Scotland Bill (Programme) (No.2)

David Mundell Excerpts

Monday 9th November 2015 Commons Chamber

[The Secretary of State for Scotland (David Mundell)]

I will not detain the House, because I do not want to eat into the time available to debate the Bill. I acknowledge the anger of the hon. Member for Perth and North Perthshire (Pete Wishart). He is always angry at something. Each time we have dealt with the Bill, we have had this sort of stunt. In the newspapers in Scotland at the weekend, the hon. Gentleman called on other Members of the House of Commons to be nicer to him. We will try, but he does make it a bit difficult.

It is clear to me that the hon. Gentleman’s anger is not directed at me or at this House, but directed at the people of Scotland because they voted decisively to remain in the United Kingdom, and that is something he just cannot accept.

Question put and agreed to.

Women in the Scottish Economy

David Mundell Excerpts

Thursday 5th November 2015 Written Statements

[The Secretary of State for Scotland (David Mundell)]

The Government will be responding to the recommendations in due course and discussions between Professor Sawers and the UK Government are continuing on this matter.

[HCWS296]

Scotland Bill

David Mundell Excerpts

Monday 2nd November 2015 Written Statements

[The Secretary of State for Scotland (David Mundell)]

The UK Government are delivering on their commitment to make the Scottish Parliament one of the most powerful devolved Parliaments in the world. Every deadline has been met in bringing forward new powers to the Scottish Parliament, and another milestone will be reached on 9 November when the Scotland Bill has its Report and Third Reading.

The Scotland Bill delivers the Smith Commission agreement in full. The agreement was reached by Scotland’s five main political parties, and it means the Scottish Parliament will have control over around £11 billion of income tax revenues and responsibility over welfare benefits worth approximately £2.7 billion (by 2014-15 figures). For the first time, more than 50 per cent of the Scottish Parliament’s budget will be funded from revenues raised in Scotland.

The Joint Exchequer Committee has met four times since June 2015 to take forward negotiations on Scotland’s fiscal framework. The meetings have focused on key elements of the framework—block grant adjustment and subsequent indexation mechanisms, administration and implementation costs, the no detriment principle, capital and resource borrowing, VAT assignment, fiscal scrutiny and governance. Discussions have been constructive and are focused on securing a fair and workable fiscal framework which delivers the recommendations made by the Smith Commission in its report of November 2014.

Work is continuing and both Governments aim to complete this work as soon as possible in order to give respective Parliaments time for due consideration of both the fiscal framework and the Scotland Bill. This is likely to be after both the UK spending review and the draft Scottish Budget. Since the Scotland Bill’s introduction to Parliament in May 2015 it has been subject to healthy and productive scrutiny, including five days of debate in the House of Commons so far. During this time I have spoken to people from organisations representing the range of Scottish public life about the new powers the Bill contains, as have my ministerial colleagues. I have worked with the Scottish Government to seek their views, and committees of the UK and Scottish Parliaments have taken evidence and reported on the Bill’s provisions.

Throughout this work I have been clear that I would reflect on sensible and constructive suggestions made. Today I am tabling amendments to the Scotland Bill. I have listened to the debate and I am responding with amendments designed to improve the effectiveness of the legislation and to ensure that the new powers for the Scottish Parliament work as the Smith Commission intended. Part 1 of the Bill relates to constitutional arrangements. An amendment will strengthen the clause on the permanence of the Scottish Parliament and Scottish Government by including a provision that includes a requirement that the Scottish Parliament and Scottish Government should not be abolished except on the basis of a decision of the people of Scotland. While the UK Government are clear this is a scenario that has never been envisaged, the amendment is intended to make clear that there is absolutely no doubt: Holyrood is here to stay.

Additional amendments to Part 1 provide technical refinements to the elections clauses, and ensure the Scottish Parliament is responsible for relevant provisions related to the operation of the Scottish Parliament and Scottish Government.

Part 3 of the Bill includes provisions on welfare. The amendments will give further flexibility to the Scottish Parliament on benefits in relation to carers, and will enable the Scottish Parliament to legislate to provide for forms of non-financial assistance with a view to reducing maternity expenses, funeral expenses or expenses for heating in cold weather. There will no longer be a cap on the amount of discretionary financial assistance an individual who is in receipt of a reserved benefit can receive to assist with rental costs. The discretionary financial assistance must still be provided to help the individual with their housing costs and additional spending must be funded by the Scottish Government. The Smith agreement stated that universal credit will remain a reserved benefit to be administered and delivered by the Department for Work and Pensions, and Scottish Ministers to make decisions about varying the housing costs within universal credit for claimants who rent their homes as well as deciding when to pay those housing costs direct to landlords. A co-operative approach between the UK and Scottish Governments will be essential and amendments will clarify the Secretary of State’s role in agreeing to universal credit regulations that can be laid by Scottish Ministers.

Paragraph 54 of the Smith agreement relates to the power to create new benefits in devolved areas. A new clause will be tabled to address this.

The remaining parts of the Bill transfer substantial powers to the Scottish Government and Scottish Ministers. Amendments will be tabled to clarify the approach taken to the devolution of tribunals and to the Crown Estate. In response to feedback from stakeholders the clause on equal opportunities has been amended in order to better set out the powers to be devolved. Other amendments strengthen the delivery of the Smith agreement on the clauses relating to fuel poverty, onshore oil and gas licencing, consumer advocacy and advice and the office of communications. A new clause ensures the destination of Scottish fines, forfeitures and fixed penalties can be made explicit in primary legislation where necessary.

The Smith Commission agreement outlined a number of areas for further consideration, and the UK and Scottish Governments have taken forward discussions on each of those. As a result of those discussions I am tabling amendments to devolve abortion policy and responsibility for welfare foods to the Scottish Parliament. The amendments tabled today will strengthen the Scotland Bill and represent another milestone in making the Scottish Parliament one of the most powerful devolved parliaments in the world. I look forward to this important piece of legislation returning to the House for debate next week.

[HCWS282]

Scotland Act 1998 (Modification of Schedules 4 and 5) Order 2015

David Mundell Excerpts

Monday 14th September 2015 General Committees

[The Secretary of State for Scotland (David Mundell)]

I beg to move,

That the Committee has considered the draft Scotland Act 1998 (Modification of Schedules 4 and 5) Order 2015.

It is an honour to serve under your chairmanship, Mr Gray. I know that as a Scot you take a close interest in all matters that relate to Scotland.

If it pleases the Committee, I shall provide a brief summary of the background to the order and set out what it seeks to achieve. When the Fixed-term Parliaments Act 2011 was passed, it provided that the next general election for membership of this Parliament would occur on 7 May 2020. That same Act also provided that the next Scottish parliamentary ordinary general election would be on 5 May 2016. The Scotland Act 1998, to which I shall refer as the 1998 Act, provides for the poll at Scottish parliamentary ordinary general elections to be held on the first Thursday in May every fourth year. All this combines to mean that, as things currently stand, there are due to be general elections to both the UK and Scottish Parliaments on 7 May 2020.

It is agreed that a clash of elections is undesirable and this Government have always been committed to ensuring that any clash is avoided. The Government are also committed to implementing the recommendations of the Smith commission agreement. One of those recommendations is that the Scottish Parliament should have all powers in relation to Scottish parliamentary and local government elections in Scotland.

As the Committee will know, the current Scotland Bill makes provision to implement that recommendation. However, as both the UK and Scottish Governments agree that Scottish parliamentary electors should be aware of the term of the Scottish Parliament to which they are electing Members when they vote in May 2016, we are faced with an issue of timing. If the Scottish Parliament is to legislate in advance of the May 2016 election to determine a date for the first Scottish parliamentary ordinary general election after that one, the power to do so needs to be devolved now.

Devolving that power is exactly what this order does. The order is made under section 30 of the 1998 Act. Section 30 provides a mechanism whereby schedule 4 or schedule 5 to that Act can be modified by an Order in Council, subject to the agreement of both the UK and Scottish Parliaments. The order amends both schedules 4 and 5 to the 1998 Act. First, schedule 4 to the 1998 Act lists enactments that are protected from modification by the Scottish Parliament. Much of the 1998 Act itself is included in this list. As I have already mentioned, the 1998 Act provides for the poll at Scottish parliamentary ordinary general elections to be held on the first Thursday in May every fourth year. Section 2(2) of the 1998 Act makes that particular provision. The order therefore amends schedule 4 to the 1998 Act to allow an Act of the Scottish Parliament to modify section 2(2) in relation to the first Scottish parliamentary ordinary general election after 2016.

Secondly, as the Committee knows, schedule 5 to the 1998 Act lists the matters that are reserved to this Parliament. Among other things, elections for membership of the Scottish Parliament are reserved. In order that the Scottish Parliament can determine the day of the poll at the first Scottish parliamentary ordinary general election after 2016, the order will amend schedule 5 to provide that that matter will no longer be a reserved matter. The amendments to both schedules will combine to ensure that the Scottish Parliament has the power to determine the date of the first Scottish parliamentary ordinary general election after that to be held next May. The order also amends section 2 of the 1998 Act in connection with the amendments to schedules 4 and 5.

However, the order places certain limitations on the day that can be chosen. Specifically, the order will prevent the day of the poll determined by the Scottish Parliament from being the same as the day of the poll at a UK parliamentary general election, other than an early parliamentary general election, a European parliamentary general election or an ordinary local government election in Scotland. I would like to make it clear that those limitations were recommended in the Smith commission agreement.

The order demonstrates the Government’s commitment to honouring the Smith commission agreement. It also demonstrates the way in which this Government can work effectively with the Scottish Government to make the devolution settlement work. I commend the order to the Committee.

--- Later in debate ---

[David Mundell]

I thank the hon. Gentleman for his kind words. I felt that it was appropriate to introduce the order myself because it is a very important measure that relates to the Scotland Bill.

The hon. Gentleman will know that we have already taken forward the order that allows the Scottish Parliament to determine whether 16 or 17-year-olds can vote in next year’s Scottish parliamentary elections, and the Scottish Parliament has decided to allow them to vote. We should take this opportunity to encourage everyone to register so that all eligible 16 and 17-year-olds can vote in those elections.

I have discussed with the Scottish Government the delivery of the Smith commission report’s recommendations, and we agreed that if it were necessary to meet the timing of the transfer of the Work programme arrangements, I would be willing to consider introducing a section 30 order to fit in with the Scottish Government’s roll-out of their proposed Work programme. However, at the moment, we believe that, should the Scotland Bill be enacted according to the timescale currently envisaged—by next spring—that will allow the Scottish Government to move forward with the Work programme as they would wish.

I hope that clarification satisfies the hon. Gentleman.

Question put and agreed to.

