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“The Committee considers that the effect of the clause on permanency, as currently drafted, is primarily declaratory and political rather than legal in effect. The UK doctrine of Parliamentary sovereignty makes achieving permanence problematic. The Committee recommends that the Scottish electorate should be asked to vote in a referendum if the issue of permanency was in question, with majorities also being required in the Scottish Parliament and the UK Parliament.”

That is the purpose of the SNP amendments, which we will be moving.

James Cleverly (Braintree) (Con): Does the hon. Gentleman genuinely believe that there are circumstances in which the permanency of the Scottish Parliament could be called into question without the voice of Scottish people being heard?

Angus Robertson: I congratulate the hon. Gentleman on his election. I gently encourage him to remind himself of the position of the Conservative party in the run-up to the referendum on Scottish devolution. It was totally opposed to devolution, so he will perhaps understand why SNP Members, who have consistently supported home rule, wish to see that reflected in the legislation. He will have the opportunity to support the SNP amendment later.

Mr Graham Allen: If there is absolutely no threat whatever to the Scottish Parliament, why not put that fully on the face of the Bill, as the hon. Gentleman suggests?

Angus Robertson: The hon. Gentleman makes an excellent point. Hopefully, the Committee does not need to divide. If there is support from Labour and from the Government, everybody will be satisfied and we can move forward.

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In legal terms, there is nothing to stop the Westminster Parliament from repealing clause 1, according to the doctrine of parliamentary sovereignty and the associated norm that one Parliament cannot bind its successors. The Scottish Government produced an alternative clause that includes a double lock—it would require that the clause cannot be repealed without the prior consent of the Scottish Parliament, and without the people of Scotland voting to abolish the Scottish Parliament in a referendum conducted for that purpose. The Scottish Government clause forms the basis of our amendment.

Mr Kevan Jones (North Durham) (Lab): I have no objection to what the hon. Gentleman is trying to achieve, but can he clarify the amendment? It states:

“The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

The country does not have a constitution, so will he identify the legal definition and what is constitutional?

Angus Robertson: The hon. Gentleman knows that the UK does not have such a constitution—we are strong supporters of a constitution, whether for the UK or for Scotland—and that the constitution is based on custom and practice. Legislating on the matter would be an appropriate safeguard.

The SNP approach would strengthen the declaratory and political effect of the clause. It also acknowledges the position of the Scottish Parliament and the long-standing sovereign right of the people of Scotland to determine the form of government best suited to their needs, as recognised in paragraph 20 of the Smith commission report, which states:

“Reflecting the sovereign right of the people of Scotland to determine the form of government best suited to their needs, as expressed in the referendum on 18 September 2014, and in the context of Scotland remaining within the UK, an enhanced devolution settlement for Scotland will be durable, responsive and democratic.”

Mr Jones: I am just trying to be helpful. The hon. Gentleman might have the wording “United Kingdom’s constitution” in an amendment, but would it have any legal force? An amendment to the American constitution, or to any other written constitution, is legally binding. What would be the status of the hon. Gentleman’s amendment?

Angus Robertson: I am making the point that it would be very difficult for people to go back on legislation with the express wording proposed in the amendment. It is not that difficult a concept to grasp.

The Scottish Government noted in their response to the Devolution (Further Powers) Committee interim report that both the House of Commons Political and Constitutional Reform Committee—I am looking at the hon. Member for Nottingham North (Mr Allen), who served with great distinction as the Chairman of that Committee—and the House of Lords Constitution Committee raised concerns with those aspects of the UK Government’s clause.

The Scottish Government’s alternative clause and the SNP amendments address more minor issues with the UK Government’s clause, using the definite article “the” instead of the indefinite “a”, as that is

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the language used in the Scotland Act 1998. That was picked up by the right hon. Member for Orkney and Shetland (Mr Carmichael).

Andrew Gwynne (Denton and Reddish) (Lab): Will the hon. Gentleman give way?

Angus Robertson: I want to make some progress, if the hon. Gentleman will forgive me. I have given way to Members on both sides of the Committee.

The SNP also suggests using “constitution” rather than “constitutional arrangements”, because the former term is already straightforwardly used in the 1998 Act. “Constitutional arrangements” is a term most commonly used to refer to the governing arrangements of bodies and offices, and is therefore inappropriate for describing the governance of Scotland. That is politically important for both the Conservatives and the Labour party, given that the very first words of the vow were:

“The Scottish Parliament is permanent, and extensive new powers for the Parliament will be delivered”.

In his foreword to the Smith commission report, Lord Smith made the position clear by saying:

“The Scottish Parliament will be made permanent in UK legislation”.

The main body of the report, however, had a slightly weaker formulation:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

The fact that the cross-party Scottish Parliament devolution committee—including the Scottish Conservative party, and now, as a result of amendments to this part of the Bill, the SNP, the Liberal Democrats and Labour—has sought to deliver a stronger legal protection for permanence suggests that the Westminster Conservatives are the only partners in the Smith deal who hold the softer interpretation of what Smith was proposing.

