The next item of business is a statement by John Swinney on the Smith commission. The Deputy First Minister will take questions at the end of the statement, so there should be no interventions or interruptions.
14:18
I am grateful for the opportunity to set out for the Parliament the Scottish Government’s response to the proposals on the Smith commission that the United Kingdom Government published last Thursday.
The Scottish Government welcomes the publication of the UK Government’s command paper and draft bill. It is no secret that we do not believe that the Smith proposals go nearly far enough, but the publication of the draft clauses is another important step in providing the Parliament with further levers to improve the lives of the people of Scotland.
The Scottish Government’s objective now is to develop a bill that commands broad support and will be ready for introduction as soon as possible after the United Kingdom general election in May. That is in line with the Scottish Government’s clear position 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 work in this country.
I welcome the progress that the Scottish and UK Governments have made in agreeing an order to transfer powers to give 16 and 17-year-olds the vote in Scottish Parliament and local government elections. The order was laid in both Parliaments last week.
Through joint working and effective co-ordination, we should reach a similarly agreed position on the new Scotland bill. Encouragingly, there are areas in the draft clauses where the initial drafting is already close to what should be in the final bill. Examples include the provisions on air passenger duty and the aggregates levy. Our initial assessment of the income tax provisions also suggests that they are close to delivering what the Smith commission recommended.
However, there are a number of areas that the Scottish Government wishes to be improved. First, I highlight the provisions that require the Scottish ministers to consult UK ministers and those that say that the Scottish ministers must obtain consent. No one in this chamber would want decisions of this Parliament on issues such as the bedroom tax to be frustrated by the need for consent from the UK Government. Even the Secretary of State for Scotland agreed over the weekend that there should be no right of veto. It is therefore important that the UK Government revisits the clauses that require consent.
Secondly, devolution of employability programmes appears to be limited to programmes that deal with people who are at risk of long-term unemployment and to programmes of more than 12 months. Neither of those restrictions featured in the Smith commission report. I look to support from all other parties for the fullest possible implementation of those important powers.
Thirdly, we—and, I think, a wide range of stakeholders—were concerned that Lord Smith’s recommendation of a power to create new benefits in devolved areas does not appear in the command paper or the bill. The clauses would allow this Parliament only to create new benefits in the much narrower areas of welfare that are to be devolved under the bill.
Similarly, the ability to top up reserved benefits has been watered down to cases of hardship. That is not a credible interpretation of paragraph 54 of the Smith report, which said:
“The Scottish Parliament will have new powers to create new benefits in areas of devolved responsibility ... The Scottish Parliament will also have new powers to make discretionary payments in any area of welfare without the need to obtain prior permission from DWP.”
It is not credible to argue that this Parliament already has the competence to create benefits in devolved areas when social security schemes are specifically reserved under the Scotland Act 1998. Many in this chamber will recall the difficulties that the Parliament has faced on issues such as carers benefits and council tax reductions because of that reservation, so it is vital that the power to create new benefits in devolved areas is put beyond any reasonable doubt. Those proposals have rightly been hailed as some of the most important of the Smith proposals, so that is perhaps the most serious omission from the bill as it was published last week.
More widely, there is detailed work to do across a range of provisions to improve and refine the draft clauses. There is already debate in academic circles about whether the provisions that guarantee the permanence of the Parliament and put the Sewel convention on a statutory basis are as strong as they could be.
The provision on the Crown Estate is complex and the scheme to transfer assets to the Scottish Government will need to be explored with the United Kingdom Government. We need to be sure that this Parliament has legislative competence out to 200 miles under the draft provision.
We will consider carefully the equalities provision to ensure that it meets the Smith report recommendation that
“The powers of the Scottish Parliament will include, but not be limited to, the introduction of gender quotas in respect of public bodies in Scotland.”
Among the other provisions that we will consider carefully are those on tribunals, consumer protection and advocacy, and fixed-odds betting terminals, on which stakeholders have already expressed doubts about the effectiveness of the draft clauses.
