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25 Nov 2009 : Column 544

Mr. Darling: I suspect that we will have ample opportunity to return to that tomorrow afternoon on the last day of the debates on the Queen's Speech. Let me just make a general point. Yes, over the past 18 months or so we have had to put a substantial amount of money into the banking system. However, I remind the hon. Gentleman, and the House, that the exceptional liquidity assistance was repaid. As for the other schemes, fees are charged for the credit guarantee scheme, and the money has to be repaid under the special liquidity scheme. Ultimately, of course, we will get back the money that we have put into RBS and Lloyds when we come to sell those banks at whatever time is appropriate.

Dr. John Pugh (Southport) (LD): Will the Chancellor of the Exchequer publish now or in future the rate of interest charged, and if not, why not?

Mr. Darling: I am happy to discuss further with the Governor of the Bank of England what further information we can put before the House. The general point of importance is that when these facilities are provided the banks have to lodge collateral, they have to pay a fee, and we get the money back.

Mr. William Cash (Stone) (Con): The Chancellor knows that over the past year I have repeatedly asked him about the true level of indebtedness of the United Kingdom. He also knows that the Office for National Statistics itself has had some difficulty in obtaining the figures; I have raised that issue with him. Would he be good enough to tell me whether the ONS was informed at the appropriate time about the matters that he has raised today? Has it been given the truth, in line with its new independence under the Statistics and Registration Service Act 2007, on which we wholly rely; and has it raised any matters of concern, as it is entitled to under the Act?

Mr. Darling: The ONS's concern is about how the banks in which we have shareholdings should be accounted for in the national statistics. The hon. Gentleman is well aware of the conclusion that it has reached. The responsibility for loans of this nature is properly a matter for the National Audit Office, as well. Between all the public authorities, I hope that there will be sufficient examination and disclosure of what is going on. Now that the situation has stabilised, I think there is no difficulty in explaining to people exactly what happened. Indeed, there is everything to be said for doing so, especially for those people who thought at the time that we were doing things that were precipitate or that we perhaps did not need to do. I am afraid that just over 12 months ago we were faced with a quite extraordinary set of conditions that required very dramatic and unprecedented action.

Sammy Wilson (East Antrim) (DUP): I think that the whole House recognises the importance of the Bank of England's acting as lender of last resort to ensure the liquidity of the banking system. However, does the Chancellor accept that that then places an obligation on these banks not to cause liquidity problems for their customers by the unilateral withdrawal of overdraft and loan facilities or unexpected changes in those conditions? What price has he sought to extract from the banks for this continued level of public support?

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Mr. Darling: I updated the House in my statement at the beginning of November. In view of what Mr. Speaker said, I am not going to repeat that, but I urge the hon. Gentleman to look at it. In it, I set out what the arrangements were and what the banks were paying. I agree with him, and with other hon. Members who have raised this, that there is still a particular problem with small businesses getting funding; that is something that we are pursuing.

On the particular cases, I strongly advise him, as I advised my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke), that it is well worth taking the matter up with the bank concerned; sometimes matters can be resolved, sometimes not. There is a general problem in this regard. In the case of HBOS customers, for example, there is no doubt that that bank's pricing policy caused it massive problems in not reflecting the true cost of making the loans. Obviously, I do not know what business or bank the hon. Gentleman is referring to, but I strongly advise him to pursue the matter with the bank concerned if he has not already done so.

Mr. Andrew Pelling (Croydon, Central) (Ind): The Chancellor chastised the hon. Member for Twickenham (Dr. Cable) for asking questions about what other secret arrangements there might be, and suggested that he should be more than a commentator-he may well be so in the next Parliament. Does he think that in the context of the real drama that occurred 13 months ago, it would have been better if Lloyds Banking Group had used the asset protection plan instead of going to equity holders, whose confidence would have been shaken by the fact that they were not properly advised of the bank's circumstances?

Mr. Darling: The asset protection scheme was not announced until the middle of January, which is of course after the events that we are talking about. The exceptional liquidity assistance had to be provided for at the time. It started as we were working up the capitalisation scheme and then putting it in place, so it predated the asset protection scheme. Had the asset protection scheme been in place and operating, the situation might have been different, but I do not think that anyone would be in a position to say that.