4.30 pm

As an entirely sensible safeguard, the SNP has proposed amendment 58, securing a double lock to protect the Scottish Parliament, which one of us will move formally later. It states:

“The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

It also states:

“Subsection (1) or (1A) may be repealed only if…the Scottish Parliament has consented to the proposed repeal, and…a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”

The amendment is intended is to ensure that the Scottish Parliament can be abolished only with the consent of the Scottish Parliament and the Scottish people after a referendum, and we look forward to pressing it to a vote.


John Redwood: I have always been a Unionist, but my idea of my country, the United Kingdom, is that it must be a democracy at peace with itself, and can only proceed as a happy and successful democracy if it has the consent of most of the people most of the time to the Union institutions and the powers of those institutions.

I am pleased that, because we proceed democratically and understand the need for consent, this Parliament listened to Scotland and, quite recently, granted a

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referendum to establish whether it was the settled will of the Scottish people to leave the United Kingdom altogether and set up their own arrangements. We discovered two things as a result of that democratic exercise. We discovered that the Scottish National party itself was not arguing for full independence: it wanted to remain part of the currency union, for example. I do not see how it is conceivably possible for an independent country to be part of a currency union.

Peter Grant (Glenrothes) (SNP): Is the right hon. Gentleman seriously suggesting that Germany is not an independent nation?

John Redwood: That is exactly the problem: Germany is not an independent nation. No member of the eurozone is an independent nation, and that is why those countries are experiencing such trouble. The trouble is not just for Greece, which is very visibly not independent, because it is being told how to conduct its economic policy. Germany is not independent either. Germany did not wish to lend Greece huge sums of money, but the European Central Bank, acting in the name of Germany, has advanced huge sums of money, which it will find very difficult to get back, but which Germany has to stand behind.

Patricia Gibson (North Ayrshire and Arran) (SNP) rose—

John Redwood: If SNP Members will allow me a little time, I will say things that they will like. I am not trying to make life difficult for them.

This is my analysis. In the referendum the SNP went for something more akin to home rule than what I would regard as full independence, but at that stage the Scottish people said no even to that. They seemed to say yes to the rather larger devolution of powers that the three main Unionist parties were then offering. However, we are now experiencing new circumstances.

Like my hon. Friend the Member for Gainsborough (Sir Edward Leigh), who has tabled a very interesting amendment, I think that this Parliament must listen to the new voice of the Scottish people. It is clear that there has been a shift of opinion towards more home rule than the Unionist parties were offering at the time of the referendum. That is why we are here today, listening very carefully to what the SNP has to say, and that is why I think it extremely important for us to have this debate on full fiscal independence, or fiscal autonomy. It would be one way for our Parliament to respond when the Scottish people have said, “We do not want to be completely independent as a separate country, but we want much more self-government—or home rule—than was envisaged by the Unionist parties at the time of the referendum, because we can see that that was not very popular.”

The Unionist parties collectively did rather badly in Scotland come the general election. [Interruption.] Well, between them, they received just under half the vote, while the Scottish nationalist party received just over half the vote. Because the Unionist vote was split, practically no Unionist Members of Parliament were elected, but it is still the case that Scottish opinion is

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fairly evenly balanced. The Scottish nationalists did not get 70% or 80% of the vote. If they had done, then, as far as I am concerned, they would really be in a position to tell us the answer, but, as judged by the vote, they speak for only about half the Scottish people. However, as representatives, they speak for practically all the Scottish people because they have most of the Members in this place.

I am listening very carefully and will want to hear more about what SNP Members want, but I am also very conscious that, in parallel with this exercise on powers as set out in this Bill, in some way far more important negotiations are already under way on what the new financial settlement will be, and those are not yet being reported to this House. That is crucial not just to the SNP and its representation of the Scottish people, but to the people of England. I find the more home rule that is on offer and the more we hear the Scottish voice, the more I have to be an advocate not of the Union, but of England, because someone needs to speak for England and to say that the consequences of much enhanced Scottish devolution, and some fiscal devolution as well, are serious for England. England needs to be in the discussion just as Scotland does, as this is our joint country and a major change in its arrangements will have a fundamental impact on England.

While I am very attracted to the idea of my hon. Friend the Member for Gainsborough that it would be a shrewd move to, for once, get ahead of the Scottish appetite for home rule and on this occasion to grant full fiscal devolution, we need to ask how feasible that is and what the consequences will be for Scotland and England. If Scotland wishes to be part of common welfare and pension guarantees, some limitation is already imposed on the spending side of full fiscal devolution. We have to think about the position of England if cross-guarantees are being offered for some part of that welfare package. If we are going to proceed in the way the Government currently plan and the way the negotiations are currently being undertaken—as I understand it, there is an attempt to find a way of adjusting the block grant for Scotland to take into account the new Scottish responsibilities, as some items of spending will have to be added in as a result of the devolution of new functions, and there will be a reduction in the block grant to take account of those taxes that are now Scotland’s to fix and collect—therein lies an immediate problem.

Mr MacNeil: Would not an easier solution be for Scotland to collect its own tax, as Catalonia does, and then pay into the centre, rather than the centre paying out? The taxes should be raised by the Government of the territory paying the taxes and paid into the centre rather than giving them to the centre for it to then pay out. In that way, the centre will have to stop saying it is subsidising people when it returns their own taxes.

