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]

Oral Answers to Questions

David Mundell Excerpts

Wednesday 25th February 2015 Commons Chamber

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

3. What discussions he has had with the Scottish Government on practical steps to encourage employers to pay the living wage.

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

I have regular discussions with the Scottish Government on a range of employment issues. The UK Government support businesses that choose to pay the living wage, where that is affordable and does not cost jobs.

[Jim Sheridan]

I thank the Minister for that response, which seems somewhat aspirational rather than ambitious. He will be aware that the Scottish Government at Holyrood refused to support the call for a living wage that was put forward by Labour in Scotland. Will he follow the example set by my local Labour-controlled Renfrewshire council, which has not only introduced a living wage, but used the procurement process to encourage its suppliers to pay the living wage?

[David Mundell]

There are excellent examples of local authorities taking forward initiatives with the living wage, and South Lanarkshire council is one. Perhaps the hon. Gentleman heard the speech that my colleague, Ruth Davidson, made to the Scottish Conservative conference on Friday in which she called for help and support for businesses that promoted the living wage. I hope Scottish Labour and the Scottish Government will support her in that regard.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

A Labour Government will ban the use of exploitative zero-hours contracts, which leave people not only not making the living wage, but unable to make a living on the minimum wage. Why will this Government not do the same?

[David Mundell]

The hon. Lady forgets that there was actually a Labour Government up until five years ago who took no action whatever on zero-hours contracts. This Government have banned exclusivity in zero-hours contracts, which is what leads to exploitation.

[Margaret Curran (Glasgow East) (Lab)]

This Government are constantly making claims about new jobs that have been created in Scotland since the last election. Of those new jobs, what proportion have been in low-paying industries?

[David Mundell]

Since this Government came to power, 107 jobs a day have been created in Scotland. I am afraid that the hon. Lady has had a memory lapse, because she cannot remember the position on employment when this Government came to power and she cannot accept the good news of the creation of new jobs.

[Margaret Curran]

What I do remember is that the Labour Government implemented the minimum wage in the face of opposition from the Conservative party. According to new research from the House of Commons Library, 82% of these new jobs are in the low-paying sectors. That news comes days after the TUC revealed that one in five workers in Scotland is paid below the minimum wage. Just this morning, the Office for National Statistics revealed that 28% of workers are on zero-hours contracts. This Government stand up for the wrong people: they help out their friends who have been avoiding their taxes, yet they do not help those who work hard and play by the rules, but do not even get a decent wage in return. Will the Minister take any action in what remains of the last days of this Government to help ordinary working people to get a decent wage, or is the only hope is that in 71 days’ time, we get rid of this out of touch Government and get a Labour Government who will put working people first?

[David Mundell]

The hon. Lady could start by endorsing Ruth Davidson’s proposal to incentivise the paying of the minimum wage, and that is actually a fact, not rhetoric. As I have told the hon. Lady on numerous occasions, if she has evidence of people not being paid the minimum wage, she should bring that forward. Yesterday, the Government did something the Labour Government never did: we named and shamed 70 companies, including some in Scotland, that do not pay the minimum wage. What she should be celebrating is the fact that this Government have delivered 107 jobs a day in Scotland, 1,645 of which are in her constituency, as can be seen from the drop in jobseeker’s allowance claimants.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

6. For what proportion of participants in the Work programme in Scotland job outcome payments have been made to providers of that programme.

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

Work programme participants are some of the hardest to help and can experience multiple barriers to finding work. There are two providers in Scotland: Ingeus has supported 21.2% of all claimants into a job outcome; and Working Links has supported 20.4% of claimants into a job outcome.

[Sheila Gilmore]

The Work programme has performed worse in Scotland than in any English region. In the meantime, successful local projects such as the Engine Shed in my constituency have had to close. Does the Minister agree that powers over this should be devolved as quickly as possible—and not just to the Scottish Parliament, but to local authorities?

[David Mundell]

I certainly agree that the Engine Shed was a great project. I have made it clear to the Deputy First Minister that if proposals are brought forward after the election for the devolution of the Work programme, separate from other items to be devolved, I would have an open mind about that.

[Mary Macleod (Brentford and Isleworth) (Con)]

Thanks to this Government, those helped into employment though the Work programme do not have to pay income tax on the first £10,000 they earn. Does the Minister agree that that represents progress towards economic growth in Scotland and opportunities for its young people?

[David Mundell]

Absolutely. Some 32,620 people in Scotland have found work through the Work programme, which means they can bring home a wage, support their family and play a part in their wider community.

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

By any measure the Work programme has been a failure. It has wasted public money and let down the people depending on it. When will the Government listen to not only the Smith commission, but the dozens of civil society organisations in Scotland that have called for employment support to be devolved so that we can develop an integrated system in Scotland that actually works?

[David Mundell]

I do not think that the 32,620 people who have found work through the Work programme would agree with the hon. Lady’s assessment. It is now time for her party to come forward with its proposals for an alternative to the Work programme, rather than just criticising the Government and calling for more powers. This Government have given a commitment to effect a transition to such a programme, but first we need to know what it will be.

[Jim McGovern (Dundee West) (Lab)]

11. The Work programme is obviously failing in my constituency and in the city of Dundee as a whole, where only one in seven participants actually get a job. What will the Minister do to address that problem?

[David Mundell]

I fully acknowledge that the hon. Gentleman has been a fervent campaigner on this issue—and, indeed, on employment—in his constituency, but I am sure that he welcomes the fact that over the past five years, under this Government, the number of jobseeker’s allowance claimants in his constituency has gone down by 842—some 27%.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

9. Unemployment in the Motherwell, Wishaw and Bellshill area rose again last month, with more than 500 young people now unemployed. Why has the Tory Work programme failed them?

[David Mundell]

I absolutely dispute the claim that the Work programme has failed them. The Work programme looks to help the most vulnerable people into work, and people have moved into work over the past five years in the hon. Gentleman’s constituency, where the JSA claimant count has come down by 1,403—some 39%. I am sure that even he welcomes that.

--- Later in debate ---

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

8. What discussions he has had with Scottish Government Ministers on the co-ordination of programmes to dual the A1.

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

The provision of road transport in Scotland is a devolved matter. Department for Transport Ministers did, however, offer to work with Transport Scotland on a joint feasibility study on dualling the A1. The Scottish Government chose not to take up that offer.

[Sir Alan Beith]

Now that this coalition Government have committed £290 million to dualling the A1 on the English side of the border, should not the SNP Government in Scotland bring forward plans to dual remaining single carriageway sections on the Scottish side of the border?

[David Mundell]

I agree with my right hon. Friend. He may be aware that my colleague John Lamont MSP has been making exactly that call.

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

As we await the dualling of the A1, has the Minister heard of the success of the average speed cameras on the A9? Accidents have been cut by 97%, speeding is down by 90% and the road experience has been totally transformed. Will he now get his right hon. Friend the Chief Secretary to the Treasury to abandon his reckless and irresponsible campaign to take those cameras down and put my constituents at risk once again?

[Mr Speaker]

Order. I think I was very generous. The hon. Gentleman started banging on about the A9, rather than the A1, but we will let him off on this occasion.

[David Mundell]

It is worse than that, Mr Speaker. We constantly hear complaints from the hon. Gentleman about this place intruding into the affairs of the Scottish Parliament, and yet he raises an issue that is solely the responsibility of the Scottish Parliament.

Draft Scotland Clauses

David Mundell Excerpts

Thursday 22nd January 2015 Commons Chamber

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

With permission, Mr Speaker, I wish to make a statement to the House about the further devolution process in Scotland and the publication of draft clauses to implement the Smith commission agreement.

The draft clauses published today deliver a substantial package of new powers to the Scottish Parliament. We are publishing ahead of the Burns night deadline, demonstrating the Government’s commitment to honouring the vow made to the people of Scotland during the referendum and meeting the timetable we set out during the referendum to deliver further powers to Scotland.

The referendum on independence on 18 September 2014 saw Scotland vote decisively to remain within our United Kingdom family of nations, retaining the strength, security and stability of being part of the UK. But the Scottish people did not vote for no change. During the referendum campaign, the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition, made a joint commitment to deliver more powers to the Scottish Parliament.

The Smith commission, chaired by Lord Smith of Kelvin, was the result of that commitment. All five main parties in Scotland came to the table and reached agreement on the proposals for further devolution to Scotland within the United Kingdom. The Government welcomed the fact that this was the first time that all of Scotland’s main parties had taken part in a process to decide the future of devolution. This landmark agreement was signed by all five parties. I am grateful to Lord Smith and the members of the commission for their work.

The commission’s heads of agreement were published on 27 November and the Government committed to bring forward draft clauses to implement the agreement by Burns night, 25 January. This was a challenging timetable, but, by publishing a Command Paper and draft clauses today, I am pleased to say that the Government have delivered on their commitment in advance of that deadline.

The clauses published today will make it possible quickly to translate the Smith commission agreement into law at the beginning of the next Parliament. The draft clauses provide for an already powerful Scottish Parliament to become further empowered and more accountable to those who elect it. As a result, the Scottish Parliament will become one of the most powerful devolved Parliaments in the world.

