The next item of business is a statement by the Deputy First Minister, John Swinney, on the Smith commission. He will take questions at the end of his statement and there should therefore be no interventions or interruptions.
14:04
The Scottish Government believes that decisions that affect the lives of people in Scotland should be taken here in Scotland to reflect the priorities and views of those who choose to live and to work in this country. That is why we campaigned for the establishment of the Scottish Parliament; why we voted for the Scotland Act in 1998; and why we supported the Scotland Act in 2012. It is why we campaigned for, and believe in, Scottish independence, and it is why we took part in the process of the Smith commission.
In the light of the referendum result, the Government produced proposals for further devolution on 10 October, arguing for a robust package of further powers for this Parliament.
As a participant in the proceedings, and on behalf of the Scottish Government, I record our thanks to Lord Smith of Kelvin for his clear, focused and neutral direction of the commission’s proceedings. I am also grateful to the secretariat of the commission, which was made up of officials from the United Kingdom Government, the Scottish Government and this Parliament, for its hard work in supporting the process. I also thank the other members of the commission for the generally good-natured approach that was taken to the process.
The commission had a challenging task. The promises that were made to the people of Scotland in the lead-up to the referendum—promises of home rule, near federalism and extensive powers for this Parliament—meant that expectations around the process were extremely high. Four hundred and seven organisations and more than 18,000 individuals in Scotland took the time to write to the Smith commission, setting out their views on further devolution, which clearly demonstrates that engagement and interest in politics in Scotland remain as strong as they were during the referendum. On behalf of the Scottish Government, I welcome the contents of the report but regret that a wider range of powers has not been devolved.
The report contains a number of recommendations that will enable this Parliament to better serve the people of Scotland. Devolution of air passenger duty, in particular, is a responsibility for which we have been calling for some time, and it was first proposed—alongside devolution of the aggregates levy—by the Calman commission in 2009. It is a tax that impacts on our tourism industry and the wider business sector.
More extensive powers over income tax, albeit within the reserved framework set by Westminster, open up new opportunities to this Parliament and will increase accountability. The flexibility in all rates and bands except the personal allowance is an improvement on the narrow and inflexible power for a Scottish rate of income tax that we are in the process of implementing.
The devolution of some benefits for disabled people, carers and our elderly will enable us to develop more effective approaches to supporting the most vulnerable people in our communities. The experience of the bedroom tax has shown us the risks of Westminster taking decisions for the whole of the UK on a one-size-fits-all basis, which ignores the reality of circumstances here in Scotland. The proposal to vary the housing element of universal credit will enable us to prevent that from happening in the future. Subject to this Parliament’s ability to find the required resources, we now also have the prospect of being able to create new benefits that could assist our people.
The long overdue agreement to transfer to this Parliament the responsibilities and revenues of the Crown Estate to 200 nautical miles has had long-standing support across the parties. With those powers, we will be able to ensure that island and coastal communities receive 100 per cent of the net income from sea bed leasing revenues, ensure that there is a coherent system of support for our renewables industry and enable greater investment in a wide variety of projects, ranging from harbour improvements to community tourism projects. The Minister for Transport and Islands will begin discussions on the use of those powers in Orkney today.
Finally, I am sure that everyone in the chamber will welcome the fact that this Parliament will have control over our own elections. The Parliament has more than demonstrated its competence in delivering fair and robust constitutional processes, and I am particularly pleased that we secured agreement on the need for early action to allow us to extend the franchise to 16 and 17-year-olds for the 2016 election.
Following the publication of the report, the Government wants to make rapid progress in implementing its recommendations in full and true to the spirit and intention of the Smith report. To make that progress successfully, a number of principles should be observed.
First, the UK and Scottish Governments must work jointly to produce the draft clauses that are due to be published by the end of January. The First Minister wrote to the Prime Minister on the day that the report was published to offer the Scottish Government’s full participation. Given that a joint secretariat composed of members of the civil services of the UK Government and the Scottish Government along with staff from the Scottish Parliament has been able to effectively and properly support the Smith commission, it seems logical to extend that approach to the drafting of the clauses that will put into practice the commission’s recommendations.