I stress the importance of non-legislative parts of the proposals—most notably the fiscal framework to support the operation of the tax and spending powers. The negotiations on the fiscal framework will be more complex than the negotiations on the block grant adjustment under the Scotland Act 2012, although we can build on that experience. I hope that we can do the negotiations in slightly less time than it has taken to deal with the block grant adjustment to date. There are new factors, such as the no-detriment policy, which will seek to identify the relative costs and benefits of policy decisions, and the block grant adjustment for the assignment of VAT revenues.
I welcome the UK Government’s acknowledgement that we must move forward by negotiation and agreement on the many important issues that the fiscal framework will cover. There is clearly much to do to construct an agreed new fiscal framework that serves the needs of the people of Scotland. I will look for an early meeting with Treasury ministers to progress that work.
I turn to the next steps in taking forward the issues. The Scottish Government’s aim is to work with the UK Government and others to develop the draft clauses into a bill with widespread support that is ready to be introduced at Westminster shortly after this year’s general election.
The UK Government’s command paper envisages a similar process. I state clearly that the Scottish Government is committed to working constructively with the UK Government to refine and improve the draft clauses. In doing so, I hope that we will see early consultation and a willingness to address concerns and that we will have the support of other parties in this Parliament for issues that we advance.
Of course, the next steps in the process are not for Governments alone. The Scottish Government will discuss our plans for stakeholder engagement with the UK Government, and we will consider what other support we can offer stakeholders and the public to engage with the bill. The Parliament will also play a key role in the next stages of consideration of the issues at stake. The Devolution (Further Powers) Committee, of which Bruce Crawford is the convener, has issued a call for evidence on the command paper and the draft clauses. I expect the committee to carry out detailed pre-legislative scrutiny of the bill and to take evidence on it in due course.
I know that, in addition, the committee has planned a series of public engagements to allow the people of Scotland to have their say directly to Parliament on the relevant provisions. The first of those events will take place in Hamilton on 2 February and the following one will be held in Aberdeen after the February recess. That is an important initiative by the committee, which I wish it every success in progressing.
Publication of the UK Government’s command paper and draft bill last week marked the start of a new phase of work on the Smith commission’s proposals. That phase gives the Scottish Parliament and the people of Scotland opportunities to shape the bill to deliver what they want from the Smith commission’s work.
The most immediate priority is ensuring that the bill that is introduced later this year delivers the spirit and intent of the Smith commission in a coherent and practicable way. Beyond that, we have begun to consider how the new powers should be used to improve the lives of the people of Scotland. As many people have commented, that is the underlying purpose of the exercise.
The Scottish Government has set out how it plans to use some of the powers that will come to the Scottish Parliament to create jobs, to boost the economy and to tackle inequality. We have made clear proposals to cut air passenger duty, to replace the work programme and to make sure that communities benefit from the devolution of the Crown Estate.
This Parliament will need to agree to the bill that is introduced in Westminster later this year. The Scottish Government will support that process to achieve transfer of competence as swiftly and as effectively as possible. At the same time, the Government will consult the public and interested groups on how the powers should be used and how we share powers with local authorities and communities across Scotland.
There should be a common objective of ensuring that the Smith commission agreement is implemented as swiftly and as effectively as possible. That means that all of us must recognise the parts of the proposals that represent good progress and must work with the Scottish Government to argue for improvements in key relevant areas. We in the Scottish Government are determined to argue for what is in the best interests of the people of Scotland but, in the end, it will be for them to judge—at the ballot box—whether the proposals meet their ambitions and whether the proposals have been delivered.
The Deputy First Minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for that, after which we will move on to the next item of business.
I thank the Deputy First Minister for an advance copy of his statement and I welcome the publication of the command paper, which heralds the biggest transfer of powers to this Parliament since devolution.
Labour has said that we will deliver the home rule (Scotland) bill in the first 100 days of a Labour Government. It will provide extensive new powers over tax, jobs and welfare, and it will form the basis of a modern home rule for Scotland at the same time as protecting the bonus that we receive from the Barnett formula.
I note the Scottish Government’s response to the requirement for consultation with the UK Government about changes to universal credit. I genuinely do not believe that that amounts to a right of veto; it relates to practical issues such as timing. I am sure that we all agree that the sensible thing to do in the interests of ensuring smooth transition is for both Governments to talk to each other. It was wrong to suggest that there is any other intent behind that.
