Previous SectionIndexHome Page


Mr. Garnier: Forgive me if I am being a little obtuse, but is it a prerequisite of voting in the truncated or one-question referendum ballot paper that the hon. Gentleman envisages that the voter must be a potential taxpayer, or may non-taxpayers also vote?

Mr. Wallace: Of course non-taxpayers will also vote. The fact that we have tax thresholds means that a number of people do not pay tax because their income, regrettably, is insufficient. They will be eligible to vote, as will people who are on social security and do not pay tax. As you are aware, Mr. Martin, from having sat through a large part of our earlier debate, the referendum franchise will essentially be governed by residency and, unlike that for parliamentary elections, it will include peers and European Union citizens who are in Scotland. Of course, peers and EU citizens resident in Scotland pay tax, but taxation is not the basis of the franchise; nor is it the basis of the franchise for elections to the United Kingdom Parliament.

3 Jun 1997 : Column 282

The point I was making was that taxation powers are critical to the Scottish Parliament, to give it flexibility and accountability. Indeed, the absence of tax powers was identified by Conservatives and others as one of the weaknesses of the Scotland Act 1978. People may recall that, when the Bill was going through another place, Lord Home said that the Scottish Assembly had to have some ability to raise revenue, or we should be "asking for trouble".

Those of us who were involved in the referendum campaign may remember that the great promise to the Scottish people, at the behest of the late Lord Home, was that, if they rejected the proposals, an incoming Conservative Government might offer them something better. Of course, that never materialised. Many of us saw through that ploy at the time, but it is important to remember that the absence of tax powers was seen as a weakness. Many of my hon. Friends who were in Parliament at that time agreed with that, but thought that half a loaf was better than no loaf at all. We would certainly now take the view that tax powers are absolutely essential.

9 pm

The other argument that is put against the tax powers is that having tax rates in Scotland that varied from those in the rest of the United Kingdom would cause substantial problems. Many businesses have come to Scotland. Inward investment in Scotland has been significant over recent months and years, and that is by companies that have known that there was a distinct possibility--indeed that it was increasingly likely--that a Scottish Parliament would be established with tax powers. That has not turned them away. I suspect that fluctuating exchange rates and the pace of technological change and innovation are much more influential in determining investment decisions than the fact that Scotland may have a different tax rate, plus or minus 3p, from the rest of the UK.

Already there are significant differences, even in personal taxation, within Scotland and within the UK. Council taxes vary from local authority to local authority. The siren voices coming from the Conservative party tell us that, because Scotland might conceivably--of course this would happen only if the people of Scotland had voted for it--have a higher tax rate, perhaps by 1p in the pound, people are going to flood out of Scotland and go to work in England. By the same token, because Shetland has the lowest council tax rate in Scotland, I am surprised that there has not been a huge influx of people from all over Scotland, indeed from other parts of the UK, to live in Shetland, not only for the privilege of paying a lower council tax, but for the many other privileges that go with living in Shetland. Clearly, there are a number of reasons why people decide to invest in a particular place.

Because the council tax bands in Scotland are materially different from those in England and Wales, similarly valued houses in Carlisle and in Dumfries can have different council tax rates. Because of the banding, the council tax for a house in Dumfries can be much higher than that for a similarly priced house in Carlisle, yet there is no evidence of a drain of people from Dumfries and Galloway into Cumbria. Because I was born and brought up in those parts, I know that companies recruit from both sides of the Borders, and in recent times

3 Jun 1997 : Column 283

that has never been identified as a problem in terms of recruitment. Therefore, the case for the tax powers is considerable.

As I said, we wish to consolidate the two questions. Why not have the two questions? In many respects, although the Labour Government, perhaps anticipating the next debate, will say that they are against a multi-option referendum, with the two questions, they are offering a variation on the multi-option referendum. We shall have the status quo as one option. Another option will be the scheme proposed by the Scottish Constitutional Convention--a Scottish Parliament with taxation powers--and the third option will be a Scottish Parliament without taxation powers. The odd thing is that no serious person within the home rule movement in Scotland currently advocates a Scottish Parliament without taxation powers.

I understand that, in a recent interview, the Minister of State said that, if the outcome of the referendum were yes, no, the Government would be prepared to legislate for a Scottish Parliament without taxation powers--indeed, for a Parliament that no one is campaigning for. I have no doubt that the Government's good faith and commitment is to a Scottish Parliament with taxation powers. I am sure that they believe that that is in the best interests of Scotland. However, that raises an interesting question, which I hope that the Minister will answer when he replies to the debate. Why are the Government prepared to contemplate, at least in theory, and prepared to put into practice--they have indicated that they would--legislation that they believe would be less than in Scotland's best interests?

I know that the Conservative party believes that it is not in Scotland's best interest to have a tax-varying Parliament, but I believe that it should have a tax-varying Parliament and I know that that is what the Government believe; we must be concerned that they are prepared to legislate for something less than that. The Government must answer that question.

We are elected to exercise our judgment in the best interests of our constituents and our country. If our judgment is that Scotland should have a Parliament with the full taxation powers proposed by the Scottish Constitutional Convention, we should be wary of trying to legislate for anything less than that.

I fear that if a Parliament does not have taxation powers, that could be the recipe for the break-up of the United Kingdom and for an unstable Parliament. If, for example, the Parliament could not deliver a new hospital in Arbroath or a new school or school refurbishment in Greenock, it would be easy for a Member of the Scottish Parliament to say that there was not enough money, because Westminster would not provide it, and to complain that the Parliament did not have the power to vote any money for itself. That could lead to instability.

Another possible outcome of the multi-choice option is that there could be a no, yes vote. Some people say that they do not want to risk a Scottish Parliament without taxation powers, so they will not provide a blank cheque by voting yes on the first question. However, they may want to ensure that if there is a Parliament, it will have taxation powers, so they will vote yes on the second question. I have heard some Conservative supporters say

3 Jun 1997 : Column 284

that they do not support a Scottish Parliament, but that if there is to be one, it should have the proper accountability that comes with taxation. That would give a no, yes outcome. No one has told us what will happen if we get a no, yes outcome.

Another point of concern to my hon. Friends is that there is the possibility of unstitching a key part of the Scottish Constitutional Convention scheme. I know that that is not what the Government wish, but it is what they are positing as a possibility. During the general election, the present Prime Minister said that even English parish councils have tax powers. Some people took advantage of that and said that he was comparing a Scottish Parliament to an English parish council. I understood him to mean that if an English parish council can have tax powers, a fortiori, a Scottish Parliament should have tax powers. We are being asked to accept the possibility of a Scottish Parliament without tax powers. If it is good enough for an English parish council, it must be good enough for a Scottish Parliament.

Mr. Andrew Stunell (Hazel Grove): Will my hon. Friend confirm that parish councils in England are not subject to a limitation on the amount of taxation that they can raise within the tax area that they are granted? In fact, if we take the Prime Minister's analogy a little further, it would be appropriate to remove the upper and lower ceiling on the variation of revenue-raising powers which it is now proposed to give to the Scottish Parliament.

Mr. Wallace: That was a helpful intervention. I bow to my hon. Friend's knowledge of English parish councils. I thought that the powers were more limited, but I am interested to hear those points. It strengthens the case. If English parish councils have that degree of flexibility and the accountability that goes with it, it is even more worrying that the Government would be prepared to countenance the possibility of losing the more modest and limited powers proposed for a Scottish Parliament.


Next Section

IndexHome Page