The second principle is that, when possible, both Governments should take early action on devolution and on tackling key areas of concern. The most pressing need is for early action to secure the powers for the Parliament to enfranchise 16 and 17-year-olds—as the Scottish Government would like to do, and for which there is support across the political spectrum in the Parliament—in time for the 2016 election.
All of us watched the tremendous success of the extension of the franchise to 16 and 17-year-olds for the referendum, which was a model of democratic participation and engagement. It is essential that the commitments that were made to 16 and 17-year-olds during the referendum campaign are extended to ensure that they can participate in the elections to this Parliament in 2016. The First Minister repeated the commission’s call for early action on representation for 16 and 17-year-olds in her letter to the Prime Minister last week, and I am sure that the whole Parliament is hopeful of a positive response to that proposition.
Similarly, early legislative action could be taken to devolve responsibility for air passenger duty. The Scotland Act 2012 provides an order-making power to allow new devolved taxes to be added to land and buildings transaction tax and landfill tax, which we are currently implementing.
Early action could also be taken on gender quotas. In her previous ministerial role, Shona Robison wrote to the UK Government to outline the Scottish Government’s proposals for a section 30 order to provide the Parliament with the necessary competence. We must make progress down that route.
Paragraph 96 of the Smith commission report lists a number of important issues for consideration that do not require an act of devolution. They include important issues around immigration to support our economy, asylum seekers and victims of human trafficking; retention of fine income in Scotland; and health and safety. My Cabinet colleagues and I will write to our UK counterparts to seek early discussions on those matters over the next few days. Progress on those powers would be an early down payment on the further devolution that we have all been promised, and whether it is achieved will be a key test of the UK Government’s commitment.
My third principle is that the UK and Scottish Governments should start preparing in good faith for the transfer of the powers that are identified in Lord Smith’s report. In particular, the UK Government should not take any steps or decisions that would significantly affect the position of this Parliament after devolution, or that would constrain our freedom to come to our own decisions, without our express agreement. The most obvious example of such a step is the move from disability living allowance to personal independence payments, which the First Minister mentioned in the chamber last week. The First Minister will write to the Prime Minister to ask for the roll-out of PIPs to be halted in Scotland and for the proposed cuts to disability benefits not to be implemented before the relevant responsibility is passed to this Parliament. I hope that all members will support that position.
Another example concerns employment programmes such as the work programme, the current contracts for which are approaching their end. It is crucial that the UK and Scottish Governments agree the arrangements that will follow those contracts, and we should explore all the options, including the devolution of responsibility to this Parliament, as soon as is practical.
Of particular importance is agreement that more powers will be accompanied by firm financial foundations and a fiscal framework that provides an equitable settlement to both Governments. Experience of the continuing negotiation on and implementation of the Scotland Act 2012, which I discussed at length with the Finance Committee yesterday at its evidence session on the Isle of Arran, has shown that the implementation of financial agreements is almost as important as the legislation itself. In my letter to the Chancellor of the Exchequer on the autumn statement, I therefore proposed that we meet in short order to start discussions on how those aspects of Lord Smith’s recommendations will be implemented.
There is a long way to go before the Smith recommendations are delivered for Scotland, but I believe that we will have the best chance of fulfilling its commitments if we follow the principles of joint working between the UK and Scottish Governments, the taking of early action when possible and both Governments preparing in good faith for the transfer to take place.
This is not a process that can or should be confined to Governments. Participation was one of the themes of the First Minister’s comments on our programme for government last week, and participation and engagement have been watchwords for Scottish politics since the extraordinary experience of the referendum.
At the start of the Smith process we engaged with groups of stakeholders to shape our proposals for more powers and our approach to the commission’s work. The Scottish Trades Union Congress supported devolution of employment law, health and safety, trade union law and the minimum wage. The STUC also advanced amendments to immigration legislation so that the Scottish Government would be able to direct immigration policy as it affects Scotland.
The Institute of Directors suggested variable capital allowances to promote localised investment, particularly in businesses in challenged areas; and the Scottish Council for Development and Industry called for research and development incentives to improve Scotland’s poor industrial record in that area.