John Redwood: But if Scotland wisely decides to have lower tax rates to make itself more popular, the Union will be losing out if those lower tax rates collect less money.

Mr MacNeil: The right hon. Gentleman should realise that it is not lower taxes that have made the SNP more popular; it is better public services in Scotland—that has given us 50% of the vote versus his party’s 37%.

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John Redwood: If Scotland wishes to impose higher taxes, the Union has less of a problem with that—unless it chooses to impose higher tax rates which collect less revenue, because those could be a problem for the Union as a whole—but it would be a problem for Scotland if it had to collect higher tax levels and it did not get all the money back; I would have thought it would want to get all the extra money back that it was collecting. Full fiscal autonomy means it would take responsibility for both raising the money and spending it. If Scotland wishes to spend more under fiscal autonomy, she can do so if she has a magic way of getting more money off people through either higher or lower tax rates, whichever work in the particular fiscal circumstances.

We need to have working papers on how full fiscal devolution might work and whether it is truly full fiscal devolution, because if we are going to full fiscal devolution, England will want guarantees that we are no longer acting as a buffer or subsiding the Scottish settlement, just as Scotland will want guarantees that she has got a fair deal and is capturing the benefits of her fiscal independence. If we go for a mixed system, which is where we currently are with the real debate between the Smith commission, the pro-Union parties and the SNP, there is a lot to be worked out, and I hope that at some point those on the Treasury Bench will share some of their thinking with the Committee.

Andrew Gwynne: I find myself in the unusual position of agreeing with much of what the right hon. Gentleman is saying. Do not these arguments illustrate the asymmetrical nature of the devolution settlement across the four nations of the United Kingdom? Does he agree that whichever funding model we go for in relation to Scotland, there will be implications for the finances of the other three nations? Does he not think that we need a constitutional convention to put that right?

John Redwood: No, I do not think that we need a constitutional convention, because that would create endless delay and complications. I agree with previous comments that we are here to try to solve this problem for our respective constituents. I spent quite a lot of my time during the election speaking for England and saying that I wanted to ensure that England got a reasonable deal out of this. SNP representatives clearly did the same in relation to Scotland, and we both achieved similar levels of success in attracting lots of votes for what we were saying.

Mr MacNeil: The right hon. Gentleman talks about getting good deals for the various parts of the UK, but let us look at the wider British Isles. Does he think that the aggregate GDP of the British Isles would be as high as it is today without the full fiscal autonomy that the Republic of Ireland, the Isle of Man and the United Kingdom all enjoy? If the aggregate GDP of the British Isles is higher for those reasons, does he not agree that it will be higher still when Scotland achieves its full fiscal autonomy?

John Redwood: I start from the point of view of democracy. A democratic state has to have the full range of powers, including fiscal autonomy and its own currency. That is different from asking: what is your state? I would still rather have the United Kingdom as

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my state, but I have just explained that if it is the will of the Scottish people that the UK is no longer their preferred state, they must leave—of course they must.

Mr MacNeil: The right hon. Gentleman is being very kind in enabling our dialogue to continue. I am sure he would acknowledge that the UK functioned between 1603 and 1707, when the Parliaments were independent.

John Redwood: Well, it functioned after a fashion, but I would not have wanted to live through that time. The nations were clearly not nearly as rich as they are today. Labour Members sometimes try to pretend that we have gone back to an ancient age, but I am sure that none of them would willingly go back in time and live in that era, because we are obviously so much better off now.

Mr Kevan Jones: I do not want to divert from the subject, but was not the reason for the Scots’ enthusiasm in going forward in 1707—[Interruption.] It was not an economic blockade; it was speculation in the colonies of central America.

John Redwood: Yes, it was a kind of early version of the banking crash, which also reminds us that Scottish banks can sometimes get into trouble, and that the Union’s insurance can be quite helpful to them.

George Kerevan: May I return the discussion to the here and now? I should like to clarify something that the right hon. Gentleman said, because I think I agree with him. Is he saying that there was a clear desire in the debate that took place in Scotland post-Smith for a fuller measure of complete domestic fiscal control within the UK, but that achieving it would require serious discussions about how it would work in Scotland and how it would affect the fiscal arrangements in the rest of the UK? Does he agree that it could be done reasonably quickly, but would require transitional arrangements? It cannot be done overnight, but it is the way to go. If we do not do this, we will end up having endless piecemeal discussions, which would produce more friction than light.

John Redwood: I am making an even more urgent point than that. I am saying that that discussion is going on in parallel with our debates on this Bill. I hope that its content will be shared with Members at some point, because it is a matter of great importance to the United Kingdom, to England, to Scotland and so forth. As I understand it, those taking part in the negotiations are up against these very issues. If, for example, too much independence is given to Scotland on spending patterns, would there be a Union guarantee to pay for it all? How would it be fair to other parts of the Union if Scotland could increase her spending without having to take responsibility for raising the money for it? If Scotland starts to raise more of her own money, how do we adjust the block grant? In the current negotiations, nobody is suggesting getting rid of the block grant and saying that Scotland can have all her own money and just spend her own money. I am not even sure that is what the SNP wants. Negotiation is going on about how far—[Interruption.] If the SNP genuinely wants all that, that is fine. We then have to have a serious discussion, before it could be agreed to, over the borrowing. I will call it “borrowing”; I do not think “black hole” is a terribly useful term.

