Scotland Bill

Angus Brendan MacNeil Excerpts

Tuesday 30th June 2015 Commons Chamber

[Dr Whiteford]

The Secretary of State and I have a different perception of time frames and what they mean to people living on limited incomes. When the Scottish Government sought permission to raise the cap on DHPs, the UK Government used exactly the kind of blocking and delaying tactics that will be left open under the Scotland Bill. These are not theoretical, worst-case scenarios. I would like to refresh the Secretary of State’s memory, as it was early in 2014 when the Scottish Government first sought the UK Government’s permission to lift the cap on DHPs, and I raised the issue on more than one occasion in this Chamber subsequently. In fact, it took until May last year for the Government to grant permission—for something that could have been done overnight. Most of the public organisations I deal with in my capacity as an MP have a 21-day turnaround, yet the Government take months at a time. That is an awful long time for someone living on their uppers and struggling with their income.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

My hon. Friend is making a fantastic speech. Is it not amazing to hear the nanny-esque statements coming from the Conservative Front-Bench team about the Government giving the Parliament permission? That is the sort of thing that they would not tolerate themselves if the European Commission, the French or the German Government were involved, but they expect the Scottish Government to come cap in hand to Westminster when all they want is to do the decent thing for people. It is ridiculous.

[Dr Whiteford]

My hon. Friend makes a very pertinent point.

During the intervening months between the simple request and getting the permission we needed, some of our most disadvantaged citizens continued to accrue rent arrears or had to do without essentials in order to meet their liabilities. That is just one concrete example of how restrictions of this type currently act as a stalling mechanism and a barrier to progressive change, and they demonstrate why we need to get rid of the veto.

Other examples of things we could do with these provisions include the power to maintain direct payments of housing benefit to social landlords—something that I think is in everybody’s interests—and the power to ensure that under universal credit claimants can receive individual payments, which potentially benefits women and children and protects their interests. Then there is the power to equalise the earnings disregard between the first and second earners in a household. Again, given the persistent pay gap in Scotland between women and men, that measure could predominantly benefit up to 70,000 women by up to £1,200 a year. By contrast, if we leave the Bill unamended, we curtail the powers of the Scottish Parliament to enact policies that are overwhelmingly in the interests of our citizens and are supported by them. We risk seeing such measures batted off into the long grass.

We also store up trouble down the line. It is fair to say that the Secretary of State got himself in a richt kirn earlier this month on the “Scotland 2015” programme when he was asked directly about the veto. When the presenter put it to him that

“it could be used to block if there was a political will to do that because who would decide if the Secretary of State was unreasonably withholding consent?”,

the Secretary of State said:

“Well, I would hope that it would never come to that, but because it’s on the face of the legislation ultimately it might be the courts that would decide.”

I fear that the Secretary of State has let the cat out of the bag; I suspect he was a lot more candid than he intended to be. I think we can infer from that very revealing remark that he knows that, in practice, this Bill’s measures will act as a veto on the Scottish Parliament—pure and simple. I put it to the Committee that if the Scottish Parliament has to go to court to enforce the powers devolved in the Bill, it is not worth the paper it is written on.

--- Later in debate ---

[Mr MacNeil]

I am sure the right hon. Gentleman is not suggesting that there is an in-line benefits system across Europe. The real problem is austerity. The Greeks were told five years ago that, if they followed austerity measures, their problems would end, but their problems have not ended. They have become worse, because austerity makes things worse. It is nothing to do with welfare; it is to do with austerity.

[John Redwood]

I think that welfare has quite a lot to do with austerity, and I think that we agree. I think that the policies that have been forced on Greece have been too austere. It is quite wrong to make the Greeks cut public spending when they cannot expand their money supply, expand credit or expand the private sector to create the jobs that they clearly need to create in order to make some success out of the cuts imposed on the public sector.

When, after 2010, we conducted policy as a coalition to bring about recovery in Britain—including Scotland—it worked very well, and it was private sector led. We were able to do that because we had a full range of powers over interest rates, money creation, credit and banking, which a nation that has joined a currency union does not have. That is the Greek tragedy. The Greeks are able to carry out only the public sector part of the EU fix, which is the bit that is austere. They are not able to carry out the private sector-led recovery.

