Examination of Witness (Questions 520-531)
RT HON
JACK MCCONNELL
MSP
22 APRIL 2008
Q520 Mr Turner: I am sure that is
for debate, but the point is surely there is a lump sum for Scotland
which is spent by Scotland in the way Scots wish which is a higher
proportion, about 15%, than in the whole of England and also for
Wales some elements are higher. You have not responded to that
particular point.
Mr McConnell: The historical reasons
for that have been well laid out and have been justified by both
Conservative and Labour Governments here in the past. The debate
around the distribution of money between Scotland and England
actually distracts from what might be the real debate that needs
to take place, which is inside England itself. I say very much
as an observer that there are different needs in different parts
of England and those debates have not taken place because primarily
the politicians have focused more on the national debate.
Q521 Mr Turner: So you might advocate
regional instead.
Mr McConnell: There needs to be
a far healthier debate inside England about the way public expenditure
is used in different regions of the country. It is not for me
to tell members how to conduct their business, but as long as
members who represent constituencies inside England are focused
on what Scotland has, or for that matter what Northern Ireland
or Wales has, then perhaps they are not contributing to that debate
that will basically need to be resolved because there are Whitehall
departments spending a lot of money in England and it is being
spent in different areas in different ways.
Q522 Mr Tyrie: I was hoping to be
exceedingly quick because I thought I was going to be able to
ask you whether there is anything on the issue of the Barnett
formula and the issue of the English question which Lord Steel
said with which you disagreed, but I think there is. At one point
in your replies it appeared that there was not anything but there
is, is there not? I do not think you are in favour of moving a
long way across that spectrum on fiscal autonomy, whereas Lord
Steel is quite clear that there is something to be said for devolution
on income tax or CGT and once that is done, he feels that the
Barnett formula will need looking at again, even if it might result
in pretty much the same arrangement as before.
Mr McConnell: On the one hand,
there is a need to discuss the financial purpose of the Scottish
Parliament and the financial responsibility that it has alongside
perhaps the ongoing debate about how much money it has to spend.
It is right that the current block grant plus or minus three pence
income tax was designed back in the early 1990s at a time when
income tax was 30 pence or so in the pound, when there were no
differential rates. They are about to change, are they not? It
is also right that after 10 years of devolution there is a good
hard look at that and international examples to see whether there
is a better way of securing financial accountability and responsibility
and potential economic benefit in Scotland. On the other hand,
I have been involved in this debate now since the late 1980s in
terms of detail. I was a member of the Constitutional Convention
Executive Committee, I have obviously been both Finance Minister
and First Minister and I have yet to see someone produce a workable
alternative that would have the consent of enough politicians
and across a wider spectrum in Scotland. The business community
in Scotland is very nervous about fiscal autonomy, very nervous.
They operate as part of a single market across the UK, the idea
of differential tax rates in different parts of the UK worries
them significantly and I understand that.
Q523 Mr Tyrie: But where are you
on this is what I am asking?
Mr McConnell: I am trying to say
that there is a case for looking at the current settlement, but
the case has not yet been made to move away from that to a new
arrangement. If you start from a position of fiscal autonomy,
you are starting from a dangerous position because you are starting
from a position that effectively creates two different taxation
regimes inside the UK single market and that is difficult economically.
If you start from the position of wishing to move incrementally
towards more taxation powers, then the Scottish Parliament have
to think that through extremely carefully, look at international
evidence and try to design a system that is workable. My preference
on that would probably be that it is taken away from the politicians,
some form of Royal Commission or something of that sort that would
look at this in some detail, look at the evidence and come back
with a reasoned report that could be considered by all parties,
perhaps after the next general election. I would say that was
worth looking at.
Q524 Mr Tyrie: Just to be clear,
you are making the recommendation that there be a Royal Commission
to examine the Barnett formula?
Mr McConnell: I would not put
it as strongly as to say I was making a recommendation, but I
would suggest that that kind of format for looking at this would
be more appropriate than a political debate where people are essentially
making political points through the debate on fiscal powers.
Q525 Mr Tyrie: I am sorry to press
you, but what are you recommending?
Mr McConnell: I am sorry to be
unhelpful, but I hope what I am saying is consistent in that I
believe that the current arrangement does require to be reviewed
but I also believe that any change in the current arrangement
is extremely difficult and needs to be discussed, debated and
analysed with great care by everyone involved and all the parties
have people with different positions on this.
Q526 Mr Tyrie: So you favour a review
of the Barnett formula.
Mr McConnell: I am not yet persuaded
that there is a workable alternative.
Q527 Mr Tyrie: You are not yet persuaded
there is an alternative; you are not persuaded that it would come
out with something different, radically different from the current
structure. I do not want to put words in your mouth I just want
to clarify what you said. As for how that review should be conducted,
you think one possibility would be a royal commission but you
have no hard and fast views on exactly how to conduct the review.
Mr McConnell: That is very close
to my position.
Q528 Mr Tyrie: Just add or subtract
so that we can be clear for the record what your opinion is.
Mr McConnell: I am persuaded of
the case for looking at the financial powers. I am not persuaded
of the case for any specific alternative yet. I would be concerned
about the idea of what is described as full fiscal autonomy. I
believe that there is a need for some independent analysis and
review of this perhaps by a body like a royal commission. However,
the one positive thing that I would say, because that might appear
to be very negative, is that I do not believe that it is beyond
the intelligence of the good people of the United Kingdom, academics,
politicians, civil servants and others, to come up with a workable
alternative, but nobody has yet.
Q529 Chairman: For six years you
had the power to implement a degree of fiscal autonomy, by either
raising income tax or lowering income tax to a different level
from that in the rest of the UK. Was it political paralysis that
you never did so?
Mr McConnell: It was a decision
about priorities. First of all, it would have been difficult to
justify any money that we would have raised or we would have taken
out of the taxation system against the administrative costs of
such a change. That is an absolute primary contribution to the
judgment that has led to all the parties not using that power
or proposing its use over the last eight years. Beyond that I
took the view that we had, as a number one priority in Scotland,
a need to raise the level of economic growth and that the way
in which we did that was to invest in skills and transport infrastructure
and promoting Scottish business abroad and that that was more
important than to think about the taxation system.
Q530 Mr Tyrie: Did you agree or disagree
with Lord Steel's conclusion that there was an inevitability about
a move towards English committees in the UK Parliament to deal
with English-only legislation certified by the Speaker?
Mr McConnell: Like him, I am hesitant
to comment on the work of Members of this House from constituencies
in England but I suspect that this is the kind of debate that
will rise and fall depending on who is in power and who is in
opposition and what the distribution of constituencies is across
England rather than necessarily being a point of principle.
Q531 Mr Tyrie: Lord Steel gave us
a very clear indication of the direction of change. I am asking
you whether you agree with his conclusions about the direction
of change.
Mr McConnell: I do not think that
change is inevitable. Continuing debate is inevitable but change
is not inevitable.
Chairman: We have been able to cover
a great deal of ground and we are very grateful to you for your
help this afternoon. Thank you very much indeed.
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