith commission proposed. It is not good enough, as the Bill currently stands, simply to recognise the existence of the Sewel convention. The Bill’s clauses are vague and, as drafted, do not in fact require Scottish Parliament consent for UK Government legislation in devolved areas. That is not acceptable.

In the Committee stage, we will explore the gaps in the Bill more fully, but I will provide the House with one final example of its shortcomings in the area of employment. The Bill does not include the full range of employment support services currently delivered by the Department for Work and Pensions, contrary to both the letter and the spirit of paragraph 57 of the Smith agreement. That, too, needs to change.

Will the hon. Gentleman give way?

I am still making progress.

These are matters of substance: shortcomings identified and agreed by all parties in the Scottish Parliament. The Scottish Government have helpfully provided new clauses to the Devolution (Further Powers) Committee on those and other gaps in the Bill—amendments that would deliver on the Smith agreement in full. Will the Secretary of State agree now to introduce them as Government amendments? If he cannot offer that guarantee, I am happy to confirm that the Scottish National party will do so, so that the Bill can be given these most basic and essential improvements during its Committee stage.

In that respect, I want to remind the Secretary of State of the Government’s stated policy with regard to England, as set out in the Queen’s Speech, and to replace the word “England” with “Scotland” to create what I hope can be a new principle for the passage of this Bill—perhaps we can call it the Mundell principle— as follows: “That decisions affecting Scotland can be taken only with the consent of the majority of Members of Parliament representing constituencies in that part of our United Kingdom”. That means that if the majority of Scottish Members of this House, representing the views of the Scottish Parliament, desire a change to the Bill that affects only Scotland, his Government must not and should not stand in our path.

The Scottish Parliament and Government have set out the steps that must be taken to ensure that this legislation delivers on the Smith agreement. The Bill is a response to the referendum, but we now need an adequate response to the general election and the clear mandate for more powers that was delivered. I agree with the words of the Scottish Council for Voluntary Organisations in its briefing to Members on the Scotland Bill:

“As it stands, the Scotland Bill fails to recognise the sea change of opinion in Scotland and the wish for further devolution.”

That failure must now be remedied. If the Government are unwilling to give the people of Scotland what they want, the SNP will table the necessary amendments.

The manifesto on which I and my colleagues were elected was one that secured the support of more votes in Scotland than the Conservatives, the Labour party and the Liberal Democrats combined. We have been clear on our priorities for more powers, stating that

“we will prioritise devolution of powers over employment policy, including the minimum wage, welfare, business taxes, national insurance and equality policy—the powers we need to create jobs, grow revenues and lift people out of poverty.”

Those priorities will be the focus of our amendments in Committee and on Report. I hope that the Government will accept such changes as reflecting the clearly expressed will of a majority of Scottish Members on issues that affect Scotland only.

With meaningful powers over working-age benefits, we can protect Scottish society from the ideological attacks on our welfare state being undertaken by this Government. With responsibility for a full range of economic levers, we can work to support the job creators in Scotland. We can do more to create the wealth and share it more fairly. We can make more of our natural competitive and comparative advantages, boost exports and encourage innovation as we work to make Scotland’s economy more competitive and more productive. These are more powers for a very clear purpose: to deliver policy that works better for the people of Scotland—policy for the many, not just for the few. As our manifesto made clear, we will seek to amend the Bill so that the Scottish Parliament can become responsible for all revenues raised in Scotland as part of a wider financial arrangement that includes borrowing powers. That is also part of our mandate.

The people have spoken, and the UK Government should respect their choice. We know that the UK Government blocked the devolution of many new powers during the very last hours of the Smith negotiations. They were wrong to do so, as the election result has made very clear. Press reports have revealed that very late drafts of the agreement, as negotiated between the Scottish parties, included

“proposals to devolve income tax personal allowances, employers’ National Insurance contributions, inheritance tax, and the power to create new taxes without Treasury approval.”

We are also told that Labour representatives on the Smith commission blocked plans to devolve additional powers on employment law, including the national minimum wage. I hope that the Labour party, in particular, will now shift its stance so that we can ensure that minimum wage levels are set by the Scottish Parliament, not by this Tory Government. I look forward to the Scottish Labour party adding its voice and vote in Committee to SNP amendments to devolve the minimum wage.

The delivery of substantial new powers for our Parliament has become the settled will of the Scottish people, as expressed in elections and opinion surveys. People want the devo-max that was promised in the final days of the referendum. Scotland deserves nothing less.

Will the hon. Gentleman give way?

I am just concluding.

As a recent study by the Economic and Social Research Council has revealed, 63% of people in Scotland support the full devolution of both taxes and welfare benefits, including unemployment benefit. Our guiding principle should be that the people of Scotland get the form of government that they want. For almost two thirds of our fellow citizens, that is a Parliament in Scotland with substantially stronger powers than we have today and substantially stronger than are on offer in this Bill.