Of course, we are not here to talk about Greece; we are here to talk about our currency union. However, I wanted to make that point because, whereas Greece is having to move away from a position in which it shared only currency and is now discovering that it needs to share a great many other policies with the European Union in order to achieve success, in Scotland things are going in the opposite direction.

We have a currency union—a perfectly good currency union, which is supported on all sides. I believe that Members of the SNP are great fans of the currency union and do not wish Scotland to have an independent currency, but they need to consider this: if they do not want proper independence in the sense of having their own currency, and if the currency is to work in the way in which it has worked in the past, there will have to be some basic standards of welfare that are common across the country, and there will have to be agreed systems of transferring money from rich areas to poor ones. There are rich towns and cities in both Scotland and in England. The rule of our system is that those in areas of high income or relative success pay more tax, and those in, say, towns or counties with a lot of poverty benefit from big transfers.

[Mr MacNeil]

I almost feel sorry for interrupting the right hon. Gentleman when he is advancing a good argument for the redistribution of wealth through taxation, and has also admitted that austerity is not a good idea. However, I think that the mention of Greece is erroneous. If we are talking about an optimal currency zone, a better parallel would be Germany and the Netherlands. The independence that those countries have from each other is welcomed by SNP Members. I hope that the right hon. Gentleman will go a little further than the enlightened remarks that he has made so far, and will agree with us that Scotland and England should be as independent from each other as Germany and the Netherlands.

[John Redwood]

I am not prepared to go that far. I think that there can be problems in the euro currency zone between Germany and the Netherlands, because they do not have the full range of common policies that they may need. At present, it appears that the Dutch and German economies are sufficiently synchronised for the arrangement not to cause problems in the Netherlands, but that is clearly not true of Portugal, Spain, Ireland or Greece. The fact that there are more countries that it does not fit than countries that it does fit implies that there is something wrong with the fundamental architecture of the euro. That is why I am anxious for us to bear it in mind, when we are debating the issue of how much welfare discretion there should be, that a common welfare system is normally one of the characteristics of successful currency unions.

Yes, I do believe in redistribution. We all believe in redistribution. We believe that, in a civilised country such as ours, we should tax the rich more and give money to those who need support. We have arguments about how much the amounts should be and about the conditions, but we all believe in transfers, and we all believe that the balance must be right.

When I asked the hon. Member for Banff and Buchan to say how much more an enlightened Scottish Government would like to give, by means of welfare payments, to tackle immediate problems of low income or poverty, she was not able to tell me. That was a pity, because I took it that her intention, and the purpose of the amendments, was to give the Scottish Executive power to increase benefit levels in comparison with the levels, or the range, of benefits currently on offer in the Union. I did not think that SNP Members were seeking these powers in order to be meaner than the Union Government are proposing to be, and I see them consenting to that. I feel that this debate would be richer and fuller if they shared with us the amount of extra money that they would like to spend.

[John Redwood]

That brings us back to an important and interesting question. At what point does the transfer of power become destabilising for the currency union and the common transfers that make up our common country? That, surely, is one of the issues that were examined in the referendum, when a majority of Scottish people felt that they wanted to remain in the United Kingdom and in the currency union. Having read and listened to what was said by those who were actively involved in the debate, I suspect that the currency union was rather central to the securing of that vote, and that it was when the parties of the Union said that Scotland should leave the currency as well as the UK, if that was the wish of the Scottish people, that the majority voted to stay in the Union.

[Mr MacNeil]

I should be fascinated to know the size of the changes in welfare spending that the right hon. Gentleman would find destabilising. The hon. Member for Gainsborough (Sir Edward Leigh) said yesterday:

“the Scottish Parliament spends £37 billion and raises £30 billion”.—[Official Report, 29 June 2015; Vol. 597, c. 1234.]