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4.45 pm

It is obvious that the United Kingdom has been living well beyond its means as a state for many years and is still borrowing large sums, and that, collectively, the United Kingdom, including Scotland, has built up those debts. Some of that money has been spent in Scotland and some of it has been spent in England. If we went for so-called full fiscal autonomy, we would face the question of what do we do about the new borrowing and what do we do about the past borrowing. One thing we have surely learnt from Greece and other places in the euro currency union is that the borrowing of a state in a currency union is of great concern and interest to the rest of that union. There would therefore have to be an agreement on borrowing, with past debt levels attributed to Scotland, because it would have to pay an interest bill on those. Future build-up of Scottish debt would also have to be addressed: whether it would be separate Scottish debt or would still come with the full Union guarantee, which would probably make it a bit cheaper. That becomes the centre of the row, rather than it being over which taxes we have.

Patricia Gibson: Does the right hon. Gentleman not agree that successive Westminster Governments could learn much from the economic management of the Scottish Parliament, which has balanced its budget, in a fixed budget, every year, while Westminster has run up successive debts?

John Redwood: That is because all the time that it is a subsidiary Parliament of the Union, and part of our public expenditure and borrowing plans, it has to abide by the remit. The hon. Lady is right in that it has been given a tougher remit than the Union gives itself, but it is not fair to say that that is of no interest or benefit to Scotland, because of course much of the Union expenditure is also being committed proportionately in Scotland and so it is Scotland’s share of the debt as well. I am making a factual statement; I am not trying to make party political points, wind up the SNP, rerun the referendum or anything like that. I am just trying to get this Committee to understand that grave and big issues are being hammered out elsewhere, we are not hearing about them and they impinge very much on this crucial debate that we are now having.

I have intervened in the debate because I want an opportunity to talk about this financial settlement, which matters to England as well as to Scotland. The proposal put forward by my hon. Friend the Member for Gainsborough brings things centre stage. If we went down his route and had full fiscal autonomy, I would want to know what that meant; how much responsibility Scotland would take, for example, for pensions as well as welfare; and what the borrowing settlement would be. The residual is the borrowing, and unless we know what the answer is on that, we still will not have a happy Union or stable expenditure.

Ian Blackford: I thank the right hon. Gentleman for his most gracious speech and his thoughtful remarks about the future of the constitutional arrangements between Scotland and the rest of the UK. It is perhaps worth remembering that when Gordon Brown spoke on behalf of the three Unionist parties prior to the referendum, what was offered was as close to federalism

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as we could get. What was talked about was home rule in the spirit of Keir Hardie. It is akin to the remarks that the right hon. Gentleman is making. It is perhaps worth remembering that the manifesto commitment the SNP stood on was delivering powers for a purpose to the Scottish Parliament. He is right: that is what the Scottish people voted for in returning 56 Members of Parliament to this Chamber.

John Redwood: Then I think we need to have another debate, on another day, which looks at what is going on in these important financial discussions. Although my constituents are interested in what powers Scotland gets, they are far more interested in how the money works between the different parts of the Union. We have no papers before us today to elucidate that.

Ian Murray (Edinburgh South) (Lab): For the second time in five and a bit years, I agree with the right hon. Gentleman. On the complicated nature of the fiscal framework, which I believe he is trying to unpack, does he not agree that the Labour new clause, which will be debated at some point, to set up an independent commission on the costs and implications of full fiscal autonomy provides a much more reasonable and sensible approach?

John Redwood: We are where we are. Promises were made, I thought in good faith, by the three Front-Bench teams. They were not my chosen promises; they were made on behalf of the three Unionist parties. They did the job for the referendum, but they then did not do much of a job for the Unionist parties at the general election. However, we cannot now be seen to be delaying for any great length. There needs to be proper work—and I am sure that proper work is going on in the Government at the moment as they try to work out a financial settlement in parallel to this Bill. I am just suggesting that perhaps this Parliament needs to have some of that thinking shared with it.

Today is the first opportunity, within the clear parameters of new clause 3, to try to expose a bit of the thinking on how a limited amount of fiscal autonomy will work, and on how many of these taxes Scotland will not only collect, but be responsible for and have knocked off the block grant. As I remember it, when the leaders came up with this promise, Gordon Brown was a big voice—obviously, he was not one of the leaders at the time—for rather less fiscal autonomy. He was trying to stop Scotland controlling her own income tax revenues, so I do not entirely share the interpretation of the Labour Front-Bench team of what Mr Brown was trying to do at that point.

I will bring my remarks to a close with the simple conclusion that the world has moved on because of the general election result. The debate on money is taking place elsewhere, but we currently have a short debate about money here. I hope that the Front-Bench team will share some of its thoughts on money. Fiscal devolution seems to be attractive to many people in Scotland, but we need to know where it ends and how we sort out all those crucial issues about debt and borrowing as well as about shared policies such as pensions.

Mr Graham Allen: Sir David, it is a great pleasure to see you in the Chair this afternoon. Like many colleagues, I had assumed that you would be in your green tights

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dancing around the maypole with many other dignitaries at Runnymede.