Children 1st supported powers over all aspects of employment rights and conditions to create a much more family-friendly employment regime, and it supported the devolution of child support. The Scottish Council for Voluntary Organisations supported devolving the full package of powers over welfare to create a welfare system that puts fairness and supporting people at its heart, and the full devolution of equalities law. The full devolution of equalities legislation was supported by Engender and other equalities groups.
It should therefore be little surprise that, given that none of those responsibilities was devolved, there was such widespread disappointment on the publication of the report last week. The proposals mean that control over 71 per cent of taxes in Scotland remains at Westminster, along with 85 per cent of welfare decisions, including the conditions and sanctions that are causing so much distress in our country. These proposals cannot be characterised as home rule or as near federalism as is possible in the United Kingdom. The vow has simply not been fulfilled. [Interruption.]
Order.
Although the commission may not have given us all the tools that we want and for which we will continue to argue, we in the Scottish Government stand ready to play our part, and we now look forward to the next steps in Scotland’s journey.
The Deputy First Minister will now take questions on the issues raised in his statement. I intend to allow around 30 minutes for questions, after which we will move on to the next item of business.
I echo the Deputy First Minister’s comments about the good-natured approach to the commission taken by all members, including the Deputy First Minister. It is a pity, then, that his statement had such a grudging nature, with 500 words on powers in the Smith agreement and 2,000 on process, pitfalls, powers not there and demands for transitional down payments. What a depressing lack of imagination!
With the Smith agreement we will, if we choose, reintroduce a 50p tax rate for top earners and a 10p rate to help low earners. The Deputy First Minister could even extend the personal allowance the way that he wants through a zero rate. We can redesign the whole work programme to get people into work more effectively, and we can redeploy hundreds of millions of pounds-worth of disability benefits to re-inject dignity and respect into the system. We can attack child poverty by supplementing child benefit for families under stress. We can reform carers allowance to give carers the rights that they want, and we can finally match attendance allowance and DLA to our own system of care of the elderly. We can construct a whole new Scottish welfare system of new benefits of our own design.
We can give coastal communities the benefits from their own shore and seabed, use extended borrowing powers to build the tens of thousands of houses that we need and decide for ourselves about fracking. We can, at our own hand, gender balance the boards of public bodies, give 16 and 17-year-olds the vote and bring ScotRail back into the public sector. We can have a Parliament entrenched, with more extensive powers devolved than in federal Germany or federal Australia.
Presiding Officer, this is the vow delivered. Scotland knows it. The Deputy First Minister was part of it. Why will he not just admit it?
Iain Gray sat round the Smith commission table, as I did, and he would have witnessed the willingness of the Scottish Government and the representatives of the Scottish National Party to advance the interests and the powers of the Scottish Parliament. The Government set out proposals on a whole range of issues in our submission to the Smith commission of 10 October. Whether they were about economic responsibilities, control over the welfare system or ensuring that Scotland has the economic levers at our disposal to generate the revenues that will allow us to create a fair society, all of that is a matter of public record.
Iain Gray’s rather hysterical tone this afternoon is an indication of how desperate he is to tell the people of Scotland that, somehow, this is the sum total of the Labour Party’s proposals.
Iain Gray has to wrestle with the fact that the Scottish Trades Union Congress is at odds with him about many aspects of the Smith agreement and the Scottish Council for Voluntary Organisations is underwhelmed by the lack of control over welfare. It is not a surprise that I should point those things out. After all, we as a Government talk to those organisations, we listen to them and we put forward their arguments in the Smith commission as effectively as we possibly could.
Iain Gray talks about the powers that are contained in the Smith commission report—about the ability to create new welfare benefits or to enhance existing ones. Those powers are part of the report, but this Parliament has to be able to generate the revenues that will enable us to pay for those things. Iain Gray has never been terribly good at working out how we generate the revenues to pay for things that we want to take forward.
At the heart of our proposition was the need for this Parliament to have transformative economic powers that would enable us to create the wealth to invest in a fair and civilised society in our country. Iain Gray may take comfort from the fact that the Smith commission delivers all the things that he talked about, yet the fact that, on the welfare system, the punitive sanctions at the heart of the Department for Work and Pensions regime in Scotland remain reserved to the United Kingdom represents a travesty of the position that he puts forward.
On the question of a depressing lack of ambition, the Labour Party personifies it.