As our amendment on the Order Paper makes clear, we wish the Bill to progress into Committee so that it can be improved. Change is necessary, and I hope Government Front Benchers accept that reality. SNP Members will work with the Scottish Parliament to deliver the improvements to the Bill that are required—improvements that will first deliver the Smith agreement in full, and then give us the new powers Scotland needs to enable us to create more jobs and boost economic growth, to increase wages and opportunities across society and to deliver higher living standards for hard-pressed households.

The Westminster system has delivered growing inequality. The gap between the super-rich and the rest is growing at an unacceptable rate. We are among the most unequal societies anywhere in the world. Westminster is not working for the majority of people in Scotland—or arguably for the rest of the UK, either—and that is why there is such a clamour in Scotland for a new way of doing things and for the powers, in our own hands, to make a difference.

The UK Government have promised that this Bill will deliver the Smith commission in full, and that it will include proposals from the Scottish Government that were endorsed by the electorate in the general election. In the weeks ahead, the House of Commons will debate amendments that can strengthen the Bill. I hope that the Government will deliver on the vow, accept the verdict of the electorate and ensure that the Bill does deliver what the Scottish people require.

It is a pleasure to follow the hon. Member for Moray (Angus Robertson), although it would certainly have been more of a pleasure if he had taken my intervention earlier. I will ask the question that I would have asked then. He made the point that the end of the SNP Members’ amendment says that they want full fiscal autonomy “in the medium term”. Would he care to tell the House when the medium term is? They were talking about a period of 18 months when the referendum was taking place.

The hon. Gentleman did say something that was correct: the people have spoken. The people spoke in the general election, and there is absolutely no question but that there is a mandate for the Bill before us. It is absolutely right that Members from both sides of the House move forward with the vow and all it means in a way that shows trust and good faith, and we will do that.

I will make a number of observations about the fiscal framework, and I would be interested to hear Ministers come back on those points. In his initial remarks, the Secretary of State used the phrase that the solution had to be long lasting and fair, which are big words. My concern is that a solution based on a fiscal framework that is not fair will not be long lasting. I do not believe that the use of the Barnett formula, as it is currently envisaged—even with changes through the devolution of certain revenue-raising powers—is fair on my constituents, or indeed those in Wales or in other parts of England. The flawed Barnett formula settlement is unfair on middle England, and as a result, this whole settlement may unwind.

Let me say a few things about the Barnett formula on which we need to be clear. The first is that it does not represent a subsidy to Scotland, or it has not over the past 25 to 30 years. I have never said that it did. Broadly speaking, the extra money that Scotland gets—£1,600 per head—has been paid for by the proceeds of Scotland’s oil. We can look at the analysis year by year, but the Institute of Directors analysis has said that that, roughly speaking, has been the case over the past 25 to 30 years. It is not a question of subsidy, but of fairness and of need. When we are allocating public spending across our state, there should be cognisance of where that money is required to be spent to have the biggest impact. Indeed, a progressive party—we are continually told that the SNP is progressive—should surely be at the forefront of wanting a formula based on need.

Will the hon. Gentleman therefore explain why he has taken £254 per household from my constituency in Oldham and given it to an affluent area in Surrey?

I have not taken any money from anyone, or given any money to anyone. The hon. Lady’s constituents in Oldham receive roughly £1,600 a year less from public spending than they would receive if they had the same demographic profile and lived north of the border. That is an anomaly, and it is an anomaly that causes a potential risk to a settlement that is necessary and right.

Conservative Members do not question the fact that there is a Scottish Government now, and that that Government have entitlements.

The hon. Gentleman is knowledgeable about this matter, and he was right to say that no subsidy is implied by Barnett. Unlike most of his colleagues, he looks at both sides of the balance sheet. However, he spoilt that by talking about a needs-based assessment. Does he recognise that that would imply a £4 billion cut in Scottish funding, right now?

I recognise that a needs-based assessment —that is, an assessment that will result in public money being spent where it is most needed—is fairer. However, I am not saying that it should be introduced immediately, as it would be with full fiscal autonomy, and as it would have been had the hon. Gentleman’s party won the referendum. Such things can be done over a period of, say, 10 or 20 years. There can be a target for the achievement of fairness.

As I was saying, no one questions the right of the Scottish Government to provide free prescriptions and free tuition—if that is their priority—and to make different arrangements for social care. However, if such provision is predicated on a baseline of funding that is unfair and wrong, it is reasonable for us to question it, and not to let the Scottish Government get away with saying that they can take such action because it is progressive. That is neither fair nor right.

We are talking about a formula that is based on need, and a formula that the late Joel Barnett was desperate to get rid of. A House of Lords Select Committee made the position very clear. Moreover—this is not mentioned often enough—the Holtham commission identified the serious underfunding of Wales as a consequence of the Barnett formula. That problem will have to be addressed in Scotland. It is true that public spending must reflect sparsity, and must reflect the fact that Scotland’s population is more spread out. However, it also needs to reflect relative ageing and relative measures of deprivation.

The hon. Gentleman is making an interesting speech, but at its heart is something of a contradiction. He says that we must implement the vow, but scrap the Barnett formula. Is he aware that the Barnett formula features in paragraph 6 of the vow?