He described that as “quite responsible”. He also said that the UK raised staggeringly more—£648 billion, an amount that is about 20 times greater—but, of course, the UK also spent a great deal more, with a black hole of £732 billion. Given those figures, and given the difference between the sizes of the states of Scotland and the UK, in terms of both spending and raising powers, just what type of changes does the right hon. Gentleman think would have to hit welfare before it began to destabilise the Union? I suggest that it would be necessary to make a millionaire of each and every unemployed person before that point was reached.

[John Redwood]

I do not think that it would be necessary to go that far. At present, there is clearly a disproportion between the size of Scotland and that of the rest of the United Kingdom, and, as the hon. Gentleman’s budget figures show, a lot more money is collected elsewhere than in Scotland. That, however, is not the point at issue. [Interruption.] I am not asserting anything; I am just asking a question. We are engaging in a crucial debate on how much welfare power should go to Scotland. I am one of those who agree that some welfare power should go to Scotland in accordance with Smith, but we have to ask how far it goes, and what the consequences might be.

If countries have a common work area and a free movement area, and if they share a language, a labour market and a currency, that arrangement can bring benefits when it has settled down, because it is backed by political union. When we start to unpick the political union, we must ask ourselves at what point that unpicking of that union, or the welfare transfer union, will become damaging. A point will be reached when it does become damaging, because one part of the country will be too attractive, or too unattractive, compared with another part. A single currency area as big as the United Kingdom can work only if there are fair systems for raising money from the rich, wherever they may be in that big area, and giving enough to the poor, wherever they may be.

[John Redwood]

I fully understand the arguments against the spare room subsidy, or the bedroom tax. I understand the politics of it only too well. I do not want to go into my private views now, but it is a matter to be settled within the Union Parliament, and by the Government of the Union, under current powers. It does not make good law to say that if there is a particular benefit that people in Scotland do not like very much, that is the one that we should be able to fix. We need to come up with a settlement for a longer-term period which takes account of the principles.

It is for that reason that I am presuming to spend just a few minutes reminding colleagues that very big principles are involved in this instance. We need to secure the right balance, one that enables Scotland to feel that it can make enough of its own decisions to meet the mood of the majority, but falls short of giving it so much power that the Union’s mechanisms for switching money around do not work. I find it very difficult to make decisions on this Bill without knowing what the financial settlement will be, because it will not work unless there is enough money to make it work, or if England does not think that it is fair to them. Scotland may well find that the financial settlement is not fair to them—I am sure our SNP colleagues will not be shy if that is the case—but England has delivered big majorities for me and many of my colleagues, so we have a mandate and a voice and we need to make sure that the financial settlement that emerges is fair to us. The range of powers that Scotland has will have a bearing on that settlement.

[Mr MacNeil]

I thank the right hon. Gentleman for giving way; he is being very kind. On welfare, we already share a common language with a country in the common travel area, namely the Republic of Ireland, where people can get up to €188 per week, with extra payable for those who have children. I am not saying that people are going from Liverpool or the north-east of England to a far more advantageous situation in the Republic of Ireland in the common travel area—which they could do—so I think that the right hon. Gentleman’s fears are misplaced. I would almost suggest that his fears are politically motivated and based on wanting to keep powers in Westminster and a deep psychological need for Westminster to over-control aspects of people’s lives around the current UK.

[John Redwood]

I am afraid that that is a bad example, because it proves my case. Ireland broke from the pound, set up its own currency and then, unfortunately for Ireland, chose the euro, but that was Ireland’s decision and it has had a bumpy ride ever since.

The big difference we need to remind ourselves about for the purposes of this welfare debate is that there is a common currency, so there have to be some limits to the amount of freedom appropriate for welfare benefits. If the SNP wishes to be truly independent and wants an independent currency, I fully understand its position and none of these arguments makes any sense.

I think I have made my point and I hope that Ministers will bear it in mind that it is very difficult to come to a conclusion before we know what the financial settlement will be. It is also very important to remember that there is a common work, language and currency area, which means that there has to be some family resemblance in the benefits that are paid.

--- Later in debate ---

[Sir Edward Leigh (Gainsborough) (Con)]

I should like to speak to new clause 55. The explanatory statement tells us:

“This new Clause would remove from the list of reserved matters in the 1998 Act (and so transfer to the Scottish Parliament) all social security schemes, including National Insurance and housing benefit, as well as child support, occupational and personal pensions and war pensions.”