I echo what the Deputy First Minister and Iain Gray said about the process. I take this opportunity to place on the record in this Parliament my thanks to Lord Smith and the secretariat from both Governments. There cannot be a shadow of a doubt that, in the complex and difficult discussions that we had to have, the quality of the data made available to us was second to none.
As a participant, I know that the process was challenging and stimulating. It was certainly robust and at times it was fiery, but it was enjoyable, and that was in no small measure due to the sage, patient and shrewd chairmanship of Lord Smith.
I accept that it is unwelcome to members on the SNP benches that the Smith agreement was always going to be about devolution. It was never going to be about independence. I guess that their reaction is predictable. I suppose that the Smith agreement could have delivered a crown for the First Minister, Scottish passports and heaven knows what else and they would still not be satisfied. It would not be enough.
I thought that the First Minister’s reaction to what is a sweeping transfer of new powers to this Parliament was—it is not a word that I would use about her readily—verging on the nebbie. I thought that the Deputy First Minister was, if I may say so, uncharacteristically acidic, as though something very sour had passed his lips. I think that what passed his lips was the recognition that this is a powerful, effective, implementable package of devolved measures for this Parliament.
The agreement is a constitutional development of huge significance, because by common assent, with the exception of the SNP, the proposed changes are more wide ranging and powerful than was expected. Scotland will now raise more than 60 per cent of what she spends and will be among the most powerful sub-legislatures in the world.
The SNP reaction to all this confirms the reality. I think that it knows that the Smith agreement shot its fox. [Interruption.]
Order.
To deal with the actual powers, not the dreams and aspirations of another party’s constitutional future, I have two short questions for the Deputy First Minister.
First, the First Minister has expressed her enthusiasm for a 50p tax rate. Is that a floor or a ceiling?
Secondly, the Smith agreement identified a specific issue in relation to the Scottish Parliament: its ability to hold the Scottish Government to account. That becomes more pressing with the prospect of such a wide-ranging transfer of further powers to the Scottish Parliament. Is the Deputy First Minister in principle hostile to the proposal that some key committees should be chaired by Opposition MSPs?
Let me deal first of all with Annabel Goldie’s point that somehow the SNP has been alone in its disappointment in the Smith commission’s conclusions.
The general secretary to the Scottish Trades Union Congress, Grahame Smith, said:
“we are underwhelmed by the package as a whole which does not meet our aspirations.”
John Downie of the Scottish Council for Voluntary Organisations said:
“we are disappointed to see that today’s offerings fall far short of”
the wholesale devolution of welfare. One Parent Families Scotland said that it was “disappointed” about the outcome of the process. The Institute of Economic Affairs said that the Smith proposals are
“a dangerous half-way-house, failing to bring about the benefits that much fuller devolution would have brought to Scotland.”
Engender Scotland said:
“This is a complicated division of responsibility. We are concerned about how well the cumulative impact on women of this devolution has been assessed.”
Bill Scott of Inclusion Scotland said:
“We are disappointed that the Smith Commission failed to devolve all welfare and more fiscal powers to Scotland.”
I am interested in listening to what the people of Scotland say, and the people of Scotland are disappointed by the Smith commission’s conclusions.
On the specific issue of the 50p tax rate that Annabel Goldie raised, the First Minister set out the Government’s position on the 50p tax rate if we had those powers today. Obviously, we have no sense of when the tax powers will be available to the Scottish Government for us to take decisions on that question.
On the question about the chairing of parliamentary committees, that is perhaps territory that I venture into very carefully, as it is about parliamentary governance, but I have always believed—and I believe this about many aspects of local authority business—that it is absurd for a Government member to chair, for example, an audit committee. That is absolutely ludicrous, because an audit committee should hold the Government to account and should be chaired by an Opposition member. That does not always happen in local authorities, and it is ridiculous that that is not the case.
Therefore, yes, there are certain committees that should be chaired by Opposition members. I have never made a secret of that fact in my belief in parliamentary democracy.
The Deputy First Minister will be aware of press reports that the chancellor is about to devolve corporation tax to Northern Ireland. Does he agree that
“if a scheme to vary corporation tax were to be available in some of the devolved countries of the UK as a tool of the UK Government’s regional economic policy, it should be available as an option for a Scottish Government to use also”,
and that
“any discussions about this should involve all the devolved nations”?
