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Volume 605: debated on Wednesday 10 February 2016

The Secretary of State was asked—

Single Market

1. What assessment he has made of the value to the economy in Scotland of UK membership of the single market. (903484)

Mr Speaker, I am sure that everyone, particularly in Scotland, will share your warm wishes to Andy Murray and Kim Sears on the birth of their daughter.

Latest official statistics published last month show that in 2014 around 42% of all Scottish international exports were destined for countries within the European Union. The value of these exports is estimated at around £11.6 billion.

Does the Secretary of State agree that the package that the Prime Minister will discuss in greater detail with his colleagues on the European Council will bring about much needed reform and be a catalyst for further reform in the future, thus making it quite clear that the single market is good for the United Kingdom and, of course, good for Scotland?

In a reformed EU, we could have the best of both worlds—access to the single market while not being a member of the euro or Schengen. I believe that would be good for Scotland and good for the rest of the United Kingdom.

The single European market and the ability to affect the legislation that governs it is hugely important to the Scottish economy, especially the exporting sectors such as whisky. Will the Secretary of State confirm that, regardless of the ongoing negotiations, he will personally campaign for Scotland and the UK to remain within the European Union?

The right hon. Gentleman will know and will, I am sure, be pleased to have heard that the leader of the Scottish Conservative and Unionist party, Ruth Davidson, has expressed exactly that position.

The good news is that I get a second bite of the cherry, so perhaps at the end of this question the Secretary of State will answer my question about whether he will support Scotland and the UK remaining within the European Union. Making a positive case for remaining in the EU will be crucial in the weeks and months ahead, so will the Secretary of State give a commitment not to repeat the grinding negativity of project fear and condemn ridiculous scare stories such as those from the Prime Minister on immigration and the refugee camp in Calais?

I will make my position known when the negotiations have been concluded, but I make this offer to the right hon. Gentleman: if the reform package goes ahead and if I am campaigning to keep Scotland in the United Kingdom I would be delighted to join him, the right hon. Member for Gordon (Alex Salmond) and the First Minister on a platform to make that case.

Last night I had the pleasure of meeting the Scotch Whisky Association, which introduced me to some of the finer products from across the border. Simpsons Malt in my constituency produces an enormous amount of the malted barley sold across the border in Scotland to produce this whisky. Does my right hon. Friend agree that expansion into new markets that have nothing to do with the EU is the growth area for the whisky industry?

There are tremendous opportunities for development of the Scotch whisky industry. I think that the Scottish Government, the United Kingdom Government and all parties in the House are united on that. When the President of China was in the United Kingdom recently, we had the opportunity to present his wife with a bottle of her favourite malt whisky from Scotland, and both he and his good lady were able to make clear how important the product is to developing markets in China.

What discussions has the Secretary of State had with Scottish businesses about the possibility of a UK exit from the European Union, and what concerns have those businesses expressed about the impact it would have on their ability to gain access to, and export to, the single market?

The clearest message that I receive from businesses in Scotland is that they want a short EU referendum campaign so that we can have the minimum amount of uncertainty.

Revised Fiscal Framework

2. What recent discussions he has had with the Chancellor of the Exchequer and Ministers of the Scottish Government on negotiation of a revised fiscal framework for Scotland. (903485)

I have regular discussions with the Deputy First Minister to discuss the fiscal framework. The Joint Exchequer Committee met on Monday, and negotiations are ongoing.

Yesterday the First Minister wrote to the Prime Minister listing the issues on which agreement still needed to be reached. They were the method for

“block grant adjustment…set-up and administration costs, capital and revenue borrowing, fiscal oversight and dispute resolution.”

Can the Secretary of State confirm that those are all the outstanding issues on which agreement still needs to be reached?

It was established at the start of the discussions that until everything was agreed, nothing was agreed, but considerable progress has been made on all those issues. I was very pleased to learn from the First Minister’s letter that the Finance Secretary would be presenting revised proposals from the Scottish Government. That is what a negotiation involves: it involves both parties presenting revised proposals as the negotiation progresses, and that is exactly what the UK Government are committed to doing.

The starting point of the fiscal framework discussions is the Barnett formula, which means that Scotland’s public spending per capita is 15% higher than the United Kingdom average. Does the Secretary of State believe that that differential will be maintained in perpetuity?

My hon. Friend’s views on the Barnett formula are well known. I do not agree with them, and nor do the Government. The Government’s position is that the formula will remain, even in the post-fiscal framework environment.