I will begin with the constitutional measures. The biggest transfer of powers to the Scottish Parliament and Scottish Minsters since the start of devolution comes with greater flexibility for the Scottish Parliament and the Scottish Government to manage their own arrangements, with statutory recognition of the enduring place of a Scottish Parliament in the UK’s constitutional arrangements. Our commitment to the process has already been evidenced by the steps the Government have taken to enable the Scottish Parliament to extend the franchise to 16 and 17-year-olds in time for the 2016 Scottish Parliament elections, with an order now laid before both Parliaments.

On the fiscal framework, the package gives greater financial responsibility to the Scottish Parliament with an updated fiscal framework for Scotland, consistent with the overall UK fiscal framework. As the Smith commission agreement set out, the new fiscal framework will be agreed and implemented jointly by the UK Government and the Scottish Government through the Joint Exchequer Committee, with suitable engagement with both the UK and Scottish Parliaments. For the first time, more than 50% of the money spent by the Scottish Parliament will be funded by the Scottish Parliament. This is an important step that builds on the measures brought forward by this Government in the Scotland Act 2012 and further increases the financial accountability of the Scottish Parliament to the people of Scotland.

Under the tax clauses, Scotland will receive extensive new tax powers without losing the essential elements of our unified tax system that support the single market and make the UK such an attractive place to do business. The Scottish Parliament will be given the power to set the rates of income tax and the thresholds at which these are paid for the non-savings and non-dividend income of Scottish taxpayers. This is the most significant tax in Scotland and a powerful redistributive tool.

The first 10 percentage points of the standard rate and the first 2.5 percentage points of the reduced rate of value added tax will be assigned to the Scottish Government. This means that the Scottish Government will retain half the VAT revenue generated in Scotland. The clauses also give the Scottish Parliament the power to charge a tax on air passengers departing from Scottish airports and on commercial exploitation of aggregate in Scotland.

The welfare clauses provide for key welfare measures to be designed by and delivered in Scotland. The Scottish Government will be responsible for a number of benefits, including those for disabled people and carers. Issues relating to long-term unemployment will be tackled with specific consideration of local circumstances. As set out by the Smith commission, universal credit will remain reserved, but the Scottish Government will have certain flexibilities, including the power to vary the housing cost element. Scotland will continue to share the benefits and strengths of the UK-wide system for pensions, labour market benefits and Jobcentre Plus.

Additional clauses build on the already significant powers of the Scottish Parliament and Government in a range of other policy areas. To give a few examples, there are new powers for the licensing of onshore oil and gas extraction, powers to introduce gender quotas in respect of public bodies in Scotland, and powers to police the railways. Together, these clauses give greater responsibility for more decisions affecting Scotland to be made in the Scottish Parliament and paid for by revenue raised by the Scottish Parliament.

Later today, the Prime Minister and ministerial colleagues will host an event in Edinburgh to present the Command Paper and clauses to representatives of civic Scotland. This will signal the next phase of the work.

The clauses are presented today in draft. They will require further preparation to make them ready for their introduction in a Scotland Bill in the next Queen’s Speech. It has become clear that this legislation will be taken forward by whoever leads a Government after the general election. To get the clauses fully ready, the Government wish to engage with experts from civic Scotland. We are also committed to engaging with the Scottish Government and Her Majesty’s Opposition ahead of finalising the clauses for introduction. Questions of commencement and implementation will need to be answered, and in order to do this we will need to understand what the Scottish Government intend to do with the new powers. It will be necessary for the fiscal framework to be agreed alongside the introduction of the Scotland Bill.

Lord Smith made further observations to which we need to pay heed. In some areas, he recommends further devolution from the Scottish Parliament to local authorities in Scotland. He also recommended better working between the two Governments and the two Parliaments.

The Command Paper and draft clauses provide for a responsible and accountable Scottish Parliament inside a strong United Kingdom. By publishing ahead of time, the Government are demonstrating that they are meeting their guarantee to the people of Scotland. The clauses ensure a set of proposals that do not cause detriment to the UK as a whole or to any of its constituent parts.

The Government remain committed to ensuring that Scotland and the whole of the United Kingdom continue to prosper from our single domestic market, our social union, and the strength that comes from the pooling and sharing of risks. People in Scotland made it clear that they want to keep the advantages of a UK pound, UK pensions, UK armed forces, and a strong UK voice in the world. These clauses allow that to happen.

This is the package that Scotland voted for, it is what all parties in the Smith commission process signed up to, and it is what this Government are delivering today. I commend this statement to the House.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I thank the Minister for advance sight of his statement.

Today we mark another milestone in the delivery of the vow made to the people of Scotland before the independence referendum in September. The timetable set out by my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) during the referendum campaign has now been exceeded at every stage, with a Command Paper on the process towards further powers just 25 days after the referendum; the conclusion of the Smith commission and agreement by all five of Scotland’s political parties before St Andrew’s day just 10 weeks after the referendum; and today, ahead of schedule, just 18 weeks after the referendum, the draft clauses that will form the basis of the next Scotland Bill.

Before I turn to our response to the draft clauses and the Command Paper laid before the House, I want to provide an absolute guarantee from the Labour Benches. As my right hon. Friend the Leader of the Opposition has made clear on a number of occasions, the powers agreed by Smith will be delivered, and the next Labour Government will include a new Scotland Bill in our first Queen’s Speech. Labour created the Scottish Parliament in 1999, we supported more powers for the Parliament in 2012, and we will create a powerhouse Parliament with these new powers when we are in government.

Labour made it clear at the outset of the Smith commission process that we wanted a settlement that, first, respected the outcome of the referendum, namely a strong Scotland inside a UK where we pooled and shared risk; secondly, moved the maximum possible power from Westminster to the Scottish Parliament; and, finally, did not make Scotland worse off.

We are satisfied that the Smith commission delivered that outcome and we can say with confidence that with these clauses we will be delivering home rule—the full powers that Scotland needs. As the Command Paper notes, the powers the clauses will confer on the Scottish Parliament will mean that it will control about 60% of spending in Scotland and retain about 40% of Scottish tax. That will make it the third most powerful devolved Assembly in the OECD.

Before I turn to the detail of the clauses, I wish to press the Minister on two areas that I hope he will address in his reply. The Command Paper makes explicit reference to the Barnett formula and the agreement of all five parties during the Smith commission to its continuation. Can the Minister provide any more clarity about how the adjustment to the block grant will take place and how discussions with the Scottish Government to agree that are progressing?

I also wish to press the Minister on an item on page 40 of the Command Paper, which reproduces the following commitment from Smith:

“MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including Income Tax.”

Given the Chancellor’s comments at the Treasury Committee on Tuesday, can the Minister provide an absolute reassurance that that part of the Smith agreement will be respected, as it is not addressed in the paper?

I now wish to turn to the detail and the precise powers that the clauses will confer specifically over job creation, tax and social security. The clauses confer full power over income tax and a number of other taxes. We welcome the clarity provided by the Command Paper on the areas to be devolved. We welcome the extension of powers over VAT, which go further than the proposals of the Smith commission, but will the Minister explain why that change was made?

On welfare, the clauses will transfer extensive new powers on the Scottish Parliament, including powers worth £2.5 billion for welfare spending and the powers to create new benefits. Will the Minister confirm that the clauses as drafted respect the spirit and the letter of the Smith agreement and allow the Scottish Government to create new benefits? Will he also explain the process that will now be undertaken to examine in more detail the consequential arrangements to adjust the Scottish block grant to reflect what will now be devolved to the Scottish Parliament?

On job-creating powers, my hon. Friend the Member for Glasgow East (Margaret Curran) has already raised with the Secretary of State, and at Scottish questions, our desire to see the job-creating powers of the Work programme passed to Scotland at the earliest opportunity. It continues to be our view that that could be achieved by using a section 106 order to transfer responsibility to the Scottish Government immediately. That would reduce any uncertainty about the effect of continuing contracts in Scotland and it would allow others to start to remedy the failure of this Tory Government’s Work programme in Scotland, which sees only one in five people into a job. Will the Minister consider again the introduction of those powers now?

Finally, I would welcome more clarity from the Minister on the devolution of the Crown Estate. Will he clarify the process that will be followed to determine the transfer scheme and how long it might take? Will he also explain how the Government will ensure that the Smith commission’s recommendation that the powers be further devolved to our island communities will be seen through? Many in our rural and island communities will want guarantees about the devolution of the Crown Estate and that the powers will be passed to the islands as both the UK and Scottish Governments promised during the referendum.

This is another milestone in Scotland’s home rule journey. The Smith agreement was the response to the call for change that we heard, and today one thing is clear: Scotland will have a powerhouse Parliament.

[David Mundell]

I very much welcome the hon. Gentleman’s commitment, and indeed that of his party both in Scotland and across the United Kingdom, to the implementation of the Smith commission proposals. The position could not be clearer: whichever party is in government after the next general election, the proposals will be taken forward in the Queen’s Speech.

The hon. Gentleman raised a number of issues. The Prime Minister, the Leader of the Opposition and the leader of the Liberal Democrats have made it very clear that the Barnett formula is here to stay. The discussions on the creation of the fiscal framework will have to take into account the additional revenue raised by the Scottish Parliament. It is very important for MPs from Scotland to make it clear to our colleagues that the Scottish Parliament’s additional ability to raise funds will not be in addition to the block grant that it receives, because an amount still to be calculated will be deducted from the block grant under the Barnett formula.

