Meeting of the Parliament

Meeting date: Thursday, December 5, 2013

Official Report 859KB pdf

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General Question Time

Question 1 is from Joan McAlpine, who is not in the chamber.

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Tax System (White Paper Proposals)

2. To ask the Scottish Government what actions underpin the proposals in the white paper on independence to simplify the tax system. (S4O-02678)

“Scotland’s Future” sets out this Government’s aspiration to create a simpler tax system for Scotland that will stimulate the economy, build social cohesion and sustain Scotland’s public services.

As set out on page 121 of “Scotland’s Future”, the Government will work with revenue Scotland to simplify the tax system to reduce compliance costs, streamline reliefs and help to reduce tax avoidance, with the aim of generating additional tax revenues of up to £250 million per year by the end of the first session of an independent Parliament.

We have already shown a commitment to streamlining reliefs in developing devolved taxes. Land and buildings transaction tax will contain fewer reliefs than the United Kingdom tax that it will replace. We will seek to replicate that approach in developing a Scottish tax system that will reduce the scope for individuals and corporations to avoid paying their fair share of taxes.

Let me draw the cabinet secretary back to the point. The finance secretary’s expert group said that making the tax system simpler would “imply tough choices.” Sir James Mirrlees, Nobel laureate and member of that expert group, wants VAT on food, even though that would cost a family £500 a year. If the cabinet secretary is not going to do that, what tough choice does she recommend? Different industries have acquired special tax breaks, sometimes after many years of campaigning. Will the cabinet secretary come clean and tell us which industries will lose out?

It is a bit rich to get lectures on VAT increases from members of parties who are in government in Westminster. There are no Scottish Government proposals for what Alison McInnes suggests. I recommend that she takes the time to read “Scotland’s Future”, in particular part 2, entitled “Scotland’s Finances”, which very clearly sets out the opening fiscal position of an independent Scotland and the changes that this Government would make, in terms of both raising revenue and additional spending commitments over the first session of an independent Scottish Parliament.

We have very clearly set out our plans and our vision for Scotland if we vote yes. What is missing absolutely from the other side of the debate is any vision for what happens to Scotland if we vote no.

Will the cabinet secretary highlight the benefits of an integrated benefits and tax system in assisting families with childcare, as outlined in “Scotland’s Future”?

I am very mindful—I know that this view will be shared across the chamber—that if we continue on the current path of welfare cuts under the Westminster system, potentially we will consign up to 100,000 more of our children to a life in poverty. That is unacceptable and nobody in rich Scotland should be prepared to settle for it.

The white paper sets out how we can start to do things differently, and Aileen McLeod is absolutely right to draw attention to our transformational childcare policies. We would not spend money on weapons of mass destruction; we would invest instead in the childcare that is required to give our kids the best start in life and help women into the workplace. The integration of tax and benefits is something that is badly needed to avoid letting people fall further into poverty traps, and it is only with the powers of independence that we will get the chance to do that.

It is absolutely right that the white paper sets out that vision of how we can do things differently and better in an independent Scotland. Right now, it is the only vision in existence for the future of Scotland.

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Independence (Currency Options)

3. To ask the Scottish Government what discussions it has had with Opposition parties about currency options in an independent Scotland. (S4O-02679)

The Scottish Government agrees with the fiscal commission working group that retaining sterling in a formal currency union with the rest of the United Kingdom is in the best interests of both Scotland and the rest of the UK. Scotland is a key trading partner for the rest of the UK, which exports more to Scotland than to Brazil, South Africa, Russia, India, China and Japan put together.

Does the cabinet secretary agree that it is simply not good enough for Opposition parties to denounce the Scottish Government’s plans to retain the pound? If Opposition parties think that retaining sterling would not be in Scotland’s interests, is it not time for them to say what currency Scotland should have if Scots vote—as I believe that they will—for independence in September?

Kenny Gibson is absolutely correct. I confidently predict that all those politicians in the Labour/Tory/Liberal alliance, who are, as is their absolute right, arguing against independence, will, if Scotland votes for independence, be on the same side as us, arguing for sterling in a currency union. That is the reality of the situation. I am sure that members across the chamber will have seen today’s intervention by a number of Scotland’s leading businesspeople, who have said that, if we vote for independence, retaining sterling in a currency union is exactly the right thing to do, not just for Scotland but for the rest of the UK.

On a more general point—and following my response to Alison McInnes—I think that the no campaign is in significant difficulty. It is devoid of any positive vision for the future of Scotland if we do not become independent. It will not be good enough to continue to say, “You can’t do that”, and to continue to spread fears and smears that fall apart before our very eyes. “Scotland’s Future” is the only vision for the future of Scotland, which is why I think we will be seeing more and more people support it.

Once again, the cabinet secretary is entirely missing the point—or, rather, the points. Will she accept two things that she rejected last week? First, does she accept that, if there is a vote for independence, it is totally irrelevant what I think or what any of the Opposition parties or anyone in this chamber thinks about a single currency, because the decision will be for the rest of the UK, over which we will have no influence whatever? Secondly, does she accept that even if there were a common currency we would not have the fiscal independence that she kept talking about last week? Will she accept those two facts, which she completely failed to understand last week?