Scotland Bill

David Mundell Excerpts

Monday 6th July 2015 Commons Chamber

[The Secretary of State for Scotland (David Mundell)]

I was pleased that in the Committee stage, we had an acknowledgment that we have had four full days of debate on the Floor of the House, making this one of a small number of Bills to have received the highest level of scrutiny. The Bill has not been sent upstairs to a Committee Room, but debated on the Floor of the House of Commons so that all 59 of Scotland’s MPs have been able to take part in the debate. I am very pleased that more MPs have been taking part in each day as we have proceeded.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Yes, we have debated the Bill, but no amendments have been accepted by the Government even though that is the express desire of the Scottish Parliament. The Secretary of State said in Scotland on Sunday that he was minded to have amendments accepted in the House of Lords. Does he not believe that these important amendments must see the daylight for elected Members and that it must not be for unelected Lords—that repository for cronies and donors—to make up their mind on what is included in the Bill?

[David Mundell]

I am sure that sounded good when the hon. Gentleman wrote it down. It should not come as a surprise to Members that the Government have not accepted amendments at this stage of the Bill’s progress. Unlike in Holyrood, which has only one substantive amending stage, this House has two opportunities for Members to table amendments before a Bill passes on to the other place: Committee and Report. We brought to the House a Bill that had already benefited from considerable scrutiny, including by the Devolution (Further Powers) Committee, and which contained significant changes from the draft clauses.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will the Secretary of State give way?

[David Mundell]

I just want to make this point.

This is the stage where the Bill should be held up for further scrutiny on the Floor of the House, so that arguments can be tested and alternative arguments laid out.

[Ian Blackford]

Will the Secretary of State give way?

[David Mundell]

If I could just finish my point.

I was interested to hear the rationale for the points made by the hon. Member for Glasgow South West (Chris Stephens). In a previous day’s debate, an amendment was moved on why national insurance contributions should be devolved to the Scottish Parliament, yet not one Member spoke to that amendment or explained to the House why Scotland would benefit from the devolution of national insurance contributions.

The Committee stage has provided an opportunity for amendments to be put forward. I accept that some amendments are genuine and could, if adopted, make the Bill better. Some amendments have not been genuine amendments. We spent a long time debating full fiscal autonomy when it was quite clear that the SNP Scottish Government did not want to see the amendments relating to that passed. We have had a series of amendments laid before Parliament over the four days. I am giving an absolute commitment that we will reflect on them and come back on Report with amendments to the Bill.

I recognise that there have been many constructive contributions to today’s debate, not all by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) it has to be said.

[Mr MacNeil]

rose—

[David Mundell]

A number of proposed technical changes could clearly improve the Bill.

[Mr MacNeil]

On a point of order, Mr Amess. The Secretary of State has named me and my constituency. Do I not have the right to intervene on him?

[The Temporary Chair (Sir David Amess)]

That is not a point of order; that is a point of debate.

[David Mundell]

There has been considerable discussion on the Bill. I want to concentrate on a few of the very important issues that have been raised.

The devolution of managing the Crown Estate’s wholly owned assets in Scotland, the revenue arising from those assets and the competence to legislate on those management functions was a significant and important element in the debate on the clause 31 group. The clause gives effect to the Smith commission. It allows for the Scottish Crown Estate’s assets to be managed by the Scottish Government or such other person nominated by them, and that the Scottish Government should receive the revenue from the management of those assets. Going forward, the clause means that the Scottish Parliament will have the competence to legislate for the management of those assets. It provides for the protections envisaged by the Smith commission to ensure the transfer is not detrimental to defence or other UK-wide critical national infrastructure.

I am not in favour of the approach taken in new clause 57. I will explain why. It enables the Scottish Parliament to legislate on the Crown Estate Commissioners, which was not agreed by the Smith commission. It does not provide for the important protections for national security and vital UK-wide infrastructure, and it does not protect Scottish Crown Estate employees who are so vital to ensuring that we transfer the Crown Estate in Scotland as a viable, ongoing enterprise.

I actually agree with the right hon. Member for Gordon (Alex Salmond) on something—this is quite an occasion—because I do not believe that what the Scottish Parliament is required to do in its management of the Crown Estate should be prescribed. I do not accept it is appropriate to table an amendment that suggests what further devolution should take place in Scotland. I have complete confidence in the Scottish Parliament to determine that in an appropriate way.

Let me say in response to the Opposition’s amendment 52 that we believe it is right for the responsibilities to be transferred to Scottish Ministers. The Scottish Parliament is a legislative rather than an Executive body, and for that reason it is not equipped to undertake the management functions that are currently exercised by the Crown Estate Commissioners.

I can assure the Committee, in response to amendments 125 and 126, that the sovereign grant paid to Her Majesty the Queen will not be reduced as a result of devolution of the Crown Estate to Scotland and that Scotland will continue to contribute to the sovereign grant. The annual amount of the sovereign grant is determined in accordance with a formula that is based on the revenues received from the Crown Estate Commissioners. However, there is a mechanism to ensure that the value of the sovereign grant cannot fall below the amount from the previous year. The changes made in the Scotland Bill will not and cannot cause the sovereign grant to reduce. Even though management of the Scottish assets and revenues from those assets are to be devolved, Scottish taxpayers will continue to contribute to the grant, through the contributions to the Consolidated Fund.

[Ian Blackford]

We keep hearing from the right hon. Gentleman and the Government about the respect that they have for the Scottish Parliament. In the general election, Scotland returned 56 SNP Members of Parliament, who stood on a platform of delivering home rule for Scotland. Every legitimate amendment that we have brought to this House has been vetoed by Government Members. When they talk about English votes on English laws, why do we not have Scottish votes on Scottish laws?

[David Mundell]

I think I did hear that contribution on at least one other day during the debate, so I understand where the hon. Gentleman is coming from. I reiterate, once again, that we will reflect on the amendments that have been brought forward. I am meeting the Deputy First Minister on Wednesday to hear what the Scottish Government’s approach to many of these matters is and how we will work over the summer to look at how, together, we can improve the Bill.

[Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)]

Will the Secretary of State give way?

[David Mundell]

I will not, because I have very little time to comment on all the issues raised in this debate.

I want to comment on a couple of further matters that were raised in relation to the Crown Estate, one of which was about Fort Kinnaird—which, for Members not from Scotland, is a shopping centre in Edinburgh, and apparently a very successful one. The management of the Crown Estate’s wholly and directly owned Scottish assets is what is to be transferred under the transfer scheme. Fort Kinnaird is not wholly and directly owned by the Crown—

[Drew Hendry]

rose—

[Tommy Sheppard (Edinburgh East) (SNP)]

rose—

[David Mundell]

Let me complete this point. Fort Kinnaird is held by an English limited partnership in which the Crown Estate manages an interest alongside other commercial investors. The partnership owns property in other parts of the United Kingdom. Fort Kinnaird has never been wholly and directly owned by the Crown. Revenues from the Crown Estate’s interest in Fort Kinnaird will therefore continue to be passed to the UK Consolidated Fund for the benefit of the UK as a whole.

The hon. Member for Edinburgh South (Ian Murray) raised the coastal communities fund. Coastal communities funding has been allocated for 2014-15, 2015-16 and 2016-17. The Government have committed themselves to the coastal communities fund until 2016-17. Devolution of the Crown Estate in Scotland will not impact on this funding.

In answer to the points raised by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), the position on the Crown Estate Commissioners is that they will still be able to make commercial investments in Scotland, as and when opportunities arise in the Scottish market.

[Martin John Docherty (West Dunbartonshire) (SNP)]

Will the Secretary of State give way?

[David Mundell]

If I may, I want to comment on the important amendments dealing with abortion. The Abortion Act 1967 sets a common legal framework for abortion to be performed in Great Britain. New clause 56 would give the Scottish Parliament the power to amend that legislation—as, indeed, would new clause 66, tabled by my hon. Friend the Member for Gainsborough (Sir Edward Leigh). Clearly a number of views have been expressed in this Committee and in communications to Members of this House about the devolution of the policy and about the current policy. The Government do not consider the amendment appropriate at this time.

Hon. Members will be aware that abortion was one of the issues identified in the Smith commission agreement for further consideration. However, the Smith commission did not state that devolution should happen now, through this Bill. It stated that a process should be put in place to consider the matter further. In keeping with that recommendation, a process was established between the UK Government and the Scottish Government to consider the issue. Discussions are at an early stage. Accepting the amendment would pre-empt those discussions. However, as has been said a number of times in this debate, there is no reason why the Scottish Parliament should not be able to decide an issue of this significance, because it has demonstrated its ability to do so on numerous other significant issues.

I shall conclude my remarks as time demands. I recognise that there have been a number of constructive approaches from hon. Members, seen in their amendments to the equal opportunities clause. I think we all agree on the outcome we seek—that Scottish Ministers and the Scottish Parliament should have competence for socio-economic inequality and any duties attached to that. I have asked officials to look at the technical suggestions made to improve the drafting, but I want to put some matters on the record in my remaining time.

We believe that the clause provides a broad, flexible framework within the Scottish Parliament so that it can introduce additional equal opportunities measures, including gender quotas. I had a very useful meeting last week with Alex Neil to discuss this issue. The Smith commission agreed that the Equality Act 2010 should remain reserved and that the subject matter of the Equality Act 2006 falls within the scope of the equal opportunities reservation. That is why the clause is clear on this point. No reference was made in the agreement to devolving the functions of the Equality and Human Rights Commission. The commission is open to discussion as to how accountability to the Scottish Parliament for its activities in Scotland might be strengthened. I would expect that to be a matter of discussion with the Scottish Government, should they wish to make it so.

The Government do not, however, agree that legislation should determine the gender balance of the Scottish Parliament. That is for the electors and the parties in Scotland to decide. As for gender balance on boards, we believe that the clause delivers the Smith commission agreement, but I will take these points away and look further at the drafting suggestions.

[Martin John Docherty]

I am delighted that the Secretary of State has given way to me. Will he go back to the matter of the Crown Estate? He seems to be proposing a two-tier system in respect of the Crown Estate in Scotland. If the Government are going to bring forward English votes on English laws, the same system will not apply in England, and there is only one Crown Estate in England. It will eventually get all the money, whereas there is a two-tier system for Scotland—

Scotland Bill

David Mundell Excerpts

Monday 15th June 2015 Commons Chamber

[Angus Robertson (Moray) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hoyle. I welcome you back to your role. I wish to speak in support of amendment 58, which stands in my name and in the names of my hon. Friends.

The Scottish National party has submitted a series of amendments to the Scotland Bill based on the three-pronged commitment outlined in our manifesto for the UK general election: first, delivering on the Smith agreement in full; secondly, devolving additional powers in priority areas such as job creation and welfare protection; and, thirdly, enabling the Scottish Parliament to move to a position of full fiscal autonomy. This approach was backed in record numbers by voters in Scotland in May, giving the SNP a clear mandate for change, which the UK Government must recognise and must act upon.

