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Volume 622: debated on Wednesday 1 March 2017

The Secretary of State was asked—

Taxation Powers

The Chief Secretary to the Treasury attended a Joint Exchequer Committee with the Scottish Government’s Cabinet Secretary for Finance and Constitution in November. They discussed the ongoing work between both Governments to implement these and other powers. There are, of course, regular and ongoing discussions between officials from both Governments.

Does my hon. Friend agree that these taxation powers, coupled with other powers that have been devolved to Holyrood, make it one of the most powerful devolved Parliaments in the world? Does she also agree that, quite rightly, they make the Scottish Government accountable for their actions in respect of taxation, and that the Scottish Government are responsible for making Scotland the most highly taxed part of the United Kingdom?

My hon. Friend makes a very good point. The new devolution settlement does indeed deliver one of the most powerful and accountable devolved Parliaments in the world, and the people of Scotland will look to their Government to use those tax powers wisely to make Scotland as competitive and attractive a place as possible in which to do business. We obviously want the Scottish Government to use those powers to deliver that and it is for them to choose how they use them, but they do have to account for their use to the people of Scotland.

Does my hon. Friend share my confusion that the Scottish Government prefer the narrative of whinge, whine and waffle to using the powers that this Parliament has given them to prove their competence in running the country?

As I am sure many hon. Members also know, I am very aware from many of my conversations with businesses—particularly those thinking about their plans for the future, especially since the referendum last year—that they often see competitiveness through the prism of tax and that they want to know the Government are entirely focused on creating the conditions in which businesses can grow and thrive. I really think that all of us need to focus on pursuing our plans to make our respective countries very competitive. In Scotland, the Government have to understand that the decisions they take about using their powers are part of such a package for businesses.

The Tories at Westminster are facing rebellion on their Back Benches on business rates. What advice are they taking from the Government in Scotland, who have listened to local businesses and put on a cap of 12.5% for businesses in the hospitality sector and particularly those in Aberdeen that have been hard hit by the oil price?

I think that is just an attempt to make a political bragging point. My right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Communities and Local Government have made it quite clear that they will have more to say about that. They are listening carefully to the concerns of particularly the smallest businesses and of those hardest hit by business rates in England.

Will the Minister explain to me how, simultaneously, the Scottish Government can, first, be not using the taxation powers they have, and secondly, be the highest taxed part of the country, particularly when neither of those statements is in fact true?

It is for the Scottish Government to account to the Scottish people for their plans. These points might be interesting ones to bring to Westminster and knock about in this Chamber, but real people are looking at the impact of those plans on their family income and the Scottish Government will have to account to them for those plans. It is far more than just a debating point.

13. Does the Minister agree that the Scottish Government’s decision to make Scotland the most highly taxed part of the United Kingdom will reduce the country’s competitiveness and ultimately make Scotland a less attractive place in which to live, work or do business? (908910)

These are all very important points. It is for the Scottish Government to use the powers that have been devolved to them and to account to their people for using them, but there is no doubt that people look at the competitiveness of tax regimes, whether personal or business, and that those regimes are important in the key decisions that people make about competitiveness and other things.

Leaving the EU: Trade

Following the EU referendum, Scotland Office Ministers have regularly met representatives of Scottish industry and business. What comes out clearly is the appetite to seize and make a success of the opportunities afforded to us by leaving the EU, forging a new role for ourselves in the world to negotiate our own trade agreements and be a champion for free trade.

I am a bit scared to ask my supplementary question because I think my Scottish National party colleagues have had three Weetabix this morning. My question is about exports, of which Scotland has made a fantastic success, particularly in food and drink. How confident or worried should we be if we come out of Europe that those markets will be damaged, and what can the Government do to support them?

My hon. Friend is absolutely right to highlight food and drink as Scotland’s top manufacturing export, accounting for £8.9 billion in 2015. Leaving the EU offers us the opportunity to negotiate new trade deals across the globe and create even more opportunities for Scotland’s world-renowned food and drink.

Agriculture and fisheries are key parts of the Scottish economy and Scotland’s export sector. Powers for both are devolved to the Scottish Government. Under the Secretary of State’s Government’s plans, will all decisions on agriculture and fisheries be taken by the Scottish Parliament and the Scottish Government after Brexit?

