Devolved Administrations: Borrowing Powers

(Limited Text - Ministerial Extracts only)

Tuesday 9th July 2019 Westminster Hall

[The Financial Secretary to the Treasury (Jesse Norman)]

It is a delight to speak under your chairmanship, Mr Hollobone. This is an important topic that commands interest not only across the House but, more importantly, across the four constituent nations of our Union and among our constituents. I take my hat off to my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate and for the energy that he and his generation of Scottish Conservative MPs bring to the House of Commons. It has been a tremendous tonic and has been very good for the House as a whole.

Like my hon. Friend, I am surprised and a little dismayed that the Scottish National party is not present for the debate. That in itself tells a story that we need to explore more widely and that I will come to later. He raised a wider issue, so I will talk about what the Government are doing more generally before I address the question of Scotland that he raised so eloquently.

As my hon. Friend and everyone in the Chamber will know, the Government are committed to strengthening the Union, which is arguably the oldest and most successful partnership of its kind in the world. Only last week, the Prime Minister announced an independent review to ensure that Departments in Whitehall work in the best interests of the Union. Protecting the Union is also a priority for both candidates who are vying to be the next Prime Minister.

[Ian Murray]

I understand that the Minister’s opening remarks are about the Government protecting the Union, but what does he say to the 63% of Conservative members who would rather see Brexit than the UK staying together?

[Jesse Norman]

I do not think that they regard that as in tension with a proper unionism; they worry about the union with the EU. In their view, they are giving voice to a sovereignty that the United Kingdom of Great Britain and Northern Ireland expresses and has done for more than 200 years.

As colleagues will know, I can never talk about the Union without mentioning my great hero, Adam Smith. He said that the 1701 union was:

“a measure from which infinite Good has been derived”

to Scotland. How right he was. The reason why that was true for Smith and is true now is that the Scots took advantage of the potential offered by that incorporating political arrangement. As the House will know, Scots spread out across the world, ran large chunks of it and were extremely effective and successful entrepreneurs and businesspeople. Their country and the United Kingdom as a whole greatly benefited.

Borrowing powers are one of the most important ways in which the Government are strengthening the constitutional settlement, by providing devolved Administrations with greater choice and responsibility. Greater resource borrowing helps to ensure budgetary stability and affords devolved Administrations the flexibility to manage volatility associated with their new revenue-raising powers—or tax powers, in Scotland’s case. Similarly, capital borrowing powers offer much greater control over infrastructure investment.

The Scotland Act 2016 increased the Scottish Government’s capital borrowing limit to £3 billion, with an annual limit of £450 million. The resource limit was also raised to £1.75 billion, with an annual limit of £600 million. Those are substantial sums that create a degree of responsibility. To have those powers is to be trusted to exercise them responsibly. If that means investing them in better services on behalf of local people, that is the responsibility that those Administrations face.

It should be clear that those individual borrowing powers come on top of the funding that devolved Administrations receive through the Barnett formula. The fact that devolved Administrations already receive a share of all UK Government borrowing under the formula explains the need for limits on their borrowing to ensure the sustainability of the public finances. Spending decisions taken by the UK Government continue to deliver growth and prosperity across the whole of the United Kingdom. As my hon. Friend and colleagues will know, last year’s Budget provided a funding boost of £950 million in Scotland, £550 million in Wales and £320 million in Northern Ireland.

By 2020, all three devolved Administrations will therefore have received a real-terms increase during this spending review. Before adjustments for tax devolution, block grant funding will have grown to more than £32 billion in Scotland, £16.1 billion in Wales and £11.7 billion in Northern Ireland. There has been further support through city deals and growth deals, including more than £1.3 billion for eight such deals in Scotland.

I reassure my hon. Friend and the House that the Government are also committed to devolving greater responsibilities on tax and welfare. Once the 2016 Act is fully implemented, more than 50% of the Scottish Government’s funding will come from revenues raised in Scotland, making the Scottish Government more accountable to the people they serve. That is surely the point—with power comes responsibility—so the fact that the SNP is not present in the Chamber is a token of the wider problem of the Scottish Government’s lack of accountability. It is unfortunate that, although one constantly hears that Government’s grievances, they do not spend to address the issues of which they complain—my hon. Friend the Member for Angus (Kirstene Hair) is absolutely right to make the point about playing politics. However, the question at the heart of the debate and of the points raised by my hon. Friend the Member for Ochil and South Perthshire is not one of disingenuousness or hypocrisy but one of public service and accountability.

I thank my hon. Friend the Member for Ochil and South Perthshire for securing this debate and for his important and eloquent speech. It poses a challenge to the Scottish Government to live by what they say and to do what they profess. I am grateful to have had the opportunity to speak for the Government and demonstrate our continued support for the sustainability and prosperity not just of the Scottish nation and economy but of those of Wales and Northern Ireland.

Question put and agreed to.