The UK Government must live up to the words of the Prime Minister on 10 September 2014, when he said:

“If Scotland says it does want to stay inside the United Kingdom then all the options of devolution are there and are possible”.

If all options are possible, it is the duty of the UK Government to respond to the clearly expressed desire of the Scottish people for more powers in the Scotland Bill. The SNP amendments include effectively entrenching the Scottish Parliament—that is what we are discussing now—placing the Sewel convention on a meaningful statutory basis and giving the Scottish Parliament the legislative competence to remove the reservation on taxation, borrowing and public expenditure, enabling the Scottish Parliament to legislate to deliver full fiscal autonomy. The SNP also proposes amendments for further priority powers at later stages in the Bill, including powers over tax, setting the minimum wage and taking responsibility for welfare decisions. In this first group of amendments, I will speak on issues relating to the permanence of the Scottish Parliament, and my hon. Friend the Member for Dundee East (Stewart Hosie) will speak shortly on full fiscal autonomy.

Amendment 58 relates to the permanency of the Scottish Parliament and Government. Paragraph 21 of the Smith commission report stated:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

However, in its analysis of the draft clauses published by the UK Government, the Scottish Parliament’s Devolution (Further Powers) Committee raised two main issues. As I stressed in the previous stage, that was an all-party Committee, involving members from the Scottish National party, the Scottish Labour party, the Scottish Conservative party, the Scottish Liberal Democrats and the Scottish Green party.

[The Secretary of State for Scotland (David Mundell)]

It is important to get it on the record that Alex Johnstone MSP has made it perfectly clear that his participation on the Committee is not to be conflated with the SNP press release issued at the time of the Committee’s report. He clearly supports the Committee’s report, but not the SNP’s attempt to distort that report.

[Angus Robertson]

It will no doubt be a relief to you, Mr Hoyle, that I will confine myself to the words agreed by all Committee members, including Mr Johnstone, when he signed up to the report.

That cross-party Committee found that the form of words on permanency proposed in the Scotland Bill was a weaker formulation than stating simply that the Scottish Parliament and the Scottish Government were permanent. We agree with the view of the Committee—and of Mr Johnstone—in paragraph 47:

“The Committee is of the view that the inclusion of the words ‘is recognised’ in draft clause 1 has the potential to weaken the effect of this clause, which would be unfortunate given the all-party agreement to this recommendation as part of the Smith Commission, and the views expressed to us by the former Secretary of State for Scotland that he perceives that the permanence of the Scottish Parliament and Scottish Government is guaranteed.”

The Committee was also told by the former Secretary of State that he was open to reconsidering the wording of draft clause 1, but changes were not made in the published Bill. This suggests that the Government might be open to the amendment.

Paragraph 49 of the report agreed by Mr Johnstone and all other Committee members states:

“In evidence to the Committee, the former Secretary of State for Scotland commented that he was ‘open to thinking about different ways in which…permanence could be achieved’. The Committee welcomes the openminded approach of the former Secretary of State with regard to this issue. The Committee therefore considers that there is scope to further strengthen the permanency provisions.”

The Committee’s analysis of the published Bill, however, confirmed that there was no change between the draft and the final clause.

The Committee called for additional protection in paragraph 50 of its report, supported by Mr Johnstone and all other members:

“The Committee considers that the effect of the clause on permanency, as currently drafted, is primarily declaratory and political rather than legal in effect. The UK doctrine of Parliamentary sovereignty makes achieving permanence problematic. The Committee recommends that the Scottish electorate should be asked to vote in a referendum if the issue of permanency was in question, with majorities also being required in the Scottish Parliament and the UK Parliament.”

That is the purpose of the SNP amendments, which we will be moving.

--- Later in debate ---

[Stewart Hosie]

The hon. Gentleman is right about one thing: we did not win the referendum. There was, however, an election that we did win, so we are not bringing forward another mandate for independence; we are bringing forward provisions for full fiscal autonomy. I hear Tories pontificate right, left and centre about responsibility, but when it comes to full fiscal responsibility for Scotland, all of a sudden there is silence. They just sit on their hands and say no.

[David Mundell]

Why then did the SNP not table the new clause in the name of my hon. Friend the Member for Gainsborough (Sir Edward Leigh)? If the hon. Gentleman wants that full-blooded proposal, why did he leave it to the Tory Benches to propose what he claims is an SNP policy?

[Stewart Hosie]

I can almost hear Professor Adam Tomkins, the Tory adviser to this Tory Minister, coming up with that daft question. I say this to the Minister: our amendment 89 would deliver full fiscal autonomy in a way that makes sense.

Our opponents argue that full fiscal autonomy would lead to more cuts to the Scottish budget, which is ridiculous when one considers that between 2009-10 and 2013-14, at a time when the North sea was generating £32 billion in oil revenues, the Scottish Government’s budget was cut by about 9%. According to the Institute for Fiscal Studies, prayed in aid by Tories and Labour alike, the cuts of more than 5% implied in 2016-17 and 2017-18—in this Parliament—will be twice the size of any cuts over the last Parliament. The UK Budget showed that implied cumulative cuts to day-to-day spending on public services in Scotland over this Parliament could amount to £12 billion in real terms compared with 2014-15. In the absence of full fiscal autonomy, therefore, we are not protected from cuts. Rather, we suffer a double blow: continued austerity and an inability to grow the economy and increase tax yields in the way that Scotland requires.

--- Later in debate ---

[Ian Murray]

Well, the hon. Gentleman is wasted in this House; he should be in the City, buying and selling futures in oil price shares. I think that is the best way for him to go. The three points that fall from the OBR report are the unpredictability of the oil price, the difficulty of extraction in the North sea and the fact that, whatever way we look at it, oil revenues will be declining sharply over the next 20-year period. It would appear that the hon. Gentleman—[Interruption.] I am happy to take other interventions, but it is quite clear that SNP Members cannot defend their policy for full fiscal autonomy. Indeed, they should listen to their hon. Friend, the hon. Member for East Lothian (George Kerevan), who said that it would be economic suicide. He is an experienced journalist and economist, so they would do well to listen to him.

In conclusion, we will push amendment 38 to the vote because we feel that the permanency of the Scottish Parliament should have the underpinning of the Scottish people by any means that would be appropriate, including a referendum. We will push to a vote new clause 2, which proposes a constitutional convention to resolve some of the larger issues on a constitutional settlement across the country. We will oppose full fiscal autonomy in all its forms, because it would be bad for the Scottish people, bad for the Scottish economy and bad for the future of Scotland.

[David Mundell]

Today is the first of four days in Committee on the Scotland Bill. I assure the hon. Member for Edinburgh East (Tommy Sheppard), whose contribution I enjoyed, that I will be listening and reflecting. Contrary to the suggestion made by the hon. Member for Perth and North Perthshire (Pete Wishart), this is not the only opportunity for changes to be made to the Bill. I will be meeting the Devolution (Further Powers) Committee of the Scottish Parliament next week to discuss points that it has raised in its report.

I would not normally begin a contribution by suggesting that anyone read one of Gordon Brown’s books, but tonight I will do so. Gordon Brown has been misquoted a number of times in the Chamber today, and it is important to put on the record the fact that in his book “My Scotland, Our Britain: A Future Worth Sharing”, he states that neither his proposals nor those of any of the pro-UK parties involved a federal solution. Although they came close to the idea of home rule, they were not home rule. Therefore, it is a myth, which has been perpetuated this evening, that Gordon Brown has called for either federalism or home rule.

[Mr MacNeil]

rose—

[David Mundell]

The hon. Gentleman has already spoken a great deal on the subject this evening. I would also like to see empirical evidence to back up the suggestion made by the hon. Member for Edinburgh East that the vow and the offer of additional powers made a significant change to the referendum result, because I do not believe that such empirical evidence exists.

[Tommy Sheppard]

Is the Secretary of State suggesting that they had no effect at all? In that case, what was the point of them?

[David Mundell]

What I am suggesting is that the hon. Gentleman cannot bring forward a shred of evidence to suggest that those proposals changed the referendum result and that somehow the people of Scotland have been defrauded. The people of Scotland voted decisively no in the referendum. They voted for a strong Scottish Parliament within the United Kingdom. The vow, which was set out in the Daily Record and other outlets, was taken forward on the basis of the Smith commission, of which the Scottish National Party was a part and to which it was a signatory. I received an interesting letter today from John Swinney, the Deputy First Minister of Scotland, who was a signatory to the Smith commission recommendations. He now tells me that the Smith commission recommendations, which he signed, were incoherent. I do not understand how he came to sign those recommendations if he genuinely believed that they were incoherent. If that was the case, he should have been making some of the arguments that we have heard this evening and during the general election campaign.

[Mr MacNeil]

Will the Secretary of State give way?

[David Mundell]

Not at this stage. The result of the general election represented a call from the people of Scotland for the delivery of the powers in the Smith commission recommendations. The Scottish National party set itself up as the voice of the people of Scotland to ensure that those powers were delivered, and they will be delivered in the Scotland Bill.

[Ian Blackford]

Will the Secretary of State give way?

[David Mundell]

Not at the moment. I have heard a number of small speeches from the hon. Gentleman, and I know the point that he wants to make.

I disagree with some of my right hon. and hon. Friends on the idea that conflict and division are inevitable when Governments work together. Despite what we regularly read in the media, see on television or hear in this Chamber, the Government work very closely with the Scottish Government on a range of important matters for the benefit of the people of Scotland. The Government remain committed to working continually for the benefit of the people of Scotland.

--- Later in debate ---

[Mr Kenneth Clarke]

When pressed on the possible difficulties of fiscal autonomy, the reaction of Scottish National party Members is to point to the tremendous new levels of growth that will be achieved by the Scottish economy, and the added GDP that will flow from their enlightened measures. They are not the first politicians I have heard attribute those kinds of consequences to their economic policy. If their policy fails, they imply that any deficit would be the liability of the UK Government and the British taxpayer. Will my right hon. Friend assure me that a fiscal framework, which is still to be achieved, will include some real fiscal discipline? We cannot have an unsuccessful devolved Government running up enormous additions to the United Kingdom’s debt and deficit.

[David Mundell]

I can give that assurance. If it is to meet the various spending commitments that we hear sprayed around not only in the Chamber, but across Scotland, the Scottish National party will eventually have to tell the people of Scotland how much tax will rise to pay for all its proposed measures. The hon. Member for Dundee East (Stewart Hosie) carefully avoided any detail about tax when he set out the case for full fiscal autonomy. He criticised the proposals in the Bill for the devolution of income tax bands and rates, and he criticised the provision for a 0% rate. In fact, all he argued for was to enable the Scottish Government to reduce the personal allowance. I do not quite understand how that would benefit the less well-off in Scotland or the Scottish economy. The full range of other income tax powers worth £11 billion are coming to Scotland as part of the Bill.

