The Secretary of State was asked—
1. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. 
2. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. 
5. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. 
10. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. 
May I begin by wishing you a very happy new year, Mr Speaker?
In the light of the recent flooding in Scotland, may I pay tribute to all those in the emergency services and in local authorities, and the volunteers, who have dealt with the challenging circumstances? The thoughts of the whole House will be with those whose homes and businesses have been flooded.
The UK and Scottish Governments are discussing the fiscal framework through the Joint Exchequer Committee, and there have been five meetings between the Deputy First Minister and the Chief Secretary to the Treasury to discuss it. The next meeting is due to take place on Friday.
I thank the Secretary of State for his answer and associate myself with what he said about the flooding, which has affected my constituency and those of many of my colleagues. We appreciate the work the emergency services are doing.
The block grant will need to be adjusted to take account of the revenue-raising powers that are being devolved, but, as agreed by the Smith commission, the Scottish Government should not be financially disadvantaged by the transfer of the new powers. What is the Secretary of State’s view of what a fair indexation for the block grant adjustment would be?
My understanding is that the Deputy First Minister of Scotland, John Swinney, with whom I had a productive meeting just before Christmas, is conducting the negotiations on behalf of the Scottish Government. At our meeting, Mr Swinney assured me that his objective was exactly the same as that of the United Kingdom Government—a settlement that is fair to Scotland and fair to the whole United Kingdom.
A fair model of block grant adjustment would ensure that Scotland is no worse off financially as a result of the transfer of new powers. Does the Secretary of State agree with the cross-party view, and that of Anton Muscatelli, Jim Cuthbert and the Scottish Trades Union Congress, that only the model of indexed deduction per capita would adequately deliver the principle of no detriment?
As I said, we are involved in an ongoing negotiation, which Mr Swinney is conducting. I have tremendous respect for his ability to reach a fair settlement for Scotland, and for the Chief Secretary’s ability to reach a fair settlement for the rest of the United Kingdom. On the basis of the discussions that took place between the First Minister and the Prime Minister, my own discussions with the Deputy First Minister and the meeting that is due to take place on Friday, I am confident that we will be able to achieve a fair settlement.
A good new year to you, Mr Speaker.
Many people will find it bizarre, and frankly unacceptable, that the Secretary of State for Scotland is not even attending the negotiations on Scotland’s fiscal framework. Can he explain why his office of Secretary of State seems to have been deemed irrelevant to those critical negotiations? Given that he is not directly involved in the negotiations, will he share his personal view on whether he agrees with the learned professors and the STUC on the preferred model?
I think what many people in Scotland will find bizarre is that at a session in Parliament that is called Scottish questions, the Scottish National party could come up with only one question, which all its Members were clearly told to ask.
I know that it may impinge on the importance that some SNP MPs attribute to themselves, but it is the Deputy First Minister of Scotland, John Swinney, who is negotiating the agreement, not them.
The model of indexed adjustment for the adjustment of the block grant may result in the Scottish block grant falling substantially without consideration of the different rates of population growth north and south of the border. Does the Secretary of State agree that that or any other model of block grant adjustment that results in a diminished Scottish budget year on year will not fulfil the Smith commission’s principle of no detriment?
I am disappointed with the hon. Gentleman’s analysis because the new powers that are being delivered by the Scotland Bill create the opportunity for Scotland’s economic growth to increase and for Scotland’s population to increase. I am very surprised that he has such a negative view of the use of those powers that it would be impossible to increase population or economic growth in Scotland and therefore increase tax take.
Does my right hon. Friend agree that the transfer of the new extensive powers that he has agreed will be given to the Scottish Parliament will for once make the SNP Government truly accountable to the Scottish people, and that the talk of a second referendum is just a smokescreen to take away their accountability to the Scottish people?
I absolutely agree that the impression created again today by SNP Members is that they are entirely driven by process arguments, and not by getting on and getting an agreement on the fiscal framework, getting the new powers in place and then doing something positive for the people of Scotland with those powers.
Will my right hon. Friend confirm that, once the fiscal framework has been agreed, the devolution of tax powers to the Scottish Parliament can begin quickly?
I am absolutely committed to delivering the powers set out in the Scotland Bill when it becomes an Act as quickly as possible. We want that Act on the statute book ahead of the Scottish Parliament elections so that it can shape those elections, and so that the parties can set out what they intend to do with the powers. I would like the tax powers in place by April 2017.
The success of the fiscal framework is vital to the future success of the tax powers that have been devolved. Confidence in the framework is vital for individuals and businesses, particularly in the border region. Does the Secretary of State believe that the Scottish Government are approaching the discussions in good faith, which will be fair to people on both sides of the border?