I have quoted from paragraph 59 of the report by the cross-party Scotland Bill Committee in the previous session of Parliament, which was chaired by Wendy Alexander.
Yes, I agree with that proposition. I agreed with the recommendation that was brought forward by the committee that was chaired by Wendy Alexander in the previous session, because I thought that it was a fair reflection of the way in which that issue had to be handled within the United Kingdom. We await the outcome of the autumn statement tomorrow, but if that proposition emerges from the chancellor’s statement the Scottish Government will continue to take it forward.
I thank the Deputy First Minister for advance notice of his statement. However, it was all too predictable. For the first time, all five parties were in the one room to agree our constitutional future, but it took him only five minutes to rubbish the report that he had just signed. Just like today, he started off well—he went through all the new powers that are coming to the Scottish Parliament—but he ended with a ridiculous tone, claiming that the vow had not been met.
All five parties—not just the three unionist parties—delivered on time a much more substantial package than anyone had previously envisaged. Is this what it is going to be like? The Government could embrace the new radical powers, or will the Deputy First Minister forever rerun the referendum that he just lost?
I do not think that Willie Rennie was at the national museum of Scotland last Thursday morning when I spoke following Lord Smith. I said to the gathering there—this was the second paragraph of my comments—that
“We welcome the new powers that will come to Scotland”.
What bit of welcome does Mr Rennie not understand?
I am perfectly happy to welcome the report’s contents and the new powers that will come to Scotland. Mr Rennie should not be at all surprised that I believe that Scotland should exercise a full range of economic and social responsibilities. After all, I have believed that all my adult life, and I will continue to do so for the remainder of my adult life.
I was greatly cheered by paragraph 18 of the Smith commission report that was agreed by all five parties:
“It is agreed that nothing in this report prevents Scotland becoming an independent country in the future should the people of Scotland so choose.”
I am delighted that all five political parties accept that fundamental proposition; it is a very good one.
This morning, Lord Smith reminded the Devolution (Further Powers) Committee that the agreement was signed up to by all the parties and was bought into “line by line.” I join others in welcoming the Smith agreement, which will deliver this place as one of the most powerful devolved legislatures anywhere in the world.
Lord Smith also highlighted that devolution cannot be about just powers coming to this place. Iain Gray indicated that we have a broad agreement on the islands agenda and the Crown Estate. Why did the Deputy First Minister omit to mention the crucial issue of the double devolution of where power is exercised in Scotland, including over the work programme that he referred to in his statement? What reassurance can he offer that the Scottish Government is committed to powers for Scotland’s people as well as just for itself?
First, any powers that are exercised in this Parliament, whether by this or any other Government, are exercised with the democratic consent of the people of Scotland. That is a rather fundamental point I would have thought that Mr Smith might have worked out after three years membership of this institution.
Secondly, the Scottish Government has made clear its desire—which we have turned into practice by, for example, the removal of £2 billion-worth of ring-fenced funds that we inherited from the previous Government—to give local authorities much greater scope for discretion and action in their areas of responsibility. We will also take forward further propositions in the Community Empowerment (Scotland) Bill, which is designed to enable communities to have greater control and influence over their lives in their localities.
As we consider the implementation and the roll-out of the Smith commission proposals, we look forward to discussing with local authorities and communities how we can best devolve responsibilities to the localities, so that policies can be exercised and taken forward appropriately to meet their needs and aspirations. That will also include into the bargain the details of the work programme, which is why it would be helpful if Mr Smith and his colleagues would support the Government’s call for the early devolution of the work programme and certainly not support any forced extension of the work programme by the United Kingdom Government.
The Deputy First Minister will be aware of reports that the draft Smith commission document was more radical. According to the BBC on 28 November, the key recommendations on welfare appear to have been removed on the day that the UK Cabinet was briefed on the Smith commission.
Does the Deputy First Minister share my concern that such reports suggest that, behind closed doors around the Cabinet table, Tories who have no mandate in Scotland took key welfare decision-making powers for Scotland off the table?