[Interruption.]

Yes, the thought does bring tears to the eyes. I am talking about a serious occasion, but it is, by necessity, a backward-looking, occasion. Eight hundred years ago, in what was a great leap forward in its time, Magna Carta was sealed, if not signed. What we have been hearing about today—and this has been a really superb debate so far by all parts of the House—is the next 800 years. We are certainly looking at the foreseeable future and at our democracy. One thing we cannot do is go back to business as usual. We have a majority party in the House, and we cannot just ram stuff through the Commons. We must consider all these sorts of Bills seriously.

I mean no offence when I say that the Scotland Bill is not the property of the people of Scotland let alone of the political parties of Scotland. The Scotland Bill is about the Union. Whether we are in a transitional period or whether we have another 800 years of happy family relationships is still to be decided. As we discuss this Bill, the local government devolution Bill, and the European referendum Bill, those colleagues who are new to the House—to all parts of the House—should be excited that they have come here at this moment. It is a time of immense potential. People from all parts of this House have expressed the view that we need to look at this matter seriously. The word “statesmanlike” has been thrown around quite a bit, but it is pertinent to this debate. What we do today and over the next four Mondays will be of great importance to all of us in the Union.

Mr MacNeil: As usual, the hon. Gentleman is making a thoughtful contribution. He said that the Scotland Bill is the property of the House, but he will recognise that the House has been forced, kicking and screaming to reach the point it is at the moment. In the previous Scotland Bill, an amendment was moved to devolve Crown estate control to Scotland, and the House would not agree to it. It has now conceded on that point because of the weight and the power of the votes from the people of Scotland and it has done so easily. Is it not a huge mistake for this place to give away too little too late and not to listen to the hon. Member for Gainsborough (Sir Edward Leigh)?

Mr Allen: I am probably one of the worst in this House for blaming Westminster. Westminster and, above all, Whitehall—that is a distinction that we can educate each other in over the next five years—deserve to have that blame attached to them, but the hon. Gentleman and his colleagues are now part of Westminster. They will need to use the Westminster system and to be a part of it, if only because they wish to get such Bills passed. The Bills that have been passed to free Scotland in the way that it needs to be freed up, that Nottingham, Leicester and Derby need to be freed up and that England, Wales and Northern Ireland need to be freed up have been passed by this place because of the efforts of people such as Donald Dewar and those who got the Scotland Act 2012 through and because of the efforts of all the parties in this House, who will, I hope, pass the Scotland Bill effectively through this Committee.

Dr Philippa Whitford (Central Ayrshire) (SNP): The hon. Gentleman mentions Donald Dewar and I pay tribute to what Donald Dewar did. In the establishment

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of the Scottish Parliament, sections were given—such as health or education—so that the Parliament could make its own policies without controlling the budget. The problem with Smith is that it is made up of little bits and pieces that mean that the two Parliaments will be forever at each other’s throats. That cannot be sustainable.

Mr Allen: The problem with Smith, with 2012 and with Donald Dewar’s devolution is that none of them was perfect. To seek perfection is to be the enemy of good. This is a progress, a process and a way forward, and it might not turn out how any of us first imagined. One key point is for those who represent England—in my case, my city of Nottingham, of which I am very proud—is that nothing in this Bill should be unable to apply to the liberation and progress of such cities. Nothing in my city should restrain or inhibit the progress I would love to see my friends in Scotland achieving, too.

This is all about devolving power. I do not wish to sour the atmosphere, but sometimes separatism and devolution are sworn enemies. I hope that this is not one of those occasions. I hope that we can all see devolution as part of a process.

Peter Grant rose—

Mr MacNeil rose

Mr Allen: If I may just make this point while I am thinking about it, I will then give way. If we continue that process, we might end up in a place that is better for everybody and we might end up with the sort of liberation of our localities and communities that we all want, whichever nation of the Union we represent.

Peter Grant: Does the hon. Gentleman agree that the only real separatists in this House are those on the Government Benches, who would quite happily see Scotland dragged out of the European Union against the express wishes of its people?

Mr Allen: We all have a stronger common interest than we sometimes dare admit, and we certainly all have an interest in making devolution work. The bigger issues that I want to come on to concern some of the structures through which we might all work together to do some of that. Some were raised by my Select Committee, which was an all-party Committee of this House and proved that we can do other things and move forward on devolution.

Let us imagine where we might be in 20 years’ time with the federal Parliament, which this is. Even the strongest small c conservative—they can be found throughout the House—would not say that we will be in exactly the same place in 20 years as we are today. That would be inaccurate. We will definitely be in a different place. What will it look like? I suspect the position will unfold. It may not be devised at 10 o’clock tonight, as the amendments envisage, but there will be progress over those 20 years. What does it look like? For some it looks like separation or independence. For others, it looks like a Union refreshed and renewed. For me, it looks like my people in my area being allowed to make more decisions of their own as of right, not because people feel they are giving them a little play out of Westminster.

Mr MacNeil rose

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Mr Allen: I give way to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who has been waiting a little while.

