Scottish Parliament (Financial Powers)
The next item of business is a Scottish National Party debate on motion S1M-1794, in the name of Andrew Wilson, on the financial powers of the Parliament, and one amendment to that motion. Members who wish to speak should press their request-to-speak buttons now, please. This debate will be rather tight, because we are five minutes over from the previous debate. I call Andrew Wilson to speak to and move the motion.
I ask the Parliament to support the motion, which calls for the Executive to trust the people of Scotland. That is no heady ambition, just a desire for normality. At present, the Parliament has fewer financial powers at its disposal than any other Parliament in the world—no power to borrow and a minimal revenue power that is barely 3 per cent of the overall budget. That is one sixth of the autonomy accorded to local councils in Scotland.
"The tax varying powers of the Scottish Parliament do not appreciably alter the kind of resources that the Scottish Executive would have to spend".
Those are not my words, but those of one of Henry McLeish's closest friends—Helen Liddell, the Secretary of State for Scotland, on "Newsnight Scotland" only recently. For the first and perhaps the last time, Mrs Liddell said something that was correct.
The Parliament's lack of responsibility will ultimately be corrosive to the proper development of democracy and accountability. Politicians must be accountable for how money is raised, as well as how it is spent. We need the same honesty and transparency with tax as we do with spending decisions. Henry McLeish has no more power at his disposal than Michael Forsyth had when he was Secretary of State for Scotland. In fact, Henry McLeish probably has even less power, given that he seems not to have the power even to appoint his own Cabinet.
The working of the Barnett formula is central to the debate. The idea of devolution is to recognise the demand for and desirability of a divergence in politics and policy in the United Kingdom, yet the Barnett formula is designed explicitly to produce convergence in spending levels per head. The basic idea of Barnett is not to preserve the differential per capita spending, but to reduce it. As the rules have been tightened and cash flows have increased, the resultant squeeze has increased.
New Labour members may find it convenient to employ Orwellian denial of that fact, but every serious academic analysis of the situation concurs with mine. Most recently at a Centre for Scottish Public Policy conference, Professor Peter McGregor of the University of Strathclyde—no SNP supporter—said that Barnett would
"ensure equal government expenditure per head across the UK … Overall the Barnett formula will not ensure a beneficial expenditure share for Scotland. Indeed it implies a ‘squeeze' for those who now enjoy an expenditure share that exceeds their population share".
That squeeze will take £1 billion out of the Scottish budget by the end of the current spending plans. That is the simple arithmetic truth that underpins devolution's financial settlement. We must ask why. Barnett and its accompanying convergence assume three conditions. First, Barnett assumes that public spending needs in Scotland are identical to the average for the rest of the UK. They are not. Secondly, it assumes that the cost of service delivery in Scotland is identical to the average in the rest of the UK. It is not. Thirdly, and most important, it assumes that public choice about the role of government, what it does and how is identical in Scotland to the average for the rest of the UK. It is not. That is the point of devolution.
It is up to the people of Scotland to decide how much of the nation's wealth we devote to public services. Those decisions should not be taken elsewhere on our behalf. Surely it is wrong that if the rest of the UK decided to privatise the health service the financial consequences of that decision would play in the Scottish budget, despite the fact that we did not want to take that route. More marginally, if the English department chose to place or increase service charges on anything from general practitioners to eye tests, the cut in funding would have an impact on the Scottish budget. As Peter McGregor said:
"Adherence to the Barnett formula would imply that the Scottish assigned budget would be likely to grow more slowly than other regions"
of the UK
"with comparatively adverse effects on the Scottish economy".
That will not stand as a situation for Scotland, which is why the SNP stands for full fiscal autonomy and normal financial powers for the Parliament. That would give us access to the £7.7 billion surplus that Scotland contributed to the UK Treasury last year and will contribute in the coming year. On any analysis—even the Government's discredited analysis—Scotland is contributing more this year and next to the UK Treasury than it will receive in public spending. I am happy to admit that in many spending areas, such as health, our per capita spend is higher. That is our choice. As the Scottish Constitutional Convention document—we will hear more about that later—that underpinned the Parliament said:
"the lion's share of other forms of public spending accrues to the South East of England".
As we said, on any analysis we give more to the Treasury than we get back. We need to argue about how to invest that rather than about constraining public spending as we do at present.
Is it implicit in the member's remarks that that surplus is partly generated by our fuel taxes, which are the highest in Europe? Is it implicit in what the member says that the SNP would sustain those levels to maintain the expenditure levels that the SNP thinks are desirable?
Mr McLetchie is half way to a neat point, but our proposals this week are Exchequer neutral and would have no impact on the overall tax take.
I will come to Mr McLetchie shortly. The key point is that Angus MacKay and someone called Raymond Robertson—if anyone knows who he is: somebody who makes Jim Murphy seem a reasonable chap—employed outdated and out-of-fashion arguments about deficits in the newspapers this week. The average UK non-oil deficit for the past 22 years is £26 billion. The average non-oil deficit during Mr McLetchie's party's term in office was £32 billion per year. That was national debt run up by the Tories every year. Sixteen years of Tory government were deficit years. Eleven of those, even on the Tories' own figures, were Scottish surpluses. [Interruption.] I will move on. That is the reality, but nobody suggests that that record of deficit means that the UK cannot be financially autonomous.