I absolutely do, because, from the discussions that Nicola Sturgeon, the First Minister of Scotland, has had with the Prime Minister, and from the discussions I have had with the Deputy First Minister—we have to remember that they are determining what will be agreed in relation to the fiscal framework—their view is clear. I take it as sincere that they want to achieve a fiscal framework agreement in the near future. We can then move forward with enacting the Bill and transferring those powers, which could make such a difference to the people of Scotland.
12 . The Smith commission recommended that the cost of establishing the infrastructure for the collection of the newly devolved taxes would be borne by the UK Government. Will the Secretary of State for Scotland, and not the Deputy First Minister of Scotland, confirm that the UK Government accept that recommendation? 
I can confirm to the hon. Gentleman that that is one of the items that is part of the discussion between the UK Government and the Scottish Government. It is so surprising that SNP MPs have such little confidence in Mr Swinney and the Scottish Government in the negotiation to hold out for positions that would be beneficial to Scotland—I find it staggering.
13. Does the Secretary of State agree with the First Minister, Professor Muscatelli and the STUC that more powers for Scotland cannot come at any price, but that the fiscal framework settlement must deliver fairness for Scotland? Will the Secretary of State commit to a date before the Scottish elections by which an agreement must be reached? 
I absolutely agree that the arrangements must be fair—fair to Scotland and fair to the rest of the United Kingdom. That is perfectly achievable. I do not want to provide a running commentary, but the negotiations and discussions that have taken place have been productive. For example, I absolutely agree with the comments of Mr Swinney to the Scottish Parliament Finance Committee —he clearly said that the Scottish Government should benefit from the positive decisions they take but accept the consequences of bad policy decisions. That should also apply to the UK Government in relation to our responsibilities.
May I take this opportunity, Mr Speaker, to wish you and all the staff of the House, as well as the Secretary of State and his office, a happy new year? Mr Speaker, you would have thought that the pantomime season was over, but judging by today’s questions, it clearly is not—[Interruption.] Oh, yes, it certainly is. I was expecting that, from someone who has no jokes whatsoever. We could be questioning the Government on no shortage of things, but the Secretary of State has created this sham by keeping the fiscal framework secret. What is ludicrous is that the SNP Finance Secretary, who is negotiating the very fiscal framework that we are discussing, could be asked what is in it. It is clear that it is the people of Scotland who are being kept in the dark. I have asked the Secretary of State this before, but will he put an end to this pantomime of manufactured grievance and be completely transparent about the fiscal framework?
The Government are completely transparent about our position on the fiscal framework. We want it agreed as soon as possible and we want it to be scrutinised by both Parliaments. When I was in the Scottish Parliament recently I had the opportunity to meet Bruce Crawford, convener of the Devolution (Further Powers) Committee. He assured me that he is satisfied that in conjunction with the Finance Committee in the Scottish Parliament there will be adequate opportunity to scrutinise the fiscal framework. I am clear that there will be an opportunity in the other place to scrutinise it, and the Select Committee on Scottish Affairs is currently conducting an inquiry. I do not think that the people of Scotland will be in the dark in any way about the fiscal framework. It will achieve what we want it to achieve but it will also be subject to proper scrutiny.
I do not think that the Secretary of State understands the process and how important this is. The Scotland Bill constitutes the biggest transfer of powers to Scotland ever, but the underpinning financial provisions are being hidden from the Scottish people. I have written to both Governments and questions have been asked in both Parliaments to try to get transparency, but the response from both Governments has been “no”. Meanwhile, the Scottish Government are threatening to veto the Bill. The danger is that while these negotiations are being conducted in secret, both Governments can blame each other with manufactured grievance, and it is the people of Scotland who will lose out. Will the Secretary of State at least assure us that in future negotiations as important as this on Scotland’s finances will be conducted with greater transparency and democratic scrutiny?
I have no grievance, manufactured or otherwise. I am confident that the Scottish Government want to achieve an agreement. The UK Government want to achieve an agreement based on fairness to Scotland and fairness to the rest of the United Kingdom. I give the hon. Gentleman an absolute commitment that the fiscal framework, as agreed, will be subject to full parliamentary scrutiny here in Westminster and in the Scottish Parliament.
Question 3—I call Sir Henry Bellingham.
3. What plans he has to meet Ministers of the Scottish Government to discuss defence installations in Scotland. 
May I start by adding to your comment in introducing question 3, Mr Speaker? I congratulate my hon. Friend on the recognition he received last week for some 30 years’ service to this House and the people of Norfolk. It is a great pleasure that he received that recognition.
