Scotland’s Fiscal Framework

Debate between David Mundell and George Kerevan

Wednesday 24th February 2016 Commons Chamber

[David Mundell]

Obviously, I do not agree with the hon. Lady’s perspective on specific policies, but she is right that the Scottish Parliament will now have specific and detailed responsibilities in relation to welfare. We have a joint ministerial group on welfare, which includes myself and Scottish Ministers Alex Neil and Roseanna Cunningham, and we look to work though that group on the transfer of the specific powers. We do not want a transfer of power without new arrangements being in place, because the people in receipt of the benefits must be our prime concern. We will work closely together. An enormous amount of work has been done by officials to date and I am confident that once we know what the Scottish Government’s proposals are—we do not know fully—we will be able to make an effective transition.

[George Kerevan (East Lothian) (SNP)]

In his reply to my hon. Friend the Member for Perth and North Perthshire (Pete Wishart), the Secretary of State seemed to confirm that the Treasury’s opening bid in these negotiations—the so-called level deductions approach, which would have led to a £7 billion cumulative cut in Scottish spending—was merely a negotiating ploy. If that is the case, will the Secretary of State confirm that it was disrespectful of the negotiations to start with a position so far from the vow, and will he confirm that that will never happen again?

[David Mundell]

What complete and utter nonsense. A deal is done that is good for Scotland and good for the United Kingdom, and hon. Members on the Scottish National party Benches have to trawl through newspaper reports to find something that they can complain about. This is a good deal for Scotland which gives Scotland new powers. Let us talk about how we use those powers for the benefit of Scotland, and let us put the grievance agenda to bed once and for all.

Oral Answers to Questions

Debate between David Mundell and George Kerevan

Wednesday 6th January 2016 Commons Chamber

[David Mundell]

I do agree with my hon. Friend. It is a fundamental part of the growth in Scotland’s economy that we are part of a single market within our United Kingdom. I recently had the pleasure of visiting Alexander Dennis, the bus manufacturer in Falkirk, and I am sure that they would agree that the rest of the United Kingdom was one of their most important markets.

[George Kerevan (East Lothian) (SNP)]

Given that employment in Scotland is now 53,000 higher than it was before the crisis, and that output in Scotland is now 3% higher than at the pre-crisis point, does the Secretary of State concur with Scottish business leaders who oppose the Treasury’s savage cuts to the UK’s trade export agency in the autumn statement?

[David Mundell]

I very much welcome the figures the hon. Gentleman set out on the positive economic position in Scotland. What I do not subscribe to is the frequently voiced Scottish National party and Scottish Government position that anything good that happens in Scotland is in relation to the Scottish Government and anything bad is in relation to the UK Government. We have two Governments working together for the benefit of Scotland’s economy.

Oral Answers to Questions

Debate between David Mundell and George Kerevan

Wednesday 4th November 2015 Commons Chamber

[David Mundell]

I do not agree with Kezia Dugdale, but at least she has the guts to stand up and say that she will put up taxes and put up tax credits. The SNP has said precisely nothing. It wants an argument about process, instead of telling us what it will do with these important new powers.

[George Kerevan (East Lothian) (SNP)]

5. What discussions he has had with his Cabinet colleagues on reforming the estimates process to take account of the changes made to the Standing Orders of the House to implement English votes for English laws.

Scotland Bill

Debate between David Mundell and George Kerevan

Monday 29th June 2015 Commons Chamber

[David Mundell]

Obviously I am familiar with Cuthbert’s views on a range of issues, and many of the points the hon. Gentleman refers to will indeed be dealt with in the fiscal framework, which is why that is important for delivering a stable settlement.

The Scotland Parliament will retain the receipts from the income tax it is responsible for. This represents a significant devolution of powers, with Scotland retaining around £11 billion of income tax receipts. That accounts for over 90% of income tax receipts collected in Scotland. This gives Scotland greater fiscal autonomy, with incentives to increase employment and increase wage growth.

I emphasise to Members that there are no restrictions on this power. If the Scottish Parliament wants an income tax system with a dozen different rate bands, these powers allow it to do that. Similarly, if it wants to set a zero rate of income tax, it can.

As I said on Second Reading, the devolution of the rates and bands of income tax means we will correct a fundamental imbalance in the devolution settlement. Since 1999, the Scottish Parliament has debated how public money should be spent but not how it should be raised. The Scotland Act 2012 started to change that, giving the Scottish Parliament more tax-raising powers. The Bill goes much further.

As things stand, the Scottish Government still receive the vast bulk of their budget in a block grant from this Parliament and choose how to distribute that budget according to their priorities. When the UK Government have taken difficult decisions to bring our public finances back into order, the Scottish Government have often condemned us for inflicting cuts. Although I believe those spending reductions were necessary to secure our economy and are far preferable to increasing taxation on working families in Scotland, it is true that the Scottish Government took a different view. These clauses will allow them to do something about it.

With control of the rates and bands of income tax in Scotland, the Scottish Parliament will raise over half the money that it spends. If the Scottish Government want more money to spend on their priorities, such as higher welfare payments, they will be able to increase taxes to raise that money. However, they will have to justify that spending to the hard-working men and women in Scotland who will be paying for it out of their wages every month.

[George Kerevan]

Following on from what the Secretary of State is saying, how could the Scottish Government ever be sure of their tax yield if another House were setting the threshold?

[David Mundell]

The Scottish Government already have to manage their finances by building in estimates of revenue. That is part of the system in which we operate and part of the decision to have a United Kingdom-wide tax. I will come on to that point in a moment.

The Deputy First Minister has confirmed that the Scottish Government are already considering using the tax powers that they will shortly receive under the Scotland Act 2012 to put up income tax. The powers contained in these clauses will increase the scope for action considerably. With the SNP in government, Scots might pay the highest income tax in the UK. Perhaps the party will dust down its old “penny for Scotland” policy, although now, with inflation, it might need a little more.