I was very amused, but not surprised, to read the detail of the amendment. Angus MacKay appears to be the only finance minister on earth who does not trust himself with the nation's finances. Perhaps he knows something that we do not.
Let us look at each of the amendment's points in turn. Angus MacKay says that the Executive supports the Scottish Constitutional Convention's financial framework. I am delighted to say that, due to extensive research using the resources at my disposal, I have a copy of "Towards Scotland's Parliament" with me. It says explicitly that a Parliament funded by the block grant, as is the case at present,
"would be a minimalist approach which is neither radical in concept nor conducive to accountability as it would effectively mean that the Parliament would be more accountable to Westminster than the Scottish people and would be even less financially independent than the local authorities".
If the Executive is looking to the convention for support, I am happy to go with it, but it will find that the convention scheme is more in line with my proposals than its. Angus MacKay is mistakenly using "Towards Scotland's Parliament" to shore up his conservatism. It goes on to argue:
"No sensible person would argue that resources should be allocated throughout the United Kingdom on a per capita basis".
That is exactly what Mr MacKay and the Executive are proposing. The amendment and the Executive are left looking very foolish indeed. Mr MacKay is trying to dress up his inherent conservatism by positioning himself and the Liberal Democrats behind the convention. Events have left him behind. He now occupies the same territory and uses the same tactics and rhetoric as the Conservatives used to. That will not stand; nor will Labour's position in the debate.
Others in the Labour party agree with me. I see one of them in the chamber today. I quote:
"I was a great supporter of the Scottish Parliament having tax-raising powers. Tax raising is one of the most productive things any parliament can do because it redistributes wealth and supports public services — and that's what the majority of the Scottish people want."
That is what John McAllion said in the Daily Record—not years ago, but this January. That is what Angus MacKay's own side thinks. I will be interested to see how John McAllion votes today.
However, John McAllion is not alone. I offer Angus MacKay another quotation:
"We are only scratching the surface of devolution. There are parts of the Scotland Act, which allow the Parliament to have greater powers. If ... we feel that we need more powers then we can seek them ... I have no problem with that."
That was no back-bench radical, but Henry McLeish. I wonder whether he has checked with Wendy Alexander about his ability to say such radical things.
When they have a consistent position—which is never—the Liberals have a similar record. Malcolm Bruce said:
"The Scottish parliament itself will not be able to meet the aspirations of the Scottish people, however, until it has control over their own revenues. The devolution settlement is unsustainable in the long-term."
Will the member take an intervention?
If Frank McAveety has something serious to contribute, I would be delighted.
Will Andrew Wilson reveal the insights that his party contributed to the debate in the Scottish Constitutional Convention about a Scottish parliament?
Perhaps Frank McAveety would like a history lesson. He will recall that it was Gordon Wilson who proposed the existence of a convention in the first place.
Malcolm Bruce said:
"In due course, financial devolution should follow political devolution."
That is what we call for today. Where would any debate on fiscal autonomy be without Brian Monteith and the Conservatives? Brian Monteith said:
"I think the answer lies in us considering full fiscal freedom for the Scottish Parliament".
Does the Conservative party stick to its own spokespeople's views on these matters?
All those people—John McAllion, Henry McLeish, Brian Monteith and, of course, me—are correct: the Parliament's present position is unsustainable. The Barnett squeeze is unsustainable. We must act now to be in line with the consensus of the two thirds of Scots—according to polling—who agree that the Parliament should have full financial powers.
Angus MacKay and the Executive can stand, as the Conservatives did, against the tide of Scottish public opinion. The SNP wants to look forward to the opportunities that greater powers can give us. We look forward to the serious debate that we can have in the chamber about what to do with the real powers of a normal independent country.
"Towards Scotland's Parliament", which was produced by the very convention on which Mr MacKay rests his amendment, says:
"The conclusion therefore, suggests that the greater the access to sources of revenue given to the Scottish Parliament the greater the freedom of action it will have and the more acceptable it will be to the Scottish people."
That is what the convention document says. Those are our proposals today. I ask Angus MacKay to give a bit of thought to his statements, to consider supporting the motion and to follow through with the real principles of devolution and the convention he says he supports.
I move,
That the Parliament notes that the current devolution settlement gives the Scottish Parliament fewer financial powers than any other Parliament in the world; further notes, that while devolution is a recognition of the need and desirability for policy divergences within the United Kingdom, the financial settlement underpinning it is designed explicitly to produce convergence in public expenditure; recognises that two thirds of Scots already support the devolution of full financial powers to the Scottish Parliament and calls for the Scottish Executive to respond to this growing consensus and bring forward proposals to deliver full financial powers to the Parliament.
The SNP's motion shows the party's real intent: independence by the back door. It claims that we have fewer powers than any other Parliament in the world, but the words "Parliament of an independent country" are deliberately missed out. The SNP ignores the fact that we are a devolved country within the UK, not separate from it. To compare ourselves with devolved government elsewhere in Europe, do the German Länder have full fiscal powers? Does Catalonia? No.
Will the minister take an intervention?
And no to Mr Wilson as well.
As in every devolved country, there is sharing between Governments.
The SNP goes on to say that the Barnett settlement is designed to produce convergence. The truth is that whenever there is an increase—as there was in the previous spending review and as there was in this month's UK budget—we get the same cash per head as the rest of the UK.
Will Angus MacKay tell me whether any of the other devolved Parliaments to which he refers have fewer financial powers than ours? Does he agree that the Barnett squeeze will produce a convergence in spending per head? The minister referred the same spending per head—does he want the same spent on health in Scotland as in England?