As I understand it, Mr Swinney’s comments about the employment programme do not reflect the discussions that took place in the Smith commission. Clause 22 will give the Scottish Parliament full powers over that area. It will mean that all of the work programme will be devolved, in addition to other, smaller employability programmes.
We agree that job-creating powers are important. The work programme is important in that regard. It has not worked very effectively, so I welcome the opportunity to reform it. However, Labour wants that to be devolved now. Labour would equally reform the work programme, but we would devolve it to local authorities, which are best placed to tackle the challenge of jobs. Will the cabinet secretary join Labour in calling for the urgent devolution of the work programme and in turn commit to devolving it to local authorities?
Finally, will the Deputy First Minister provide us with a timetable for getting the fiscal framework that he spoke about in place?
In her first remark about the universal credit, Jackie Baillie missed the point of what we have been presented with—not in the words of the command paper but in the words of the clauses. She is an experienced parliamentarian and she knows the significance of every single word in a legislative provision.
Clause 20(4) of the United Kingdom Government’s draft clauses, which affects universal credit, raises significant doubts, which the Scottish Government has raised, in relation to the fact that the UK ministers would be able to prevent a Scottish Government from taking forward reforms in that area if they chose to do so. They would have a basis to do so in relation to either practicability or timing.
Jackie Baillie will understand the Scottish Government’s view, which is utterly consistent with that of the Smith commission. It believed that those powers should be devolved to the Scottish Parliament for them to be exercised by the Scottish Parliament. They were not to be exercised with caveats applied to them. That is the problem in clause 20(4).
Because we are dealing with clauses of a draft bill, we have to get precision into those provisions. To be fair to the UK ministers, they have said since Thursday morning that there are absolutely no caveats, problems or obstacles. I simply say that, in the spirit of dialogue, let us change that clause and remove any possible caveats that there could be to the exercising of those responsibilities in the Scottish Parliament.
The Scottish Government wants to see the devolution of employment programmes to the Scottish Parliament. We have made no secret of the fact that we think that the work programme has been a poorly performing programme, and we think that it would perform better if it were integrated in the wider employability provisions that are put in place. Some of those will be taken forward by our local authority partners and some will be taken forward by third sector organisations; both will do so in a more successful fashion than that in which the work programme has been able to take those issues forward.
The problem that we face is that the work programme contracts have been extended beyond the period that we all reasonably thought that they would be in existence for. They were extended while the Smith commission was deliberating on that very question. We have certainly made the point to the UK Government and we will continue to make the point to it that we need to ensure that the wide range of employment programmes is available to us. We will, of course, be happy to take forward the delivery of those programmes in partnership with our local authority colleagues.
The final point that Jackie Baillie raised was about the timescale for the fiscal framework. As I indicated in my statement, I wish to embark on early discussions with UK ministers on the fiscal framework. That is very important not just for me but for all of us, because the fiscal framework that emerges out of the provisions will affect every single member of the Scottish Parliament, the judgments that we are able to make and the issues with which we will have to wrestle. The Parliament needs to carefully consider the process, and the Government will certainly advance those discussions at an early stage and inform Parliament of their course.
I, too, thank the cabinet secretary for the prior sight of his statement. I also thank him for a welcome surprise. I liked the character of the statement, which was unexpectedly conciliatory. That is in striking contrast to some of the language from the Scottish Government post the Smith report. I even see in the statement some welcomes and the word “Encouragingly”. Therefore, I feel that we are making progress and that things are indeed looking up. We can hope for a constructive partnership between the Scottish Government and the Westminster Government with a degree of confidence.
The Smith commission was very clear that this is not just about the transfer of powers from Westminster to this Parliament but about how we deal with devolving some power to local authorities and local communities. I am pleased that the cabinet secretary included that in the final part of his statement, when he specifically referred to consultation
“with the public and interested groups about how these powers should be used and how we share powers with local authorities and local communities”.
However, I ask him to confirm that consideration should also be given to how we share the existing powers of this Parliament. I do not think that we should look at the new powers in a vacuum or in isolation, and I hope that he will agree that there is a broader remit that could usefully be explored.