As the right hon. Gentleman knows, the Government have confirmed in the White Paper that all the powers that the Scottish Parliament currently exercises in relation to agriculture, fisheries and all other issues will continue. We wish to have a dialogue with the Scottish Government, the other devolved Administrations and stakeholders about what happens to powers that are currently held in Brussels and where they will rightly rest after the United Kingdom leaves the EU.

Anybody watching this will realise that the Secretary of State did not answer the question. During the Brexit referendum campaign, people were told that decisions currently taken in Brussels on agriculture and fisheries would revert to the Scottish Parliament. The Secretary of State has not given a clear answer to the question, which really matters to our rural industries, our rural economy and Scotland as a trading nation. Let me try the same question again, and I would be grateful if the Secretary of State answered it. Under his Government’s plans, will all decisions on agriculture and fisheries be taken by the Scottish Parliament and the Scottish Government after Brexit—yes or no?

This Government’s plan is to engage with the Scottish Government and with the other devolved Administrations to discuss those serious issues. It is not to go out and tell the people of Scotland that the devolved settlement is being undermined by Brexit, which will lead to the Scottish Parliament exercising more powers. I can give the right hon. Gentleman an absolute guarantee that, after the United Kingdom leaves the EU, the Scottish Parliament and Scottish Ministers will have more powers than they have today.

Before I ask a question, I take the opportunity to send my condolences to the family of my great comrade, Gerald Kaufman, a genuine parliamentarian.

On 12 October, the Secretary of State stood at the Dispatch Box and said

“whatever support is put in place for businesses in the north of England will apply to businesses in Scotland.”—[Official Report, 12 October 2016; Vol. 615, c.287.]

That was in relation to the deal struck with Nissan. Does he stand by that promise?

I associate myself with the hon. Gentleman’s comments about Gerald Kaufman. He was a near neighbour of mine in the previous Parliament and I always found him to be the perfect gentleman.

I made it clear in previous answers that the Government’s approach will be consistent across the United Kingdom.

While some businesses and workers are aware of that welcome reassurance, I have yet to meet any businesses in Scotland that know about the commitment to give them the same deal as was done with Nissan. Why has the Secretary of State not been more public about the commitment? Why is it the best kept secret in Scotland?

I have made it clear to the hon. Gentleman how the UK Government are approaching the Brexit negotiations and how we are fully engaged with businesses in Scotland to ensure that we understand their concerns. We can go forward on a basis that will ensure that Scotland and the whole United Kingdom get the best possible deal from the UK leaving the EU.

Scotland’s international exports have increased by 41% since the Scottish National party Government came into office in 2007, which is a fantastic success story for Scotland. Will the Secretary of State therefore explain why the UK Government failed to negotiate any geographical indications for Scottish produce in the EU-Canada CETA trade deal?

I hope the hon. Lady’s approach on the EU-CETA trade deal is more consistent than that of her parliamentary group. On the Monday of the week when the Canada deal was discussed, SNP Members voted in favour. By the Wednesday, they somehow found that they were against.

Scottish Government: Draft Budget

As I have mentioned, the Chief Secretary to the Treasury has regular engagement with the Scottish Government’s Finance Minister. They discussed matters relating to the Scottish Government’s budget for 2017-18 at a joint Exchequer committee in November, and at a Finance Ministers’ quadrilateral in February.

What does my hon. Friend believe will be the consequences of the Scottish Government using their new powers for the Scottish economy to make Scotland the most highly taxed part of the United Kingdom?

Colleagues are rightly focused on tax and competitiveness. The increased tax powers delivered through the Scotland Act 2016 mean that the Scottish Government have responsibility for raising more of what they spend. It is for them to decide how to use those tax powers to shape Scotland’s economy, growth and jobs. I might not like their plans to make Scotland a higher-tax nation—it is up to them—but they have to explain those plans to the people they represent.

The publication of this year’s draft Scottish budget had to be delayed because the Chancellor of the Exchequer did not make financial information available until the autumn statement. What impact will the move to the autumn Budget have on the Scottish Government’s ability to plan effectively for their budget process?