Mr Wilson has made me sorry that I gave way, because he contributed nothing by that comment. [Members: "Answer the question."] I will not answer the question in that case.
The gap in spending per head of population will remain to Scotland's advantage. For example, we spend £1,200 per head on health and personal social services and England spends £960 per head. That gap of £240 per head will remain. The SNP says that two thirds of the population support full fiscal powers. If we ask people whether they would support keeping in Scotland more of the taxes that are raised in Scotland, of course they will say yes. If we tell them that we receive more income from the rest of the UK than we raise, we will get a different answer.
Finally, the SNP's motion calls on the Executive to introduce plans for full fiscal powers. Why? Simply because the SNP does not have any clear policies. It cannot even agree on its own manifesto.
Will the minister give way?
No.
I will tell members something that one of the SNP's own spokesmen said about the SNP's tax plans. Andrew Wilson himself gave a few quotations in his speech. I see that he is sitting in front of Alex Neil. I do not know whether Alex Neil has any relationship to this, but he might want to come in on it. The SNP spokesman said that the party's tax plans are illiterate and that the SNP is a bunch of numpties. That is someone from the SNP speaking about their own group.
Will the minister give way now?
No.
The spokesman is wrong. They are not illiterate. They are innumerate, as Andrew Wilson demonstrated when he talked about 16 years of Conservative government. Some of us spent a long time fighting that Government and remember that it was 18 years. The SNP can write; it just cannot add up. That is its problem.
It is simple to say that the Government in Scotland should have full fiscal powers—simple, that is, until we examine the facts and what they mean. The nationalist case falls down when we consider the facts. It is clear to everyone except the nationalists that we spend more in Scotland than we raise. The Executive—and before that the Scottish Office—produces an objective analysis every year that stands up to independent scrutiny. The latest one shows that the £33 billion spent by the Government in Scotland exceeds the £28 billion taken in in taxes.
Will the minister give way?
Sit down and listen.
That, in other words, is a £5 billion deficit, or £1,000 for every man, woman and child in Scotland. Even if we include all the revenue raised in the North sea from oil, we are still spending £2.5 billion more than we raise. That shortfall, even taking into account North sea oil, has existed throughout the past decade. It means that, under the SNP's full fiscal powers, we would have to go to the Treasury every year to ask for a top-up. What level of spending would the SNP ask the Treasury to top us up to? The same as Barnett? In which case, why change? If it is less, is that not worse for Scotland? If it is more, why would the rest of the UK agree to it? The arguments over who decides the budget level, and how, would simply result in debilitating annual arguments. Those arguments would go on outside the democratic control of the Parliament, which is, of course, just what the SNP wants.
Will the minister give way?
No.
The nationalists are not keen to discuss the level at which the Scottish budget should be set. Perhaps that is why they have not tried to use any of the Parliament's existing powers. Have we seen an SNP proposal to vary the spending in the Scottish budget that we have just enacted? No. Does the SNP think that there is not enough to spend, then? Well, if it thinks that, why has there not been an SNP motion calling on the Executive to raise income tax with the powers that we have?
The SNP also prefers to use its own numbers—its own wrong numbers—to get out of fiscal deficit. Andrew Wilson's figures, quoted in business a.m., are simply wrong. The revenues are wrong, the expenditure is wrong, the oil income is wrong and the national debt is wrong.
Why do members of the SNP avoid so many questions of detail on fiscal matters whenever they are put to them? We are still waiting to hear the answers to the following questions. How will they fill the funding gap between the revenue raised and the money they want to spend? Will they raise taxes, or cut spending? Do they still support their own 1999 penny-for-Scotland plans? Which taxes will they alter—VAT, corporation tax or fuel duty? Will it be up or down? Do they still want to slash corporation tax? Do they agree with Alex Salmond's view that tax rates of up to 50 per cent are not a disincentive? What new taxes will they bring in? How much will it cost to set up the systems—the very systems that the Confederation of British Industry Scotland says we cannot afford—to assess and collect those taxes? SNP members do not answer those questions.
How will those taxes interact with a UK-wide benefits system? What will happen to pensions and housing benefit? Does the SNP have an exchange rate policy that it can tell us or anyone else about? I do not think so. All those questions and more will not be answered next week, next month or even before the next general or Scottish election date.
The way in which we currently formulate the Scottish budget is simple, fair and easy to administer. It is simple because we automatically get our population share of any increase in England. It is fair because it recognises our need for higher expenditure. It is easy to administer because there is no annual conflict between Westminster and Holyrood. Full fiscal powers present a clear risk to Scotland, as they would mean a big deficit, annual arguments over revenues and the undermining of Scotland's case for the current higher spending per head than the rest of the UK that we currently enjoy.
Unlike Barnett and the straightforward tax-varying powers that currently exist, full fiscal powers are not simple and easy to administer, nor would it be fair to have them. What, for example, would it cost a UK business to administer different tax systems in Scotland and England? Under the SNP's proposal, we could have different sets of income tax rates and bands, different corporation tax rates and different VAT rates in Scotland. How much would ending the UK's level playing field cost Scottish businesses?
While the Executive is trying to cut red tape, the SNP wants to wrap Scottish business up in its own new tartan tape. It bases our future prosperity on one commodity: oil. Our policy, which is supported by business, is to generate a knowledge-based economy. We want a modern economy in which we generate wealth and eliminate social exclusion through our knowledge skills, not our access to raw materials.