Mr. Rob Wilson (Reading, East) (Con): Does the Chancellor have a view about how much the taxpayer,
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and the country, can be allowed to guarantee to banks-that is, how much the country can afford in current circumstances?

Mr. Darling: I am quite clear not only that what we did last year was right but that we could afford to do it. I am afraid that the hon. Gentleman must ask himself another question. We saw what happened in America when the then American Government let Lehman Brothers go down-it resulted in the American banking system, and very soon the rest of the banking system, going down too. [ Interruption. ] If the hon. Member for Tatton (Mr. Osborne) wants to discuss my phone call, I will happily discuss it with him, but I am very glad that I did not take on the responsibility for an American bank; otherwise, I suspect that he would have a lot to say about it.

Mr. Peter Bone (Wellingborough) (Con): In the Chancellor's statement, he says that £100 billion was taken in collateral by the Bank in support of these massive loans. Will he publish the document supporting that collateral and put a copy in the Library?

Mr. Darling: I would need to discuss with the Governor whether that was appropriate.

John Mason (Glasgow, East) (SNP): We accept that in the short term confidentiality is a good thing that gives confidence, but in the longer term openness gives confidence as well. In future, will the Chancellor encourage the Bank of England to report as soon as loans have been repaid?

Mr. Darling: I refer the hon. Gentleman to what I said earlier. The judgment for the Governor has to be when to disclose, and he has to take into account all the appropriate circumstances, not only in relation to when the loan is to be repaid. The hon. Gentleman will recall that at the time when these loans were being repaid-either side of Christmas and the new year last year-there was a great deal of turbulence in the system as a whole, which is why the Governor understandably decided that he thought he should let matters stabilise. The hon. Gentleman will no doubt want to reflect on this: the key thing is that we had the resources of the Bank of England, and therefore the UK Government, to intervene to deal with two Scottish banks that had got themselves into terrible difficulties. That has certainly given most people in Scotland pause for thought-it is time that the nationalists thought about it as well.

25 Nov 2009 : Column 547

Scotland's Future in the UK

1.18 pm

The Secretary of State for Scotland (Mr. Jim Murphy): With permission, Mr. Speaker, I would like to make a statement on Government plans about devolution in Scotland: for a stronger Scotland in a stronger United Kingdom.

Devolution has proved itself to be the right form of governance for Scotland. Scots know that as part of the United Kingdom we have the best of both worlds. First, Scots are proud of the Scottish Parliament and the way that it allows them to find what the late Donald Dewar called "Scottish solutions to Scottish problems". Secondly, the economic events of the past year demonstrate again the added strength of being part of the UK, the fifth largest economy in the world. While Britain brings strength to Scotland, Scotland brings breadth to Britain.

The White Paper that we are publishing today takes forward the recommendations from the final report of the Commission on Scottish Devolution; again, I would like to put on record our thanks to Sir Ken Calman and his commissioners. On 15 June this year, I welcomed the commission's report on behalf of the Government. I pledged to take the recommendations forward, with consensus and momentum. That is why we established a cross-party steering group. I thank representatives of the Labour party, the Liberal Democrats and the Conservative party in the House of Commons and in the Scottish Parliament for working together on that group.

The commission concluded that devolution has been a "remarkable and substantial success". It brings government closer to the people of Scotland and secures Scotland's position within the United Kingdom. In order to refresh the settlement, the commission made recommendations in three distinct areas. First, it recommended that closer working was needed between the UK Parliament and the Scottish Parliament and between the UK Government and the Scottish Government. Secondly, it recommended that a new, more accountable means of financing devolved spending in Scotland was needed, to strengthen the financial accountability of the Scottish Parliament. Thirdly, it recommended that while the division of responsibilities between the UK Parliament and the Scottish Parliament works well, some changes could be made in both directions to further strengthen the devolution settlement. The Government agree with the commission's conclusions, which were based on a wealth of evidence.