The hon. Gentleman raised the issue of VAT. The Smith commission clearly made a recommendation on the standard rate of VAT, and the Government feel that it is entirely consistent to apply the same recommendation to the lower rate—the 5% rate—of VAT. That will ensure that Scotland receives 50% of the revenue raised.

The hon. Gentleman raised several issues about the welfare proposals. We and the Scottish Government have established a joint welfare working group at ministerial level—I will co-chair it with Alex Neil, the Scottish Cabinet Secretary with responsibility for such matters—which will take forward some of the issues. I assure the hon. Gentleman that the Scottish Parliament will have full legislative responsibility for the Work programme. As I understand it—I will provide confirmation—my right hon. Friend the Secretary of State has already written to the hon. Member for Glasgow East (Margaret Curran) to set out why he and the Government do not believe that the section 106 route is the right way to transfer the programme. If the letter has not already been delivered, I will ensure that the hon. Gentleman receives a copy.

Of course we will proceed on the basis of good faith in relation to the Scottish Government and further devolution within Scotland. The hon. Gentleman will be aware that the Scottish Cabinet is coming to Dumfries on Monday, which will be a good opportunity for the Scottish Government to demonstrate that they are listening to people outwith the central belt of Scotland. I am sure that they will discuss the Crown estate, which is certainly an important issue in my constituency.

If I have not covered all the points made by the hon. Gentleman, I will write to him about those matters.

[Sir George Young (North West Hampshire) (Con)]

The coalition Government have moved with commendable speed to meet the aspirations of the Scottish people, and I welcome the statement. Does my right hon. Friend agree that the Government should now move with equal speed to meet the aspirations of the English?

[David Mundell]

As has already been made clear from the Dispatch Box, the proposals for Scotland are stand-alone proposals that will proceed whatever arrangement is reached for other parts of the United Kingdom. My right hon. Friend the Leader of the House has published a Command Paper setting out various options in relation to England, which I am sure will continue to be the subject of vigorous debate in the House.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

I, too, welcome the statement, and the production of draft clauses exactly to the timetable promised during the referendum. May I press the Minister on one matter on which he conspicuously did not respond to my hon. Friend the Member for Dumfries and Galloway (Mr Brown)? The Smith commission recommended that all Members of the House would decide on the Budget, which is all very well and good. That appears to have been accepted in the Command Paper, but it is entirely inconsistent with what the Chancellor and the Prime Minister have said during the past few weeks. Does the Minister accept that any future reforms will have to be fair, but must not undermine the fiscal integrity of the United Kingdom? If they did so, we would end up with all the restrictions we see in the eurozone, which no one in this country—north or south of the border—wants.

[David Mundell]

Nobody in the House, with the exception of one party, wants to see the fiscal nature of the United Kingdom undermined in any way, and my right hon. Friend the Chancellor most certainly does not. He has made it clear that as we move forward with the different settlement in Scotland, there will be elements of the Budget that do not apply to Scotland. Clearly it is appropriate, as there is a debate about the governance of England, to debate that matter too.

[Sir Malcolm Bruce (Gordon) (LD)]

My constituents in Gordon overwhelmingly rejected independence and declared their support for the United Kingdom. They will certainly welcome the statement. However, they are concerned that it is the responsibility of the Scottish Government to provide devolution within Scotland. The people of Gordon feel extremely let down by the Scottish Government, who have diverted resources and powers away from them, leading to a crisis right across our public services.

There is also an abuse of the term “home rule”. Apparently, to the SNP it means everything except foreign affairs and defence, which means that it does not address the single currency, the single market or the single welfare system. In other words, it means independence. Nobody should be in any doubt that voting for the SNP is voting to break up the United Kingdom.

[David Mundell]

I certainly agree with the right hon. Gentleman’s final statement. We have to move the debate on, so that it is a debate about what the powers of the Scottish Parliament are used for, rather than a debate about powers, which always seems to be predicated on blaming someone else for the lack of action by the Scottish Government. I hope that today will be a watershed and that the debate in Scotland will be about what the Scottish Government are doing with the extensive powers the Scottish Parliament has and those that it is going to receive.

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

How come the UK austerity parties are so far behind the curve when it comes to more powers for the Scottish people? The Scottish people thought that they were getting real home rule, as the right hon. Member for Gordon (Sir Malcolm Bruce) described it, or “almost federalism”, which is the phrase that was used. Instead, we have this veto-ridden document. Is not the only way the Scottish people will get the further powers they want to have more SNP MPs? That is why we are at 52% in the polls.

[David Mundell]

I could not disagree more with the hon. Gentleman, but he would not expect it to be otherwise. Some of the questions that he has raised today and on other occasions need to be addressed to John Swinney and Linda Fabiani, who were the SNP members of the Smith commission. If these powers were so important to them, why were they not deal-breakers in reaching the Smith agreement? Instead, they signed an agreement at 8 o’clock one night and at 8 o’clock the next morning, they set about deriding it. This agreement is what the people of Scotland voted for by a significant majority. More than 2 million people in Scotland voted for a Scottish Parliament with more powers, and that is what the draft clauses deliver.

[Mr Andrew Tyrie (Chichester) (Con)]

It is right to honour the vow and I warmly welcome the Minister’s announcement. Does not the big increase in devolved powers from this place to Scotland that is embodied in the announcement highlight the need finally to address the West Lothian question? It cannot be right that Scottish MPs should continue to vote on English-only issues and laws in such circumstances. The English and the Welsh need more than a say. Is it not necessary, in order to buttress the Union as a whole, that they have the power to decide whether such a measure is acceptable to them?

[David Mundell]

I absolutely agree with my hon. Friend, and I think that most people in Scotland would agree with his sentiments. However, it is always important to make it clear in such discussions in this Parliament, in case they are misrepresented, that this is a stand-alone package of measures that will be implemented regardless of where the debate in England, Wales and Northern Ireland goes.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

May I ask the Minister about pensions and benefits? Will he confirm that, under the Smith commission’s proposals, although the pensions system is being reserved, which will provide a floor level for pensioner income in Scotland, things like the winter fuel payment are being devolved, which will effectively allow the Scottish Parliament to double pensioner incomes in Scotland, if it is willing to pay for it? Similarly, will he confirm that the Scottish Parliament will be able to increase every welfare benefit in Scotland through the use of discretion, should it wish to do so, because some benefits are being devolved entirely and those that are not being devolved will have a floor level set by the United Kingdom, meaning that it will be entirely up to the Scottish Government whether they wish to make the money available to double, treble or quadruple any of those benefit levels?

[David Mundell]

I agree with the hon. Gentleman. If he refers to pages 50 and 49 of the Command Paper, he will find a good summary of the benefits for which full responsibility will be devolved to the Scottish Parliament, and of the measures related to universal credit. Although universal credit will remain reserved, as was agreed by all five parties to the Smith commission, the housing element will be subject to Scottish Government engagement.

The hon. Gentleman is right that with their new powers, the Scottish Government will now have a responsibility and will need to explain whatever decisions they take to the people of Scotland.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

May I, too, commend the Government for publishing the clauses and making this statement? The Smith commission recommendations, if properly enacted, are a blueprint for home rule delivered, and the clauses will ensure that. However, the devil is always in the detail, and it will require good will to work through the process in the coming months and ensure that the recommendations are properly enacted. What will the Government do to ensure that there is good will from all parties in the process, so that we do not have a jam further down the line, which the Scottish people would never forgive?

[David Mundell]

I assure my right hon. Friend that I am personally committed to that good will, and the recent meetings that I have held with Alex Neil to discuss welfare matters, for example, have been extremely constructive. The Prime Minister is meeting the First Minister today, which I am sure will also be a constructive dialogue, and the Secretary of State is in almost constant dialogue with the Deputy First Minister, who has responsibility for constitutional matters. Scottish Government and UK Government officials also work extremely well together. I give my right hon. Friend the undertaking that we are committed to delivering not just the letter of the Smith commission proposals but the spirit of them.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The extensive income tax powers that are to be devolved to the Scottish Parliament will give Scotland the opportunity to make different decisions on taxation. The Scottish Labour party is committed to restoring the 50p rate of income tax for those earning more than £150,000 a year. Will the Minister join the Scottish Labour party in supporting that policy, putting some clear blue water between the Conservative party and the SNP, which refuses to support the restoration of the 50p rate?

--- Later in debate ---

[David Mundell]

I thought the hon. Gentleman was asking me to join the Scottish Labour party, which I understand I can do for just £1 at the moment. Although I do not seek to endorse any particular policy of the Scottish Labour party, I welcome a debate on these issues in Scotland. We need a debate on the use of the powers and the difference they can make in Scotland, not simply a debate on the powers themselves.

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate the Government on delivering this significant package of powers ahead of schedule, which will bring about a powerful Scottish Parliament. Will the Minister confirm that the Government have completely rejected the submission that the SNP made to the Smith commission to replace the Barnett formula with disappearing oil revenues? It was revealed at a Scottish Affairs Committee hearing that if the black hole were made up purely out of income tax, it would mean a staggering 14p in the pound increase in Scottish income tax rates.