The Barnett formula has been tried and tested over two decades of giving Scotland its fair share within the UK, and as long as it remains the best system for Scotland we will support it. Rather than arguing to change the current system, we will devote our energies to achieving best value from our own budget. We will not spend our time debating in the never-never land inhabited by the nationalists. We stand up for Scotland and we deliver for Scotland.
I move amendment S1M-1794.1, to leave out from first "notes" to end and insert:
"supports the financial framework for devolution as set out by the Scottish Constitutional Convention and supported by the Scottish Labour Party and the Scottish Liberal Democrats; notes that the Barnett formula has provided a stable fiscal framework for government expenditure in Scotland; and welcomes the current record level of public expenditure in Scotland."
We have heard the SNP lay out once again its general election stall, full of the same old policies of borrow, tax and spend and, although it was not said today, independence. I would like to ask a question before we go any further, because I see that some of the serious players are here today. Where does the SNP now stand on its policy of independence in Europe?
Totally in favour.
I thank the Presiding Officer for being gracious with me; I should not have invited an intervention. So, the SNP is happy with "Frankfurt will rule". The German banking system will take over. That is what the SNP lost the argument on before.
Will Mr Davidson give way?
I shall give way in a while.
What I cannot understand is why the SNP seems to be hell-bent on competing with Labour and its Liberal lackeys to see who can penalise Scottish families the most.
Will Mr Davidson give way?
I shall give way in a moment.
Did the SNP learn nothing when its penny-for-Scotland policy cost it votes from its own supporters? Now, it wants to drive out entrepreneurs and risk takers, who help to drive our economy, with an increase in the top rate of tax. How does the SNP think we would create jobs without those essential people being active in the Scottish economy? The SNP would make Scotland the most highly taxed part of the UK.
Does Mr Davidson regret that there was a deficit in 16 of the 18 years of Conservative government? The average non-oil deficit for the Tory period was £32 billion a year. Does he regret that record?
I thought the SNP came to the chamber today to discuss the powers it wants for this Parliament.
The SNP is offering a sop of 2p a litre off fuel tax. That is less than the cut we offered last year. I have to say that Labour, through Gordon Brown, offered only a temporary relief. The SNP has said nothing about removing the stealth taxes that Labour has put in place, so presumably it wants to put additional tax on top of them. The SNP has not mentioned a return to the uniform business rate, which Labour abolished. That is another part of the SNP's well-established high tax credentials.
Full fiscal autonomy is an unnecessary and irrelevant distraction from the budgetary choices that Scotland faces. Nobody argues about a few Tories in the past having commented on it, but I do not think that the SNP's ranks are uniform on the issue.
Please sit down, Brian.
Fiscal responsibility should be the byword for any party that seeks to govern. It is a matter of how we divide our resources rather than a mad scramble to obtain and wield further, increased taxation powers.
I would be grateful if you would ask Mr Rumbles to sit down, Presiding Officer.
I will decide when Mr Rumbles sits down, Mr Davidson.
I apologise.
The Parliament's current tax-raising powers have not been used because even Labour is beginning to understand that enough is enough. The Parliament has not settled down yet. This debate is a distraction that takes the Parliament's attention away from the many current issues that should be addressed.
It is unfortunate for Scots that Labour, with Liberal backing, is still proposing new taxes, such as the graduate tax, city-entry tolls and road tolls. The latter is apparently backed not only by the Liberals, but by the nationalists, who introduced this debate.
Labour has added the equivalent of 10p on basic tax but reduced the basic rate by only 1p. The nationalists are obviously happy to continue with that and to add to it. The Liberals, like the nationalists, want to increase income tax and additional taxation on fuel. We all remember the caravan tax and the dogs tax.
Will Mr Davidson give way?
Mr Davidson is in his last minute.
The truth is that Scottish families are paying £670 a year more under Labour, with Liberal backing, and the nationalists want to add to that. The other parties are full of members who are determined to make Scotland the overtaxed, uncompetitive and disillusioned nation that it has never been. Our enterprise economy can never be based on high taxation. No one will ever be able to trust any of the other parties again on taxation. That leaves the Conservatives as the only party that can be trusted on tax.
I have a word or two of advice for Andrew Wilson and his colleagues. They should live in the real world, buy a calculator, do their sums correctly, balance their books and give up wish-list accounting. Unless they change their ways, nobody will support them—as Labour and the Liberals will find out soon.
I am happy to state that the Liberal Democrats fully support Angus MacKay's amendment.
I will make two main points. The first is the need to retain Barnett to keep the situation steady for the next few years and the second is the need to replace it with something more intelligent.
Before I do that, I will form a fleeting—or I hope permanent—partnership with Frank McAveety, who mentioned the SNP's absence from the Constitutional Convention. There was honest and hard discussion in the convention between people who took different views on devolution. Some people—including some Labour people, all the Liberal Democrats, many of the trade unionists, church representatives and others—wanted the maximum devolution. Others wanted less far-reaching devolution. If the nats had joined in, that would have greatly strengthened the maximalist cause. However, they were not there; the battle of Bannockburn had broken out and they were off.
Does Mr Gorrie accept that the SNP left the convention because it ruled out our perfectly reasonable policy? Despite the fact that the SNP was not part of it, the convention proposed greater autonomy than the Parliament has today—and yet Angus MacKay's amendment asks us to support those proposals.
