Scotland’s Fiscal Framework

Angus Robertson Excerpts

Wednesday 24th February 2016 Commons Chamber

[David Mundell]

I am very happy to give my right hon. and learned Friend the assurance he seeks. The Scottish fiscal framework will be consistent with the UK fiscal framework.

[Angus Robertson (Moray) (SNP)]

May I begin by thanking the Secretary of State for advance sight of his statement and indeed for the conversations he had yesterday, given the constraints of parliamentary time and being able to make a statement only today? We appreciate his having done so.

I speak on behalf of all Scottish National party Members in welcoming the agreement on the fiscal framework, and we all look forward to the draft heads of agreement being published for parliamentary scrutiny in this place and in the Scottish Parliament later this week. My SNP colleagues in the Scottish Government were clear throughout these protracted negotiations that they would not sign a deal that included a threat to the Scottish budget. Members on the SNP Benches here, too, pursued the UK Government’s commitment to the principle of “no detriment”, a promise made during the Smith commission negotiations and a promise that the SNP has ensured has been delivered.

When negotiations began, Scotland’s budget faced a threat from the Treasury of a cut of £7 billion. This week, it was £3 billion, and yesterday morning it was £2.5 billion, but last night my colleagues in the Scottish Government secured a deal that will ensure that Scotland will not be a pound or even a penny worse off, and that the new powers that were promised will be delivered. I pay tribute to the First Minister, Nicola Sturgeon, and the Deputy First Minister, John Swinney, for their efforts to stand up for Scotland and for being stronger for Scotland.

I welcome the fact that the UK Government will guarantee that the outcome of the Scottish Government’s preferred funding model—the per capita indexed deduction—is delivered in each of the next six years. I understand that a transitional funding arrangement will be reviewed following the UK and Scottish parliamentary elections in 2020 and 2021 respectively. The review will be informed by an independent report, with recommendations presented to both Governments by the end of 2021. In that context, let me say this: the Smith report was crystal clear that the fiscal framework had to be agreed by both the UK and Scottish Governments. The Treasury tried to engineer an agreement that would have allowed it to impose a model of indexation in five years’ time—those are the facts of the matter. That would have seen billions cut from Scotland’s budget. Let me therefore ask the Secretary of State the following questions: will he confirm that the Treasury no longer has the power to impose a method of indexation? Will he confirm that the review will go ahead without prejudice to the outcome? And will he confirm that there is no default indexation option and that the Scottish Government’s agreement is required before any new indexation model can be adopted?

[David Mundell]

I thank the right hon. Gentleman for welcoming the parts of the agreement that he did. This has been a negotiation, and this is the point arrived at in the agreement; it is not possible for the Treasury or the UK Government to have engineered an agreement, as what was needed was the agreement of the Scottish Government, and that is what has been achieved. The two parties have been able to reach an agreement on a fiscal framework that is both fair to Scotland and fair to the people of Scotland.

I can reassure the right hon. Gentleman that the review will go ahead on an independent basis, without prejudice or a predetermined outcome, and it will be concluded by the end of 2021. There will be no imposition of any formula at the end of that period, and what happens will be by way of agreement. As I said in my previous comments, when I quoted what Lord Smith said, I believe that this process, through some of the most difficult types of negotiation, gives us confidence that in a maturing relationship the UK Government and the Scottish Government will be able to reach such an agreement.