5 pm

Mr MacNeil: I see that my patience has paid off and I am grateful to the hon. Gentleman. Is not one of the problems, in yet another Scotland Bill three years after the previous one, that Westminster may give away a little bit here and a little bit there? Would it not be better to turn the telescope around and have the relationship that the Faroe Islands have with Denmark? They can take the powers that they want to take and it is not a big deal for Copenhagen to give Tórshavn those powers. In Westminster it seems a massive deal to give people control over the minimum wage in Scotland—a power that Labour blocked, for goodness sake. It should not be like that. If Scotland wants it, let Scotland take it and let this place be gracious about it.

Mr Allen: It is always good to knock off a quick anti-Westminster point, so I will join the hon. Gentleman and say that everything that he resents about Whitehall, I resent at least as much in so far as it impacts badly on one of the 10 poorest constituencies in the United Kingdom, so—I mean this in a friendly way—he does not need to lecture me about how inadequate Westminster and Whitehall are at freeing up and liberating people to get better jobs, improve skills and improve their schooling, all the things that all of us hold in common as we move forward.

What I am saying is that we need to figure out how progress that has been made in Scotland—massive progress, which I fully support—can be replicated, not just in a narrow sense of “This is good for us”, but if it is so good, how it can be good also for Wales, Northern Ireland and England.

Andrew Gwynne: I commend the work that my hon. Friend and his Select Committee did in the previous parliamentary Session. Although we are talking today specifically about the Scotland Bill, is this not also about how we re-engage the debate across the whole of the United Kingdom about how we bring powers down to the very local level so that what happens in Scotland today is valid for Nottingham, Manchester, Durham and other parts of the Union tomorrow?

Mr Allen: If we have now breached the principle and the wonderful idea of devolution—giving power away, not decentralisation, where Westminster and Whitehall can suck it back—let us look at devolution that is entrenched and can stand the test of time. I agree very much with getting the words right. My Select Committee was clear about the words reflecting the permanency of the Scottish Parliament.

The question is how we achieve permanency in an unwritten constitutional environment. We do it in two or three possible ways. One suggestion in one of my amendments—I tabled new clauses 6 to 9—is that the Scottish Parliament is protected behind the ingenious mechanism of the Parliament Act, which requires both Chambers to agree to any change in the status of those things that are protected. The other idea is related to Magna Carta, which is being celebrated today, and calls for a new Magna Carta—a written constitution. I commend

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the Scottish Executive for the work that they have already done on that.

[Interruption.]

If any hon. Member has something to say, please stand up and correct me. I am happy to take a correction.

Stewart McDonald: The legislation was changed from Scottish Executive to Scottish Government. It is not a briefcase.

Mr Allen: I am sorry for once that I gave way to an hon. Member because this is a serious debate. There is a precedent and if we can build on the precedent, however we name it, and make a broader constitutional settlement for the United Kingdom, there will be fewer occasions on which any of us need doubt when progress is made. If it is clear for every schoolboy and schoolgirl that the structure of their Government is there in writing, there is less likelihood that those powers can be sucked back into Westminster and Whitehall.

Mr Jackson: I declare an interest as an adjunct associate professor of British politics. I pay tribute to the fantastic work that the hon. Gentleman did in the previous Parliament. The point that SNP Members are missing is that the progress that has been made since the Scotland Act 1998 was as a result of the sovereignty of this Parliament. May I also respectfully correct the hon. Gentleman? We are not a federal Parliament, because that presupposes a codified written constitution setting out the powers, duties and responsibilities of the centre and the constituent parts of a sovereign nation.

Mr Allen: We might not yet be a federal Parliament officially, and we might not yet have the right words for it, but there is absolutely no question but that our Union is moving towards a federal basis, rather than the alleged parliamentary sovereignty referred to earlier. I hope that I live long enough to see parliamentary sovereignty in this House, because I have not seen much of it over the couple of decades I have been here.

The other thing that I think is really important to have clarified—this is also in the interests of my friends in the SNP—is the role of local government. If we have an overarching, federal structure in the United Kingdom, there are certain things that that structure needs to define. Human rights is a classic example, and I would argue strongly that so too are the rights of the sub-national tiers of government. Otherwise, all we would be doing is transferring state power from Whitehall to Holyrood. Some people say that that is precisely what has happened in Scotland, but I am sure that is a false accusation. However, in order to ensure the freedom of those who work at the grassroots, in our communities and neighbourhoods, defining the rights of local government, which is commonplace in every other western democracy, and to do that in our Union while it exists and is flourishing, would ensure that no such accusation could be levelled at my newly elected friends in the SNP.

Andrew Gwynne: My hon. Friend will remember that in the early 1990s there was a word that was in vogue in what was then the European Community: subsidiarity. Although it is a horrible word, it has a very serious meaning, which is that decisions should be taken as closely to the people as appropriate. Is not that just as relevant to the devolution debate? We should be talking about handing powers from this place not only

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to Holyrood, Cardiff Bay and Stormont, but even to places such as Manchester city region, and to local communities beyond.

Mr Allen: I think that devolution is so good that it should apply to everybody in the Union. I welcome the breakthrough that has been made in Scotland and hope to see a similar settlement for England, Wales and Northern Ireland. I often say—my hon. Friend will have heard this before—that subsidiarity is the ugliest word in the political lexicon to describe the most beautiful concept.