[John Redwood]

When will the Secretary of State be able to share with Members the proposals to adjust the grant formula? Scotland will have higher spending and it will have tax revenues of its own, and my constituents in England are very interested in what the grant formula will look like.

[David Mundell]

I made it clear earlier that we would, in early course, bring forward details of the full fiscal framework as it is being negotiated.

I was not convinced by the arguments for full fiscal autonomy advanced by the hon. Member for Edinburgh East and others. I was not convinced by the red-blooded version that my hon. Friend the Member for Gainsborough (Sir Edward Leigh) set out for delivering the Scottish National party’s manifesto commitments, and I was not convinced by the SNP full fiscal-lite proposals—sometime, somewhere, somehow.

[Ian Blackford]

The hon. Member for Gainsborough (Sir Edward Leigh) gave an eloquent speech, in which he explained how the debate in Scotland had moved on. We won the election in Scotland, and the people of Scotland have demonstrated their desire for powers, for a purpose and for a Parliament. Is it not the case, as the hon. Gentleman said, that the Government are playing with the future of their own Union, which they want to defend? It really is about time that they listened to the Scottish people and delivered what the people of this country have asked for.

[David Mundell]

I said at the start of my remarks that I was listening to the Scottish people. The only people who are playing games are those who threaten another referendum in Scotland every time they do not get what they say they want.

The principal issue raised in relation to full fiscal autonomy is that it would mean Scotland having almost £10 billion less to spend by the last year of this Parliament. That is not good for Scotland, and that is why this Government will not support it. I am afraid that the only argument we have heard in support of these proposals was that heard during the referendum campaign—basically, “It will be all right on the night: trust us.” The people of Scotland decided on 18 September last year that they did not trust that argument, and I still do not trust it. Full fiscal autonomy would mean an end to the Barnett formula. It would mean that the Scottish Government had to fund all public spending in Scotland from their own resources. The Scottish Government would therefore be fully responsible for raising all the tax from Scottish taxpayers required to fund all spending in Scotland on public services, benefits and pensions.

[Stewart Hosie]

Can the Secretary of State confirm that in terms of the principles underlying Smith, we have no detriment and no advantage simply because of devolution itself, and that there will be a negotiated financial framework between the Scottish and UK Governments for the devolution in this Bill? Of course, we already have limited borrowing consent under the Scotland Act 2012 to fill holes in revenue, notwithstanding that the repayment terms were too short. Can he confirm that under the “no detriment, no advantage” principles there will be a negotiated financial framework for this Bill, and that there are already revenue-borrowing powers in statute?

[David Mundell]

I can confirm that the Scottish National party signed up to the Smith commission agreement, this Government are committed to delivering the Smith commission agreement, and the hon. Gentleman will therefore get what he is looking for in respect of the Smith commission agreement. There is not a shadow of a doubt about that.

Full fiscal autonomy would mean the end of Scotland pooling resources and sharing risks with the rest of the United Kingdom, and an end to Scotland being part of the UK’s hugely successful single market, which generates jobs, growth and prosperity. To all intents and purposes, the fiscal union between Scotland and the United Kingdom would end entirely, and the lesson of the eurozone is that it is extremely difficult to have a successful currency union without fiscal union.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I understand the Secretary of State’s desire to protect the Scottish people, but whether or not there is a £10 billion shortfall, if this is what the people of Scotland and the bulk of their representatives want, then why do not the rest of us, in the interests of the rest of the UK that we represent, let them have it, provided that we have a guarantee that we will not have to bail them out?

[David Mundell]

I do not accept the hon. Gentleman’s argument. A £10 billion shortfall in spending in Scotland would affect every school, every hospital, and every family by £5,000. I am not going to countenance that, and I am not going to support any amendments that would promote it.

We have had a lengthy discussion on full fiscal autonomy.

[Sir Edward Leigh]

Will the Secretary of State give way?

[David Mundell]

I will. [Hon. Members: “Oh!”] I will take my hon. Friend’s intervention because he proposed an amendment.

[Sir Edward Leigh]

Let me be quite clear: those of us who propose full fiscal autonomy and the scrapping of the Barnett formula are also arguing that there should be a block grant based on Scotland’s needs and not on England’s spending, so that there is a real Parliament making real decisions, which is what the Scottish people want.

[David Mundell]

I have noted what my hon. Friend has said. At times today, I am sure that he will have been an honorary member of Team 57.

I want to make very clearly a point that echoes the evidence I gave to the Select Committee chaired by the hon. Member for Nottingham North (Mr Allen). I regard a Scottish Parliament as a prerequisite of a United Kingdom. There will not be a United Kingdom if there is not a Scottish Parliament. I can understand why there is a lot of debate about the exact wording, and I will continue to listen to it, but I am absolutely clear that without a Scottish Parliament there will not be a United Kingdom, and that it is not sustainable to argue about lots of preconditions on that basis.

[Mr Graham Allen]

I thank the Secretary of State for listening to the proposal by the Political and Constitutional Reform Committee. Will he take away the idea that what he is saying are to be in the Bill, in so many words? What those words are to be should be left to him, and perhaps he can return to that on Report.

[David Mundell]

I said that I would reflect on a number of the issues raised by the right hon. Member for Orkney and Shetland (Mr Carmichael) relating to proposals by the Law Society of Scotland. Among those is the debate on the wording currently in part 1, and we will certainly look at that.

I do not accept amendments 58 and 59 because they refer to the term “constitution” whereas clause 1 refers to the term “constitutional arrangements”. The term “constitutional arrangements” is used to reflect the fact that the United Kingdom does not have a written constitution. That is a well-established constitutional arrangement of which a Scottish Parliament is a crucial and enduring part.

In new clause 2, the hon. Member for Edinburgh South (Ian Murray) proposes a constitutional convention. I have said at this Dispatch Box previously that I, and this Government, do not support a constitutional convention for reasons that have been well rehearsed, not least because—on this one matter I am in agreement with the Scottish National party—it would slow down the progress of this Bill, which I am committed to taking through Parliament as quickly as possible.

Other matters have been raised and we have debated them fully but they do not fully relate to the Bill. On that basis, I propose that we move to vote on the amendments.

[Mr Alistair Carmichael]

I am mindful of the fact that we have spent a considerable amount of time on this group of amendments, so I will not detain the Committee for long at this stage.

We have had a very good debate; in fact, two very good debates. On the first, there is among the three Opposition parties a broad measure of consensus that the Bill is capable of improvement. I will hold the Secretary of State to his word when he says that he will take that away and look at it. I remind him that while he might win a majority quite easily in this House, the Bill will also be scrutinised in the other place. I urge on him further consideration and suggest that the proposals brought forward by me and others tonight—I do not intend to press mine to a vote, but others who choose to do so will have my support—are reasonable.

I was very disappointed by the Secretary of State’s response on the constitutional convention. Ultimately, if we are to continue with this Union, a federal structure is inevitable. That will have to be grasped sooner or later, and the way in which that will be done is through the calling of a constitutional convention.

There has not been the same level of consensus on our other debate about the proposals for full fiscal autonomy. It has not been a particularly good debate: it has been characterised more by the heat it has generated than the light. Like the hon. Member for Edinburgh East (Tommy Sheppard), I favour the idea of evidence-based policy. I am not without sympathy for those on the SNP Front Bench when they say that they could do things differently with the extra powers that would be given to them. However, to simply say that it could all be done by generating extra economic growth is not good enough.

--- Later in debate ---

[The Temporary Chair (Mr David Crausby)]

The hon. Gentleman’s point of order is noted.

[David Mundell]

I am happy to respond to the points made and to restate, as I did on the previous group, that I will be meeting the Scottish Parliament’s Devolution (Further Powers) Committee next week, which will be an opportunity to explore some of the issues it raised in its report.

The Government’s starting point is that the Smith commission’s intention was not that the current constitutional position should be changed. Instead, the commission’s intention was that legislation should accurately reflect the political understanding of the convention, and that is exactly what I see the clause as doing.

Currently, the Government do not normally legislate in devolved areas without the consent of the Scottish Parliament. Clause 2 sets out that practice. In doing so, it puts on a statutory footing a convention that has been consistently adhered to by successive United Kingdom Governments. I understand the desire to put beyond doubt that we will seek the consent of the Scottish Parliament when legislating on devolved matters. However, in effect, amendment 56 seeks to limit the sovereignty of this Parliament by removing the word “normally” to state that the Parliament of the United Kingdom cannot legislate with regard to devolved matters without the consent of the Scottish Parliament.

In reality, the amendment would directly contradict section 28(7) of the Scotland Act 1998, which states that the section, which relates to Acts of the Scottish Parliament,

“does not affect the power of the Parliament of the United Kingdom to make laws for Scotland.”

The amendment would radically alter the way in which the practice was intended to operate as envisaged by Lord Sewel.

[Mr Alistair Carmichael]

The Secretary of State is making a compelling case for codification. On a number of occasions and in different ways, the House has limited its sovereignty, particularly in relation to the European Communities Act 1972. As I recall, there is judicial authority on that from the Factortame case. Surely he accepts that the mere act of putting a convention on a statutory footing is a change. For that reason, the adherence to the word “normally” is not appropriate.

[David Mundell]

It is not a change to how things are normally done, but a change to how they are set out on the face of legislation. As part of the Smith process, it was clear that people wanted the convention set out in the Bill, but I do not accept that they want a change to the convention as envisaged by Lord Sewel.

[Mark Durkan (Foyle) (SDLP)]

Surely not even the Smith commission wanted mere commentary to be dressed up as a clause. That is all clause 2 is—mere commentary. There is no binding or cogent constitutional governance in it.

[David Mundell]

I answered the hon. Gentleman’s questions when he was part of the Constitutional and Political Reform Committee, and I understand the strength of his views, but it was the view of the Smith commission that the convention should be set out in such a Bill, which is what the UK Government are doing. It is a fundamental principle of United Kingdom constitutional law that the United Kingdom Parliament is a sovereign legislature. The people of Scotland voted last September to remain part of that United Kingdom. Therefore, it is right that this Parliament, while respecting the Scottish Parliament and its right to legislate, continues to be able to legislate for all matters without restriction on its sovereignty.

Furthermore, I believe amendment 56 is unnecessary. The Bill adopts the language that formed the basis of the Sewel convention. When Lord Sewel said that he would

“expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament”,

he did not intend his words to carry a technical meaning. The same expectation exists in clause 2. The wording used will take the convention’s ordinary English language meaning.

