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Devolved Finances

Volume 722: debated on Wednesday 16 November 2022

1. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902188)

3. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902190)

8. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902195)

9. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902196)

11. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902200)

12. What assessment his Department has made of the impact of the reduction in the Scottish block grant on devolved finances. (902201)

Scottish National party Members may want independence, but they certainly do not have independence of thought. The UK Government are providing the Scottish Government with a record block grant settlement of £41 billion a year over the next three years. That is the highest spending review settlement since the advent of devolution, and I hope that the SNP will join me in welcoming that, although I will not hold my breath.

So much for “Jackanory”. According to the House of Commons Library, the Scottish block grant was cut by 4.1% this financial year and is set to be cut by a further 6% in the next financial year. That is a two-year real-terms cut of nearly £5 billion. The UK Government repeatedly claim to be increasing the funding for Scotland, but that is clearly not true, so why do the Minister, the Secretary of State and his Government refuse to admit that they have cut the block grant and plan to cut it even further, and when will the Secretary of State for Scotland stand up for Scotland?

This Secretary of State is standing up for Scotland. The £41 billion settlement over three years was a record figure; it is the highest figure since devolution began and the first grant was agreed in 1999. I am standing up for Scotland, but I recognise that the Scottish Government have tough choices to make. Inflation is affecting the whole world and they will have to make responsible choices. I do not believe that it is responsible for them to cut their public services by £1.25 billion.

Independent research shows that the Scottish block grant will be cut by £5 billion in real terms over the next two years. What if the Scottish Government have £5 billion less to spend and our councils have less to spend, despite cost and demand going up? Let us consider Glasgow City Council. The city treasurer, Councillor Ricky Bell, said today:

“The consequences of what looks likely to be passed on to Scotland’s public services will be catastrophic and communities, already reeling from 12 years of Tory austerity, are being pushed to the brink of destruction.”

What can he do, other than support independence, to stop those communities being destroyed?

Supporting independence will certainly not help the finances of Scotland; many independent economists have made that observation. As I said, it is absolutely a choice that the Scottish Government have to make about how they spend their budget. If they need to do so, they have tax-raising and borrowing powers. That is a decision for them, but equally, they have to choose what their priorities are. I would say that keeping £20 million in the budget for an independence referendum that no one wants is not responsible.

Thanks to Brexit, the UK has the highest inflation in the G7, which has caused an additional £1.7 billion to be knocked off the Scottish budget due to pressures such as energy increases, wage increases and the cost of living. Instead of giving a robotic answer about the biggest budget being awarded—the Secretary of State wrongly stated that Scotland has borrowing powers, which we do not for our revenue budget—will he say what discussions he has had with the Chancellor about additional revenues coming to Scotland to offset the inflationary pressures?

I must set the record straight: borrowing is available for both capital and revenue, and there is an emergency figure, as was available during covid. The hon. Gentleman raises a point about inflation. Rising energy costs and rising food prices, as a result of Putin’s illegal war in Ukraine, have affected continental Europe and the United Kingdom. This is a global issue. The Bank of England is taking steps, and the Chancellor’s statement will take further steps tomorrow, to stabilise the markets. What we are very clear about is that we have put in place support for people through the household support scheme, the energy price cap and the £37 billion that the Chancellor announced earlier this year. As we have always said, we will protect the most vulnerable in society.

Public sector pay increases are a sensible way for a Government to help their citizens with a cost of living crisis, but the UK Government are denying devolved Governments the ability to do that by cutting devolved budgets. Would a better use of public money not be to shut down the Scotland Office propaganda unit and transfer its budget to the Scottish Government to help fund pay rises for tens of thousands of people in Scotland?

The hon. Lady and I have this discussion on many occasions, because this is one of the points that she is keenest to make in the Select Committee on Scottish Affairs. She knows the answer, which is that the Scotland Office’s spending on its communications pales into insignificance in comparison with the Scottish Government’s.

The block grant for Scotland covers many of the Government spending priorities that affect the people of Scotland from day to day, such as health, education and local government. However, I am afraid that there are many areas it does not cover, from pensions and most social security to consular services for Scots imprisoned abroad, such as my constituent Jagtar Singh Johal of Dumbarton, who has been arbitrarily detained for five years by the Government of India. We know that the Prime Minister met the Prime Minister of India at the G20 summit. Does the Secretary of State know whether they discussed Jagtar’s detention? If he, as Scotland’s man in the British Cabinet, does not know, why not?

Order. The hon. Gentleman’s supplementary does not relate to the question, so it cannot be answered.

Anti-poverty groups such as the Joseph Rowntree Foundation and the Child Poverty Action Group have praised the Scottish Government for expanding and trebling the Scottish child payment—a watershed moment for tackling poverty in Scotland. Families in Scotland now get £100 every four weeks for each child up to the age of 16, which will have a significant impact. Instead of trying to hamstring such positive anti-poverty activity by cutting the block grant, will the Secretary of State increase spending for Scotland so that we can put it into the pockets of needy families hammered by Tory austerity?