There are many good reasons for moving to a single fiscal event in the autumn—allowing for longer-term planning is one of them. On the subject of planning for the long term and increasing certainty, I would add that taking the threat of a second referendum off the table is the single biggest thing that the SNP and the Scottish Government could do for certainty and confidence among the business community.

Leaving the EU: EU Nationals in Scotland

4. What discussions he has had with the Secretary of State for Exiting the EU on the status of EU nationals living in Scotland after the UK leaves the EU. (908901)

I have regular conversations with the Secretary of State for Exiting the EU on a number of issues. The UK Government have made it absolutely clear in their White Paper that securing the rights of EU citizens in the UK and of UK citizens in the EU is one of our top priorities in the Brexit negotiations.

The Secretary of State’s answer is not very reassuring given the speculation about a potential cut-off date for EU nationals later this month. The other place will vote on an amendment today that will secure the residency rights of EU nationals. If that is passed, will the Secretary of State urge his colleagues to end this disgraceful uncertainty on residency rights for EU nationals, who contribute so much to the Scottish and UK economies? If he does not, he will send out a very strong message that he is willing to use the lives of EU nationals as a bargaining chip for a hard Tory Brexit.

I agree with one thing the hon. Gentleman says: EU citizens in Scotland, and indeed in the whole United Kingdom, make a significant contribution to civic life and the economy of our country. As the Prime Minister has repeatedly made clear, we want those people to stay. She has sent out a very clear message, and it is clearly set out in the White Paper. We do not believe that the Article 50 Bill is the place to set it out.

12. I will certainly bear it in mind that it is a similar question, Mr Speaker. Does my right hon. Friend the Secretary of State agree that the business community in Scotland shares a far more positive and optimistic outlook, rather than the forever-negative comments from the Scottish Government? (908909)

Order. This is on the importance of the rights of EU nationals. I am sure that that is what the hon. Gentleman meant.

I know that businesses across Scotland value the contribution that EU citizens make to their businesses, and I am clear with them that even when the UK leaves the EU, it will be important for EU citizens still to come to Scotland and play an important part in our economy.

A recent report from the British Medical Association shows that 40% of European doctors might leave the UK after Brexit because of the Government’s shameful inaction on giving a clear guarantee to EU nationals. Why will the UK Government not do the right thing and give a clear guarantee to EU nationals, who are a valued part of our society in Scotland, that they have the right to remain?

I am absolutely clear about the importance we place on the role of EU nationals in the economy and the health service, but I would take the hon. Lady’s comments about encouraging doctors and other medical professionals to come to Scotland a lot more seriously if her Government had not decided to tax them more than any other part of the UK.

Does my right hon. Friend agree that as well as safeguarding the role of EU citizens in the UK after we leave the EU, it is vital that we safeguard Scots people who have gone to live in other parts of the EU?

I absolutely agree with my hon. Friend. It is vital that we secure the position of UK citizens in the EU, many of whom are Scots, and it is perfectly legitimate to take forward that issue in conjunction with securing the rights of EU citizens in Scotland and the rest of the UK. I am hopeful that that can be dealt with very early in the negotiations.

It is clear that the Government are happy to play political football with these people’s lives. It shows contempt for 12,000 people working in our health and social care service in Scotland and for 20,000 people working in the food industry, which the Secretary of State has just bragged is the most important part of Scottish industry. When will he stop treating these people this way and give them the guarantee they need to live a happy and secure life in Scotland?

I have made it absolutely clear, as has the Prime Minister, how much we value the contribution that EU nationals make in Scotland to both the economy and civic society. We want them to stay, but we also want UK nationals elsewhere in the EU to be able to stay where they are.

Joint Ministerial Committee

5. What recent assessment he has made of the effectiveness of the Joint Ministerial Committee. (908902)

The Government are committed to getting the best deal for Scotland and the UK in the negotiations with the EU. The Joint Ministerial Committee on EU Negotiations was established to facilitate engagement between the UK Government and devolved Administrations and has had substantive and constructive discussions in monthly meetings since November.

At the last meeting of the JMC, the Prime Minister committed to an intensified engagement with the Scottish Government on their EU proposals. Can he update the House on that process?