I also ask the cabinet secretary whether he has a timeframe in mind for the process and, if so, what it is.
The last time Ms Goldie and I exchanged words on the Smith commission, she somewhat unjustly accused me of being “curmudgeonly”. I thought that, of the many things that I have been accused of being in this Parliament, it was the most unwarranted. [Laughter.] It forced me into some ungallant remarks back to Ms Goldie, which I shall refrain from today, in the spirit of co-operation.
I agree with a number of the points that Ms Goldie made about devolution of powers within Scotland. When this Government came to power, we took a strategic decision about enabling local authorities to exercise much greater fiscal flexibility than they had previously, by removing the ring-fencing arrangements that had been in place across many aspects of public expenditure. That gave local authorities the freedom to make particular choices according to the needs of their localities.
I accept that there is an argument—I made it in my statement—for the devolution of responsibilities to local authorities and also to local communities. I am sure that Ms Goldie accepts that the debate is about more than devolution to another tier of government; it is also about devolution to our communities. The Community Empowerment (Scotland) Bill, which was introduced by Mr Mackay and which Mr Biagi is taking through the Parliament, is designed to encourage the process of discussion and involvement at the local community level and to ensure that our communities are able to achieve a great deal more as a consequence of responsibilities that they can exercise with their own free will.
On the timescale, I would like to make as much progress as possible on addressing some of the specific issues that we have about the clauses before the United Kingdom general election. That will mean that the UK Parliament can make the swiftest start to legislating immediately after that election. The Devolution (Further Powers) Committee, which Mr Crawford convenes, will be looking at the issues in this Parliament, and I am sure that it will make a substantial contribution to the process.
I have noticed again today that the Labour Party keeps referring to the draft clauses and the coming legislation as the home rule (Scotland) bill. That appears to be the new mantra. I ask the Deputy First Minister whether he considers that the draft clauses, as presented, can in any measure whatsoever be described as home rule.
It is not a description that I would apply to the provisions. There are greater powers for the Parliament—I have already made that clear to the Parliament—but some significant areas of responsibility remain reserved to the United Kingdom Government that should be transferred to the Scottish Parliament to constitute the term “home rule”.
The exchange that I had with Jackie Baillie about clause 20(4) is illustrative of some of the constraints that still percolate their way into the draft clauses. We have to use the opportunity of dialogue to remove those provisions to ensure that we have the ability to exercise powers as we judge fit here in Scotland.
I thank the Deputy First Minister for the advance copy of the statement. Annabel Goldie is right—he has made a remarkable transformation from bad cop to good cop within the space of just one week. I hope that that continues, because the Scottish Government’s response to the Smith agreement and the subsequent publication of the clauses was deeply negative.
This is the transfer of £20 billion-worth of new taxes, with a £3 billion new Scottish welfare system, and that transfer will pose considerable challenges for this Parliament and this Government. We have seen with the establishment of Revenue Scotland the real difficulties that the transfer of only two small taxes posed to the Government and the Parliament. To avoid a repeat of those mistakes, will the cabinet secretary agree to establish a cross-party advance fiscal team to plan the effective and orderly implementation of these new, substantial powers?
I can go back to playing bad cop quite quickly, if Mr Rennie would like that. Indeed, I am tempted to do so, following the baloney that we have just heard from him.
First, it is a fact that less than 30 per cent of Scottish taxes will be set in Scotland after the Smith process concludes, and that 14 per cent of welfare spend will be devolved to Scotland. Is that the summit, in Mr Rennie’s view? I am sure that there were moments during the Smith commission process when Mr Rennie’s colleagues would have liked to achieve more welfare devolution than was secured at the end, so we should not get a lecture from him about the extent of the provisions.
Mr Rennie mentioned Revenue Scotland, which must be ready for business on 1 April. I have said consistently to Parliament that I am very confident—and have been for a considerable time—about the efforts of the Revenue Scotland team to ensure that the organisation is ready for its operational activities on 1 April. I will meet the board on Thursday, and I have seen regular updates. I am very pleased with the progress that has been made, and I hope that I am able to make further announcements about that soon, subject of course to wider discussions with the United Kingdom Government.