I turn to the first of those recommendations. Scotland has two Parliaments-this Parliament, which remains an important symbol of the UK and continues to have vital daily relevance to Scotland, and the Scottish Parliament at Holyrood, which has firmly established itself over the past decade in Scottish hearts and minds. The commission recommended that the two Parliaments should examine how they work together in the interests of Scotland and the UK. Many of the recommendations are first a matter for you, Mr. Speaker, and for the Presiding Officer in the Scottish Parliament, and I have had the opportunity to meet you both separately.

The core of the commission's recommendations is about funding for Scotland. Under this Government, public spending across the UK increased in real terms
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by 42 per cent. in the decade after 1997. The Barnett formula meant that Scotland got the same per-head increase over that period. The commission recognised the benefits of that funding mechanism and how it had given the Scottish Parliament a good start, but 10 years on, it recommended a new deal on funding, retaining the stability and fairness of the block grant while improving accountability.

Since the first day of devolution, the Scottish Government have been accountable for how they spend taxpayers' money. Under today's proposals, they will also be held to account for how they raise it. We will give the Scottish Parliament greater freedom, but also the responsibility, to set the level of income tax in Scotland. In future, the size of Scotland's budget will be down to decisions made in Scotland. In addition to new tax powers, we will give the Scottish Parliament new powers and responsibilities on capital borrowing. We will also devolve stamp duty land tax, aggregates levy and landfill tax, and we will keep the commission's recommendation about air passenger duty under review.

While we rightly celebrate today the strength that the Union of the United Kingdom provides, that unity does not mean uniformity. So in addition to a new deal on funding, we agree in principle to devolve new powers to the Scottish Government and the Scottish Parliament. On the power to regulate air weapons, the Government have kept controls under close scrutiny and there are encouraging signs that recent changes are having an effect. However, the Government agree in principle to devolve the regulation of air weapons to the Scottish Parliament.

We will also devolve the power to set the drink-drive limit. We believe that there are benefits to having a single drink-drive limit in place across Great Britain, but there are no overwhelming reasons why the limit should not be devolved. Additionally, the Government will ensure that Scottish Ministers have the power that they need to determine the national speed limit in Scotland, along with their existing broad powers to determine speed limits.

Elsewhere we will take the opportunity, as the commission recommended, to reserve powers to the UK Parliament where experience has shown that a common approach across Britain or the UK works better. For example, we will reserve the regulation of all health care professions to ensure a consistent regulatory regime across the country.

The full package of proposals is set out in the White Paper that we are publishing today. We will continue to take our plans forward with consensus and momentum, and we will introduce a Scotland Bill as soon as possible in the next Parliament to introduce the Calman package. We will phase in the new financial arrangements carefully, and we plan to have the changes in place during the next term of the Scottish Parliament.

Support for Scottish devolution remains strong in Scotland and elsewhere in the UK, and so does support for the Union of the United Kingdom. The plans that the Government are setting out today will create a stronger, more accountable Scottish Parliament within the framework of the United Kingdom. That strength through unity is a great asset, and today is an important step in building a stronger Scotland and a new deal for devolution. I commend this statement to the House.

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David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con): I thank the Secretary of State for his statement, for the advance notice of it and for the extent to which both he and his predecessor have engaged with fellow Unionist politicians in Scotland during the Calman process. I also put on record my thanks to the commissioners for their work. The Conservatives fully supported the setting up of the commission and have played a full part in its work.

I look forward to reading the White Paper, but does the Secretary of State concede that the timing of it so near an election inevitably means that the issue will have to be revisited by the next Government? Does he acknowledge that his Government's White Paper should not bind any incoming Conservative Government? Conservatives accept that the Scottish Parliament needs to be more financially accountable, that the devolution settlement needs to be tidied up and that Westminster and Holyrood need to start working constructively together for the good of Scotland and Britain, but we will ensure those things through our own White Paper, not this Government's proposals launched in the dying days of this Parliament. Will the Secretary of State welcome that commitment and undertake to continue in the spirit of Calman, on the basis of consensus and momentum, regardless of who is in government, and resist the temptation to play party politics with such an important issue as Scotland's constitution?