John Redwood: An important part of our Union is that there has been a transfer as well as a fiscal Union, so the richer parts pay in more, relatively, and the poorer parts draw out more. Does the hon. Gentleman feel that that could be sustained with full fiscal autonomy, or is that a problem?

Mr Allen: As far as I am concerned, the idea of income tax assignment was applied in the Scotland Act 2012. I think that it is the basis on which devolution can move further forward in Scotland, and certainly on which it can start to move forward more seriously in England so that we have not just piecemeal breakthroughs, as we are having at the moment, but something that can apply to every local authority throughout the whole of England and Wales and, if it wishes, Northern Ireland.

Stewart McDonald rose

Mike Weir rose

Mr Allen: I will give way to the hon. Member for Angus (Mike Weir), because the hon. Member for Glasgow South (Stewart McDonald) is now in my bad books.

Mike Weir: I have listened carefully to what the hon. Gentleman has been saying, particularly about local government. Does he accept that it is not up to this place to determine the form of local government in Scotland, Wales and Northern Ireland? Decisions about local government are already devolved to the Scottish Parliament and the Assemblies of Wales and Northern Ireland. England may determine its own local government through this place, but questions about local government in Scotland, Wales and Northern Ireland are not to be decided here.

Mr Allen: We need to think carefully about whether the rights that we would like to enjoy in our constitution should be placed at a federal level or at a national level. Let us fantasise about what would happen if, for example, the European convention on human rights was abolished and the right to torture people was established in part of the United Kingdom—[Interruption.] I know it is a silly example, but let me continue for a moment. I cannot imagine that we in the federal Parliament would not object to that ridiculous state of affairs. In some written constitutions, transcending values—concerning, for example, human rights, structures and democracy—may be in the federal constitution rather than in national constitutions. We need to debate that, and I hope that the hon. Member for Glasgow South will join in that debate rather than simply shaking his head, as he is doing.

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Martin John Docherty (West Dunbartonshire) (SNP) rose—

Mr Allen: I will give way to the hon. Gentleman. I am sure, since his Front-Bench colleague is telling him not to take too much time, that he will be brief.

Martin John Docherty: I am grateful to the hon. Gentleman for participating in this resolute debate about the future of Scotland and the British Parliament. I come back to the Statute of Westminster of 1931. Is the hon. Gentleman suggesting that Scotland should be a dominion?

Mr Allen: That was before even my time. I will allow the hon. Gentleman to educate me about that in the Tea Room.

Ian Paisley (North Antrim) (DUP): On a point of order, Sir David. May we have a ruling that there is no such thing as the British Parliament; there is the Parliament of the United Kingdom?

The Temporary Chair (Sir David Amess:) Order. I listened carefully to what the hon. Member for North Antrim (Ian Paisley) said, and it was a point of argument, not a point of order.

Antoinette Sandbach (Eddisbury) (Con): The hon. Member for Nottingham North (Mr Allen) seems to be advocating a written constitution, but the problem with that, as we have seen clearly with the Government of Wales Act 2006, is that it invites judge-made law. Recent Supreme Court decisions on the 2006 Act have led, in effect, to judicial decision making on a reserved powers model, which is not contained in the Act.

Mr Allen: I am sure that I would be called to order if I went into too much detail on the pros and cons of a written constitution. Suffice it to say that reams and reams of judge-made law exist, but our citizens are not allowed to see the basis on which that framework is put into place.

Mr MacNeil: Further to the point of order made by the hon. Member for North Antrim (Ian Paisley), France knows that it is France, but the UK does not seem to know that it is the UK. That is an extraordinary state of affairs.

The Temporary Chair: Order. Again I say to the Committee that that is a point of argument, not a point of order.

Mr Allen: Perhaps I can turn to a subject that will help the hon. Member for Na h-Eileanan an Iar, who has intervened several times, in his future career: the House of Lords. I have tabled a new clause that would enable the nations of the Union to decide how they would like their representatives in the second Chamber to be chosen, elected or balloted for. Should the SNP have reached its zenith, and should it suffer a catastrophe after the next general election, I suggest that the hon. Gentleman may wish to have his name added to a list of such representatives put forward by the Scottish Parliament.

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Mr MacNeil rose—

Mr Allen: I think the hon. Gentleman has made more than his fair share of interventions. There may of course be others in the Scottish National party who wish to take his place.

5.15 pm

As we now have a five-year Parliament, one of the answers to this—with Government consent, I hope—is to convene a constitutional convention so that all the parties of good will can come together. I strongly hope that we could benefit from the views of Conservative Members who have spoken today. We could pull together a constitutional convention that did not at all delay Bills coming to this House. The problem is not that we take Bills through too slowly but that we take them through too quickly—although there are cast-iron reasons why this Bill should move forward quickly. We could have a constitutional convention that looks at all the issues—subsidiarity, local government, a written constitution, English devolution, and the human rights that we cherish so much in this country—and takes as long as it likes alongside the ongoing legislative process.