The Smith commission recommended that the Sewel convention be put on a statutory footing—no more, no less. That is what the Bill seeks to achieve. Accepting amendment 56 would be to go further than was recommended, radically alter how the convention was intended to operate, and attempt to limit the authority of the UK Parliament. For those reasons, I urge hon. Members to resist it.

Amendments 41 and 45 seek to make additional stipulations to the Sewel convention. I reiterate that the Bill already establishes that the UK Parliament will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. That convention operates effectively at present. The amendments would add unnecessary bureaucracy to the procedure. I do not believe that the statutory requirements that would be placed on Members of the UK Parliament by the amendments would add any value to a process that operates well, and that is being placed on a statutory footing by the Bill.

On amendments 19 and 20, and new clause 10, as I have said, the Bill adopts the language that formed the basis of the Sewel convention. As I said in previous remarks, when Lord Sewel said that he would

“expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament”,

he did not intend those words to carry a technical meaning. We have established that the Bill clearly states that the UK Parliament

“will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament.”

That is what the well-established Sewel convention does, and it has been consistently adhered to by successive UK Governments. We have had more than 15 years of good practice of the convention. It has not been breached. In the context of my earlier remarks, I do not accept that it could be. I believe that that current good practice will continue.

The hon. Member for Nottingham North (Mr Allen) referred to the Government’s plan to reform the Human Rights Act and its incompatibility with the devolution settlements. Amendment 5, which he tabled, would make it more difficult for the UK Parliament to repeal the Act. Let me be clear about the Government’s intentions: we are committed to human rights and have pledged to bring forward proposals for a Bill of Rights. The protection of human rights is vital in a modern and democratic society. This Government will be as committed as any to upholding those human rights. The purpose of a Bill of Rights is not the diminution of rights, but to reform and modernise our system, and to restore credibility to the human rights legal framework.

The Government know that our proposals for reform are likely to be significant. As such, we will consult widely on the reforms. We are aware of the potential devolution implications of reform and will engage with the devolved Administrations as we develop proposals. We are currently developing our proposals and it would not be sensible to prejudge that process at this stage through the amendment. I hope the hon. Gentleman reconsiders his statement that he wishes to press it to a Division.

I believe I have addressed all the proposals. The Government are not persuaded by them at this stage but, as I have indicated, I will discuss the report of the Scottish Parliament Devolution (Further Powers) Committee when we meet next week.

[Wayne David]

We shall not be pressing any of our amendments to a vote. I note that the Secretary of State has said that he is not convinced “at this stage”, and I take that to mean that he is open to persuasion and willing to listen. I hope he will be persuaded by arguments that will be put to him in the other place, and, indeed, by Members of the Scottish Parliament, which he will visit shortly.

There is something of a mismatch between theory and practice here. Theory has it that this Parliament is absolutely sovereign, but, in practice, the very existence of devolution puts constraints on that sovereignty, as does the very fact that we are members of the European Union. I think that we have reached a point at which that needs to be legally recognised. There is no doubt that the word “normally” is legally imprecise, and if it ever arose in a court of law, enormous difficulties would result because of that conflict between theory and practice.

I take on board what the Secretary of State has said, and I hope that we shall see some movement. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3

Elections

Scotland Bill

David Mundell Excerpts

Monday 8th June 2015 Commons Chamber

[The Secretary of State for Scotland (David Mundell)]

I beg to move, That the Bill be now read a Second time.

May I begin by offering my warmest congratulations to all new MPs from Scotland on winning their seats? This Government respect the results from Scotland in the general election, just as we respect the result of the referendum last year. As the Prime Minister said, this is a one-nation Government. That is why one of our chief priorities is to bring the four nations of our United Kingdom together. The Bill is an important part of a package of measures that we believe does just that. If the House agrees to give the Bill a Second Reading it will be subject to four days of line-by-line scrutiny on the Floor of the House. I am happy to have my feet held to the fire, and for the Bill to receive full scrutiny, because I am confident that it delivers the Smith commission recommendations in full, but that does not mean that we will not listen carefully to contributions as it is debated.

[Alex Salmond (Gordon) (SNP)]

rose—

[David Mundell]

Let me progress a little.

Let us not allow bluff and bluster to obscure the fact that there is already substantial agreement on the most significant aspects of the Bill. The UK and Scottish Governments agree on the devolution of income tax, representing £11 billion in revenue, and on the principle, if not yet the detail, of devolving £2.5 billion in welfare.

[Alex Salmond]

Has the Secretary of State seen today’s edition of the Daily Record, in which there is an excellent eight-page supplement? The paper, after all, offered the vow, and more than any other newspaper, was influential in securing a no vote in the referendum. In its editorial today, the Daily Record describes the Bill as “unacceptable” for not implementing the promises of the Smith commission. Why does the Secretary of State believe that the Daily Record describes his Bill as unacceptable and accuses him of reneging on the Smith commission’s recommendations?

[David Mundell]

I am afraid that that is the right hon. Gentleman’s interpretation. There is an excellent piece, which I commend to him, by Professor Adam Tomkins, in that very edition, in which he sets out the argument that the Bill clearly meets the Smith commission recommendations.

[Alex Salmond]

rose—

[David Mundell]

Let me continue. We are going to debate the Bill in full. We are going to scrutinise, over four days, every line and every clause. I am satisfied that the editor and readers of the Daily Record will be confident that the Bill meets the Smith commission recommendations in full when we complete that process. [Interruption.] No, we have dealt with that issue. [Interruption.]

[Mr Speaker]

Order. We cannot have argument by gesticulation. The right hon. Member for Gordon (Alex Salmond) is a seasoned observer—he does not have the excuse that he is a newcomer to the House—and he has a sort of cheeky chappie countenance, but I am afraid that it will not wash at this stage. He will have to try his luck later.

[David Mundell]

I fear there is a lot of cheek still to come.

Over 18 years, the devolution of power and decision making from this Parliament to the Assemblies of Wales and Northern Ireland and to the Parliament in Scotland has changed the constitutional make-up of the United Kingdom fundamentally. I was proud to be elected as a Member of the new Scottish Parliament at its inception in 1999—indeed, I was the first MSP to ask a question in that Parliament on the opening day, so I draw from my experience of the Scottish devolution settlement as I take this Bill forward.

Even though some had doubts at the time, few would now deny that devolution has been a success story for Scotland. It has ensured that decisions affecting our homes and our families, from schools to hospitals to our police service, have been taken closer to the people they affect. As today’s Bill makes clear, the Scottish Parliament is a permanent part of the UK’s constitutional arrangements. The Bill recognises that, and rightly so.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

To what extent does the Bill represent a full and final settlement for the future of the United Kingdom? How stable will it be?

[David Mundell]

I anticipate that the Bill will be a very stable settlement for Scotland as it was signed up to by all five of the political parties represented in the Scottish Parliament, including the Scottish National party.

That does not mean that the devolution settlement is or ever was perfect. From the start the settlement contained an imbalance, with a Scottish Parliament responsible for spending money which another Parliament—this one—was chiefly accountable for raising. It is one of the most important features of the Bill that it seeks to redress that balance. I will go into that in more detail later in my remarks.

[Stewart Hosie (Dundee East) (SNP)]

With reference to the Minister’s comments on responsibility, can he confirm to the House that this Bill is so inadequate that it does not even allow the Scottish Parliament to raise all the money that it spends?

[David Mundell]

In my opening comments, I mentioned that there had been a referendum in Scotland last year in which the people of Scotland voted to remain within the United Kingdom as part of this United Kingdom Parliament, but with a strong Scottish Parliament. The Scottish National party was part of the Smith commission which signed up to the tax powers. I find it interesting that the Scottish Government made a 61-page submission to the Committee in the Scottish Parliament about this Bill. How many lines were dedicated to the £11 billion of tax measures? Two lines, because the Scottish Government agree with those measures.

[Mrs Maria Miller (Basingstoke) (Con)]

Can my right hon. Friend confirm that the measures that he is putting forward will make the Scottish Parliament one of the most powerful devolved Parliaments in the world?

[David Mundell]

Indeed. I hope these measures will allow the debate to move from process to action and policy, and that we can finally hear from the Scottish Government how they intend to deploy the significant powers that are provided in the Bill and in the Scotland Act 2012.

[Geraint Davies (Swansea West) (Lab/Co-op)]

The hon. Member for Dundee East (Stewart Hosie) said that the deficiency of the Bill is that it does not allow Scotland to raise all the money it spends. I am confused. I thought the SNP did not want full fiscal and financial autonomy because that would get rid of the Barnett formula. Is the Secretary of State any the wiser?

[David Mundell]

I think the hon. Gentleman, like me, looks forward to amendments to the Bill being tabled, setting out the SNP position on full fiscal autonomy. I have heard that issue raised on numerous occasions but I am still not absolutely clear what it means in the SNP’s terms. The Institute for Fiscal Studies identifies a black hole of between £7 billion and £10 billion in Scotland’s finances.

[Sir Edward Leigh (Gainsborough) (Con)]

With respect—[Interruption.] Actually, I am going to make a point that might be quite positive. With respect to my right hon. Friend’s arguments, what worries me is that this might not be the end of the story, because it does not get to the kernel of the problem, which is that the Scottish Parliament will raise only about 50% of what it spends and, therefore, will be fundamentally a spending Parliament, not a tax-raising Parliament. There is a good Conservative case to be made for full fiscal autonomy, because it would breed responsibility.

[David Mundell]

I do not believe that there is a Conservative case, or indeed any case, to be made for an outcome that would leave Scotland with a gap of between £7 billion and £10 billion in its finances, which would affect every school, every hospital and every person in Scotland.

The independence referendum on 18 September 2014 was a truly historic moment, and I am proud that the people of Scotland voted decisively to remain part of our United Kingdom. The debates were passionate, as many here today will attest, and extensive, and the level of participation was a credit to Scotland. The result was clear and decisive. It represented the sovereign will of the Scottish people. In voting no on independence, we Scots, for the first time in our history, made the positive, conscious and collective choice to pool our sovereignty with our neighbours in England, Wales and Northern Ireland. We made the positive choice to enjoy the best of both worlds. We chose to continue to share the benefits of being part of a strong United Kingdom while enjoying the benefits of a strong devolved Parliament in Edinburgh delivering Scottish solutions to Scottish issues. However, a no vote was not a vote for no change. The Conservatives, Labour and the Liberal Democrats all published extensive proposals for more powers for the Scottish Parliament in the months before the referendum.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

The SNP accepted the result of the Scottish people but, during the referendum campaign, when Gordon Brown spoke on behalf of the Conservative, Labour and Liberal parties, we were promised that we would get as close to federalism as possible; that we would have home rule in the spirit of Keir Hardie. We hear about respect. The SNP won the election in Scotland conclusively. We stood on a mandate of powers for a purpose. Why does the Secretary of State not deliver what the people of Scotland voted for: a powerhouse Parliament with full economic powers?