These are complex matters, as I said yesterday, and I have tabled this probing amendment to elicit from those on the Government Front Bench their thoughts on this vital matter.

I shall start by making a controversial statement. I believe that, by dribbling out powers—that is not my own phrase, but one given to me by one of my Scottish friends; I still have one or two left—we are giving the Scottish National party a crowbar with which to blast the Union apart. This Parliament is giving the SNP just enough purchase on that crowbar by giving it just enough powers to feed a sense of grievance. If we were to give the Scottish Parliament full responsibility for social security, it would be difficult for it to feed on that grievance. It would have to be a responsible Parliament and take responsible decisions, and I am confident that it would do so.

My amendment would place all social security within Scotland, including pensions, in the hands of the Scottish Parliament. Scotland has a more ageing population than the UK as a whole, and immigration there is much lower—I never understand why, but apparently it is—so Scotland will need a needs-based formula to protect the pensions of Scottish people. That is precisely the argument I have been using in these debates. A needs-based formula that buttressed a Scottish Parliament with full fiscal autonomy would sustain the Union. I would therefore replace the Barnett formula with such a needs-based formula to protect the pensions of Scotland’s ageing population. That is where I am coming from.

We are not very far into this Parliament, yet already I feel that I might be wearying my colleagues by making the same point over and again. However, it is an important point to make. There are not a huge number of my colleagues present in the Chamber today, but I recall from reading my history books that during the debates on what was to become the Government of India Act 1935, the House of Commons debated the Bill day after day. In those debates, people such as Brendan Bracken, Harold Macmillan and Winston Churchill made the point over and again that dribbling out powers to India would destroy the connection between India and the United Kingdom. Very few people listened to them. I do not claim to be in the same league as them, but I believe that this debate is extremely important. It is important to understand that we could destroy the Union by not getting this right, and we must debate that contention.

[Mr MacNeil]

It is interesting to hear the hon. Gentleman talk about the angst over the connection with India that was palpable in the Chamber during those debates. Does he agree that the angst—admittedly, there is not much on the Labour and Tory Benches today, given how few of their Members are here—that will be created by the Government’s voting against the wishes of the 95% of Scottish MPs who want to achieve x, y and z in the Scotland Bill will go away some day, when the powers go out from this place? At that time, English Members will need to worry only about matters that relate to England, rather than about those that relate to Scotland.

[Sir Edward Leigh]

I think we have to act responsibly and to remember that, unfortunately, only three Unionist MPs are left in Scotland. The SNP has won a notable victory in Scotland and needs to be listened to—we do not always have to agree, but we have to listen. Ultimately, I am as passionate a Unionist as anybody on these Benches, but I believe that there is a better route to maintaining the Union. If we dribble out these powers, we are making a grave mistake.

Let me deal with the point that if we have a single currency system we must have a common welfare system. That is a perfectly respectable point and I completely understand it. It was made by my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) in the debates two weeks ago and has been made extremely well by my right hon. Friend the Member for Wokingham (John Redwood). I understand where they are coming from, and we are all very much aware of the Greek situation, but I would argue that the comparison is misplaced: the difference between Germany and Greece is infinitely greater than that between England and Scotland. In the United States, full fiscal autonomy for the states works because there is a common English language and full mobility of labour. When there are disparities in wealth, labour moves around the United States in a very vigorous way that is difficult to achieve in the European Union.

The comparison of Scotland and England with the Netherlands and Germany is much more apposite. We have a common language, a common border and very similar systems, albeit separate legal systems—although they are based on many of the same traditions. Members can understand the point that I am making. Of course, if the Scottish Parliament was to act completely irresponsibly and take control of its social security and just spend, spend, spend, the thing would break apart; I agree that the currency union would become unsustainable. But surely as parliamentarians, with confidence in our own Parliament and elected representatives, we should have the same confidence in our fellow countrymen and ladies who will be running the Scottish Parliament. I personally believe that if we gave them full responsibility, they would have to act responsibly if they wished to be re-elected.