There has been an increase. As a Barnett consequential, there is an extra £82 million coming to Scotland this year through the household support fund. As a result of the rates cut in England, there is an extra £296 million coming this year. We have devolved some of those benefits, so it is the Scottish Government’s choice how they spend that money.

Yesterday, Nicola Sturgeon wrote in the Financial Times that the Scottish Government’s budget this year has

“not received a single additional penny from the UK government.”

The Secretary of State will know that that is completely false. It is another example of this fibbing First Minister, who has recently been forced to correct the official record in the Scottish Parliament for false claims made there. Does the Secretary of State agree that that is a misleading and incorrect quote from Scotland’s First Minister? Will he outline what additional funding has gone from the UK Government to the Scottish Government this year?

My hon. Friend is absolutely right. As I have just said to the hon. Member for Glasgow Central (Alison Thewliss), the extra funding from Barnett consequentials that is going to the Scottish Government this year from the household support fund is £82 million; it was £41 million last year. The council tax rebate in England has generated another £296 million that is going to the Scottish Government.

In my right hon. Friend’s assessment, did he reflect on what the impact on the Scottish block grant would be if hon. Members on the separatist Benches achieved their ambition of breaking up our United Kingdom?

My hon. Friend makes a very good point. Scotland is the best-funded part of Great Britain, and there is a Union dividend there of £2,000 per man, woman and child.

The Secretary of State, or should I say Lord Jack-elect, was blindingly loyal to the former former Prime Minister, the former former Chancellor, the former Prime Minister and the former Chancellor over the summer. They crashed the British economy on the back of handing out tax cuts to the richest. The economic crisis was created around the Cabinet table in Downing Street by the people the Secretary of State sits beside, and it will be paid for by working Scots. What price does the Secretary of State think Scottish public services and Scottish working people should pay for his Government crashing the economy?

First, as I have said in previous answers, we are facing a global economic downturn as a result of Russia’s illegal war in Ukraine. On the hon. Gentleman’s final point, the Prime Minister has made it very clear that he wants to protect the most vulnerable in society.

The hon. Gentleman refers to my previous roles in Cabinet. I do acknowledge that mistakes were made. The Chancellor took immediate steps to restore market stability when he came into his new role.

I am sure that the hon. Gentleman will agree about one other thing. Along with leading economists, we can all agree that the biggest risk to the economy of Scotland is the reckless—[Interruption]I was just waiting for the temperature to rise—the reckless plans of the Scottish Government.

It is the reckless plans of both Governments that pose a danger to Scotland, but the point is—and this is what the Secretary of State denies—that it is about not just the last 12 weeks but the decisions of the last 12 years.

A few weeks ago, a constituent came to my surgery in tears. My constituent’s 1.79% five-year fixed-rate mortgage rate was expiring, and the remortgage rate was nearly 6%. That familiar story, which means going from a stable income and affordable bills to the crushing anxiety of being unable to pay for the roof over the heads of one’s family, was totally avoidable, but this Government and Secretary of State chose to ignore the experts, ignore their own officials and ignore independent bodies such as the Office for Budget Responsibility, and the result has been a Tory premium on everyone’s mortgage. Does the Secretary of State think that he and his new Prime Minister should stop refusing to say sorry and give the public an apology, which is the least that they deserve?

I do understand how concerned people are about their mortgages. Obviously, a number of factors are influencing interest rates, but we are doing all we can to limit those factors and to support the people who need support most at this difficult time.

It is very concerning to hear the Secretary of State dispute the figures from the House of Commons Library. Let me emphasise that Scotland’s block grant is being cut, our services are being eroded by Tory cuts, the economy is being undermined by Brexit and Scotland, as part of the UK, is facing the deepest recession in Europe. This Government’s response is more austerity, despite Scotland’s rejecting that premise for more than 50 years. Will the Secretary of State and the rest of his disaster capitalist Tories get out of Scotland’s way, stop denying democracy, and allow Scotland to choose its own path out of this nightmare?

As the hon. Lady knows, the party that is denying democracy is the one that does not accept the result of the 2014 referendum.

I would not be here if we had not accepted the outcome of that referendum, and I do not need any lectures on democracy from a soon-to-be-unelected baron. No matter how much this Government deny it, Scotland’s budget is being cut. Let us put independence aside for a moment. Does the Secretary of State think that it is the Tories who are causing Scotland’s demise and short-changing us, or is it this Union institutionally?

As I have said before, the Union brings a Union dividend of £2,000 per man, woman and child to Scotland. It deals with last year’s deficit of—according to the Scottish Government’s own figures—£23 billion. It is a Union that delivers jobs. As we announced yesterday, it is delivering 4,000 jobs on the Clyde for the building of five type 26 frigates. This is a Union that serves the whole United Kingdom well. At different times, different parts of the United Kingdom pull their weight in different ways, but we are all much stronger together.