[David Mundell]

The Scottish Affairs Committee is to be commended for its work on the impact that the falling oil price would have on the figures given in the Scottish Government’s White Paper. My hon. Friend is quite right to highlight that black hole.

The position on the Barnett formula is quite clear: the Prime Minister, the Leader of the Opposition and the leader of the Liberal Democrats have made it absolutely clear that the Barnett formula will continue.

[Mr John Denham (Southampton, Itchen) (Lab)]

As a result of this statement it is much clearer what the governance of Scotland will be; it is much less clear what the governance of England will be, and which decisions will be retained at UK level. The paper produced by the Leader of the House before Christmas was inadequate and inconclusive. Is it time for a clear statement that considers all aspects of the governance of England, where power should lie, and how decisions should be taken?

[David Mundell]

It is to be welcomed that the referendum in Scotland and the Smith commission have brought about debate in England about governance within England, and that discussion is clearly ongoing. I do not accept the right hon. Gentleman’s comments about the Command Paper produced by my right hon. Friend the Leader of the House, as that is a significant part of the debate.

[Dame Anne Begg (Aberdeen South) (Lab)]

If 50% of the money spent by the Scottish Parliament will be funded by the Scottish Parliament, is it about time that an independent body, like the Office for Budget Responsibility, is set up in Scotland to ensure that spending is scrutinised properly? Is the Minister aware of whether the Scottish Government plan to publish a timetable of when the powers that they currently hold, or will receive, will be further devolved to local level?

[David Mundell]

The hon. Lady makes a good point, and I am sure that our counterparts will want to raise that issue in the Scottish Parliament to ensure that the Scottish Government set out a timetable for devolution. Of course a strong body—an equivalent to the Office for Budget Responsibility—is required, and I am sure that that will be discussed as we go forward with the fiscal framework.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Does the Minister accept that nothing in this decent and honourable document diminishes the standing of local government, given that local authorities deliver more, day by day, to ordinary people than the Scottish Parliament or even this House?

[David Mundell]

I absolutely agree, and I was appalled by the comments of Joan McAlpine MSP in relation to denigrating local government in Scotland. Local government in Scotland currently does an excellent job under very difficult circumstances. We need devolution within Scotland, not the ever-centralising nature of the current Government.

[Mr Mike Weir (Angus) (SNP)]

The Minister claims a substantial transfer of powers, but is it the case that many new powers, for example those regarding benefits or fuel poverty, remain subject to a veto by UK Ministers?

[David Mundell]

That is the hon. Gentleman’s almost inevitable interpretation. The position on consultation and working together is that the Department for Work and Pensions will continue to administer benefits and therefore clearly needs to work with the Scottish Government on that. The Scottish Government will have the capacity to take forward arrangements as they choose. [Interruption.] Perhaps we are already getting a flavour of what we will see continuing in Scottish politics—when the SNP does not deliver the promises on welfare that it makes to the people of Scotland, it will be somebody else’s fault.

[Pamela Nash (Airdrie and Shotts) (Lab)]

I remain concerned about some of the responses that the Minister has given to my hon. Friends, regarding MPs who represent Scottish constituencies voting with their colleagues across the UK on the Budget, including income tax. He said that there was a commitment to honour the wording and spirit of the Smith commission. The Smith agreement is explicit that that power will be retained, and many believe that that is necessary in order for Scottish people to be represented equally in this place with people across the UK. Will the Minister confirm whether the Conservative party will stick to the commitment in the Smith agreement and support Scottish MPs voting on the Budget, including income tax?

[David Mundell]

The hon. Lady obviously did not hear my response to the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling). As my right hon. Friend the Chancellor indicated earlier this week, the Budget will be framed in a different way after powers have been transferred to Scotland. It is wholly appropriate to hold a discussion and debate on matters that apply solely to England, or to England and Wales, about who makes decisions in that regard.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I would like to press the Minister slightly further on the response he gave to my hon. Friend the Member for Airdrie and Shotts (Pamela Nash). At some stage the Budget has to be taken as a whole entity, because it has implications right across the UK. It was clearly the intent of the Smith Commission that all Scottish MPs would have a vote on that Budget. Will the Minister give a simple yes or no answer: will that now happen?

[David Mundell]

I made that very clear in my previous answers. What I welcome from both hon. Ladies is a willingness to engage in the debate on which MPs should vote on which matters. It is disappointing that the Opposition more widely have not been prepared to engage with the Command Paper and the debate instigated by my right hon. Friend the Leader of the House. Let us have that debate on the governance of England and let us all make our contributions to it.

[Mr William Bain (Glasgow North East) (Lab)]

Can the Minister confirm that, with the proposals before the House today, if the Scottish Parliament chooses to introduce discretionary payments, which would effectively top up even reserve benefits such as unemployment benefit or employment and support allowance, that will be a decision purely for the Scottish Parliament and that this Parliament does not have a veto? Does he agree that these powers would make the Scottish Parliament one of the most extensive welfare Parliaments anywhere in the world?

[David Mundell]

Yes.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

I thought my ears were deceiving me when I heard the Minister say that there would be powers for gender quotas in public bodies in Scotland. That is excellent news, and something from which the rest of the UK would benefit. A popular measure is the devolution of air passenger duty, which is very important for Prestwick airport and has the potential to help it tremendously with the problems it has been having. Will the Government consider bringing that forward before the general election and giving those powers to Scotland now?

[David Mundell]

I certainly respect the hon. Lady’s championing of both gender issues and Prestwick airport. It is not practical, within the time scale of Parliament ahead of the general election, to introduce the necessary procedures to transfer air passenger duty. We are pressing ahead on a very, very tight time scale with the 16 and 17-year-old vote. I hope that as soon as we have a new Parliament, post general election, we will expedite all the measures in the clauses and have them in legislation as soon as possible.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Will the Minister confirm whether the clauses relating to rail mean that the Scottish Government will no longer be required to put rail services out to tender? Will he agree to meet me, and any other interested MP who wishes to see the railways in Scotland brought back into public ownership, to discuss whether that will be possible under the forthcoming legislation?

[David Mundell]

It will certainly be possible for the franchise in Scotland to be let to a public sector organisation. That was the basis of the agreement on the Smith commission to which the hon. Lady’s Labour colleagues signed up.

[Fiona O'Donnell (East Lothian) (Lab)]

May I say to the House that we will not hear MPs from the Scottish Labour party bleating about the fact that the Smith agreement went beyond our original submission, because we know how to put country before party.

The proposals give powers to the Scottish Parliament to build a fairer Scotland, an issue that was at the heart of the referendum debate. I want to ask the Minister about a particular aspect of that agenda—access to work support grants. I wrote to the Secretary of State for Work and Pensions about that at the beginning of December. There is no certainty in Scotland on how the assessment takes places—there are inconsistencies. Is the Minister proposing that support grants should be part of the settlement?

[David Mundell]

I will certainly speak to my right hon. Friend the Secretary of State to look at the position of the correspondence he entered into with the hon. Lady.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Government are currently rolling out the personal independence payment benefit throughout the UK, but PIP benefits will, of course, be devolved to the Scottish Parliament under these proposals. Given that we all know that the PIP system is already causing chaos and misery to many of our constituents, do the Government propose that the PIP benefits should continue to be rolled out in Scotland when, in a year or so, the matter will be devolved to the Scottish Parliament, which might want to do something different?

[David Mundell]

I have two points in response. First, that issue will be discussed at the first meeting of the joint ministerial group. Secondly, whatever happens to the current PIP regime, as we move forward on benefits, we need to have a clear idea of what the Scottish Government are proposing. The transition will be affected by what we are transitioning to, so on the devolution of benefits, it is very important for the Scottish Government to come forward with their proposals. None of us wants to see a UK system being switched off without a Scottish system in place.

[Sheila Gilmore (Edinburgh East) (Lab)]

Following on from that, one important thing that could be done over the next few months would be to get the involvement of many organisations—voluntary organisations, charities and so forth in the disability and carers sector, for example—in framing some of these ideas. Can the Minister tell me how these organisations are going to be involved right from the start, because I believe that they will have important insights into this work? They need to be convinced that this will give them—I believe it will—an ability to shape a much fairer welfare system.

[David Mundell]

The hon. Lady makes an excellent point. I have already discussed that with the Scottish Government, and it will form part of the agenda for the first meeting of the joint ministerial welfare group.

North Sea Oil and Gas (Employment)

David Mundell Excerpts

Tuesday 20th January 2015 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Streeter. I pay tribute to the hon. Member for Aberdeen North (Mr Doran) not only for securing the debate but for his well known support of the sector and, as his time in Parliament draws to a close, for his contribution to politics in the north-east over many years. I welcome his considered contribution. Many other Members also made valuable contributions. I apologise for the absence of the Minister for Business and Enterprise, my right hon. Friend the Member for West Suffolk (Matthew Hancock), who is currently overseas and would otherwise have responded to the debate.

[Mr Doran]

The Minister is apologising for the absence of his right hon. Friend; I should have noted the absence of my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who is with my right hon. Friend the Member for East Renfrewshire (Mr Murphy) in Aberdeen, but would otherwise have been here.

[David Mundell]

I echo the comments of all contributors, who pointed out the importance and timeliness of the debate, given the challenges faced by companies operating in the North sea and all those who work in the sector in the United Kingdom; that was emphasised by my hon. Friend the Member for Waveney (Peter Aldous) and the hon. Member for North Tyneside (Mrs Glindon).