When I appeared last week before the Scottish Parliament’s Culture, Tourism, Europe and External Relations Committee, I was able to tell it that in the two weeks since the plenary meeting of the JMC, six substantive meetings had taken place between senior officials so that both Governments could discuss the proposals set out in the document, “Scotland’s Place in Europe”. We regard this as a serious contribution to the debate and continue to engage with it.

May I draw my right hon. Friend’s attention to the fact that the Public Administration and Constitutional Affairs Committee has been taking a great interest in the inter-institutional relationships within the UK, that we produced a report in December on this subject, which I commend to him, and that the main thrust of the recommendations are not about structures and institutions but about natural adversaries sitting down together and developing relationships and bonds of trust and understanding?

Obviously, I very much take my hon. Friend’s work seriously. Despite what often appears in the media, it is possible for the two Governments to engage in a constructive way. We are already in agreement on many issues in the Scottish Government’s document.

It is not just a matter of trying to keep the EU nationals who are currently in our health and social care service. The workforce is the biggest challenge that NHS Scotland faces, so will the Secretary of State support Scotland having the powers to attract EU nationals in future, not just keeping the ones who are here now?

I have said previously from this Dispatch Box that I do not support the devolution of immigration powers to the Scottish Parliament, but I do support arrangements that will ensure that the vital workers needed in depopulating areas, skilled areas and in areas that rely on seasonal workers can come to Scotland.

Earlier, the Secretary of State refused to confirm that Scottish fishing and Scottish agriculture would become the responsibility of the Scottish Parliament. When will his Department present to the Joint Ministerial Committee a list of powers that will be devolved to the Scottish Parliament after Brexit, or will he refuse to do so and simply follow instructions from No. 10?

What I want to do and what I have attempted to do is engage in a constructive discussion and dialogue with the Scottish Government and the Scottish Parliament about how we repatriate powers from Brussels. I do not try to make a serious and wrong political point that this is an attempt to destabilise the Scottish Parliament, because I know that when the process is complete, the Scottish Parliament will have more powers than it does today.

UK Single Market and Scotland’s Economy

6. What assessment he has made of the importance of the UK single market to Scotland’s economy. (908903)

7. What assessment he has made of the importance of the UK single market to Scotland’s economy. (908904)

Sales from Scotland to the rest of the UK are worth nearly £50 billion, a figure that has increased by over 70% since 2002 and that is four times greater than the value of exports from Scotland to the EU. There is no doubt that the United Kingdom is the vital Union for Scotland’s economy.

Does the Secretary of State agree that we must not create barriers or do anything to impede the functioning of the UK domestic market as we leave the EU, given its vital importance to the economy of Scotland?

I could not agree more with my hon. Friend. I find it strange that those who make such a fuss about the EU single market seem to have a complete disregard for a market that is four times as large to Scotland’s economy.

Given that Scottish whisky is the largest net contributor to the UK’s balance of trade and goods, is the Secretary of State encouraged by the fact that if we move from the single market to World Trade Organisation arrangements, Scottish whisky will have a zero tariff?

It is important to note that there is a zero tariff for Scotch whisky under WTO rules. As to our future relationship with the EU, my right hon. Friend the Prime Minister has made it absolutely clear that we want to negotiate a free trade agreement with the EU, which would be enormously to the benefit of the Scotch whisky industry.

All this UK single market business is quite interesting, but is the Secretary of State trying to suggest that a Brexitised isolated UK, desperate for friends and any trading partners, would not trade with an independent Scotland?

What I am suggesting is that if an independent Scotland were to put up tariffs and barriers with its vital largest trading partner, which provides four times as much economic development as the EU, that would be a disastrous series of events.

It is vital that both the UK and the Scottish Governments work together to maximise the number of jobs created, but it is clear that the one thing the Scottish Government could do to help job creation in Scotland most is take the suggestion of a divisive independence referendum off the table.

8. The Secretary of State previously told the Scottish Affairs Committee that he attends Cabinet Brexit meetings based on whether he thinks the agenda items are important to Scotland. Will he tell the House which Brexit policy areas he thinks are important to Scotland and which areas he thinks are not important? (908905)

I also made it clear to that Committee that it was not appropriate to give a running commentary on the Government’s internal discussions on Brexit. What I am committed to do is delivering the best possible deal for Scotland in these Brexit negotiations.