[David Mundell]

I have heard the hon. Gentleman make his points before. The facts of the matter are that the SNP took part in the Smith commission after the referendum, signed up to a package of measures set out in the commission’s report and then, during the election, argued that its MPs would come to this Parliament to ensure that it was delivered.

[Ian Paisley (North Antrim) (DUP)]

Can the Secretary of State outline whether any of the fiscal arrangements that will be changed as a result of the Bill will affect Northern Ireland in any way?

[David Mundell]

It will clearly be the case that the Scottish Parliament will have significantly greater powers over income tax and welfare than it has now, but the Scottish Parliament is currently able to introduce policies that are significantly different from policies that are adopted in Northern Ireland. That is the nature of devolution and the devolution settlement.

[Ian Paisley]

I will put it the way a Ballymena man would: how much will it affect Northern Ireland?

[David Mundell]

It will depend on the policies that are pursued in the Scottish Parliament. For example, were my colleague Ruth Davidson to become First Minister of Scotland, we would see taxes reduced in Scotland, which I think would have a positive effect in Northern Ireland, because it would be an incentive to see business done in a compatible manner. But devolution is about taking decisions in the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, and increasingly in different parts of England.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my right hon. Friend agree that, at a time when we are devolving more powers to Scotland and other parts of the United Kingdom, we also need a fair and equitable settlement for the people of England, starting with English votes for English laws?

[David Mundell]

As my hon. Friend is aware, that proposal was in the Conservative party manifesto and it will be brought to this Parliament. [Interruption.] I think we have concluded on the issue of what devolution means throughout the United Kingdom.

The Conservative-led coalition Government passed the Scotland Act 2012—the biggest single transfer of fiscal responsibility to Edinburgh in 300 years. They also oversaw significant further devolution to Wales and Northern Ireland, as well as groundbreaking work on city deals and a step change across England with the work towards the creation of the northern powerhouse. The Bill before the House today represents a further step forward in the governance of Scotland and our United Kingdom.

The settled will of the Scottish people is now that Scotland should remain part of the United Kingdom. As such, this Bill demonstrates the Government’s determination that the Scottish Parliament should be made more powerful, more accountable yet autonomous, and better equipped to serve the people of Scotland. It is the fulfilment of our manifesto commitment that the all-party Smith commission agreement should be implemented in full. The fact that the Bill was introduced on the first day after the Queen’s Speech and that its Second Reading is taking place at the first opportunity since the general election speaks volumes for the Government’s determination to honour that manifesto commitment and get on with the job.

[Tommy Sheppard (Edinburgh East) (SNP)]

I congratulate the right hon. Gentleman on his new position and on beating off the opposition that he no doubt had in getting it. Does he not have cause to reflect that, whereas the previous Government in which he served as a Minister had the support of about a quarter of the elected Members of this House from Scotland, he is now this Government’s sole representative in Scotland? Does not that place on him a moral obligation to discuss with the elected representatives of the people of Scotland how to take forward this Bill? Is he not concerned that the all-party group in the Scottish Parliament that considered his draft proposals says that they do not equate to the proposals made by the Smith commission?

[Mr Speaker]

Order. Interventions must be brief.

[David Mundell]

I was intending to cover a number of the points that the hon. Gentleman raises. I have met the Scottish Parliament committee that was set up in relation to the Bill, and I am going to appear before it to give evidence directly on 25 June. I am in ongoing and constant dialogue with the Scottish Government in relation to this Bill. This very morning, I had a very cordial meeting with John Swinney, the Deputy First Minister, who is responsible for constitutional matters. During the four days when the Bill will be debated on a line-by-line basis, I will be very pleased to hear the suggestions and proposals that come forward from the hon. Gentleman’s group and, indeed, from any Members of this House.

[Tommy Sheppard]

What, then, is your observation on the fact that an all-party group of the Scottish Parliament, including members from your own party, has come to the conclusion that the proposals before us do not put into effect the Smith commission proposals? What is your reflection on that?

--- Later in debate ---

[Mr Speaker]

Order. All these things take some acclimatisation, but debate must always go through the Chair. The concept of “you” does not arise, because “you” means me—and I have no views on these matters.

[David Mundell]

The hon. Gentleman will see that there have been significant changes to the draft Bill—[Interruption.] There have been. If he goes through the Bill in detail, he will see that there are significant changes. [Interruption.] Well, I do not regard the power to give the Scottish Parliament the right to top up all welfare benefits in Scotland as some minuscule change; I regard it as a very, very significant clause in the Bill. It is one of a number of changes that have been made. We have made it very clear that throughout the Committee stage of the Bill we will look at proposals for changes to it. The Scottish Government published some proposed changes to the Bill yesterday—it was nice to see them—and no doubt we will have a greater chance to debate them in detail.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I do not think that I have ever seen such a shambling Front-Bench performance. Why does the Secretary of State believe he should have a veto over certain issues decided by the Scottish Parliament?

[David Mundell]

I had thought that being part of a larger number might change the hon. Gentleman’s habits, but he remains as ungracious as ever. The Bill contains no vetoes, as he will be well aware if he has read it in detail. What it contains are mechanisms to allow two Governments to work together on matters of shared interest and application. To me, the meaning of a veto is that when someone says they want to do something, someone else has the capacity to say, “No, you can’t.” Not a single provision of the Bill relates to such a proposal.

[Martin John Docherty (West Dunbartonshire) (SNP)]

Does the Secretary of State fundamentally believe that the decisions of a democratically elected Government sitting in Edinburgh, who have 56 of the 59 Scottish Members in this House, should be challenged by him or any other Government Member with a veto?

[David Mundell]

I am sorry that the hon. Gentleman did not hear what I said in response to the hon. Member for Perth and North Perthshire (Pete Wishart). There are no vetoes in the Bill. The hon. Gentleman and others will see that clearly when we scrutinise it line by line.

[Several hon. Members]

rose—

[David Mundell]

I need to make a little progress.

Let me turn to the all-party Smith commission agreement, achieved under the chairmanship of Lord Smith of Kelvin. The morning after the decisive no vote in the referendum, the Prime Minister announced that all-party talks should take place to ensure further devolution to Scotland. The remit was defined by the referendum result: keeping the UK together and keeping Scotland a strong part of it. All four parties represented in this House, with the addition of the Scottish Green party, took part in the process, and all five parties signed up to the final agreement without caveat.

[Jo Stevens (Cardiff Central) (Lab)]

Does the Minister not agree that the Prime Minister gambled with the Union to sweeten the SNP, and that that sweetness has now turned sour? The Prime Minister is in chaos over Scotland, as he is over Europe.

[David Mundell]

I do not quite get the hon. Lady’s multiple metaphors. I am sure that there are some SNP Members who are sweet, and there are certainly some who are sour.

The central aim of the Smith commission was to address a flaw that had existed in the devolution settlement from the outset by making the Scottish Parliament more accountable for raising the taxpayers’ money that it spends. The significance of that point should not be overlooked, and we have alluded to it already: before fully implementing the Scotland Act 2012, the Scottish Parliament controlled almost 60% of public expenditure in Scotland, yet it was responsible for raising only about 10% of the funding. I did not believe that that was sustainable, and neither did the people of Scotland. For Holyrood to be the powerhouse Parliament that it rightly aspires to be and that this Government want it to be, it must be accountable to the people of Scotland for raising more of the money that it spends. The Bill is about ensuring that that missing link is fixed.

A second key aim of the Smith commission was to ensure that more decisions about welfare policy can be taken in the Scottish Parliament, so that specifically Scottish circumstances can be taken into account. The timetable set for the talks was that an agreement should be reached by St Andrew’s day. It was a challenging deadline, but it was met with a few days to spare—another commitment delivered to the people of Scotland on time.

I pay tribute to the 10 members of the Smith commission who represented their parties with skill and tenacity and worked constructively and co-operatively throughout the duration of the commission. They should be proud of what they have achieved for the people of Scotland. Again, I pay particular tribute to Lord Smith of Kelvin, who chaired the talks. He brought to the task his characteristic blend of good humour, insight and hard work. Of course, the occasional bout of strong-arming was also needed, but he says such bouts were mercifully rare.

Key to the success and the credibility of the talks was the fact that Lord Smith made sure that the voice of civic Scotland was heard loud and clear as the negotiations progressed. More than 18,000 people made submissions to the commission on what powers should be devolved to Scotland, and more than 400 individual organisations the length and breadth of Scotland submitted their views on the way forward.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I am sure it will not have escaped the Secretary of State’s notice that the five parties that signed up to the Smith commission are the same ones that are involved in the Scottish Parliament’s Devolution (Further Powers) Committee, which has stated that the Government’s Bill does not live up to either the substance or the spirit of the Smith commission. Why will he not now go back to the drawing board and listen to what was said by the Smith commission, as well as by the 60 organisations that have called for welfare powers to be devolved, and actually deliver it?

--- Later in debate ---

[David Mundell]

I have made it clear, and the hon. Lady is aware, that significant changes have been made to the draft clauses, which were published ahead of the Scottish Parliament committee considering them. I have told the House that we look forward to seeing amendments and proposals. Yesterday the Scottish Government produced some draft clauses, which we most certainly will look at as part of our ongoing discussions with them. If the hon. Lady and others feel that the Smith commission is not met in full by the exact terms of the Bill, there will be plenty of opportunities for debate and discussion in this House. As I have said, there will be four days of line-by-line scrutiny of the Bill.

[Alex Salmond]

rose—

[David Mundell]

I have a quote from the current First Minister, so perhaps the right hon. Gentleman will wait until I have reminded him that last week she said that

“compromise isn’t…the same as concession.”

Compromise was made by all parties in respect of delivering the Smith agreement. This Bill is not about reopening those issues.

[Alex Salmond]

I know that the Secretary of State would never knowingly mislead the House, but earlier he said that the Daily Record was behind him in saying that the Bill implemented the proposals of the Smith commission. I have had an opportunity to consult today’s editorial, which says that

“there are serious concerns the proposed Scotland Bill does not fully implement what was proposed…This is an unacceptable situation that must be rectified quickly as the Bill makes its way through Westminster.”

Does the Secretary of State hold to his previous statement, or does he accept the concerns that he has not implemented what Smith proposed?

[David Mundell]

I do not think the right hon. Gentleman listened to my response, because I made it very clear that I felt that, after today’s debate and four days of detailed scrutiny of the Bill in Parliament, the Daily Record, its readers and, indeed, the people of Scotland will be satisfied that it meets the full recommendations of the Smith commission.

