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Mr. Tyrie: Many might argue that the Scots are already getting more than their fair share of the slug from the Treasury, in order to fund those public services. Does the hon. Gentleman think that further increases in those resources for public services, or cuts back to the per capita level that we see in England, would be more likely to stimulate the growth that he wants to see in Scotland?
Mr. Weir: More investment would stimulate that growth, but the hon. Gentleman is not correct to say that Scotland is receiving more. If he studies the Barnett formula—the Barnett squeeze—he will see that there is a fast-eroding differential between Scotland and England. That is one of the reasons why the Scottish Parliament needs full fiscal independence. If the hon. Gentleman adheres to the theory that he has just put forward, I should have thought that he would support full fiscal independence for the Scottish Parliament, to allow Scotland to raise its own taxes and decide its own spending levels without having access to the Barnett formula.
The Finance Bill contains no measures to allow Scotland to reach its potential for economic growth, and that is why the Scottish National party cannot support it today. But, as I said, Scotland could do better if released from the constraints of measures such as this Bill. Even within the European Union, small nations have outperformed large nations. The small nations' average is five times the growth of the Scottish economy. The Bill does nothing to help the Scottish economy become more competitive. Labour in Scotland has presided over a business rates regime that is higher than in the rest of the UK, and Labour in London insists that corporation tax should be the same in Scotland as in the rest of the UK despite compelling reasons for cutting it in areas where that would be a spur to the economy. Those are but two examples of Scotland being less competitive than it should be.
Even within the current British Union, there is no reason for such centralised fiscal powers. Polls show that 70 per cent. of Scots want financial independence, and
there is increasing support for that across the political spectrum. The Principals of St Andrews, Abertay and Glasgow Caledonian universities, and the historian Tom Devine, have all spoken in favour of independence, as has the Nobel prize-winning economist Robert Mundell.When we look at the detail of the Bill, we must ask what has been done for industries that are important to Scotland. We have heard that the Chancellor did indeed freeze whisky duty, but whisky is still subject to disproportionately high taxation. I think it was the hon. Member for Yeovil (Mr. Laws) who mentioned the difficulties caused by treatment of stock for corporation tax purposes in the Scotch whisky industry, which will more than wipe out any benefit from the frozen duty.
Having shocked the oil industry with last year's 10 per cent. tax increase, this year the Chancellor finally did one of the two things for which the SNP called last year, ending the differential taxation on pipeline infrastructure. Old pipelines such as those at St Fergus incur company tax at 70 per cent., while new ones like those at Bacton are taxed at 40 per cent. and the interconnector is taxed at 30 per cent.
Full use of the infrastructure is in the interests of Scotland, which has many pipelines with capacity, and of the Treasury, which otherwise loses revenue on what companies will declare as construction costs. The SNP has campaigned for the tax change, which will come into effect next year and will be backdated to 1 January 2004. This is a victory for the party, and I congratulate the Chancellor on finally seeing sense.
Unfortunately, however, the Chancellor's flash of sense did not extend to considering changes for the purposes of exploration and appraisal. Such changes are very necessary, as exploration and appraisal numbers have plummeted over the last five years. Last year's sudden changes have not helped, as the SNP predicted at the time. If we are to support an industry that is essential to north-east Scotland, including my constituency, we must bear that in mind. In a press statement the Chancellor said he would consider the point, but nothing has been done. Given that only 16 exploration wells were drilled last year, we need urgent action. As the Institute for Fiscal Studies noted,
- "government policy in this area still seems to be driven too much by short term revenue needs or changes in the oil price".
The Chief Secretary cited various minor tinkerings that might help unincorporated businesses, but many such businesses complain to me that they feel pressurised to go for incorporation in order to reduce their tax bills. It would be a great pity if they did so,
because in many areas self-employed small business men and partnerships constitute the driving force of the local economy. Incorporation would cause them numerous difficulties along with the possible advantages. Accountants are telling such clients, however, that they must consider incorporation. Given that they pay income tax, I realise that it can be difficult to differentiate, but I think the Government should consider the matter.The Bill imposes an annual uprating of fuel duty, but defers it until October. As the Chief Secretary will know, that is a huge issue in rural Scotland: the increase will hit both businesses and individuals there very hard. Purely using price mechanisms to cut demand, whether for green reasons or otherwise, will surely hit hardest those least able to afford the increase; yet nothing is done in this Bill to soften the blow to rural Scotland.
In his Budget speech on 9 April, the Chancellor said:
- "Owing to the recent high and volatile level of oil prices as a result of military conflict in Iraq, I have decided to defer the 1.28p a litre annual revalorisation of fuel duties until six months from now—1 October—and I will legislate to this effect. And if the current international uncertainties and volatility remain, I will not proceed with the change at all."—[Official Report, 9 April 2003; Vol. 403, c. 278.]
We heard earlier in the debate about the working families tax credit and the benefits that it brings to many people. I do not know what other Members are experiencing in their constituencies, but in mine, although the WFTC might indeed be of benefit, unfortunately there is great difficulty in actually getting it, because of the chaos in the system. This issue has been raised on numerous occasions; indeed, in last Monday's statement it was pointed out that a special hotline would be created for MPs. In fact, I received a letter this morning, giving me that hotline number. So my office telephoned the hotline about the many complaints that we have received. To be fair, we finally got through after several attempts, and we managed to get the necessary information and sort out a couple of the problems.
However, we were then told that it would probably be a couple of weeks before the money came through, despite the fact that some of my constituents were getting increasingly desperate and had had no money for four weeks. Then—lo and behold—the system crashed yet again. So even on the MPs' hotline, the system is prone to crashing. Although that issue is perhaps not covered by this Bill, it relates to the income tax and finances of ordinary people in this country and in many areas of Scotland. It must be dealt with as a matter of urgency, because it has dragged on for almost six weeks, which is totally unacceptable.
As I said at the outset, this year's Budget and the Bill before us offer nothing for Scotland and totally fail to address the real problems of the Scottish economy. We will not support the Bill this evening.
8.52 pm
Kali Mountford (Colne Valley): Before getting to the main subject of my remarks—my constituency and the economic development of west Yorkshire and Yorkshire as a whole—I want to begin by returning to certain issues that have already been debated.
Opposition Members seemed to suffer the amnesia that they usually suffer in debates such as this, and I want to put the record right regarding some of the remarks that were made, especially those on administrative waste. It is still not clear to me whether the Conservatives would cut a fifth of waste, a fifth of public services or a fifth of administrators.
Mr. George Osborne: The answer is a fifth of waste.
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