Yes, I am completely aware of that. My point is that the whole settlement will be at risk if it is not perceived as being fair in, for want of a better phrase, “middle England.” I represent a constituency that is in the north but also in the middle, depending on where you start.

Will the hon. Gentleman give way?

No, I will not. I need to make some progress.

It is not right for my constituents to have £1,600 a year less than those who live north of the border. One solution that has been mooted is full fiscal autonomy, which one imagines is something in which nationalists believe. According to their amendment, they believe in it “in the medium term”, which was not the case when they fought the general election. That is indeed a possible solution, but it would result in a black hole. I think that we should be sympathetic, and deal with the problem in a way that would be fair to my constituents and those of the right hon. Member for Gordon (Alex Salmond).

Another possible solution would be a proper, need-based review of public spending in this country that was fair to Scotland, Wales, Northern Ireland and England. That would take a while to achieve, and I am not suggesting that it would be easy or should be implemented immediately.

Will the hon. Gentleman give way?

No. I have given way twice, and I need to make some progress.

A needs-based review must be something that I would be delighted to accept if I came to Westminster representing a progressive party. Surely my progressiveness would not allow me simply to say, “We will have all we can get in Scotland”—which, as we heard from the right hon. Member for Gordon, is what was on the front page of the Daily Record. A progressive party should say, “We are not going to take all this money, because we are progressive. The settlement needs to be fair to Wales and to parts of England, where there is a great deal of deprivation.”

And that would be a step towards full fiscal autonomy.

Indeed. I understand that full fiscal autonomy would take the problem away, which is, of course, why we are now seeking to implement it “in the medium term”, whatever that means.

Of course I support the vow. Of course I support the mandate that SNP Members have achieved through their spectacular election victory. It is right for us to implement this settlement, and I will vote with the Government tonight and in the future to ensure that that happens. However, I must ask the Secretary of State to reflect on the phrase that he used in his speech—“fair and lasting”—and to ask himself whether he really believes that a fiscal settlement that is absolutely and clearly not based on need can ever be described as fair and lasting. That may yet cause us problems.

As one who has always believed in devolution, I welcome an historic Bill that devolves further powers to Scotland, granting real powers that local people have clearly demanded. Today, however, we heard the hon. Member for Moray (Angus Robertson) elevate victim mentality to a new art form.

It is fine for SNP Members to stand here in the House and say that what is on offer is not good enough, but to hear them speak, both in the House and outside, one would think that they had been no part of the Smith commission whatsoever, and that it had somehow been imposed on them from outside. They sound a bit like the Eurosceptics who claim that Brussels dictates what the United Kingdom does. Nothing could be further from the truth. SNP Members were part of the Smith commission, they agreed to the process, but then, on the following morning, they said that it had had nothing to do with them. We heard a continuation of that argument today, when it was suggested that what had been promised by all the parties who agreed to the Smith commission would not be in the Bill. Briefing from the House of Commons Library clearly states that

“there are no substantial differences between the tax powers that the Smith Commission proposed devolving and those contained in this Bill”.

We must recognise that the general election result caused a substantial change in the politics of Scotland. However, the SNP must recognise that in the vote on independence the people of Scotland voted to be part of the United Kingdom. I think that that puts working people in Scotland in a better position. We should consider the SNP’s record. Earlier today, the hon. Member for Moray shouted at one of my hon. Friends, suggesting that we were in cahoots with the Conservatives “yet again”. Given that his party was propped up by the Conservatives in the Scottish Parliament from 2007 onwards, we will take no lessons from him.

Will the hon. Gentleman give way?

No, I will not.

The hon. Member for Moray set the tone. We keep hearing from the SNP that if something is said, it is actual fact. I think that the movement towards full fiscal autonomy is one thing that the SNP wanted and actually did mention in their manifesto. I hope that they will table amendments, because it would not be in the interests of working people in Scotland. It might be in their interests with Barnett in place, but it is clear that Barnett would eventually wither away, and, given the demographics and economics of Scotland, there would then be a black hole.

Does the hon. Gentleman not accept that the working people of Scotland were consulted on this matter, that they cast their votes in the general election, and that they voted for our party? Not only did they give us the majority of seats, but more than 50% of the electorate voted for us. Does the hon. Gentleman not respect that decision by the working people of Scotland?

I do, and I expect the hon. Gentleman to respect their position in relation to how they voted in the referendum. [Interruption.] Hon. Members from the SNP say they do, but they conveniently forget that.

Will the hon. Gentleman give way?

No, I will carry on.

The important point is that we need a system that is not only fair to the people of Scotland but, as the hon. Member for Warrington South (David Mowat) said, fair to the people of the United Kingdom. We cannot have the devolution in Scotland that the Bill proposes without it affecting my constituents in North Durham and the constituents of many other Members.

Devolution raises many practical issues. One example is air passenger duty. Newcastle airport is a great example of the local council, five local authorities and the private sector working together to ensure for the region a vibrant airport with international links. It employs 3,500 people directly, with a further 8,000 people employed in the region.