Will the Secretary of State acknowledge that the guiding principle in deliberations on the Calman process has been, and must continue to be, securing Scotland's position within the United Kingdom? Is he as heartened as I am by recent polling in Scotland that demonstrates that there is very little support for separatism and an independence referendum? Does he accept Sir Kenneth Calman's view that the establishment of better working relationships between the British Government and the Scottish Government and between the Parliaments here and at Holyrood must be in place to underpin every other recommendation in his report? Given that most of the measures to improve relationships do not require any legislation, can he tell us what he will do to re-establish the good will between Westminster and Holyrood, which appears to have ebbed away?

Whatever differences we may have with the Labour Government about how to take forward the Calman recommendations, may I invite the Secretary of State to agree with me that they are as nothing compared with the divide between us and the Scottish National party? We are Unionists; they are separatists. We are in the mainstream of the constitutional debate; they are on the extreme.

However, does the Secretary of State also agree that there are no grounds for complacency? The Calman commission contrasts markedly with the so-called "national conversation", whose main participants appear to be insomniac cyber-nats. Is it not the case that the work of the commission, not Mr. Salmond's publicly funded, self-indulgent chit-chat, will endure and form the basis for taking-

Mr. Speaker: Order. I appreciate that the hon. Gentleman is in the midst of his rhetorical flow, but I appeal to him to remember that when he is referring to a right hon. Member of the House, he must do so with respect to the constituency rather than by name.

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David Mundell: Is it not the case that the First Minister of Scotland's publicly funded, self-indulgent chit-chat will not survive? It is the work of the commission that will endure and form the basis for taking forward the devolved settlement in Scotland for the benefit of the people of Scotland and Britain.

Mr. Murphy: I agree with one of- [Interruption.] I apologise to you, Mr. Speaker, for the hullabaloo and noise in the Chamber, but you will be aware that when these debates take place and Scottish MPs get together and argue so passionately on Scottish issues, it is a bit like watching a family argue.

I agree with one of the main points that the hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) made, which is that the recent polling evidence is pretty clear-most Scots are fiercely patriotic and love Scotland, and like ourselves believe in Scotland and have a great sense of our history and our future, but they have dual identity and also have a belief in being part of something bigger. That unites most Scots and people across the rest of the UK. I got in trouble for saying this some time ago, but I happen to believe that the Scottish Government made quite a good start after they were elected with the energy and excitement that took them over the finishing line. However, like most people in Scotland, I am starting to believe that they are a novelty that is wearing off.

On the points that the hon. Gentleman made- [ Interruption. ]

Mr. Speaker: Order. I recognise that the exchanges at this stage are relatively good natured, and that there are many smiles on faces and so on, but I say to the hon. Member for Perth and North Perthshire (Pete Wishart) that I think he is setting a bad example. If he were in a school class, he would be in some danger of detention. I do not want to see that.

Mr. Murphy: The five SNP Members-the other one is up the road-continue to shout across the Chamber, but most people in Scotland have stopped listening to them, regardless how loud they shout. The by-election result in Glasgow showed that absolutely conclusively.

However, on the substance of the points raised by the hon. Gentleman, most Scots want to see this Parliament and the Scottish Parliament working much better together and the UK Government working much more closely with the Scottish Government. I suspect that at local level, they would like to see Members of Parliament, Members of the Scottish Parliament and local councillors, of all parties, particularly at a time of recession, working together and trying to set aside, where they can, partisan divides. That is why it is pretty disappointing that, when there is a raft of proposals about better working relationships-we are interested in taking them all forward and working through them-the Scottish Government have just flatly refused to accept two thirds of them.

That is probably because they are not really interested in embedding the working relationships between the UK and Scottish Parliaments in the medium term, because they want to rip Scotland out of the UK. As the hon. Gentleman alluded to, it is important to have a greater sense of teamwork, which we have had through this process, with Labour, Liberal Democrats, Conservatives, and business and trade union leaders, involved in the Calman process and the steering group.

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