The negotiations on the fiscal framework are in a very sensitive and fragile state, and we must be very careful about the language that is used. However, the Secretary of State has used language like “ludicrous” and “chancing his arm” when it comes to one party to the negotiations, which is profoundly unhelpful. If the Secretary of State and the Scotland Office have nothing to offer the negotiations, will the Secretary of State vow to stay right out of it, and leave those who want to find a solution to try to get those negotiations fixed?

I find it a little odd to take a lecture from that particular hon. Gentleman on moderate language.

I do not think anyone can doubt my commitment to ensuring that we have a negotiated fiscal framework, and I am delighted that, in her letter to the Prime Minister, the First Minister set out her strong commitment to achieving such an agreement, because that is the Prime Minister’s position. As I said at the weekend, both sides have done the dance; now let us do the deal.

Does my right hon. Friend agree that if we are to have the successful devolution that we all want, we need a firm and sensible framework for fiscal discipline that will last, and will stand the tests of all the unknown economic vicissitudes that may hit the country? Will he assure us that we will not repeat the mistakes that have been made in Spain, where devolved provinces frequently run up unsustainable debts which they then blame on Madrid, causing great difficulties to Spanish Governments who are seeking recovery?

As my right hon. and learned Friend will recognise, the settlement in Spain is entirely different. I agree with him about the need for a sustainable fiscal framework, but, as the Government have made clear in the negotiations, we are willing to accept a review of the arrangements in a few years to ensure that they stand up to scrutiny, and are seen to be fair to both Scotland and to the rest of the United Kingdom.

Mr Speaker, I join you in congratulating Andy Murray and Kim Sears on the birth of their baby daughter. However, their baby daughter might be winning Wimbledon by the time we get a deal on the fiscal framework. The UK and Scottish Governments have now been negotiating it for more than six months, which is longer than it took to negotiate the Scotland Bill itself, longer than it took to strike the historic international climate change agreement and longer than it took the G20 leaders to negotiate $1.1 trillion of support for the global economy. It is clearly the indexation model that is contentious, so will the Secretary of State tell the House why he thinks the per capita index model is not appropriate for the indexation of the block grant?

I have made it clear in previous discussions that we are not going to have detailed negotiations on this matter on the Floor of the House. I have also said that I very much welcome the fact that the First Minister has indicated that the Scottish Government are going to bring forward a revised proposal, just as we have done through the negotiations. I believe that we are within touching distance of striking a deal and I remain optimistic that we will do so.

The Secretary of State says that he will not provide a running commentary on the fiscal framework, yet both Governments are providing exactly that. The respected economist Anton Muscatelli has said of the fiscal framework:

“I do not understand why it should be such a huge stumbling block.”

The constitutional expert Jim Gallagher has said:

“This fiscal framework is an eminently solvable problem.”

The Prime Minister has spent recent months shuttling around Europe trying to strike a deal on EU reform. Is it not time that he got involved and showed the same enthusiasm for striking a fair deal for Scotland in our own Union as he has shown for the European Union?

The Prime Minister is committed to securing a deal. He has spoken to Nicola Sturgeon about this issue and they have had productive discussions. They are now involved in an exchange of letters, but they are both quite clear that they now want a deal. I am confident, given the position set out in the letter from the First Minister that the Scottish Government are actively engaging in that negotiation process, as are we, that we will be able to get that deal.

North Sea Oil and Gas

3. What discussions he has had with representatives of the North sea oil and gas industry on Government support for that sector. (903487)

On 28 January, the Prime Minister and I held discussions with industry representatives in Aberdeen on further support for the North sea. As a member of the joint ministerial group on oil and gas, I also engage with key stakeholders, such as the Oil and Gas Authority, on a regular basis.

Calor Gas has its largest operational UK site in my constituency in South Leicestershire. A number of residents in the Scottish highlands and other rural areas rely on Calor Gas, which receives a large part of its Scottish gas supply from the North sea. Does my right hon. Friend agree that, as a result of the support that the UK Government are able to provide, we are much better placed to absorb the fall in oil prices than would have been the case had Scotland been an independent country?

I acknowledge the importance of Calor Gas and all those who supply off-the-network energy to people living in rural Scotland. On my hon. Friend’s wider question, he makes an important point about the ability of the United Kingdom as a whole to absorb the change in the oil price.

What discussions has the Secretary of State had with the Chancellor about continued funding for seismic surveys on the UK continental shelf?

I am sure that the hon. Lady welcomed the Prime Minister’s announcement when he was in Aberdeen of a £20 million contribution to a second round of new seismic surveys.