In response to his question, the Ministry of Defence engages with the Scottish Government about defence establishments and other defence matters at many levels, both official and ministerial. The Under-Secretary of State for Scotland and I met the Scottish Government Cabinet Secretary for Infrastructure, Investment and Cities on 17 November to discuss the strategic defence and security review. The Defence Minister responsible for reserves has met the Scottish Government Cabinet Secretary twice previously, and the Defence Secretary has agreed to meet the Scottish Government Cabinet Secretary soon.
I thank the Minister for his generosity. Given that the decision on Faslane will sustain the largest employment site in Scotland for decades to come, is it not clear that Scotland is the biggest beneficiary of the recent SDSR? Surely that makes the stance on Trident of both the Leader of the Opposition and the SNP even more perverse and damaging.
My hon. Friend is right that this Government are investing significantly in defence in Scotland. Following the SDSR, not only will we spend some £500 million at Faslane—one of the Royal Navy’s three operating bases and one of the largest employment sites in Scotland with 6,800 military and civilian jobs, which will increase to more than 8,000 as we move all our submarines to be based there by 2022—but Scotland will be home to our new maritime patrol aircraft, with some 400 extra personnel stationed to man the squadron at RAF Lossiemouth.
Scotland is in a vital geostrategic location, with the Iceland gap to our north, the Atlantic to our west and the North sea to our east. As the Scottish National party has been pointing out for a long time, it has been negligent and dangerous for a maritime state such as the UK not to have maritime patrol aircraft. We therefore welcome the Government’s recent U-turn on the procurement of P-8 maritime patrol aircraft. Can the Minister tell us when the entire fleet will be operational?
We made it clear in the SDSR that we would be procuring nine P-8 maritime patrol aircraft, and that the fleet would be procured through a foreign military sales procurement contract, the letter for which has already been submitted to the United States. The first aircraft will be operational in 2019.
The House will note that the Minister was unable to answer my question on when the entire fleet would be operational. Perhaps when he responds to my second question, he will be able to answer the first one. The RAF is currently maintaining its skill base by training on maritime patrol aircraft with the United States, Canada, Australia and New Zealand. Does the Minister acknowledge the importance of the maritime patrol aircraft training that was scheduled to be based at RAF Kinloss before the scrapping of the Nimrod fleet? Will the Government ensure that training on the P-8 maritime patrol aircraft is based at RAF Lossiemouth, as the training for Tornados and Typhoon aircraft is now?
As we are currently in contractual negotiations for the procurement, it would be quite wrong for me to pre-empt the precise nature of those negotiations, so I cannot answer the right hon. Gentleman’s initial question on how many aircraft will be available, and when, until such time as the contract has been concluded. On the question of training, he is right to say that we have crews in service on this platform with other users in the United States. The training basing will be established as part of the procurement process in the coming months.
Strategic Defence and Security Review
4. What recent discussions he has had with (a) the Secretary of State for Defence and (b) Ministers of the Scottish Government on the effect on Scotland of the strategic defence and security review. 
While defence and national security remain reserved to the UK Parliament, we recognise the importance of engaging with the devolved Administrations. As I said in my answer to the previous question, Lord Dunlop, the Under-Secretary of State for Scotland, and I have had meetings with the Scottish Government to discuss these matters.
UK defence contracts are a major source of jobs in Scotland, with 2,500 people employed on Clydeside. Can the Minister explain why his Government reduced defence spending by 14% in the last Parliament?
I am sorry that the hon. Gentleman seeks to hark back, rather than to look forward. At the end of November we published the SDSR, in which the Government committed to increase defence spending in real terms for each year of this Parliament, and that is what we are looking forward to. Much of that investment will be spent in Scotland, and indeed in south Wales, as we procure the Ajax vehicle.
6. What assessment he has made of the level of growth in the economy in Scotland. 
The Government’s long-term economic plan has laid the foundations for a stronger economy. The Scottish economy has been growing for 11 quarters in a row. Scotland continues to benefit from being part of the UK, which was the fastest growing G7 economy in 2014 and is forecast to be the joint fastest in 2015.
My constituency has a number of manufacturing companies that do a great deal of business in Scotland, contributing to the growth of the local economy of Redditch as well as to the economy of Scotland. Does my right hon. Friend agree that that is just one element that makes the Union so successful?
I do agree with my hon. Friend. It is a fundamental part of the growth in Scotland’s economy that we are part of a single market within our United Kingdom. I recently had the pleasure of visiting Alexander Dennis, the bus manufacturer in Falkirk, and I am sure that they would agree that the rest of the United Kingdom was one of their most important markets.
Given that employment in Scotland is now 53,000 higher than it was before the crisis, and that output in Scotland is now 3% higher than at the pre-crisis point, does the Secretary of State concur with Scottish business leaders who oppose the Treasury’s savage cuts to the UK’s trade export agency in the autumn statement?