On Mr Rennie’s point about the fiscal framework, the Scottish Government has a role to perform in negotiating with the UK Government the details of that. I will of course advise Parliament on the course of those discussions. In case Mr Rennie is facing a restless night worrying about that particular point, I reassure him that I intend to fight very hard for the interests of Scotland in the fiscal framework.
I thought that we had escaped the bad cop this afternoon, but apparently we have not. I was about to welcome the cabinet secretary’s statement and—as Annabel Goldie did—recognise his acknowledgment of the progress that has been made and the optimism about progress to come.
We have a lot of work to do and more to debate, and there should be a bad cop, but only when it is necessary. We should not be making up fights, as has been done with clause 22. The Scottish Government claims that the devolution of employment support fell well short of its promise, when Mr Swinney knows that he agreed in the Smith process that those powers would remain in the UK Government’s hands—for example, on jobcentres and reserved benefits.
Why does Mr Swinney not acknowledge fully where there is agreement and get on with the hard debate about the issues on which there is still work to be done, rather than fabricating debates over issues that have no substance?
If Mr McNeil wants to throw in the towel on important issues that affect Scotland that is up to him, but I will not do so on the issues that we are concerned about. On universal credit, for example, I have rehearsed with Jackie Baillie the issue of substance that is at stake in the wording of the clause as it stands.
If Mr McNeil wants to turn a blind eye to that and say, “No, no—we should just roll over and let it all happen, and we should not bother about it or agitate to protect people”, I do not know what, precisely, he is complaining about today.
The Scottish Government will go about its proper duty of ensuring that the Smith commission’s proposals are turned into reality in the clauses and that there are no attempts to constrain in any way the exercise of responsibilities that should properly be exercised by the Scottish Parliament.
In response to the UK Government’s published draft clauses, Margaret Lynch, the chief executive of Citizens Advice Scotland, said:
“The Smith Commission led us to believe the Scottish Government could craft its own welfare system, outside of Universal Credit, taking into account the needs of Scotland. It seems now that offer has been withdrawn.”
Does the Deputy First Minister share Ms Lynch’s views, and does he feel that the welfare needs of the people of Scotland have been ignored by the UK Government?
I said in my statement that there was a substantive concern about the narrow definition of the ability to create new benefits. That does not translate paragraph 54 of the Smith commission report into what anybody could believe was a legislative provision. It is one of the issues that, as a priority, we need to revisit.
The Deputy First Minister mentioned the principle of no detriment and the commentary has made much of how difficult that principle is. Mr Swinney called it a new principle but it is not, is it? Mr Swinney has just successfully negotiated a no-detriment settlement with regard to already devolved taxes. That was a negotiation in which, in the end, the Scottish block benefited more than it was initially thought might be the case.
Does the Deputy First Minister agree that the principle of no detriment is well established, understood and effective?
Mr Gray must have taken the optimistic tablets this morning if he thinks that my block grant adjustment about land and buildings transaction tax was a cheery and optimistic affair. I would use none of those words to describe the process.
There is a significant difference, which is why I disagree with Mr Gray when he says that the no-detriment principle is not new. The no-detriment principle, as it will have to be applied and as it is speculated about in the command paper, relates to how, where there is a devolution of an income tax responsibility, there will then be changes to the way in which expenditure decisions are calculated within the United Kingdom’s existing framework, through the Barnett formula. That is new territory. That is why, in my answer to Jackie Baillie, I made it clear that it was in the interests of everybody in this Parliament, whatever their politics—although it is very unlikely, at some stage in the future somebody else might have to stand here and do the finance secretary’s job—
Heaven forfend!
Exactly—heaven forfend. However, it is in the interests of every one of us to ensure that the interests of Scotland are well protected by the application of the no-detriment principle.
Given the ambiguities around the application or disapplication of conditions, as enshrined in the clauses of the draft bill, will the Scottish Government indicate what discussions it has had with the UK Government regarding the fiscal policies and framework that are needed to support the promised early introduction of the bill? Will the Scottish Government discuss the issue of capital borrowing with the UK Government, and the suggestion that capital spending could be replaced by borrowing? Has the UK Government indicated when those fiscal requirements will be ready?