I have said many times in the chamber that I have enormous respect for Malcolm Chisholm, but he is putting that position under serious pressure at the moment.

I want to make three points. First, it is completely wrong to say that what people on the Opposition benches think about life in an independent Scotland is irrelevant. If the people of Scotland democratically vote to be independent, they are going to have to come forward with some policies about what life in an independent Scotland should be like—unless, of course, they want to remain consigned to opposition for ever, which, I have to say, they are doing a good job of suggesting at the moment.

Secondly, on the question of the rest of the UK, what no one on the no side can answer is how it would possibly make any sense for the rest of the UK to force its own businesses into a separate currency from Scotland’s when Scotland itself did not want to be in a separate currency. That would cost businesses in the rest of the UK at least £500 million in transaction costs alone. The key strength of our position, which the no side really struggles with day and daily, is that it is not just in the interests of Scotland but overwhelmingly in the interests of the rest of the UK.

Thirdly, Scotland would of course have fiscal independence. More than that, we would have control over our welfare state, which is something that I would have thought that Malcolm Chisholm, looking at the destruction and devastation being done to it by the Tories, whom he seems to support in the better together alliance, would want. The sooner we get control of our welfare state in Scotland, the better.

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Fuel Poverty

4. To ask the Scottish Government what it is doing to tackle fuel poverty. (S4O-02680)

The Scottish Government is committed to eradicating fuel poverty. Since 2009, it has invested £220 million in fuel poverty and energy efficiency programmes, with an estimated total net saving of more than £1 billion to household incomes over the lifetime of the measures, and has created a £200 million per year initiative, using Government funding to lever in additional investment from energy companies to tackle fuel poverty.

However, we need the full powers of independence to tackle all the causes of fuel poverty. If elected in an independent Scotland, this Government will move the costs associated with the energy companies obligation programme and the warm home discount scheme from levies on consumers’ bills to central resources, cutting energy bills by roughly 5 per cent, or £70 a year, and allowing a new means of funding and delivering energy efficiency improvements to Scottish homes that is fairer and better suited to our needs.

Sharp rises in gas and electricity prices have plunged more families into fuel poverty across Scotland, and we are now fast approaching 1 million households in fuel poverty. As the minister has said, the white paper proposes to reduce energy bills by around 5 per cent by moving the cost of some environmental schemes from energy bills and funding them instead from central Government resources. Is it not the case that that 5 per cent, which is an average saving of approximately 20p a day, would be added to taxation? With the sharp rises in energy prices, how does this Government aim to meet the statutory 2016 target to eradicate fuel poverty?

I outlined in my answer how we are tackling fuel poverty and will continue to do so. In an independent Scotland, we will continue to keep the same spending to deal with fuel poverty, reducing fuel bills, and we will have full powers over our economy, tax and welfare systems, reducing poverty overall in Scotland, including fuel poverty.

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Independence (Compatibility of Tuition Fee Charges with European Union Law)

5. To ask the Scottish Government for what reason it considers that, in the event of Scotland becoming independent, charging United Kingdom students tuition fees but not students from other European Union countries will be compatible with EU law. (S4O-02681)

We believe that the unique and unprecedented position in higher education of a post-independent Scotland will enable us to continue our current policy in a way that is consistent with the principles of free movement across the EU as a whole and which is compatible with EU requirements.

As detailed on page 200 of “Scotland’s Future: Your Guide to an Independent Scotland”, our policy is based on the unique and exceptional position of Scotland relative to other parts of the UK; the relative size of the rest of the UK; the fee differential; our shared land border and common language; qualification structure; the quality of our university sector; and the high demand for places.

I have read that section of the white paper, and I have also read article 18 of the Treaty on the Functioning of the European Union, which clearly states that discrimination on the ground of nationality is illegal. Even the Universities Scotland legal advice, which the minister likes to refer to, states clearly:

“RUK students will require to be treated no differently from other EU students.”

Is the minister actually denying that, under EU law, it is illegal to discriminate on the grounds of nationality? If he is not, where does that leave his policy in the white paper?

It leaves the policy completely untouched, because the argument of objective justification—as the member will know, given his expertise in European law—is a clear and understood argument in these circumstances. The member should consider that argument. Perhaps he would also like to reflect on his party’s policy, which appears to be to impose tuition fees. The no campaign’s offering is to have tuition fees in Scotland. The Scottish Government believes that education should be based on the ability to learn, not the ability to pay. If the member shared that view, he would be working hard to make sure that that continued to be the case in Scotland. However, of course, that pass has been sold by the member and the Labour Party.

Can the cabinet secretary confirm whether the law officers have given an opinion on the policy that is contained in the white paper?

The member is aware that such confirmation is not given by any Government. It is not given by his Government in Westminster and it is not given by this Government. However, I am happy to say to the member that the details that I gave in my initial answer—concerning the unique and exceptional position of Scotland relative to other parts of the UK; the relative size of the rest of the UK; the fee differential; our shared land border and common language; qualification structure; the quality of our university sector; and the high demand for places—are clear elements of an argument for objective justification, which is a term that I am sure he will understand.