The Government are committed to the long-term future of the sector in the North sea. We recognise that the sustained fall in oil prices presents real challenges for the sector. Announcements of job losses, such as those we have heard about this afternoon, are a real concern and particularly affect Aberdeen and the north-east. The effects will be felt not only in the north-east of Scotland and by big international companies, but by the hundreds of small and medium-sized businesses that are an integral part of the supply chain. Those businesses work across the UK to service the sector, and they play a role in the whole of the UK economy.

We are committed—I hope that the hon. Member for Glasgow North West (John Robertson) accepts this—to working in partnership with others. I welcome the tone of the contribution of the shadow Scottish Secretary, the hon. Member for Glasgow East (Margaret Curran). We are committed to working with the Scottish Government, local authorities and the industry to provide all we can for those affected by job losses. I will pursue the issue that the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) raised about the Department for Work and Pensions. My colleague, the Secretary of State for Scotland, has committed to participate in the First Minister’s jobs taskforce, which was announced last week, and the Aberdeen city council’s oil and gas summit in February.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I apologise to the Minister and the House for not being at the earlier part of the debate; I was at a Committee speaking about, among other things, the issue of autism.

As the Minister was referring to the supply chain and jobs that link to the wider oil industry, may I remind him that in my constituency 30,000 people work in the Bellshill industrial park, and many of them fit that description? All of them are asking for honesty and transparency about the flexibility of the oil market and the oil industry.

[David Mundell]

I certainly take that point on board; it reinforces the fact that this issue is resonant not only in the immediate area of Aberdeen, but in the whole of Scotland and the rest of our United Kingdom.

At the PILOT meeting in London last Tuesday, industry leaders expressed real concern, but recognised the need and opportunity to work collectively with Government to introduce a range of efficiency measures that would help them through the downturn and ensure that the industry was stronger in the longer term. The right hon. Member for Gordon (Sir Malcolm Bruce) made the point strongly that the industry could emerge fitter from this time, without the necessity for sustained job losses.

The sector is a vital economic asset—one that supports growth and investment and one that we will do all we can to support. There are other events in Parliament today, one of which was the Chancellor’s appearance before the Treasury Committee. Given the signal that was asked for, he has made it very clear that he will take further steps in the Budget. As we heard in the debate, Sir Ian Wood and others in the industry have indicated that they think the Budget is the right time to take such steps. I do not think that that message could be clearer. I will undertake to convey the comments and thoughts of everybody who took part in today’s debate directly to the Chancellor, and I am sure that he and the Prime Minister will continue to engage directly with the industry.

The Government have already taken action in a number of areas. Our recent headline cut of the supplementary charge from 32% to 30% sent an important signal, as some contributors have mentioned, that the North sea is open for business. Last year, we commissioned Sir Ian Wood, one of the world’s foremost industry experts, to examine how we could maximise the North sea oil and gas industry economic recovery. Without being unduly partisan, I am very pleased to hear Sir Ian being lauded again for his contribution to the oil industry; only a few months ago, some people—I do not think they are in this room—were deriding him because he said he did not feel independence for Scotland was in the industry’s best interests.

On this matter, Sir Ian’s response is twofold: get the right regulator in place and get the right fiscal regime. The Government have moved fast to implement his recommendations. We have set up the regulator in the form of the Oil and Gas Authority. It will be up and running this year and based in Aberdeen, under the expert stewardship of Andy Samuel. Since starting in his role as chief executive at the beginning of the year, Mr Samuel has been working at pace to ensure that the authority will be ready to start operating effectively by the beginning of April.

Last week, in light of the recent falls in global oil prices, the Secretary of State for Energy and Climate Change asked Andy Samuel to accelerate work with industry to identify key risks to oil and gas production in the UK continental shelf and what further measures might be taken by Government and industry to mitigate them. In addition, we have carried out the oil and gas fiscal review to examine how we can build on the success of our existing field allowances and put in place a regime that is internationally competitive.

The oil and gas industry has acknowledged that our system of allowances has been transformational in incentivising North sea investment. Allowances were directly responsible for £7 billion of 2013’s record-breaking £14.4 billion investment in the North sea. That investment has supported more than 50,000 jobs in the United Kingdom. At the autumn statement, we announced a new allowance for high-pressure, high-temperature oil and gas projects. That allowance will reduce the tax rate on a portion of the company’s profits from 60% to 30%.

Last year, we also announced further reforms to the fiscal regime—reforms to generate investment. We will be introducing a basin-wide investment allowance to simplify and replace the existing system of offshore field allowances over time. We are also taking action to encourage companies that are already investing by extending the ring-fence expenditure supplement from six to 10 years for offshore oil and gas activities, helping the short-term cash flow of companies looking to invest.

Our third area of reform is exploration, where access to good-quality seismic information has been an issue for the industry. Our commitment to provide financial support for seismic surveys in under-explored areas of the UK continental shelf will help the situation.

We want to reward investment in the North sea. As the UK’s economy grows and our recovery strengthens, our direction of travel will be to implement further measures to increase investment. Of course, decommissioning also has to be considered; in the coming decades, that will be increasingly important as the UK continental shelf moves into the decommissioning phase ahead of many other basins. The challenge here is that the North sea, owing to its maturity, will often have to be the site of pioneering methods. Industry will need to develop new operating models and bring in skills and expertise. However, the opportunity is immense. Get this right and we will develop highly valuable—and saleable—expertise here in the UK and reap great rewards down the line. It will be vital to attract new entrants and specialists into the basin to take on decommissioning work.

[Sir Robert Smith]

The Minister is making an important point about the value of decommissioning, but we really want that to be as far away in the future as possible. The crucial thing is to sustain production. I would be grateful if he took the message back to the Treasury that when people drill for oil, they take a big risk, and if they find something, they would like a larger share of what they find as a reward. The supplemental tax needs serious review.

[David Mundell]

I think I had set out in my initial remarks that the issue is a combination of ensuring that what future production there can be is maximised and of taking advantage of the opportunities that may arise through decommissioning.

I want to address a point that the hon. Member for Aberdeen North raised on health and safety and the ageing infrastructure. As many of the UK’s onshore installations are working beyond their original design lives and have been exposed to a harsh environment and heavy usage, it is absolutely essential that asset integrity is maintained. Asset integrity is critical to effectively managing and controlling major accident hazards, protecting the work force and maintaining production. Maintaining such arrangements, even during a period of low oil prices, is essential for the two key reasons that he set out: first, to comply with legislation to manage major risk hazards; and secondly, to maintain these assets for use in the future. I assure him that the Health and Safety Executive will continue to inspect thoroughly asset integrity issues and raise those with the industry at every opportunity to ensure that regulatory standards are not compromised.

It is by bringing a package of measures together and by working together—I think that is the sentiment of this afternoon’s debate—that we will maximise the potential of the industry and support vital jobs across the sector and the supply chain in the north-east of Scotland, as well as in areas such as East Anglia, to which my hon. Friend the Member for Waveney drew attention so adroitly. We have been talking about those jobs today; it is because the UK has such a large and diverse economy, of course, that we are able to commit to these long-term support measures.

We can deal with the volatility of oil prices and continue to provide the stable regime that is so important to the industry. The hon. Member for Glasgow East drew our attention to the many predictions that have been made about oil prices, but it is in a country on the scale of the United Kingdom that changes can be sustained. On that basis, having listened to today’s debate and set out the measures that the Government have taken, I conclude my contribution.

Oral Answers to Questions

David Mundell Excerpts

Wednesday 14th January 2015 Commons Chamber

[Ann McKechin (Glasgow North) (Lab)]

2. What change there has been in the level of child poverty in Scotland since 2010; and if he will make a statement.

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

Estimates of the number and proportion of children in relative low income are published in the National Statistics households below average income series. Those estimates are available for each financial year up to 2012-13, and they show that since 2010 the number and percentage of children in relative low income in Scotland have remained at 200,000 and 17% respectively.

[Ann McKechin]

It is incredible how complacent the Government are about the fact that child poverty in Scotland is increasing. According to the Institute for Fiscal Studies, it is set to increase by a further 100,000 by 2020 if the current Government’s policies are followed. Is it not about time that both the UK and Scottish Governments, who seem to be relaxed about that increase in poverty, got together and worked out how we can effectively use policy on distribution so that the poorest can benefit?

[David Mundell]

I am somewhat surprised at the hon. Lady taking the nationalist line on the IFS figures. I completely reject those figures about prospective increases in child poverty in Scotland. This Government are not complacent, but what our policies have achieved are a reduction in unemployment, an increase in employment and wage increases outstripping inflation. Work is the best way out of poverty, and that is what this Government’s policy is.

[Mark Menzies (Fylde) (Con)]

Does the Minister agree that with the number of workless households at its lowest level for a generation across the UK as a whole, the best way to help tackle child poverty is to get people back into work?

[David Mundell]

My hon. Friend is absolutely right, and a key figure that demonstrates our ability to deal with the issue is the record number of women in work in Scotland. I would have thought that politicians in all parts of the House would welcome that.