Although some of the convention proposals were accepted, the Executive went further on others. For example, Donald Dewar reversed one practice; whereas previous proposed legislation for devolution listed the powers that were devolved to Scotland, the Scotland Act 1998 lists the powers reserved to Westminster. There were gains and losses.
We need stability. Getting rid of the Barnett formula instantly and introducing some new formula would cause only instability. We should stick to the Barnett formula for the next few years, as it secures the bulk of our funding and ensures that the share of any additional funding is proportional to our population. It would take centuries for the Barnett formula system and any new system to converge. At the moment, stability is far better than any mucking about with the system.
However, the Liberal Democrats wish to look beyond the current system, which is not perfect. For the medium term, we are promoting regional government within England—which is critical—and are considering a needs-based financing formula for the regions of England, Scotland, Wales and Northern Ireland. As the gulf does not lie between Scotland and England, but between the poorer and richer parts of England, it is an English problem that the English have to sort out. We believe that there should be an effective democratic regional structure in which the different regions do not have the power to legislate—the English are not interested in that—but have democratic control over their economy. A needs-based formula would be fair all round, and we could make some progress towards that aim by the end of the next Parliament.
In the medium term, a needs-based formula should be introduced and a system of English regional government should be considered. In the meantime, we should retain the Barnett formula. The SNP's constant nipping at this issue has not been helpful. Although the nationalists make some good contributions when they seriously address issues, every now and then they go into their propaganda mode and lose the plot. The motion is not helpful; the amendment is much better and I am very happy to support it.
Because of the overrun on the previous debate, we have time for only two speeches in the open debate and only then if both members keep their remarks to three minutes.
It is intolerable that this subject has been squashed into such a short debate. However, that said, the debate is sterile and I do not know why we are having it. I am sorry that Duncan Hamilton has left the chamber, because it was ironic at best and hypocritical at worst for him not to accept my intervention in the previous debate. If he had accepted my intervention, I would have asked him why the SNP did not take up the whole afternoon with the debate on the tourism industry if the industry is as important as it would have us believe. Why did it shoehorn in this debate of less than an hour which we can have at any time? I have to question the SNP's sense of priorities.
Will the member give way?
No—I have no time to give way. [Interruption.] I have only three minutes. I will see Tricia Marwick outside to discuss these matters if she wants. [Members: "Oh."] I mean that in the nicest possible way, as Tricia knows.
At least this debate is in line with SNP party policy. I have dug out an SNP national council motion from March last year, which states that the council will
"seek to expand the powers of the Scottish Parliament in crucial areas such as finance, broadcasting, European and international relations and social security matters."
That is very interesting, because the cost of social security in Scotland for 1998-99, which is the last full year for which figures are available, was £9.2 billion, which is half as much again as the total Scottish Parliament budget. Where would the extra money to cover that come from? The SNP argues that we raise more money than we spend, but Andrew Wilson knows that the figures do not stack up and that that is not the case.
Where would the extra money come from? Would it come from taxation? An extract from "We stand for Scotland", the SNP's tax policy that was launched last Friday, states:
"We will not introduce any new measures to increase the overall burden of taxation or increase the rate of income tax".
If the SNP will not do that, it must tell the people of Scotland where the money for introducing full fiscal powers will come from.
Let us consider what full fiscal autonomy means: it means independence. It cannot mean anything other than that. Why does not the SNP come straight out and say that? Why, in two years of the Scottish Parliament, have we never had a debate specifically on whether we should move towards independence for Scotland? It is dishonesty. If that is really what the SNP believes, let us have that debate in the Parliament. The money for full fiscal autonomy is not there without raising taxation considerably.
We have no time to get into the debate about the Barnett formula, which is an important aspect of the matter. We will address that issue another time. However, figures for the last full year for which figures are available show that around £28 billion was taken in tax in Scotland, and £33 billion was spent in Scotland, whether through the Parliament or centrally through Westminster. The simple fact is that we would have to find ways of bridging that gap. I hope that the issue of oil will not arise, because even with oil revenue, the gap would still not be bridged.
It is about time that SNP members came clean and told us what they think. Why should a debate on this important subject be shoehorned into less than an hour, especially when the debate on the tourism industry in Scotland could have continued? That is what people in Scotland want to hear today—not debates such as this, which is going nowhere.
If Mike Watson had been a Labour MP in the 1940s, he would probably have told the Indians not to vote for independence because they were too poor. He would probably also have told the Irish not to vote for independence because they were too poor. Today, India and Ireland have two of the fastest-growing economies in the world.
It would seem to us, from listening to all these unionist members, that control from Westminster has brought resounding success to the Scottish economy. However, we should consider the record, over the past 20 years, of the official Tory Government and then the Labour Tory Government. Economic growth in Scotland has been half what it has been in the rest of the UK. This year, the Irish economy is growing by 9 per cent, while the Scottish economy is struggling to grow by 1 per cent. There are 170,000 people unemployed and looking for work in Scotland. Is that a success story from unionist economic managers? Let us also consider research and development. One company in tiny Finland spends more on research and development than does the entire Scottish economy.
Will Alex Neil give way?
Of course. Mr Davidson might care to remind us about the poll tax while he is on his feet.
That is up to Mr Davidson.