The severity of the collapse in global oil prices carries with it the danger that a number of fields in the North sea will suspend production and perhaps never resume it. Given that this would represent a serious loss of national assets and national infrastructure, may I invite the Secretary of State to have further discussions with the Chancellor in advance of the Budget to try to ensure that these fields are not lost forever and that they remain an important part of our national economy?

It will not surprise my right hon. Friend to know that that issue was part of the discussion with the Prime Minister, Fergus Ewing from the Scottish Government and representatives of the oil and gas industry at the recent meeting in Aberdeen. The Prime Minister made it very clear that he would look at any specific request or proposal in relation to supporting the industry in the forthcoming Budget.

Welfare Programme

4. What recent discussions he has had with the Secretary of State for Work and Pensions on the effects of the Government’s welfare programme on social and economic inequalities in Scotland. (903488)

9. What recent discussions he has had with the Secretary of State for Work and Pensions on the effects of the Government’s welfare programme on social and economic inequalities in Scotland. (903493)

On behalf of the Secretary of State for Work and Pensions, I meet the Secretary of State for Scotland on a regular basis to discuss the devolution of welfare programmes to the Scottish Government; at a meeting just yesterday we discussed the ever-improving labour market in Scotland. I also have regular meetings with my counterparts from the Scottish Government and we have a joint ministerial working group. I will be speaking tomorrow to the Scottish Ministers with responsibility for fair work, and for children and young people.

The Smith agreement devolved employability funding and services to Scotland, but then the autumn statement cut funding for it by an eye-watering 87%, so that the Scottish Government now have only £7 million with which to deliver those services. Notwithstanding the general acceptance that this was a politically motivated decision, what does the Minister have to say to my constituents, who live in one of the areas of highest deprivation in the whole of the United Kingdom and are, after all, the people this will have the largest impact on?

I start by hoping that the hon. Lady will welcome the fact that in her constituency the claimant count has decreased by 49% since 2010. We have record levels of employment in Scotland. There will be greater devolution for the Scottish Government in welfare, and we would be particularly happy to have discussions with them on employment programmes. Many of those will look at how we take these programmes further to support those who are out of work in Scotland but desperately want to work.

As a result of the changes from disability living allowance to the personal independence payment, thousands of Scots are losing their rights to Motability vehicles. That is particularly devastating in rural areas, where accessible public transport may be limited. Will the Minister end this iniquitous policy?

As I have said, there will be new powers under the devolution deal, which will also include top-up payments; this is still very much based on welfare payments as well. It will be down to the Scottish Government in particular to get on and start making some of these decisions. They have got the powers coming to them so they will have to start deciding how they want to use them.

It was thanks to Labour peers that the Government’s initial cack-handed and unfair cuts to tax credits were brought to an abrupt end, but we now know that the Government want to introduce new changes to income disregard which will leave 800,000 people on tax credits across the United Kingdom worse off come April. Can the Minister tell the House how many people in Scotland will be affected?

I will say, as I have previously said when the House has discussed the issues of welfare reform and welfare changes, that we have the Bill going through the other place right now and the changes we are making are to bring fairness and stability to the welfare bill in this country. We know, and we have made it clear, that despite the figures that the hon. Gentleman and the Labour party leverage constantly, people will not be affected and the right kind of transitional support will be put in place.


The employment rate in Scotland has never been higher, and it now stands at 74.9%. Our employment support offer will build on that, recognising the changing labour market environment, while delivering value for money to the taxpayer.

Erewash has many great examples of businesses whose commercial operations north of the border help to sustain jobs locally, including Rayden Engineering and West Transport. Does the Minister agree that Scotland not only supports jobs for its own population, but creates a great deal of employment across the rest of the United Kingdom?

My hon. Friend is absolutely right to say that record levels of employment in Scotland have clearly benefited her constituency, as there is a crossover in employment opportunities between her constituency and Scotland. With our growing economy, and the strength of our economy, those levels will continue to grow and grow.

Under the SNP Scottish Government, Scotland’s youth employment is at its highest level since 2005, and is 7% higher than that in the rest of the UK. Can the Secretary of State reassure me that he will make representations to the Secretary of State for Business, Innovation and Skills to ensure that Scotland receives a fair share of funding from the apprenticeship levy?

I did not fully hear the hon. Gentleman’s question, but I will certainly take it away. I understand that the Department is already looking at that matter.

It is a very serious situation if Ministers cannot hear the questions. It is also a considerable discourtesy to the people of Scotland if, when we are discussing these important matters, questions and answers cannot be heard. Let us please try to have a bit of order.