Lord Smith said to the Parliament’s Devolution (Further Powers) Committee this morning that he was conscious that some party representatives were taking guidance from their “superiors”. I am not sure that that is quite the way that I would describe it, but I suspect that that answers Mr Stewart’s question.
Now that the Scottish Government will have licensing and planning powers in relation to fracking and unconventional gas extraction, will the Scottish Government commit to my call for no approvals to be granted unless and until we have a clear policy on the climate implications for Scotland of the new source of gas, regulatory and licensing loopholes have been closed, and our regulators and planners have the knowledge and skills that are vital if they are to address the risks of new extraction techniques?
Will the Deputy First Minister agree to supply targeted finance to local authorities on the front line, as happened in relation to renewables in 2012?
Sarah Boyack has raised a number of issues about the handling of questions in that area of responsibility. I assure her that all her questions are absolutely legitimate in the context of the policy approach that is to be taken. All the points that she raised have to be considered. That is why this Government has taken an evidence-based approach, which includes ensuring that there are satisfactory answers to the questions that Sarah Boyack asked.
We will consider Sarah Boyack’s point about resources for planning authorities. It is important that the issues are properly and fully scrutinised by the relevant authorities, whether we are talking about the regulatory authorities or local authorities, if they are to deliver the satisfactory answers to which I referred in the first part of my answer.
I thank the Deputy First Minister for his statement.
To a large extent, the impact of the recommendations in the Smith report will depend not on the paragraphs in the pages of the report but on the way in which the recommendations are implemented—the legislation and the policy and operational changes that flow from it.
Does the Deputy First Minister agree that agreement between the two Governments on the detailed implementation of the recommendations must be sought, not least in the context of major issues such as how the borrowing regime is expected to work? Does he have a clear indication from the UK Government that it is prepared to work with him ahead of the drafting of legislation by the end of January?
Mr Harvie’s point is fundamental to the discussion. After the Calman recommendations and the command paper that the United Kingdom Government published, we had to press very hard to secure reforms to the proposals for implementation of the Calman recommendations, which in their original form were financially disadvantageous to the Scottish Parliament and the Scottish Government.
Mr Harvie is absolutely correct. It is crucial that the words of the Smith commission are translated into draft clauses and particular legislative provisions in a fashion that meets the needs and expectations of people in Scotland. I think that that is best delivered in an open and transparent fashion, with joint authorship of clauses. Issues that are relevant on both sides of the debate should be properly considered in that space, and the Parliament should be able to consider the output of the joint process.
That is what the Scottish Government has recommended and what the First Minister has raised with the Prime Minister. To date, I have seen no response to that proposal, but if we are serious, as Mr Harvie knows that the Smith commission report is, about strengthening the whole process of intergovernmental discussion between the Scottish Government and the UK Government, that would be a sensible and practical way forward.
Does the Deputy First Minister share my disappointment that there was no recommendation in the Smith commission report that would allow Scotland to enforce our own minimum wage—something that a number of organisations across the country have called for, including Children 1st, the Child Poverty Action Group and the STUC?
Can the Deputy First Minister provide assurances that he will continue to press for powers over the minimum wage to be devolved to Scotland and that he will ensure that Westminster—especially the unelected House of Lords—does not attempt to roll back on what has been agreed by the Smith commission?
I share the member’s disappointment that powers over the minimum wage have not been devolved to Scotland. Such powers would have assisted us in tackling some of the very serious in-work poverty issues that we wrestle with in Scotland by giving us some practical tools to enable us to work on those issues.
On the question of implementation, I assure Christina McKelvie that the Scottish Government will work assiduously—I set this out as clearly as I possibly could in my statement—to ensure the satisfactory implementation of the Smith commission recommendations. That will be at the heart of the Scottish Government’s approach.
As the Scottish Parliament information centre briefing on fiscal devolution shows, this can be a real powerhouse Parliament. The Smith agreement was, by any reasonable reckoning, a substantial transfer of power: disability living allowance, personal independence payments, attendance allowance, carers allowance and mobility allowance—the list goes on and on. This is a set of serious powers, but perhaps the most radical and, potentially, the most substantial power of all is the ability to create our own benefits. On that basis, will the Deputy First Minister set up a cross-party mechanism to consider how to implement those new powers to benefit some of the most vulnerable people in our communities?
