Examination of Witnesses (Questions 300-308)
NICOLA STURGEON
MSP
26 FEBRUARY 2008
Q300 Mr Turner: If we have got the
level of devolution approximately right, which I realise you disagree
with but is equally possible and, for instance, Wales does not
have as much, Northern Ireland does not have as much, England
has none, you would accept, I think, that people are prepared
to bring those up-to-date or would you say, "It's completely
irrelevant to me?"
Nicola Sturgeon: I take a very
keen interest in developments south of the border. Scotland and
England share an island, that is not going to change, and there
will always be a very keen interest in what each other is doing.
The point I am making is I think if there is an appetite in England
to change the governance arrangements to have more devolution
within England, and there have been some attempts at that in recent
years that have not in every case come to fruition, then that
should happen on its own terms regardless of what further devolution
or what further debate there is about the constitutional arrangements
in Scotland. It is perhaps simply underlining the point on asymmetric
devolution that I made earlier on. It is inconceivable and unsustainable
to argue that one part of the UK should almost put its own aspirations
and advancing its own interests on hold while another part catches
up. We all have to decide what arrangements best fit our own interests.
Of course, there will always be a need to ensure, whatever our
constitutional settlements are, that we work well together with
whatever relationships we will have.
Q301 Chairman: If the Barnett Formula
starts to work in reverse, as I would put it, that is to say if
we enter a period in which public expenditure in the UK is being
reduced and, therefore, Scotland's defined share of it is being
reduced, will the reluctance you have shown so far, shared by
all the other parties in Scotland, to use the limited tax raising
powers you have, have to cease? Will you not have to use those
powers at that point?
Nicola Sturgeon: We do have a
Barnett squeeze and anybody who doubts that only has to look at
the budget settlements this year which in Scotland's case was
an extremely tight settlement, much tighter than south of the
border. The Government has made a very good fist of the resources
we have available but it was a very, very tight settlement. That
process you talk about is already in operation. As you know, as
well as I do, the Barnett Formula is in itself designed to bring
about convergence. My position is that Scotland would be better
served not in trying to respond through existing tax raising powers,
which are pretty blunt instruments to that process, but by financial
independence so that we are responsible for raising all of our
own taxes and making the spending decisions that flow from that.
I think that is the best arrangement for Scotland. I note that
we are not the only party now which believes that and that is
far more in our interests than trying to find imperfect responses
to imperfect systems.
Q302 Chairman: Why are the existing
tax raising powers a blunt instrument? They are a very limited
instrument obviously in the amount of money they can raise but
they flow from the existing tax system.
Nicola Sturgeon: They are blunt
in two senses. One, because, as you say, they raise very small
amounts of money but, secondly, because three pence on the basic
rate of income tax is one tax power out of a whole panoply of
possible tax powers that a normal parliament would have, so by
definition it is a blunt instrument because most parliaments anywhere
else in the world would have a whole range of tax options to use
not just to raise expenditure but to grow their economy as well.
Ireland is an example with their Corporation Tax and what it was
able to do to boost economic growth. To have one very narrow tax
power is a blunt instrument in both of those senses.
Q303 Chairman: So those powers are
really a dead letter which you might as well not have?
Nicola Sturgeon: It is up to parties
at every election to take a decision at that time depending on
prevailing circumstances at that time as to whether or not they
propose to use the tax varying power or not. It will not have
escaped your notice, Chairman, that in the first election to the
Scottish Parliament my party proposed using the tax varying power
and we chose for very good reasons on both occasions not to do
so in the subsequent two elections. Since we are talking about
the Barnett Formula, although I have made clear what my preferred
option would be, the current operation of the Barnett Formula
is perhaps one of these issues that would benefit greatly from
reactivated Joint Ministerial Committees. There is an issue just
now, for example, around funding of the London Olympics where
if we leave aside core funding for the Olympics, on the funding
associated with the Olympics on regeneration, for example, a completely
arbitrary decision has been taken by the UK Government to exclude
that funding from the Barnett Formula where any other regeneration
spending in England would be included. That has caused great consternation
on the part of all the devolved administrations but it is the
kind of issue that a Joint Ministerial Committee would be able
to discuss and hopefully resolve.
Q304 Chairman: In the context of
the constructive way you have addressed how you manage devolved
government, notwithstanding your aspiration for independence,
is there are a greater degree of financial autonomy which could
be accommodated within the devolution settlement?
Nicola Sturgeon: Of course, anything
is possible. You know what my preferred option is, but one of
the reasons we have cast the national conversation as inclusively
as we can is to make sure that all of these different options,
and there are a variety of possible different options, some of
them of more merit than others, have the opportunity to be discussed
and people who put them forward are able to do so. I think it
is for people who advocate one of these many other options to
put forward what they are and what the benefits are. It is for
me and my party to argue the case that we believe in and it is
for others to do likewise.
Q305 Chairman: Do I understand from
that that the Scottish Government does not actively seek greater
fiscal autonomy within the existing devolution settlement but
only as part of independence?
Nicola Sturgeon: If there is an
opportunity for financial greater financial autonomy, of course
the Scottish Government would welcome that. We welcome any new
powers for the Scottish Parliament. The SNP campaigned enthusiastically
for a Scottish Parliament. It was not quite the Scottish Parliament
we aspire to, and on the basis that we will warmly welcome and
campaign for any more powers for the Scottish Parliament then
we would warmly welcome greater financial autonomy but that does
not change the fact that we think the best outcome is financial
and full independence for Scotland.
Q306 Alun Michael: Can I put that
question another way round. If there were any greater financial
autonomy for the Scottish Parliament, how would you want to use
it?
Nicola Sturgeon: I am not trying
to dodge the question but it is a huge question because obviously
it depends exactly what would be on offer. For example, the power
that would be of greatest advantage fiscally to Scotland just
now is the kind of powers I spoke about earlier on, the power
to vary Corporate Tax, because we have made growing our economy
our top priority.
Q307 Alun Michael: Does "vary"
mean cut or increase?
Nicola Sturgeon: From the policy
perspective of my party in the Scottish Government that would
mean cut. I cannot speak for other parties and other policy perspectives.
There is real evidence from not just Ireland but a range of other
European countries that cutting Corporate Tax actually grows your
tax base because of the boost it gives to your economy. That would
be one power that we would want. We have announced proposals that
were in our manifesto to cut and in some cases abolish business
rates for small businesses. That is a good move and I think it
will make a big difference to a lot of small businesses.
Q308 Chairman: You would be happy
to have the tax raising powers elsewhere to pay for that, would
you?
Nicola Sturgeon: Like any government,
regardless of what our arrangements are, we have to balance our
budget, we have to make sure that our all of our commitments are
affordable. The one I was talking about there is fully funded
within our budget. What I was going on to say was while that is
an important measure I would not for a minute suggest that is
as powerful as what Ireland was able to do by cutting Corporate
Tax, attracting investment, growing the economy and growing the
tax base and tax take as well.
Chairman: Deputy First Minister, thank
you very much for your evidence today, we have found it extremely
helpful and we much appreciate it. Thank you very much.
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