In an answer to our late colleague David McLetchie on 9 February 2012, the cabinet secretary said that he wanted to introduce a management fee for students from other EU countries to defray at least some of the cost of providing them with free higher education. There is no mention of that policy on pages 449 to 451 of the white paper. Has it been abandoned?

Considerable discussion took place with other EU countries and EU officials about the concept of management fees, and the policy is extremely difficult to implement. It would still be considered, but it is extraordinarily hard to implement. In the white paper, we offer a positive approach to the issue of EU students.

If the member has ideas about how we could improve our higher education system, I will always be happy to consider them. However, as the member’s ideas have also included charging students in Scotland fees, I suspect that we will not be able to come to an agreement on them.

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Independence (Share of United Kingdom National Debt)

6. To ask the Scottish Government whether it has estimated an independent Scotland’s share of the United Kingdom national debt. (S4O-02682)

The first thing that I would say is that the UK national debt is an argument for independence, not against it.

An independent Scotland’s share of the UK national debt, and our share of UK national assets, would be part of a negotiated settlement between Scotland and the rest of the UK.

“Scotland’s Future” sets out the possible scenarios for Scotland’s share of UK national debt. Those show that, if Scotland were assigned either an historic or a per capita share of UK debt in 2016-17, we would have a lower debt to gross domestic product ratio than the UK as a whole.

The cabinet secretary will be aware that, when Labour left office in 2010, the debt in the UK was £750 billion. It is now predicted to be £1.6 trillion by 2016. Can she assure me that, in the negotiations that will follow a yes vote next year, she will drive a hard bargain with the UK in recognition of the fact that Scotland’s contribution to the UK’s finances is greater than our population level suggests?

Yes, I agree with that. Willie Coffey makes a good point. It should be remembered that, in the past three years, the UK Government has borrowed almost £400 billion. As a result of economic mismanagement at Westminster, not only will cuts to public services continue for years to come, but the independent Office for Budget Responsibility forecasts that the UK is set to remain in deficit for the next 50 years. Scotland’s public finances are stronger than those of the UK, and it is only with independence that Scotland can chart a better course for the future.

Whatever level of inherited debt is agreed or negotiated, the white paper proposes that the Government of an independent Scotland would not take on that debt but would, rather, pay the Treasury to service it. Is that not an admission that the Scottish Government knows that a separate Scotland will face far higher interest rates for Government borrowing than the UK currently does?

No, it is not. I assume that Iain Gray has read the fiscal commission’s work on the issue and knows that it has looked at it in detail. It has concluded that an arrangement whereby Scotland gradually assumes an agreed share of UK debt while contributing an agreed share to UK debt interest payments would be an efficient and sensible solution.

There will come a point in the debate—I think that it is now—when, as well as chucking criticisms at the vision that we are setting out for Scotland’s future, the no campaign will manage to come up with some ideas and vision of its own.

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Prestwick Airport

7. To ask the Scottish Government what plans it has to revitalise Prestwick airport. (S4O-02683)

As members will be aware, we completed the acquisition of Prestwick airport on 22 November, securing its future and safeguarding the significant number of jobs that are supported by the business. We are now developing our detailed proposals to ensure that Prestwick delivers a commercial rate of return and can thus maintain and enhance its contribution to the local, regional and national economies. Our business plan will consider all potential commercial opportunities and will maximise the use of the assets at the airport. It will consider new and existing revenue streams and how they can deliver optimum returns.

Does the cabinet secretary agree that bringing the airport into state ownership could improve the Scottish economy through increased business and tourism?

I agree with Colin Beattie that acquiring the airport was hugely preferable to standing by and watching it close, with all the impacts that that would have had on jobs and the local, regional and national economies. Our decision recognises the role that Prestwick airport can play in enhancing not just the Ayrshire economy, but the wider Scottish economy. We firmly believe that Prestwick has a positive role to play alongside Glasgow airport, Edinburgh airport and Scotland’s other airports. We look forward to developing the plans to ensure that that is the case.

I welcome the cabinet secretary’s positive comments. She will be aware of the new generation of aircraft—the Airbus A380 and the Boeing 787 Dreamliner—and the different ranges that those aircraft have relative to the current transatlantic workhorse, the Boeing 747. Have she and Transport Scotland considered developing Prestwick airport as a long-haul hub for flights from the far and middle east to America that specifically use those aircraft, given that Prestwick airport has the only runway in Scotland that is long enough to accommodate those aircraft? Would she be prepared to meet me to discuss that concept further?

I am certainly prepared to meet John Scott, who is one of the local members, to discuss any positive suggestions for the future of the airport. However, he will understand that I am not going to give a categorical answer to his suggestion. I refer him to my original answer, which made it clear that we will consider all possible commercial opportunities. I will be happy to meet anyone to discuss those. I am about to meet Brian Donohoe, one of the local MPs, to discuss his ideas for the future of the airport, and I am happy to meet anybody else to discuss their ideas and suggestions.