The Scottish Government is always keen to work collaboratively across the political spectrum on issues of joint interest, and the issue that Jackie Baillie raised is, of course, one of them. In the spirit of trying to advance the implementation of the agreement, we have to ensure that the manner and the form of its implementation are appropriate to Scotland’s needs and circumstances. That is why I answered Patrick Harvie as I did on a joint approach to the drafting of the clauses by the Scottish Government and the UK Government.
Our first priority is to ensure that we secure the translation of the Smith commission recommendations into practical and useful powers for the Parliament because, as I am sure Jackie Baillie will understand, my concern is that they could be interpreted and defined in a more restrictive way than perhaps was viewed to be the case by the Smith commission. We want to ensure that the recommendations are implemented to the full.
On the issue of wider dialogue and co-operation around what we may do on welfare issues, I am sure that welfare is the type of area where we can have joint work in the Parliament.
What will be the Scottish Government’s response to the failure to include in the heads of agreement the view of the National Union of Students Scotland, Universities Scotland, the Scottish Chambers of Commerce, the Institute of Directors Scotland, the SCDI and Unison Scotland that there should be partial devolution of immigration to enable the reintroduction of the two-year post-study work visa for international students who graduate from Scottish universities? Such a step would have done much to maximise our human capital and promote economic growth in the key industrial sectors of the future, such as life sciences and renewable energy.
Mr Eadie’s point is a very serious one that has been well made by the range of organisations to which he refers, including Universities Scotland and the NUS. A very common theme in my discussions with universities is the limitations of the current regime as regards the ability to recruit students and, as a consequence, the ability to recruit personnel.
A number of issues were left requiring further development as a consequence of the Smith commission. I raised a number of those issues in my statement. I assure the member that paragraph 96 of the agreement makes particular reference to those points. It states:
“The parties have raised a number of additional policy matters”
that could be taken forward by joint work between
“the Scottish and UK Governments”.
I assure Mr Eadie that that is exactly what the Scottish Government will do on this important question. We will aim to make as much progress as we possibly can to effect the implementation of some form of mechanism to ensure that we can attract the talent that Scotland requires.
The commission proposes devolving income tax and an allocation of some VAT, but it vows to keep the Barnett formula in place. Can the Government tell us how the Barnett allocation will be calculated? In particular, if future Scottish Governments are successful in stimulating the economy and gain additional revenue from those taxes, will those Scottish Governments, and by extension the Scottish people, be able to keep the additional revenue, thereby ensuring a link between Government policy and financial reward? Can the Deputy First Minister confirm whether an agreement has been reached with the UK Government on what impact the Scotland Act 2012 taxes will have on the Scottish block grant?
The final point that Joan McAlpine raises was part of the substance of my conversation with the Finance Committee on Arran yesterday. It remains an outstanding issue that we have not secured agreement with the United Kingdom Government on the block grant adjustment for the land and buildings transaction tax and the landfill tax. I was keen to secure agreement on that before I set out the budget to Parliament on 9 October, but I was unfortunately unable to get that. Only on Friday, I received a communication from the Chief Secretary to the Treasury setting out further proposals in that respect, to which I am currently giving consideration. Those issues, which were raised in 2012, remain outstanding and need to be resolved.
On the wider questions that are raised by the Smith commission, the Barnett formula will continue to apply, but there will be a block grant adjustment that will take into account the transfer of greater responsibility of income tax powers. As Lord Smith confirmed to the Parliament’s Devolution (Further Powers) Committee this morning, if the Scottish Government is successful in delivering higher tax receipts—from, for example, income tax beyond the block grant adjustment—those receipts can be retained by the Scottish Parliament and Scottish Government for use in our wider responsibilities. As we have always argued, if the Scottish Parliament is to be successful in implementing its policy agenda, it is essential that it can access the rewards of that because—on the other side of the coin—we will be carrying the risks of exercising those responsibilities.
Figures from the International Labour Organization show that unemployment in Dundee is at nearly 14 per cent, which is double the general rate. Dundee has come bottom of tables on the success of the UK work programme. I am sure that the Deputy First Minister agrees that we need more than powers to get the long-term unemployed in Scotland into work. He says that he wants the work programme to be devolved quickly, so what ideas does he have to make the work programme work better in Scotland?