The coalition Government committed to bringing forward draft clauses to implement the Smith commission agreement by Burns night 2015: they did so on 22 January —another commitment met in full and on time. When the Prime Minister went to Edinburgh on that day in January, he gave assurances that he would listen to the views on those draft causes and, as I have set out to a number of Members, we have done so. Since January, the Government have engaged extensively with interested parties in Scotland. Hundreds of people have attended events, from the north-east to the borders, giving their views on the clauses and how they could be refined further.

Of course, work remains to be done during our deliberations on the Bill and we will listen to proposals. The Smith commission recommended, for example, that the Scottish Government should be able to create new benefits in areas of devolved responsibility. We are working closely with the Scottish Government to examine whether new powers, if any, are required to implement that recommendation.

I am proud that the Bill has already benefited from significant input from people and groups across Scotland. This Government will continue to listen to views from all parts of Scotland and from those in all parts of the Chamber as we take forward the Bill and refine its provisions to ensure that the spirit of Smith can be met in full.

[Danny Kinahan (South Antrim) (UUP)]

The Secretary of State has partially answered my question by saying that he will listen to all angles and to everyone in the Chamber, but will he set up some commission or congress so that the other parts of the Union have the chance to have their say before this all goes ahead and we find we are on a roll into the future that we cannot stop?

[David Mundell]

This Government are committed to deliver the Smith commission recommendations, and that is what we will do. We are bringing forward a Bill to implement the Stormont House agreement. Proposals that anyone makes in relation to their own parts of the United Kingdom, or indeed their say on other parts of the United Kingdom, will always be capable of being debated in this House. If, however, the hon. Gentleman is asking whether I support the idea of a constitutional convention, the answer is that I do not.

[Stewart Hosie]

The Secretary of State has now been on his feet for more than half an hour. Will he actually speak about the contents of the Bill today, or will he continue to waffle until he sits down and lets others speak?

[David Mundell]

As you are well aware, Mr Speaker, the hon. Gentleman would have been equally critical of me had I chosen not to take the numerous interventions. I have done so because I want this to be a debate and for me to be held accountable to Members of the House.

I am grateful to the Scottish Parliament’s Devolution (Further Powers) Committee for its work. I am due to meet its members shortly. In getting us to this point, my officials have worked extensively behind the scenes with their Scottish Government counterparts to listen to their views, and they will continue to engage actively with them throughout the process on this Bill.

[Heidi Allen (South Cambridgeshire) (Con)]

I thank my right hon. Friend for taking my intervention. So much of what I am hearing is a lack of trust—[Interruption.]—and my point is that that has to change. There is nothing that we cannot achieve together if we have a little bit of trust. I am very new to politics, as many Members will know, but I would not stand behind a Government who I felt just wanted to play their part and play the game. I think all that Members are hearing is just noise. [Interruption.] My question is: can we not take the Secretary of State at his word, go through the Bill line by line and find a route through this together, rather than assume that there is no trust and no will to give the Scottish people what they want? Unless we are presented with that mindset, we will achieve nothing.

[David Mundell]

I very much welcome that contribution, and I hope that that is the spirit in which we can proceed. Many people who saw the Smith commission agreement signed at 8 o’clock on a Tuesday evening were disappointed when, at 8 o’clock the following morning the now Deputy First Minister suggested that there were parts of it that he did not like. I hoped that the agreement could and will be a comprehensive settlement for Scotland.

[Mr David Anderson (Blaydon) (Lab)]

Why are the Secretary of State and his party denying the people of England the right to have a constitutional convention, given that over the past two decades the Scots have had two referendums and the Welsh, the Northern Irish, the people of London and the north-east have had referendums? Why is he denying the rest of the people of England such a right, and fobbing them off with an idea drawn up by the Chancellor on the back of a fag packet?

[David Mundell]

We have had a general election in which the issues were debated extensively across the United Kingdom. What the Government are committed to do in relation to Scotland is to deliver the Scotland Bill.

You have not selected the amendment, Mr Speaker, but, as the hon. Member for Perth and North Perthshire (Pete Wishart) stated, it mentioned a veto, and I want to clarify the issue of so-called vetoes. The Smith agreement is clear that matters such as the mechanism for paying universal credit across the UK and the Jobcentre Plus network will remain reserved. That was an important argument during the referendum and was endorsed by the majority of Scots. In order to deliver, we need a system that allows the Scottish Government to take responsibility for benefits, including by being able to top them up, but allows the reserved universal credit payments mechanism to carry on working effectively. That is what the Bill does.

It is wrong to call that a veto—as I said earlier, a veto means that someone can prevent something from happening if they do not like it. The Bill does not give the UK Government that power. In fact, it explicitly says that consent for a change cannot be unreasonably withheld.

[Mike Weir (Angus) (SNP)]

But that does mean that it can in fact be withheld, because a Minister here in Westminster will have to give agreement to when a change will take effect. That Minister is not obliged to give any agreement, so consent could be withheld and it is effectively a veto.

[David Mundell]

I do not agree with the hon. Gentleman’s analysis at all. The provision is not even about agreement to a decision. It is a timing arrangement as part of the systems that need to operate. It will work the other way, too; the UK Government will need to consult the Scottish Government when they want to make changes to devolved universal credit flexibilities that will have an impact on Scotland. Other clauses, such as those on transport and elections, also require the UK Government to consult Scottish Ministers before acting.

[Kate Green (Stretford and Urmston) (Lab)]

It is helpful that the Secretary of State has said on the record in this Chamber what the intentions are in relation to the clauses in question. What will happen in the event of a dispute about the outcome of such a consultation process? Where will disputes be decided?

[David Mundell]

There are existing dispute reconciliation mechanisms in the Joint Ministerial Committee. There have inevitably been a number of disputes between the Government of the United Kingdom and the devolved Administrations, and most of them have been able to be resolved through that process.

To respond to the hon. Member for Dundee East (Stewart Hosie), I will turn to the provisions of the Bill. It is a wide-ranging Bill that will bring about a transfer of responsibility to Holyrood that will touch just about every aspect of Scottish life, affect every pay packet in Scotland and have the potential to deliver real and tangible benefits to the people of Scotland.

I turn first to the provisions on taxation. Central to the Bill is the devolution of income tax. Although the definition of income tax will remain reserved, the Scottish Parliament will have full control over rates and bands. That builds on the tax devolution set out in the Scotland Act 2012, which provided for significant powers over income tax that will come into effect next April.

One notable change to the Bill, compared with the draft clauses published in January, is the confirmation that the Scottish Parliament will be able to set a zero rate of income tax on earnings if it so chooses. That effectively gives it the opportunity to reduce the individual’s tax burden significantly if it can afford to do so and makes appropriate spending cuts or tax rises elsewhere. Of course, the reverse is true—if the Scottish Government want to spend more, they will be able to do so by taxing more, and they will be accountable to the Scottish taxpayer for it.

Alongside the devolution of income tax sits the assignment of half of Scotland’s VAT revenues. Members will recall that it is against EU law to have differential VAT rates within a member state, so the devolution of VAT would not be legal.

[Geraint Davies]

Will the Secretary of State give way?

[David Mundell]

No, I have already taken an intervention from the hon. Gentleman.

Instead of the devolution of VAT, the Smith commission recommended that half the VAT revenues raised in Scotland should be assigned to the Scottish Parliament, thereby further linking Holyrood’s funding to the performance of the Scottish economy. The more the Scottish economy grows, the greater the revenue from VAT that Holyrood will be able to keep. That is an incentive to achieve growth.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Will my right hon. Friend give way?

[David Mundell]

No; let me make a little progress.

The devolution of income tax on earnings and the assignment of VAT revenues, when taken together with the devolution of air passenger duty and the powers under the 2012 Act, mean that the Scottish Parliament will have important decisions to make. The Scottish Parliament is now responsible for raising about only 10% of what it spends, but under the Bill Holyrood will be responsible for raising more than 50% of what it spends. It will truly be one of the most powerful devolved legislatures in the world.

[Andrew Gwynne (Denton and Reddish) (Lab)]

May I take the Secretary of State back to the comments made by my hon. Friend the Member for Blaydon (Mr Anderson) and the hon. Member for North Antrim (Ian Paisley) on the impact of changes on the rest of the United Kingdom? Air passenger duty is a case in point. Regional airports in the north of England will undoubtedly feel the impact of any changes to air passenger duty in Scotland. Is that not yet another reason why, as we proceed with devolution arrangements, we need to have a proper constitutional convention so that all measures can be considered across the whole of the United Kingdom?

[David Mundell]

I have made my views on a constitutional convention known. Other hon. Members have raised the issue of air passenger duty. The Treasury has established a group to look at the impact any changes to air passenger duty in Scotland could have on airports in England.

On welfare policy, there will also be a highly significant transfer of responsibility. While the social security reservation remains in place, part 3 of the Bill means that the Scottish Government will be responsible for welfare, which last year accounted for around £2.5 billion of spending in Scotland. The Scottish Parliament will be able to make provision for a number of types of social security benefit, discretionary payments and employment support. The Bill also contains provision to transfer executive competence to Scottish Ministers to allow them to vary certain aspects of universal credit. It will give the Scottish Parliament more responsibility for benefits paid to carers, disabled people, those who are ill, those who require help with winter fuel costs, funeral payments and maternity payments. As a result of the Bill, when people most require help the Scottish Government will be able to tailor that help to particularly Scottish circumstances.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The new powers are clear. Is it not time we heard what the SNP will do with the new powers?

[David Mundell]

I absolutely agree with my hon. Friend. As ever, I have been working very closely with the Scottish Government. I am looking forward to speaking tomorrow with Alex Neil, the Cabinet Secretary responsible for welfare matters, and to taking forward the work of the joint ministerial welfare group. I have made it clear, in relation to that group, that we want to put in place transition arrangements to allow the powers to be transferred as quickly as possible. However, we need to know what we are transitioning to and so need clarity on the Scottish Government’s position in relation to the operation of those powers.

[Alex Salmond]

On a point of order, Mr Speaker. There is a rumour sweeping the Benches that Conservative Members have been provided with a prompt sheet on questions to ask the Minister. If such a disgraceful thing had happened, would that be within the rules of the House?

--- Later in debate ---

[Mr Speaker]

I gather it has been denied. I must say, I would not have lasted long in the House had I been required to sign any such paper. I am innocent of such matters. It is the first I have heard of it and I doubt it will last.

[David Mundell]

Thank you, Mr Speaker.

The Smith agreement does not stop at powers over tax and welfare. The Scottish Parliament will receive a transfer of legislative competence in a range of significant policy areas. I cannot list each power in detail now—as I have said, the House will have ample opportunity to scrutinise them in Committee—but I will provide some examples. The Bill will enable the devolution of the management of the Crown Estate’s economic assets in Scotland to the Scottish Parliament and of the management and operation of reserved tribunals to designated Scottish tribunals. The Scottish Parliament will also have additional responsibility over roads, speed limits, road signs and the policing of railways in Scotland, as well as powers over onshore oil and gas extraction—

[Ian Blackford]

rose—

[David Mundell]

I have already taken a small speech from the hon. Gentleman.