[Katy Clark (North Ayrshire and Arran) (Lab)]

The Child Poverty Action Group says that more than one in five children in Scotland are living in poverty, which is far higher than in many other European countries, and that the number is increasing as the days pass. Can the Minister explain why child poverty is continuing to increase under his Government?

[David Mundell]

I do not accept the premise of an increase. The Scottish Government’s most recent report stated that we should not take a snapshot and should instead look at indications over a longer period. I agree with the hon. Member for Glasgow East (Margaret Curran) on one point, however: we have to see closer working together by the United Kingdom Government, the Scottish Government, local authorities and the third sector. That is the best way to achieve a reduction in child poverty.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

3. What assessment he has made of the potential effect on businesses in Scotland of the removal of the requirement for employers to pay national insurance contributions in respect of employees under the age of 21 and apprentices under the age of 25.

--- Later in debate ---

[Mr Mike Weir (Angus) (SNP)]

4. What steps the Government are taking to maintain existing Scottish rail services on and connected to the east coast main line.

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

The new deal the Government have signed for the east coast main line franchise with Virgin and Stagecoach will provide new services, new state-of-the-art trains with more capacity, and reductions in journey times.

[Mr Weir]

I thank the Minister for that answer. He will know that the east coast main line is an important link through my constituency, but it has been reported that the new franchisee intends to drop one station south of Edinburgh from the line, raising fears that other stations may be dropped from the new service. Will he give an absolute assurance that, after the change of franchisee, services on the east coast main line will continue to stop at all the stations currently used?

[David Mundell]

I hoped that the hon. Gentleman and his colleagues would welcome the new franchise with its services to Falkirk and Stirling. There is no suggestion that there will be any reduction in services, but I am happy to make further inquiries for him on that point.

[Sir Malcolm Bruce (Gordon) (LD)]

Will the Minister acknowledge that to increase the reliability, speed and efficiency of the service between Edinburgh and Aberdeen on the east coast main line, we need an upgrade of that line, not least the ending of the single track south of Montrose? What steps can he and/or the Scottish Government, or the two together, take to ensure that investment?

[David Mundell]

My right hon. Friend will be aware that we actively engage in discussions with the Scottish Government on important strategic transport projects that impact the whole United Kingdom, such as the Forth crossing. I am sure that colleagues in the Scottish Government will have heard his points, and I will certainly raise them further with them.

[Fiona O'Donnell (East Lothian) (Lab)]

The Minister said that my constituents can have confidence that there will be no reduction in the service on the east coast main line, but can he explain why the Minister at the Department for Transport who has responsibility for rail franchises said that the service at Dunbar was to be reduced?

[David Mundell]

I think the hon. Lady was not listening to my previous answer. I undertook, on behalf of the hon. Member for Angus (Mr Weir), to investigate what has been said previously about the rail link north of Edinburgh, and I will also take up her point.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

It is important that the train services that are meant to run actually do so. The Minister will know that services on the east coast main line were severely disrupted on 27 December and two days later as well. Will he meet colleagues to try to ensure that when there are disruptions on the line—they were no fault of East Coast, by the way—they are dealt with more effectively, passengers are given real alternative information, and the system is made more resilient to such disruption?

[David Mundell]

As a Member who represents a significant stop on the west coast main line at Lockerbie, I share the hon. Gentleman’s concerns about such disruption. I would be happy to meet him and any other colleagues who share those concerns.

[Mr Alan Reid (Argyll and Bute) (LD)]

5. What assessment he has made of the adequacy of provision of broadband and mobile phone coverage in rural Scotland.

--- Later in debate ---

[Pamela Nash (Airdrie and Shotts) (Lab)]

6. What discussions he has had with his ministerial colleagues on job losses in Scotland resulting from City Link entering administration.

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

It was deeply regrettable that City Link went into administration over the festive period, particularly for its employees and contractors. My right hon. Friend the Business Secretary spoke regularly with the unions to discuss the situation, and our focus now is on supporting those made redundant. The Department for Work and Pensions has been liaising with its counterparts in the Partnership Action for Continuing Employment service to ensure that support is available to those made redundant in Scotland.

[Pamela Nash]

Many people lost their jobs at City Link’s Eurocentral depot in my constituency. I have been struck by the fact that not only direct employees but many so-called self-employed subcontractors lost their jobs. In reality, the latter were solely employed by City Link and had worked there for decades. They have been left not just without redundancy payments but with tens of thousands of pounds of debt. What are the Government doing to ensure that bogus self-employment is tackled and that this never happens again?

[David Mundell]

As the hon. Lady will be aware, the administrators will provide a report to the Insolvency Service on what happened at City Link during the period immediately before the redundancies and administration were announced, and we will obviously reflect on that. I take on board her point about self-employed contractors, and I will raise that directly with DWP colleagues.

[Margaret Curran (Glasgow East) (Lab)]

When I met workers from City Link this week, they told me they found out from the media on Christmas eve that their company was closing, and the redundancies were confirmed on Hogmanay. This is an appalling situation, and no worker should be treated in such a way. It is too late for those workers, but will the Minister ensure that his Government conduct a full and proper inquiry into the circumstances that led to the failure at City Link, so that workers can never be treated in that way again?

[David Mundell]

As the hon. Lady will have heard me say, the administrators will provide a report to the Insolvency Service. The Government have demonstrated, in their action over Comet, that if such a report highlights practices that should be investigated, they will be.

[Lorraine Fullbrook (South Ribble) (Con)]

7. What the next steps are for implementation of the Smith commission proposals.

--- Later in debate ---

[Mike Crockart (Edinburgh West) (LD)]

8. What discussions he has had with the Minister for culture, communications and creative industries on how effectively the Government are protecting vulnerable consumers in Scotland from nuisance calls.

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

I commend my hon. Friend on his work in recent years on this serious issue. Tackling this problem is a priority for the Department for Culture, Media and Sport, and I understand that the Minister with responsibility for culture, communications and creative industries will meet him later today to discuss the matter.

[Mike Crockart]

Over the last two years, trials run by councils and trading standards officers have installed call blockers in the homes of 400 older and vulnerable Scots, blocking more than 100,000 nuisance calls, improving their quality of life and protecting them from becoming the victims of scams. Does the Minister agree that the time for pilots is over, as the technology is proven, and that we need to establish a national scheme to protect 300,000 Scots rather than just 300?

[David Mundell]

I agree with my hon. Friend that this is an important issue. The pilots have been necessary to test the technology involved. I am sure he will be able to make that very point to the Minister from the Department for Culture, Media and Sport when he meets him later today.

The Prime Minister was asked—

Oral Answers to Questions

David Mundell Excerpts

Wednesday 2nd July 2014 Commons Chamber

[Ann McKechin (Glasgow North) (Lab)]

2. What steps he is taking to incentivise employers in Scotland to pay the living wage.

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

The Government support businesses that choose to pay the living wage, where it is affordable and does not cost jobs.

[Ann McKechin]

The Minister will be aware that many people in Scotland have started the holiday season and packed their bags, and many will be visiting the beautiful islands of Scotland, but last week the National Union of Rail, Maritime and Transport Workers reported that foreign-resident seafarers who are working on the ferries are being paid as little as £2.35 an hour. That is a disgrace to Scotland, and I urge the Minister to use his offices to work with the Scottish Government to persuade the ferry companies to pay not only the minimum wage but a living wage to every single one of their workers.

[David Mundell]

I most certainly take on board what the hon. Lady says and I will make representations in that regard. I am sure she welcomes the fact that earlier this month the UK Government published a list of employers who had not paid the minimum wage. Unfortunately, two of them were in Scotland.

[Mike Crockart (Edinburgh West) (LD)]

Mr Speaker, I know that you will be happy to hear that in May I employed an apprentice in business administration in my office and committed to paying her the living wage. Does the Minister agree with me that all MPs’ offices and Government Departments should set an example and move as quickly as possible to being accredited living wage employers?

[David Mundell]

The hon. Gentleman sets a good example, and certainly in apprenticeship schemes offered by Members of Parliament, I support the action he has taken.

[Mr William Bain (Glasgow North East) (Lab)]

14. Seven out of 10 young people in Scotland who are unemployed are applying for benefit for the second time. Is that not testament to the fact that there are simply not enough secure jobs for them that pay the living wage? Why will this Government and their equally bad counterparts in Edinburgh not use the public procurement powers available to them to ensure that every Scottish young person gets the living wage?

[David Mundell]

I would have thought that the hon. Gentleman would welcome the fact that the number of those in the 16 to 19-year-old category in Scotland who are out of work has fallen by 4,000. Work is the way out of poverty, and that is what this Government are encouraging.

[Robert Halfon (Harlow) (Con)]

Does my hon. Friend not agree that the best way to achieve the living wage in Scotland and elsewhere in the country is by continuing to take millions of low earners out of paying income tax altogether?

[David Mundell]

I absolutely agree. Tens of thousands of Scots have benefited from the fact that we have raised the personal allowance. Roughly two thirds of those on the minimum wage are now paying significantly less tax than they were when this Government came to power.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I know the Minister recognises that payment of the living wage will ease the pressures of the cost of living that many households experience, but in view of his recent admission to the Scottish Parliament’s Welfare Reform Committee that his Government’s benefits sanctions and welfare reforms have contributed to the increase in the number of food bank users, will he now apologise?