The Scottish Government is taking many actions to support investment in Dundee. Every time I travel through the city—as I do frequently—I see the fruits of the Scottish Government’s extensive investment programme, in particular around the waterfront area, which is a remarkable piece of strategic investment.
That is at the expense of the Inverclyde waterfront.
I hear the usual unanimity from the Labour benches about where the money is being spent. More than likely, the Labour Party wants to spend the money twice, which is a familiar refrain.
On Jenny Marra’s question on the UK work programme, basically, that programme has been a failure and has not delivered results in any respect. If I was presiding over that programme, I would be horrified by its poor performance. It is an expensive programme and the resources that are deployed through it should be used to support the type of employability schemes that are now commonplace in Scotland, and which involve partnerships between third sector organisations and local authorities and are tailored to people’s needs. The needs of people who have been long-term unemployed in the city of Dundee will be different from, but no less valid than, the needs of people who have been out of the labour market for a shorter period of time or those of people in other parts of the country. We need to tailor our response to address the particular needs and circumstances in different localities around the country and we can do that best in concert with the third sector and local authority employability schemes that we have in Scotland. The work programme operates in a fashion that is not consistent with that regime, so that is how I would take it forward.
I caution Jenny Marra to consider the fact that we will still face interaction with the United Kingdom benefits system’s sanctions regime, which is a severe limitation on addressing some of the issues that need to be addressed in trying to support people out of economic inactivity and into employment.
We will hear Stuart McMillan, followed by Alex Rowley.
Does the Deputy First Minister agree that the Westminster Government’s retaining control of about 70 per cent of tax-raising powers and about 85 per cent of welfare powers falls far short of the promises of home rule and maximum devolution when compared with levels of autonomy that are afforded elsewhere, including in Switzerland, Canada, the Basque Country and Navarra?
Mr McMillan will appreciate that I would have liked the Smith commission to come up with a broader range of responsibilities to enable the Scottish Government to exercise through Parliament greater control of the lives of people in Scotland, and to create the opportunities—especially economic opportunities—that are vital to Scotland’s prosperity. The Smith commission had in front of it a range of proposals from political parties and wider Scotland that would have enabled that to be the case, so I regret the fact that we did not manage to secure agreement on those points.
I call Kenneth Gibson, to be followed by Alex Rowley.
The Deputy First Minister will be aware that there have been different interpretations of what the Smith commission proposals would mean for tax and expenditure levels in Scotland. Therefore, will he provide clarity on the proportion of taxes that are raised in Scotland and expenditure over which the Scottish Parliament would have power if the proposals were fully implemented?
Under the Smith commission proposals, devolved taxes as a percentage of total Scottish tax revenues would be 29 per cent, and devolved and assigned taxes, as a percentage of the devolved expenditure, as it would be post Smith, would be 48 per cent.
I am afraid that I took you out of sequence, Mr Rowley, but you get the last word.
Thank you very much, Presiding Officer.
Now that the Scottish Government and Scottish Parliament will have more powers over spending than most federal or devolved regimes throughout the world, will the Government move beyond talking about inequality to a radical agenda for social and economic change that puts the eradication of poverty within a generation at the heart of all Government policy and action? Will it move beyond the politics of grievance and embrace the politics of change?
Many of the important powers that would enable us to tackle inequality and eradicate poverty will, after the Smith report is implemented, remain reserved to the United Kingdom Government. Welfare sanctions will remain the exclusive preserve of the United Kingdom Government. That should be one of the key powers and responsibilities in our ability to tackle inequality. I have just recounted to Parliament that 85 per cent of welfare spending will remain reserved to the United Kingdom Government.
Mr Rowley knows me well enough to know that I will use the powers available to the Scottish Parliament to deliver as much opportunity and tackle as much inequality as I possibly can, but we must be straight with the people of Scotland and say that the Smith commission proposals mean that significant areas of responsibility remain reserved to the United Kingdom Government. That is a matter of regret about the Smith commission’s position.
That ends the Deputy First Minister’s statement on the Smith commission.
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