While Alex Neil is addressing the problems that he perceives Scotland faces—and I share some of his concerns—how would he define the drivers for an enterprise economy? Would he include high taxation among them?
There are several drivers for an enterprise economy, one of which is never to have a Tory Government—especially for 18 years. One of the ways in which the Tories drive is in permanent reverse.
As Alex Neil is reminding us about the Tory Government, would he care to remind us that today is the anniversary of the day on which the SNP helped to elect the Tory Government 22 years ago?
The people who elected Margaret Thatcher were those who voted for her. If Labour had kept its promise to deliver a Scottish Parliament in the 1970s, we would have been here 25 years ago to protect Scotland against the ravages of Thatcherism. In levelling such criticisms, Bristow Muldoon should remember the role of Robin Cook, Tam Dalyell and every other Labour MP who sold Scotland down the river time after time. They are still selling us down the river, and that is why Scotland is in the mess that it is in.
For Duncan McNeil's benefit, I should point out that I am not speaking as the convener of the Enterprise and Lifelong Learning Committee in this debate.
The only answer is independence and financial autonomy for the Scottish people.
We move straight to winding-up speeches—
That last speech was a total wind-up.
I call Iain Smith, to wind up for the Liberal Democrats.
This afternoon, we have had to endure yet another debate on fantasy economics with Andrew Wilson and his colleagues. Andrew Wilson talked about honesty and transparency on the issue of taxation. Sadly, however, we get neither from the SNP in these debates. The SNP keeps telling us about the significant increases in public spending that it seeks—it wants more money for the tourism industry, for farmers, for fishermen and so on—but it never says how such increases will be paid for.
In the SNP's announcement on tax that it released last week, there was not a penny for pensioners, hospitals or the health service, schools, the police, farmers, fishermen or the tourism industry. The SNP was interested only in helping the multinational oil companies.
If Iain Smith would be so kind, would he tell us what the Liberal Democrats' policy is? Charles Kennedy said in the Argyll papers last week that he was in favour of a cut in fuel tax. Is that the Liberal Democrats' position or not?
Our position is clear in our manifesto: we will freeze fuel duty in real terms over the lifetime of the next Parliament.
Today we heard Andrew Wilson's quarterly moan about fiscal powers for the Parliament—it comes up as regular as clockwork. The SNP has nothing to debate, so it decides to have an hour on fiscal powers for the Scottish Parliament. However, the SNP does not say what it would do with the powers if it had them. That is what we and the Scottish people want to hear. How much extra spending would be introduced? How would that be paid for? By how much would tax increase? If we hear that in the summing-up speech, we will take that party's talk of full fiscal powers a bit more seriously.
The SNP's press release of 23 March, which was headed, "Shifting burden from stealth tax to fair tax", stated that the party would not
"introduce any new measures to increase the overall burden of taxation or increase the rate of income tax without consulting the people first through our manifesto."
That is fair enough, but the SNP still talks about the increases in expenditure that it will introduce without telling us how they will be paid for. Is not it about time that the SNP was open and honest on taxation and told us how it would pay for the increases in spending that it keeps promising us?
The SNP's policy is based on a flawed analysis of Scotland's fiscal health. It is based on assumptions about oil prices and revenues that are not sustainable in the long term. Under the SNP, Scotland would become an oil-dependent state. Its finance minister would have to check the oil price before committing to any expenditure. Our education policy and health policy would be based on whatever the spot oil price was at the time. When Andrew Wilson stood up to speak in today's debate, the spot oil price was $25.72 but, by the time he sat down, it had fallen 2 cents to $25.70. The simple reality is that, as a finance minister in an independent Scotland that was reliant on the spot price of oil, he would have had to sack 300 teachers to make up for the deficit.
Wind up, Mr Smith.
We have to be more realistic.
Will the member give way?
I am sorry; I am in my final minute.
You are over your final minute. Please wind up.
The Scottish Government—a Labour-Liberal Democrat coalition—has secured stable finances for Scotland and significant increases in spending. I support that, and I support the Executive's amendment.
In its enthusiastic rush to acquire extra financial powers for the Parliament, the SNP should pause to consider why many people in Scotland are wary of the idea of the Scottish Parliament being given greater tax-raising powers. The reason is simple: giving the SNP greater tax-raising powers would be like putting the fox in charge of the hen house.
At the previous election, the SNP campaigned on a pledge to impose an additional 1p on the basic rate of tax in Scotland. As far as I am aware, that penalty for being Scots is still what passes for official SNP policy. Last week, the SNP announced a new policy of an extra 5p on the higher rate of tax. Once again, that showed that the SNP is a party that just cannot kick its addiction to tax-and-spend policies.
Before Labour and Liberal Democrat members get too cocky, let us not forget that they are also part of that left-wing consensus in Scotland. They believe that the answers to all Scotland's problems lie in the hands of politicians and bureaucrats. They think that all they need to solve those problems is to be given ever-greater slabs of taxpayers' money and greater powers to intervene and interfere.
A cursory examination of the Scottish Executive's record to date shows that it would be only too happy to use increased powers of taxation to increase the tax burden on Scots. Within the limited scope that the Scottish Parliament has at present, the Executive has already increased tax on businesses by abolishing the uniform business rate across the United Kingdom and is in the process of introducing a new £2,000 graduate tax on our students—although in typical weasel words that tax is called a graduate endowment. In addition, aided and abetted by the SNP, the Executive is determined to encourage our councils to impose new toll taxes on motorists entering our towns and cities and crossing our bridges, notwithstanding the fact that the same motorists are already paying the highest fuel prices in Europe.