The Bill provides the Scottish Parliament with powers over gaming in new premises and for additional duties on the UK Government to consult Scottish Ministers on functions carried out by a range of important public bodies. It will also enable public sector bodies to bid for rail franchises in Scotland; provide for the ability to state how schemes related to fuel poverty and energy efficiency are run; and increase the ability of the Scottish Parliament to require certain bodies to give evidence before it. In addition, part 1 will take forward in full the Smith agreement that the permanence of the Scottish Parliament be recognised in UK legislation and that the so-called Sewel convention be put on a statutory footing.

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

Under the Bill, this Parliament will retain an incredibly broad power to legislate on devolved matters, even without the Scottish Parliament’s permission. Why is that, and will the Secretary of State provide examples of when he thinks such action would be appropriate?

[David Mundell]

The hon. Gentleman will be aware that since the coming into existence of the Scottish Parliament, the UK Parliament has legislated in devolved areas only with the agreement of the Scottish Parliament, under the Sewel convention, and that the Bill will put that convention on a statutory footing.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

On income tax, what will happen if someone is resident in Scotland but works over the border for an English company? If the income tax rates are different, will that not add to the compliance costs for that business? Who will compensate that small business in England for the additional compliance costs of the income tax variation?

[David Mundell]

That point was debated in full during the passage of the Scotland Act 2012, which introduced the Scottish income tax rate. In simple terms, for the hon. Gentleman’s purposes, it will be done by way of a tax code generally containing the letter S, allowing businesses to operate the PAYE system as they would normally do and without additional expense. There is a designation of “Scottish taxpayer” that is dependent on residence—and, as a point of fact for new colleagues, all Scottish MPs are resident in Scotland for Scottish tax purposes.

Finally, the Scottish Parliament will find itself largely responsible for how it runs itself, how it is elected and the people who can vote to elect it. I am pleased to confirm that we have already agreed to a request from the Presiding Officer to take action to ensure that the 2020 UK general election date and the Holyrood election date do not clash.

It is clear that a significant range of powers will be devolved to the Scottish Parliament and that the onus is now on the Scottish Government to be clear with the electorate about how they will use them.

[Robert Flello (Stoke-on-Trent South) (Lab)]

My constituents in England will no doubt be listening to what powers are being devolved, but they are also waiting to hear what is happening to the block grant and the Barnett formula, for example. They will be interested to hear how the money is flowing. Will the Secretary of State say something about that?

[David Mundell]

The hon. Gentleman’s timing is impeccable, because I was just coming on to the so-called fiscal framework that underpins the transfer of tax and welfare powers to Holyrood. Alongside the Barnett formula, the framework will deliver a fair and lasting financial settlement for Scotland and the rest of the UK. The framework will provide the Scottish Government with the means by which they can determine a mix of taxation and spending specific to Scotland, but which fits with the UK Government’s overall fiscal plan.

This means that Scotland will continue to benefit from the pooling of risks and resources across the whole of the UK, but the Scottish Government will soon be responsible for raising substantial amounts of its revenue through taxation. As a result, it will be more accountable to the Scottish Parliament and to the Scottish people. The Scottish Government will in future be responsible for more than 50% of their funding. Changes in the Scottish Government’s funding will therefore be increasingly determined by changes to Scottish taxation.

The detail of the Scottish fiscal framework will be agreed between the UK Government and the Scottish Government on the basis set out in the Smith agreement. Discussions on the framework have already begun with the aim of reaching an agreement alongside the passing of the Scotland Bill. My right hon. Friend the Chancellor of the Exchequer has met the Scottish Government Deputy First Minister, John Swinney, today. This timetable demonstrates the Government’s determination to make quick progress on the fiscal framework.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Will the Secretary of State clarify whether the final say on social security levels will rest with the Scottish Parliament?

[David Mundell]

The Scottish Parliament will have the capacity to top up welfare benefits. It could be said that it would have the final say on the level of benefit. UK benefits will obviously be determined in this House, but the Scottish Parliament will have the opportunity to top them up, as is clearly set out in the Bill.

[Callum McCaig (Aberdeen South) (SNP)]

Does not the notion of “topping up” benefits suggest that in and of themselves they are deficient?

[David Mundell]

What I think it suggests is the requirement for responsibility. If the Scottish Government believe that benefits are not at the level they should be, they will be able to ask the Scottish taxpayer for the funds to increase them. That is what I would regard as responsibility within a Parliament.

[David Mowat (Warrington South) (Con)]

A few minutes ago, my right hon. Friend described the fiscal framework of the Barnett formula as long-lasting and fair. Surely that would be the case only if the Barnett formula were based on need rather than on a historic anomaly. It is a formula that results in my constituents getting £1,600 less per person per year than they would get if it were based on need, which one would think a progressive party would wish to be the case.

[David Mundell]

My hon. Friend is a long-standing critic of the Barnett formula, and I acknowledge the point he makes. The Prime Minister, the then Leader of the Opposition and the leader of the Liberal Democrats made it absolutely clear that their parties had no intention of changing the Barnett formula. That certainly remains the position on the Government side.

[Graham Stringer (Blackley and Broughton) (Lab)]

The Secretary of State has acknowledged the point, but can he justify why English constituents will get £1,600 less?

[David Mundell]

I did not know that that was the policy of the Labour party. I had understood that it supported the Barnett formula, and I can reiterate the continuing support of Government Members for it.

One issue closely linked to the fiscal framework is the much talked-about issue of full fiscal autonomy. This issue was raised a number of times today and during the general election campaign, and some SNP Members have talked tirelessly about it. My party and the Government have made it clear that we will strongly oppose full fiscal autonomy for Scotland. As the analysis by the independent and respected Institute for Fiscal Studies told us, full fiscal autonomy would leave Scotland with a £7.6 billion black hole in its finances this year and almost £10 billion by the final year of this Parliament. This Government will never support a policy that leaves one part of the UK in such a perilous financial situation: we are members of a social union, too. However, given that the SNP set such store by the issue in its election campaign, I look forward to SNP Members bringing forward amendments on full fiscal autonomy in Committee. That is to be welcomed, because apart from anything else, such amendments would mean the people of Scotland might actually get to see what the definition of full fiscal autonomy is.

[Mr Rees-Mogg]

Is not the lesson of the euro that fiscal autonomy needs to go with monetary autonomy, and that if Scotland has fiscal autonomy it must also have its own currency?

[David Mundell]

That is a very good point and I think my hon. Friend and the right hon. Member for Gordon (Alex Salmond) will be able to spend hours debating it.

[Sir Gerald Howarth (Aldershot) (Con)]

The Secretary of State is being remarkably generous in giving way—very much like the SNP is with other people’s money. The Secretary of State said it would lie within the power of the Scottish Government to top up—I think that was his expression—welfare benefits. We know how they like being generous with other people’s money, but if they overspent at the end of one year—because of course benefits are demand-led—who will pick up the bill, the British taxpayer or the English taxpayer?

[David Mundell]

In relation to matters for which the Scottish Parliament is responsible, it will be the Scottish taxpayer who has to pay. So if the Scottish Parliament and Government want additional spending, the Scottish taxpayer will have to pay.

I wish to conclude my remarks, but I have sought to take as many interventions as possible because part of the Bill is about accountability. The Bill represents the fulfilment of a promise to the people of Scotland that a no vote in the referendum was not a vote for no change. It delivers on the all-party Smith commission agreement, as the Law Society of Scotland and many others have already made clear. The Government and the Smith Commission engaged extensively on the agreement, and on the draft clauses since January, and the Bill before us today is all the stronger for that extensive engagement. It will benefit further from four days of full line-by-line scrutiny in this Chamber. The challenge will then be for the Scottish Government to finally set out what they will do with the new powers they will receive. Now is the time for the Scottish Government to stop acting and start doing. I commend the Bill to the House.

Government's Legislative Programme (Scotland)

David Mundell Excerpts

Thursday 28th May 2015 Written Statements

[The Secretary of State for Scotland (David Mundell)]

Seventeen of the 24 new Government Bills for this Session of Parliament contain provisions that apply to Scotland, either in full or in part.

The Government’s ambitious programme of legislation will help to create jobs and support working people. It will reduce the tax burden on the lowest earners and will ensure there are no rises in VAT or national insurance contributions for the next five years, and no rise in the income tax levels for which the UK Government have responsibility.

Bringing the different parts of the United Kingdom together is a priority for the Government. For Scotland we will meet our commitment to deliver in full the recommendations of the cross-party Smith commission on further devolution. The new Scotland Bill will give the Scottish Parliament wide-ranging new powers, including greater flexibility to make its own decisions and making it more accountable for raising the revenue it spends, while keeping the advantages of being part of the United Kingdom.

Other measures affecting Scotland include a focus on energy security and support for the North sea oil and gas sector and moves to tackle extremism and strengthen counter-terrorism. The legislative programme also includes measures to control immigration and to hold a referendum on membership of the European Union.

This statement provides a summary of the Government’s new legislative programme and its application to Scotland. It does not include draft Bills.

At present the only Bill that triggers the need for a legislative consent motion under the Sewel convention is the Scotland Bill. However, it is possible that the need for consent may arise as Bills are prepared for introduction.

The Government are committed to the principles of the Sewel convention, and we will continue to work constructively with the Scottish Government to secure consent for Bills that contain provisions requiring the consent of the Scottish Parliament.

The Bills listed in section 1 will apply to Scotland, either in full or in part, on introduction. Section 2 details Bills that will not apply in Scotland at introduction. In addition to the new Bills listed below there will also be a Finance Bill and the HS2 Bill from the last Session will be taken forward.

Section 1: New legislation applying to the United Kingdom, including Scotland (either in full or in part);

Scotland Bill

Full Employment and Welfare Benefits Bill

Energy Bill

Immigration Bill

Enterprise Bill

Trade Unions Bill

Wales Bill

Northern Ireland (Stormont House Agreement) Bill

EU Referendum Bill

Investigatory Powers Bill

Psychoactive Substances Bill

Extremism Bill

National Insurance Contributions Bill

Bank of England Bill

European Union (Finance) Bill

Votes for Life Bill

Armed Forces Bill

Section 2: New legislation that will not apply in Scotland

Childcare Bill

Housing Bill

Education and Adoption Bill

Cities and Local Government Devolution Bill

Police Reform and Criminal Justice Bill

Buses Bill

Charities (Protection and Social Investment) Bill

[HCWS1]