[David Mundell]

What I think politicians should apologise for is making the poor and most vulnerable into political footballs. Poverty is a scourge in our country, not an opportunity for a press release.

[Mr Speaker]

Order. In case the House is not aware, I can inform colleagues that the House of Commons has received its accreditation from the Living Wage Foundation.

--- Later in debate ---

[Jim McGovern (Dundee West) (Lab)]

4. What assessment his Department has made of the effect of the regional air connectivity fund on Scotland.

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

The regional air connectivity fund was announced by the Chief Secretary to the Treasury last year and was doubled to £20 million in the Budget. It has already been successful in securing the air link between Dundee and London, a vital support for economic growth in the hon. Gentleman’s great city.

[Jim McGovern]

I thank the Minister for that answer. Some £2.8 million came from the UK Government to retain the air link between London and Dundee. Is that not just one more example, albeit a crucial one for Dundee, of why Scotland is stronger as part of the UK?

[David Mundell]

I absolutely agree. The air connectivity fund is a good example of the UK Government working to support economic development across all the nations and regions of our United Kingdom.

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

May I ask the Minister, on behalf of my hon. Friend the Member for Argyll and Bute (Mr Reid) and myself—this is not just a parliamentary pincer movement; it is close to the Secretary of State’s heart, and I am assured that he does have a heart, at least on Wednesdays—about Islay airport and Broadford airport on the Isle of Skye? They could both benefit if that excellent scheme were extended in conjunction with the Scottish Government: in the case of Islay, because it lacks a public service obligation and wants more commercialism; and in the case of Broadford, by re-establishing passenger links. Will he give that his full support?

[David Mundell]

I will most certainly take on board what the right hon. Gentleman says on his behalf and that of his colleagues. I am sure that everybody would welcome the opportunity to fly over the sea to Skye.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

Does the Minister agree that those who are using that fund to fly from London to Dundee later this week in order to see the launch of the aircraft carrier will be able in two different ways to see the strength of the United Kingdom?

[David Mundell]

Absolutely. The hon. Gentleman will have heard the Secretary of State highlight the importance of the flotation of the aircraft carrier on Friday, which will be a very important moment not only for Scotland, but for our whole United Kingdom.

[David Mowat (Warrington South) (Con)]

5. What assessment he has made of the potential effect of Scottish independence on energy flows between Scotland and the rest of the UK.

--- Later in debate ---

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

7. What assessment he has made of the effects of the distribution of housing benefit in Scotland.

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

In recent months, I have met every local authority in Scotland to discuss a wide range of issues, including housing benefit.

[Mr McCann]

A report by my trade union, the GMB, shows that huge sums of housing benefit are paid to company landlords in Scotland. Bearing in mind the Secretary of State’s earlier answer, will the Minister meet me to discuss how we can bring together the UK, Scottish and local governments to ensure that we get best value for housing benefit and that we can create new houses and new jobs, rather than fill the pockets of company landlords?

[David Mundell]

I would certainly be happy to meet the hon. Gentleman, with a view to convening such a meeting.

[Mr Alan Reid (Argyll and Bute) (LD)]

I want to thank the Government for recognising the extra costs of living in remote rural areas and giving councils such as Argyll and Bute extra money to give discretionary housing payments to their tenants. I hope the Government will continue to give extra money to such councils in future years.

[David Mundell]

The hon. Gentleman will know that I wrote to the Deputy First Minister of Scotland with an offer to executively devolve the power to Scottish Ministers to set the statutory cap on discretionary housing payments in Scotland. That offer has been accepted and we are working constructively with the Scottish Government to take it forward in relation not just to rural areas, but to all councils in Scotland.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Will the Minister intervene with the Department for Work and Pensions so that we can have a system where someone who is sanctioned and taken off benefits when they have an appeal does not lose their housing benefit until the appeal is heard? Once the appeal is heard, they get their money back, but they then have the problem of finding that they are in debt to the local council. Can we not have a system that is sensible and fair to people who are sanctioned by the DWP?

[David Mundell]

I certainly take note of what the hon. Gentleman says, and I would be happy to meet him to discuss it further.

The Prime Minister was asked—

Trade and Investment in Scotland

David Mundell Excerpts

Tuesday 24th June 2014 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Hollobone. I know from your frequent appearances at Scottish questions that you take a keen interest in Scotland. I congratulate the hon. Member for Glasgow North East (Mr Bain) on securing the debate, on an important subject. The Government’s policy on trade and investment is a key building block of our growth strategy, and that holds as true for Scotland as it does for the whole UK. I noted the hon. Gentleman’s comments on access to finance and will convey them to my colleagues in the Department for Business, Innovation and Skills and the Treasury. I share his concerns about what a yes vote would mean for our membership of the EU and will touch on that later.

When it comes to international trade and investment, as part of the United Kingdom Scottish businesses currently enjoy the best of both worlds—the local expertise of the Scottish Government’s trade and investment agency Scottish Development International, plus the international reach and reputation of the UK and UK Trade & Investment. In Scotland, UKTI works closely with Scottish Development International, which delivers trade services on the ground to local Scottish businesses and organisations. Scottish companies have access to both UKTI services and those provided by SDI. As part of our commitment to ensure that that close working relationship continues to deliver the best for Scottish exporters, in autumn 2012 the then Secretary of State for Scotland asked Brian Wilson, the former Scotland Office Minister, to conduct an independent review of support for Scottish exporting. His report was published last month.

The Wilson report identified many of the positives for business that come from Scotland’s being part of the UK, including the value that Scottish businesses place on the work of SDI and UKTI as a whole. The report suggests, however, that all agencies offering support to exporters need to work together better to deliver a seamless service to businesses, if they are to maximise success. The Government will study the recommendations to help us consider how best to do that. That is part of the UK Government’s continuous work to get the best from the services that they provide to business.

Of course, within the UK we currently benefit from a fully integrated open market. As the Wilson report says,

“it is critical to Scotland’s exporters—including those who currently sell to the rest of the United Kingdom—that their interests, such as having a fully integrated regulatory system and being border-free, are at the forefront of that debate.”

The UK Government have this week delivered to every household in Scotland a booklet entitled, “What staying in the United Kingdom means for Scotland”. There are sections headed, “By staying in the United Kingdom, Scotland’s public services are more affordable” and “By staying in the United Kingdom, your money is safe and goes further.” In the section entitled, “By staying in the United Kingdom, Scotland has a strong voice in the world”, we summarise something highlighted in the Wilson report:

“Companies based in Scotland have access to UKTI’s network of more than 1,200 staff”—

in 169 offices—

“in over 100 overseas markets working to support UK businesses. This is part of the UK’s wider diplomatic and consular network of over 220 locations, which also is able to help UK businesses, including those from Scotland”.

The Scottish Government propose a much smaller network, a third of the size that the UK currently has. That would be a major decrease in the presence and impact overseas that Scotland exerts as part of the UK. Yet they suggest that independence will be good for Scotland’s voice in the world. In their passion for independence, SNP leaders will say anything to make it sound easy, but as I am sure the Scottish people know, if it sounds too good to be true, it usually turns out to be so.

Last year, UKTI helped almost 2,000 firms in Scotland to export. Let us take one example. Exports are vital to the success of Scotland’s impressive food and drink sector, which the hon. Gentleman rightly highlighted. Cutting overseas support on this great scale would be a backward step for that industry. Together we can sell our products and services to the world more effectively against international competition. UKTI also works closely with UK Export Finance, which makes doing business overseas both more accessible and safer for Scottish firms by offering trade finance and insurance in case an overseas partner defaults. The Scottish Government have no plans to match that service, despite the fact that it can help to reduce the risk for Scottish firms as they do business overseas by spreading the risk across the broad shoulders of the United Kingdom.

On inward investment, UKTI promotes the whole of the UK overseas to potential foreign investors. That is another example of Scotland getting the best of both worlds, because, in addition, the Scottish Government and SDI promote the individual benefits of Scotland. UKTI helped to land three quarters of the inward investment projects that generated 13,500 jobs in Scotland last year. Our GREAT campaign has contributed to that, promoting businesses, tourism and education in Scotland, Wales, England and Northern Ireland. We are looking to make that work even more successful by making the most of the international focus that will be on the hon. Gentleman’s city for the Commonwealth games this summer.

The UK Government are working both with the Scottish Government on a joint international business conference to be held during the games period and through the British business house, to be based in Glasgow city chambers. As the hon. Gentleman knows, that is a very impressive venue, and we are most grateful to the leader and members of Glasgow city council for their support of that venture. UKTI will be using those events to promote and support British businesses, both in Scotland and across the whole UK.

Looking at trade policy more widely, in the spirit of Adam Smith, we can use our influence to push for free trade in the wider world. I noted carefully the hon. Gentleman’s comments about the WTO. I did not know about the minimum period that it had taken a new member to enter that organisation and I am very glad that he got that on the record, because, as he knows, those of us taking part in debates in Scotland about separation are often told that everything will happen seamlessly and automatically. To have a tangible example is most helpful.

The UK is using its global reach to lower market barriers and promote Scottish produce overseas. Whisky is a prime example. The UK is working to open markets and reduce tariffs on Scotch all around the world. Last year, we worked with the whisky industry to bring down barriers in 12 countries. As the chief executive of the Scotch Whisky Association said in its annual review,

“we rely on effective support from government in our overseas markets...The Scottish Government White Paper envisages a network of 70 to 90 overseas missions, but we export to around 200 markets. A diplomatic network with the necessary geographic footprint, expertise, and influence...will continue to be essential.”