Does David McLetchie believe in honesty in politics? If so, what does he think of the policy announcement this week by his leader, Mr Hague, of lower taxes but increased public spending on public services?
I believe entirely in honesty in politics. What has been announced are the overall spending plans. We have said that we will scale back increases by £8 billion of identified economies. We would give back to taxpayers in Britain some of the £690 per household that Gordon Brown has extracted as a result of the 45 tax increases that have been imposed in his four previous budgets.
The priority for Scottish Conservatives is to remove the new Scottish stealth taxes that I have outlined and to ensure that individuals and businesses in Scotland are not at a permanent disadvantage compared with the rest of the United Kingdom. We are also sensitive to the fact that the present tax-varying powers of the Parliament were the subject of a referendum. Amazingly, there was a 2:1 majority in favour. That, of course, was before Gordon Brown's 45 tax increases; before he increased the tax burden per Scottish household by £690 per annum; before the SNP's ill-fated tax-raising plans became public; and before the Liberal Democrats' renewed determination to tax everything that moves, including, as my colleague Mr Davidson reminded us today, caravans and dogs.
If there was to be any question of going down the road envisaged in the SNP motion, such a move would have to be put to the people of Scotland in a further referendum. The one thing that the debate has made abundantly clear is that the only party that can be trusted to lower the taxation burden on Scots is the Scottish Conservative party. Until such time as there is a sea change in attitude—
Wind up, please.
—to tax and spend on the part of the parties of the left in the Parliament—Labour, the Liberal Democrats and the SNP—and until there is a change in attitude that gives people and businesses in Scotland the confidence—
Wind up, please.
—that tax-raising powers are not necessarily the same as tax-increasing powers, I see little prospect of Andrew Wilson achieving his objective.
The motion is premature at the very least and dangerous at the very worst. It should be sent back for the SNP to think again.
I am sorry to hustle members, but I am constrained by the shortness of the debate.
We have been richly entertained by Captain Marvel and the flights of fancy from the nationalists—as richly entertained, no doubt, as the Scottish people would be impoverished and depressed if the SNP ever managed to get its way.
As Angus MacKay indicated, the debate is not about pounds and pence; it is about independence. We know that SNP members are no longer to use the word "independence"—it must never pass their lips. They have invented the term "full fiscal powers" instead. That is the nationalist cloak to cover their true intent; it is separation by stealth. On the way, they seek to inveigle the hapless Tories into the coalition that exists among the members sitting on those benches on both sides of the chamber.
The SNP, in seeking to play the full fiscal powers card in the context of the devolved settlement, is in fact trying to create the fundamental rift in the UK that it always seeks to create in order to promote dissent and discord, in the hope that that will create the tensions in the UK that will lead the SNP to the vaunted state of independence.
That is exactly why the Scottish Constitutional Convention—this is the bit that Andrew Wilson did not mention—recommended the use of the Barnett formula, to represent a fair share for Scotland within the UK and to avoid the annual wrangles that would otherwise take place between the UK Treasury and Scotland. If Andrew Wilson cares to read the documentation more thoroughly, he will find the references to that.
As for the Tories, who knows what they think and want on this issue. I was interested in what David Davidson said. I think that he said that the debate was irrelevant and unnecessary. Yet just a few moments ago, David McLetchie said that it was premature. Is it irrelevant and unnecessary or is it premature? Where do the Tories actually stand on that? David Davis, in the south, and Brian Monteith here seem to be convinced on the matter. It will soon be time for the Tories to come clean on those points.
We need to dispense with the vain hopes, wishful thinking and sheer sloppy analysis of the SNP. We need to consider the hard facts. Hard fact 1: objective analysis shows that total Government spending in Scotland was £33 billion in 1998-99. Against that, we raised only £28 billion in taxes.
Hard fact 2, for my arithmetically challenged opposite number there on the SNP benches: that leaves a gap, or a deficit, of £5 billion, which is £1,000 for every man, woman and child in Scotland.
Hard fact 3: even if we include all the oil revenue that was raised from the North sea, the deficit is still £2.5 billion, or £500 for every man, woman and child in Scotland.
Where will Andrew Wilson's axe fall? Which parts of the public sector that the Labour-Liberal coalition is building up will have to be taken apart to fund the SNP's folly: will it be the health service, will it be schools, will it be transport, will it be economic development, will it be environment or will it be housing? As with all detail from the SNP, its members remain entirely silent. Just like their Tory partners on the other side of the chamber, they remain silent on where their cuts will fall.
On a number of occasions, Andrew Wilson referred to the 18 years of Tory rule. Bristow Muldoon quite properly drew attention to the fact that today is the 22nd anniversary of that black day in British politics when the SNP sided with its partners, the Tories, to bring down the Callaghan Government, which brought us the poll tax. [Interruption.] That is what brought us the poll tax—which Alex Neil mentioned. If the Tories are the parents of the poll tax, SNP MPs were the willing helpers in that process.
If we are not to engage in cuts—as the SNP would have us believe—on whom are the increased taxes to fall in order to balance the books? They would include increased taxes to balance the massive deficit that would result from dismantling the Barnett formula. It is clear that they would not fall on the richest people in this country. Because of the SNP's new proposals, most of the richest, highest-earning people in Scotland, who so choose and who have the necessary flexibility and mobility to do so, will move south of the border—just 60 miles—to register their taxation.