West Coast Main Line

6. What discussions he has had with the Secretary of State for Transport and Ministers of the Scottish Government on the effect on communities in Scotland of the partial closure of the west coast main line. (903490)

I have had a number of discussions with the Department for Transport and others to ensure that the closure of the Lamington viaduct, which is in my own constituency, is addressed as quickly as possible. We remain absolutely committed to working together with all parties to reopen the west coast line in the first week of March.

I apologise for my lack of voice. The closure of the west coast main line has a huge impact not only on the economy of southern Scotland, but on Cumbria, too, as it is a strategic cross-border crossing on which many businesses in my constituency rely. I was pleased to hear the Secretary of State say that it will be open in the first week of March, as it is so important. Will he confirm that the entirety will be open by 1 March?

I welcome the hon. Lady’s comments because, as she will be aware, my own constituents who use Lockerbie station are among those most affected by these changes. We are determined to get the west coast main line fully reopened in that first week in March.

The Prime Minister claims that he will get a good deal for Britain in the European Union. Would the Secretary of State like to see the United Kingdom play the same role and have the same powers in the EU that he claims Scotland currently has in the UK?

That was quite tangentially related to the west coast main line, but I hope that the dexterity of the Secretary of State will admit of an answer.

Mr Speaker, the west coast main line is one of the most important routes within the United Kingdom to Europe via London. I have set out my position in relation to the EU referendum. If the SNP genuinely wants Scotland to remain in the EU, it is important that, rather than concentrate on process issues, it gets out and campaigns for it.

Devolution and Local Government

7. What recent discussions he has had with Ministers of the Scottish Government on the effect of devolution on the powers and autonomy of Scottish local government; and if he will make a statement. (903491)

I do not know whether the hon. Gentleman has had the opportunity to read my speech of 21 December, in which I set out that I fully support the devolution of power from Holyrood to local communities, as Lord Smith recommended in his commission agreement. This is the responsibility of the Scottish Parliament to implement, and I encourage them to do so.

Will the Secretary of State condemn those who use devolution to centralise power in Holyrood—whether it is the centralisation of the police, the fire service, health spending, local government spending, courts, colleges and enterprise companies? Will he ensure that he stands together with those who feel that devolution does not stop at Holyrood, but goes down to the Scottish local authorities and to the Scottish people?

I absolutely agree with the hon. Gentleman, and I can tell him the best way to achieve it, which is, under Ruth Davidson, to elect more Scottish Conservative MSPs to the Scottish Parliament.

In the interests of the record, can the Secretary of State confirm that, under the powers that are being devolved as part of the current Scotland Bill, the Scottish Government will be able to vary rates and bands of the Scottish rate of income tax—[Interruption.]

Order. I apologise for interrupting the hon. Gentleman. The Secretary of State and the Minister could not hear the question because of a rude eruption of noise. Perhaps the hon. Gentleman can ask his question again, and perhaps Members will have the common courtesy to allow him to be heard by their own Ministers.

Thank you, Mr Speaker. We are getting used to interruptions. In the interests of the record, can the Secretary of State confirm that, under the powers that are being devolved as part of the Scotland Bill, the Scottish Government will be able to vary rates and bands of the Scottish rate of income tax, allowing the Scottish Government to make progressive choices on these additional powers, and that the half-baked Labour plan to raise Scottish income tax for everyone before these additional powers are transferred—

Order. Members need to learn the merits of the blue pencil. If they used the blue pencil and questions were shorter, they would benefit.

The Scottish Parliament will indeed take on those very significant tax powers, which it will be able to use as it sees fit. I hope it will use them to make Scotland a more attractive place for business and commerce and to grow the Scottish economy and the Scottish population.

Economic Trends

My right hon. Friend the Secretary of State for Scotland has had a number of discussions with business organisations, including the Institute of Directors, the Scotch Whisky Association and Oil and Gas UK. It is because of this Government’s commitment to our long-term economic plan and economic prosperity that we have seen such growth in the Scottish economy. Thank goodness that the good people of Scotland voted to stay within a United Kingdom and reject independence.

Research by the Union of Shop, Distributive and Allied Workers shows that Scottish shop workers could lose up to £1,300 annually as stores increasingly abandon their additional Sunday pay rates in the light of the proposed Sunday trading regulations. Will the Minister take up these concerns with the Business Secretary?

I did not hear all that my hon. Friend said, but I can tell her that we intend to devolve power down to local authorities, so that they make the decisions on what is in the best interests of people locally. That includes local people who may want to shop on a Sunday and the interests of businesses that may want to open more liberally on a Sunday to take full advantage. I think that is a good idea. I hope that my hon. Friend might consider supporting it.