As the hon. Gentleman said, a particular concern of the Scotch whisky industry is the status of the agreements currently in place, particularly with countries such as India and China. What would the status of those agreements be in the hiatus period between Scottish independence and Scotland’s full membership of the EU, or would they have to be negotiated from scratch? That is of significant concern to the industry and, as with so many aspects of the independence debate, no answers are forthcoming from those who propose separation.

An independent Scottish state would face tough choices about its international priorities. It would be a lengthy, expensive process for Scotland to set up its own diplomatic, consular, trade and other international services— a support structure the UK already has in place—to work for its businesses and nationals all over the world. The argument is not whether Scotland could do so in due course; no doubt it could. The argument at the heart of our referendum campaign is whether it would be better for Scotland to do so or to continue to work in the effective way provided by the UK’s diplomatic, consular and trading arrangements.

The most recent economic analysis shows that Scotland’s economic recovery as part of the UK is going strong. The Fraser of Allander Institute notes that the Scottish economy has been growing for seven consecutive quarters and that the growth rate rose at 1.6% throughout 2013, while the Scottish ITEM Club has revised its forecast for Scottish economic growth upwards by 0.7 percentage points and now expects the Scottish economy to grow by 2.4% this year.

As the hon. Gentleman will know, in the past the Scottish Government have placed a lot of weight on exporting to China and on the views of the Chinese Government. Recently, however, they do not seem to be so much in agreement with the Chinese Government, perhaps because the Chinese Premier, when asked about the referendum on his visit to the United Kingdom, said that he wanted a “united United Kingdom”. I think that that sums it up well. He is the latest in an ever-growing list of world leaders who have made it clear how much rests on the referendum.

We want the best for Scotland. The Government and the people of England, Wales and Northern Ireland believe that Scotland is better off in the UK and that the UK is better off with Scotland in it. We do not need to go through a painful separation. As a United Kingdom, we have the best of both worlds, working together to help international trade and investment in Scotland to thrive. For many of the reasons that the hon. Gentleman has set out in this important debate, we wish and need to remain together. That is why, for reasons of international trade as well as a host of others, I will be urging my fellow Scots to say “No thanks” on 18 September.

Question put and agreed to.

Oral Answers to Questions

David Mundell Excerpts

Wednesday 7th May 2014 Commons Chamber

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

9. What discussions he has had with his ministerial colleagues on the effects of housing benefit changes in Scotland.

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

I have had regular discussions with ministerial colleagues about the effect of housing benefit changes in Scotland, and in particular about the application of discretionary housing payments to those affected by the removal of the spare-room subsidy. Those discussions led to the announcement on Friday 2 May that the setting of the limit for such payments could become the responsibility of the Scottish Government.

[Katy Clark]

In February the Scottish Parliament voted in favour of full mitigation of the bedroom tax, but much of that money has not yet reached tenants. Given that there has been a discussion about the discretionary cap, does the Minister agree that the Scottish Government could have acted earlier, and, given that an announcement has now been made, will he do everything in his power to ensure that there is co-operation between Westminster and the Scottish Government so that the money reaches the people who need it?

[David Mundell]

I entirely agree with the hon. Lady. The Scottish Government already had powers that they could have used to take other steps for the purpose of the mitigation that they said was necessary, but they chose not to do so. The Scottish Parliament forced additional funds to be provided, and we will not stand in the way of the spending of those funds. I shall be meeting the Deputy First Minister of Scotland tomorrow morning, and I shall convey the hon. Lady’s comments to her.

[Sandra Osborne]

Does the Minister agree with the far-reaching proposals of Scottish Labour’s devolution commission, including the proposal for the devolution of housing benefit? Does he agree that that would be a progressive, logical and practical step that would enhance devolution and the ability to meet Scottish housing needs?

[David Mundell]

I think that the proposal to devolve the setting of the cap for discretionary housing payments is a positive step, and I welcome the fact that the Labour party has presented proposals. At the end of May, the Scottish Conservative party will present its proposals following the outcome of the work of our own devolution commission.

[Mary Macleod (Brentford and Isleworth) (Con)]

An important part of dealing with housing benefit is ensuring that there is enough affordable housing. Does my right hon. Friend agree that the lack of suitable affordable housing in Scotland is the result and the responsibility of successive Scottish Governments?

[David Mundell]

I do agree with my hon. Friend. She will be aware that since 2010 the Scottish Government have had an additional £1.3 billion in funding that they could have used to provide affordable housing in Scotland. We used to hear constantly in the Chamber about the number of shovel-ready projects in Scotland, but we have not seen much shovelling.

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

The bedroom tax has been a costly fiasco in Scotland. It should never have happened, but I am glad that the Government have at long last agreed to allow the Scottish Government to mitigate its worst impacts. However, the Secretary of State recently boasted that we have a “fantastic” benefits system. Does the Minister think that he was talking about the bedroom tax, or is he also living in a parallel universe?

[David Mundell]

I certainly do not live in the universe that the SNP inhabits. It has not given us a single detail of how a welfare system would operate in Scotland. Indeed, in the 670 pages of the Scottish Government’s White Paper, there is just one reference to the establishment of such a system. The SNP set up a commission, but we have heard nothing from it, so I am afraid that I shall take no lessons from the hon. Lady.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

Does the Minister accept that, now that the Scottish Government have been given the powers for which they asked in relation to discretionary housing payments, there is no reason why they should not first cancel all the bedroom tax for this year, and then write off all the debts that were incurred last year? In order to ensure that no moral hazard is involved, should they not do as the Scottish Affairs Committee has asked, and refund the money that Scottish people paid last year in bedroom tax?

[David Mundell]

I understand that a statement is to be made about the matter in the Scottish Parliament today, and I am sure that the hon. Gentleman’s colleagues will raise those very points with the Scottish Government.

[John Robertson (Glasgow North West) (Lab)]

3. What assessment he has made of the effects of recent trends in household energy bills on standards of living in Scotland; and if he will make a statement.

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

Rising energy bills are a serious concern for consumers in Scotland and across the rest of the UK. We are increasing competition, sustaining vital financial support for vulnerable consumers, and working to ensure suppliers put customers on the cheapest tariff.

[John Robertson]

I thank the Minister for his answer. Does he agree that with the closing of coal-fired power stations and a doctrine of anti-nuclear power stations north of the border, under independence, with the reliance on renewables, energy costs must increase?

[David Mundell]

I certainly agree with the hon. Gentleman about the serious loss to the Scottish economy of closing the door on the nuclear industry, which has brought so much benefit to Scotland, and I pay tribute to him for being such a champion of that cause. He is right that energy costs will go up in an independent Scotland, as set out in the Government’s analysis on energy.

[Guy Opperman (Hexham) (Con)]

Both in Northumberland and in Scotland people are setting up oil-buying clubs to deal with the problem of off-grid energy. Does the Minister agree that the best way to combat energy problems and price rises in off-grid circumstances is to copy this good measure and spread it out across the country?

[David Mundell]

I absolutely agree with my hon. Friend. Oil clubs are developing in Scotland and the Government are keen to promote and support them. I commend him for highlighting this issue.

[Mr Mike Weir (Angus) (SNP)]

11. If the Minister is genuinely concerned about rising costs of energy in Scotland, why is it that Ofgem has yet again delayed the implementation of Project TransmiT, which would finally begin to tackle the discriminatory and expensive transmission charges? Will he press his colleagues to implement it immediately?

[David Mundell]

Project TransmiT is one matter on which I am probably in agreement with the hon. Gentleman. The important thing for Scotland is to get the right answer. Yes, it is disappointing that it has taken some time, but the Scotland Office is determined to work towards getting the right answer, and I urge him and his colleagues to continue to press Ofgem on this as well.

[Margaret Curran (Glasgow East) (Lab)]

Will the Secretary of State explain why, when the Prime Minister said that consumers in Scotland would be £50 better off after cuts to the green levies, hundreds of thousands of Scottish consumers have seen their bills decrease by only £12?

[David Mundell]

There is no reason why consumers in Scotland should not be seeing this £50 benefit, and the Government will continue to do all we can to make sure that they do.

[Margaret Curran]

That is the definition of an inadequate answer, and perhaps goes some way towards explaining why Labour’s policy has gained widespread support across Scotland. In opposing Labour’s energy freeze, the Tory-led Government have had the full support of a surprise friend in the form of the Scottish National party, and it does not stop there: standing up for energy companies, failing to take action on the living wage, proposing tax cuts for those at the top. Does the Minister not agree that Scotland deserves better than this?

[David Mundell]

What I believe is that we do not take any lectures from Labour on energy issues. Gas bills more than doubled under Labour, electricity bills went up by 50%, the leader of the Labour party was responsible for £179 of additional levies on gas bills and fuel duty went up 12 times. I am proud of this Government’s record on energy and Scotland is doing well under it.

[David Mowat (Warrington South) (Con)]

4. What discussions he has had with Ministers in the Scottish Government on the potential role of the Bank of England in the event of Scotland becoming an independent country.