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Fiscal Framework

Volume 604: debated on Wednesday 6 January 2016

1. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. (902843)

10. What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. (902852)

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? (902854)

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? (902855)

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.