Will the minister take an intervention?
The SNP front benchers' own colleagues agree with that analysis. From Angus MacKay's earlier quotation, it is clear that the SNP's own back benchers are beginning to rebel against that policy.
Give way.
Order, Mr Gibson: the minister is not giving way.
They clearly recognise that there would be a brain drain from Scotland, taking away those who are most able to develop the economy of Scotland.
The SNP's simplistic solution to everything is government by oil price. Its simple answer is to set up an oil fund, and we will all live happily ever after. In the really good years, we will put money away in the bank; in the bad years, we will draw on our savings. The trouble with that is that the boom years are past. The Tories spent the money financing unemployment. Far from including a surplus to save, the SNP's spending plans will require an overdraft from day 1. An overdrawn or empty bank account is something that the SNP is very familiar with. The SNP and empty bank accounts seem to go hand in hand. We need only look at the management of that political party itself to see Scotland's destiny. [Interruption.]
Order. There is far too much chuntering and private conversation going on. The minister is responding to the debate.
It is no wonder that at election after election the Scottish people reject the SNP. It still has no policies, priorities, principles or price tag attached to its plans. It is still prepared to deceive the people of Scotland. The coalition stands for the people of Scotland. I commend the amendment to the chamber.
The subject matter of the debate is not futile, as Mike Watson would have us believe, but goes to the nub of the argument over the future of the Parliament and the best solution for the provision of good governance in Scotland.
As the motion states, the devolution settlement provides the Parliament with fewer financial powers than any other Parliament in the world has. That curtails our ability to respond to the needs and wishes of the Scottish people, as the Executive is finding out to its cost.
I will quote from the most recent quarterly monitoring report from the independent constitution unit think tank:
"The Scottish Executive's expensive commitments for university tuition fees, teachers' pay and care for the elderly"
are
"stretching to the limit its room for manoeuvre especially now it is caught in the ‘Barnett squeeze'. This means that public spending cannot increase at the same rate as it does in England".
Is not it time for the Executive and, in particular, Labour ministers to acknowledge publicly the fundamental problem with the block and formula approach to financing Scottish government?
Will the member give way?
No.
Is not it time that Labour came out from under its anti-nationalist paranoia to consider the alternatives objectively?
It is surely not in Labour's interests to continue to fly in the face of public opinion, which in poll after poll wants the Parliament to assume control over its finances. Neither can it be in Labour's interests to continue to demonstrate impotence in the face of the Treasury in London. Why is it that the Parliament cannot even be granted the courtesy of being able to call ministers or civil servants as witnesses in pursuit of legitimate inquiries? The Finance Committee has had to abandon an inquiry into the application of European structural funds in Scotland in the face of the arrogant intransigence from Whitehall.
That will not do. The current devolution settlement is not sustainable and neither is the arch-unionist rhetoric that we have heard all too often this afternoon and down the years, which says that Scotland is too poor, too wee or too stupid to run its own affairs. The success of Ireland and others proves that small is not only beautiful but successful. Norway has secured the future of generations to come by investing its oil wealth in ways that Scotland could and should emulate.
Attempts to manage down the Scottish people's aspirations and expectations will not work any more. Just as the Tories have had to come to terms with the fact that the Parliament is here to stay, all parties need to recognise that financial devolution must follow political devolution so that the Parliament can meet those aspirations in a democratically accountable way. The question for political debate ought to be not whether we go down the road of financial devolution but how far and fast we should go.
Will the member give way?
I am sorry.
Angus MacKay should reflect on the First Minister's words on taking office. He said:
"We are only scratching the surface of devolution. It is our Parliament. If after a period of time we feel that we need more powers we can seek them through Westminster. I have no problem with that".
Angus MacKay could do worse than take a leaf out of John McAllion's book. John McAllion has said that tax raising is one of the most productive things that any Parliament can do because it redistributes wealth and supports public services.
I hesitate to recommend to David Davidson the contribution of his colleague, Brian Monteith, in favour of fiscal autonomy, but perhaps his near namesake David Davis, who is chairman of the Public Accounts Committee at Westminster, is a more respectable advocate of fiscal freedom. David Davis proposes that half of total public expenditure in Scotland should be financed by taxes that are placed under the control of the Scottish Parliament, and that an assignation should be made of up to 90 per cent of North sea oil revenues.
I have a question for Donald Gorrie: is not it time for the Liberal Democrats to raise their federalist principles and propose the dilution of the Scottish Parliament's dependency on UK Treasury grants, or are the leaders of his party too content with their ministerial positions to rock the boat with the courage of their convictions?
There are many models of devolved government in Europe and beyond on which members of unionist parties could draw in the pursuit of stable, financial devolution. For example, the Basque country has its own tax system, with most of the power to regulate and manage taxes that is usually available to countries with a treasury system. The Basque country operates under an economic agreement that includes a set of regulations that guarantee harmonisation between the Basque tax system and the systems in the rest of Spain.
SNP members would have no difficulty in supporting a move in that direction, despite the fact that it falls short of the independence that we seek for our country. We would give that our support, as it would be in the interests of Scotland, as well as being another stepping stone to our ultimate goal. Unfortunately, it appears that members in the unionist alliance have neither the wit nor the wisdom to put Scotland's interests first by advocating full financial powers for the Parliament.