I very much welcome the figures the hon. Gentleman set out on the positive economic position in Scotland. What I do not subscribe to is the frequently voiced Scottish National party and Scottish Government position that anything good that happens in Scotland is in relation to the Scottish Government and anything bad is in relation to the UK Government. We have two Governments working together for the benefit of Scotland’s economy.
The North sea oil and gas industry is obviously vital to Scotland’s economy. Yesterday, a Scottish nationalist MSP claimed that there is no crisis in the industry, even though it has been estimated that 65,000 jobs have been lost since 2014. The SNP clearly inhabits a different world from everybody else. Will the Secretary of State tell us what his Government are doing to support the oil industry and to protect the thousands of jobs that depend on it?
I find it extraordinary that anyone who represents the north-east of Scotland could claim that there was no crisis in the oil and gas industry. This Government have demonstrated, yet again, in the Chancellor’s autumn statement that we are committed to that industry and the thousands of jobs that it supports right across the United Kingdom. There will be further evidence of our commitment to Aberdeen and the north-east in the weeks ahead.
7. What assessment he has made of the effect on household incomes in Scotland of the changes to welfare announced in the summer budget 2015 and the spending review and autumn statement 2015. 
The analysis published at spending review 2015 shows that more than half of all spending on welfare and public services goes to the poorest 40% of households in the UK. That has not changed as a result of the Government’s policies since 2010.
The Institute for Fiscal Studies estimates that by 2020 more than 2.5 million working families on universal credit will, on average, be £1,600 a year worse off owing to the cuts to the work allowance in universal credit. My constituents know how that is going to damage them, but do the Secretary of State and the Minister have the first clue as to how many of those families will be in Scotland and what the scale of the impact will be on them?
The best way to help working households in this country is to ensure that we have a job-creating economy; that wages go up; that we introduce a national living wage that will help millions of people; and that we have a secure and stable economy. That is what this Government are delivering. [Interruption.]
Order. Household incomes in Scotland will be of intense interest, not least to people living in Scotland. We must hear the questions and the answers.
In a recent written parliamentary question to the Secretary of State, I asked:
“what discussions he has had with the Secretary of State for Work and Pensions on the introduction of the Work and Health Programme in Scotland.”
His response was a masterful example of how not to answer, which is what we have seen again today. Will he now take the opportunity to tell the House whether he has bothered to discuss with the Department for Work and Pensions how this new programme will affect my constituents?
This Government are making reforms to the welfare system—we are making sure that work always pays. We do have to ensure that the system is affordable, but may I remind the hon. Lady that the Scotland Bill gives the Scottish Government the powers to top up benefits and introduce new benefits?
8. What discussions he has had with the Scottish Government on increasing the number of undergraduates attending Scottish universities. 
I regularly discuss a range of matters with the Scottish Government. Although higher education is a devolved matter, the available figures show that application rates for those aged 18 in 2014 and 19 in 2015 were 37% in Scotland compared with 44% in England. [Interruption.]
Order. I also wish to hear the voice of Christchurch on the matter of Scottish universities.
How can it be in the United Kingdom national interest that school leavers from Scotland are being denied access to their own universities because of the arbitrary cap on numbers imposed by the Scottish Government, when school leavers with lower qualifications from the rest of the UK are able to gain such access?
My hon. Friend makes an important point. Students from my constituency have been refused entry to Scottish universities because of the cap imposed by the Scottish Government; we hear a lot about free tuition in Scotland but that is one of the consequences, and I am sure it will be part of the debate in the forthcoming Scottish Parliament elections.
As the hon. Member for Christchurch (Mr Chope) knows, the Scottish Affairs Committee has been looking into higher education, specifically into a post-study work scheme for Scotland. What the Secretary of State will find is that everybody—the universities, the trade unions, and the employers’ association—wants that scheme for Scotland. Will he now be a Secretary of State for Scotland and put that case to the Home Office?
We always listen with interest and take forward in a positive way anything that is forthcoming from the Scottish Affairs Committee, and I look forward to reading the hon. Gentleman’s report.
Last but not least Mr Philip Hollobone.
Departmental Running Costs
9. What the administrative cost of running his Department was in 2010; and what he expects that cost to be in 2020. 
The administrative cost of running the Scotland Office and Office of the Advocate General for Scotland in the financial year 2010-11 was £7.688 million. The administrative provision for both offices in 2019-20, agreed at the recent spending review, is £9.240 million.
Will the Secretary of State confirm to the House what percentage of his Department’s administrative costs is met by Scottish taxpayers?
My hon. Friend knows that the funding arrangements within the United Kingdom do not work on that basis. He also knows that this Government are committed to retaining the Barnett formula, which delivers a fair allocation of funding to Scotland.