There have been no substantive discussions with the UK Government since the publication of the command paper on Thursday. We have signalled our willingness to undertake those substantive discussions. I can assure Mr Brodie that that is exactly what we will endeavour to do.
Given that it should have been devolved already through Calman, does the Deputy First Minister agree that air passenger duty can and must be devolved to the Scottish Parliament at the earliest opportunity? Will he provide assurances that he will pursue that with the UK Government at the earliest opportunity?
In all the rhetoric around the clauses, the United Kingdom Government has made the point that we should make early and swift progress after the UK general election. That is the timetable that we certainly want to work to, to ensure that all reasonable steps are taken urgently to secure the devolution of all the responsibilities.
Mr Keir makes a very fair point. As he correctly highlights, air passenger duty was one of the issues before the Calman commission that were not translated into the Scotland Act 2012. We have to ensure that all these provisions are translated into the contents of the Scotland bill that emerges as a consequence of this process.
The Deputy First Minister will be aware of the increasing surcharges on the delivery of packages and parcels by a number of private companies, specifically in the north of Scotland, and not only in the Highlands and Islands but in the rural north-east. Does he agree that the UK command paper now gives Scottish ministers the powers that they need to require, on the same basis as a UK minister of the Crown, a full investigation of competition issues specific to Scotland? Does he agree that those new powers should be used to tackle discriminatory surcharging at the earliest opportunity?
I agree that, where we attract and exercise powers of that nature, they should be utilised in that fashion. We must make sure that we have the ability to exercise some of those powers and responsibilities fully and comprehensively, without reference to the United Kingdom Government. For example, where the involvement of the Scottish Government has been set out in a consultative fashion, we must ensure that we are able to secure influence greater than that and exercise responsibilities that will allow us to act in the way that Mr Macdonald has suggested.
The transfer of Crown Estate assets to Scotland does not reflect what was proposed by the Smith commission. Will the Deputy First Minister press the UK Government to provide clarity around the extent of the powers to legislate on the Crown Estate in Scotland out to 200 nautical miles and ensure that that is properly reflected in any future legislation?
One of the issues that I raised in my statement is that it is not clear to us, at this stage, that the legislative competence to exercise responsibility out to 200 miles has been devolved in the draft clauses. That is a material and substantive point that we will explore with the United Kingdom Government. The paragraphs on the Crown Estate in the Smith commission’s report—paragraphs 32 to 35, but specifically paragraph 34—make it clear that the Smith commission’s intention was to see devolved that legislative competence to exercise responsibility out to 200 miles.
Will the Deputy First Minister confirm whether it is Scottish Government policy to create a not-for-profit, publicly owned rail operator at the earliest opportunity in the light of the Smith commission’s proposals?
It was and always has been possible for a not-for-profit operator to bid for the ScotRail franchise—a franchise arrangement that was put in place and supported by the Labour Government. We invited not-for-profit interested parties to submit propositions during the recent retendering of the ScotRail franchise, and we will use the responsibilities that are devolved to us in the area to ensure that such ventures have every possible opportunity to take over the running of the railways in Scotland.
I thank the Deputy First Minister for the advance copy of his statement.
Not every paragraph of the Smith commission’s report managed to achieve crystal clarity, but the proposal to devolve power over onshore oil and gas licensing was unambiguous. Yet, the UK Government seems to be on the point of dishing out licences for fracking, coal-bed methane and other unconventional forms of gas extraction across Scotland, handing over the central belt to the fracking industry. Does the Deputy First Minister agree that such action would render those powers worthless before they are devolved and would demonstrate contempt for the process? Will the Government support the Parliament’s taking an early opportunity to vote on the matter, sending a clear signal about our expectations of the UK Government?
Mr Ewing wrote to the Secretary of State for Energy and Climate Change at the end of last week. He made the point to Ed Davey that, following the publication of the clauses on Thursday, it is crystal clear that that policy responsibility is now coming to the Scottish Parliament. Our view is that no decisions about licences should be made by the UK Government until the Scottish Parliament is able to exercise that responsibility. That call to Ed Davey was made on Friday, but I am not aware of a response. Mr Harvie will be aware that Mr Ewing will make a statement on such issues to Parliament tomorrow, when I am sure that we will have more to say on the matter.