We have had a very good debate that has been good-natured but statesmanlike. People in this House of all parties are looking to how we progress the inevitable movement towards devolution and personal and community liberation that will, I hope, be the hallmark of this five-year Parliament. I hope that we will continue these discussions and come up with answers, very much in the vein of what we have tried to do in this debate.

Stewart Hosie (Dundee East) (SNP): It is a pleasure to serve under your chairmanship, Sir David, and to speak to amendment 89, tabled in my name and the names of my hon. Friends.

If amendment 89 is passed, it will deliver full fiscal autonomy for Scotland. That means that Scotland will collect all her own taxes, fund all her own spending—all the spending that is the responsibility of the Scottish Parliament—and pay a subvention for shared spending on Scotland’s behalf, primarily on defence and foreign affairs, by the UK Government. This is not simply about responsibility for taxation; it is about responsibility for all spending outwith limited and agreed areas.

On the question of why we need this, the answer is clear. We need and deserve important decisions to be taken as close to the people as possible and, more importantly, we need those decisions to be taken in line with the aspirations and democratic choices of the Scottish people.

The next question is what we would do with the powers. The answer depends very much on the view of the Scottish Government of the day, the prevailing economic conditions, and the most up-to-date economic forecasts. I will describe what an SNP Government might do with the powers of full fiscal autonomy to grow the economy, improve conditions for business investment and job creation, and start to make society fairer—all of which are vital for Scotland’s economy and future.

We believe in the transfer of more powers to Scotland not as an end in itself but because through it the Scottish Government can exercise those powers to the

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benefit of Scotland’s economy and society. For example, we would not merely have control over income tax rates and bands for earned income but have responsibility for all tax on income, including definition, the basic rate starting threshold, and tax rates on dividend and investment income. That would allow for every possible policy choice, delivering to future Scottish Governments the flexibility to craft an income tax system. Likewise, the devolution of corporation tax would allow for a comprehensive tax regime, including an intelligent use of allowances to assist business in investing for the future.

Ian Paisley: Does the hon. Gentleman desire air passenger duty to be included in the remit of the amendment? Does he accept that to be fair to all the component parts of the United Kingdom, any change to APD should affect Northern Ireland as well as the north of England?

Stewart Hosie: Air passenger duty is to be devolved to Scotland, as it has been to Northern Ireland, albeit in a limited way. I very much welcome that. It is for each of the component parts that have responsibility for a tax to use it wisely in the interests of the people. I think we would agree that serious, proper and justifiable tax competition to grow our economy and attract investment would be a good thing, and I hope the hon. Gentleman agrees that it is always odd to hear Government Members purport to support tax competition except, of course, when it begins to affect them.

Wayne David (Caerphilly) (Lab): It is interesting to hear the hon. Gentleman setting out some of the economic and fiscal priorities of a future SNP Government. Would they increase or reduce corporation tax?

Stewart Hosie: Yes, a future SNP Government would increase it, decrease it, keep it the same and use the amount raised in an intelligent way. I know the hon. Gentleman thinks he has asked a really clever question, but we have just had the 2015 election and I am not going to write the 2016 manifesto today.

To answer a little more clearly, we have argued for targeted reductions in corporation tax in order to promote investment in key industries. We have highlighted for many years the relatively low private sector research and development spend in Scotland. However, given that R and D tax credits can be claimed only by companies liable for corporation tax, in order to develop a comprehensive, joined-up approach to encourage more innovation, we need to move to full fiscal autonomy, including the devolution of corporation tax and all related allowances, in order to be able to use that lever.

Mr Rees-Mogg: The hon. Gentleman said that Government Members are not in favour of tax competition, but I am thoroughly in favour of tax competition. It would be an excellent idea for both Scotland and Northern Ireland to have control of their corporation tax, because I think they would suddenly discover the virtues of the Laffer curve and reduce taxes quite sharply.

Stewart Hosie: Our friends in the Labour party have criticised us for understanding the Laffer curve just a little too well.

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We also want to see continued downward pressure on the cost of employing people. That is one of the reasons the SNP proposed in our manifesto to increase the employment allowance from £2,000 to £6,000 per business a year. We cannot do that at present, but we would be able to do so with the devolution of national insurance as part of a package delivering full fiscal autonomy.

Alberto Costa (South Leicestershire) (Con) rose

Stewart Hosie: I will give way in a moment, if the hon. Gentleman keeps calm.

Finally, as I have said, the issue of specific powers and what we might do with them is not all about tax: it is about other decision making, such as the minimum wage. We support a rise in the minimum wage to £8.70 by the end of this Parliament: that is the right thing to do. We do not currently have the power in Scotland to do that. Although we will table amendments to transfer that specific power, the last two examples demonstrate why we need full fiscal autonomy—to deliver a comprehensive, joined-up approach, which would allow us to increase the minimum wage to help those in employment who earn the least, while increasing the employment allowance to help support businesses to pay it.

Alberto Costa: How many times in the past eight years have the SNP Scottish Government exercised their powers to increase or decrease income tax? The hon. Gentleman keeps complaining that this place is restricting them from using powers, so could he please remind Scottish people and this Committee how many times they have used their existing powers?

Stewart Hosie: I welcome the hon. Gentleman to Parliament, but he does not need to jab his finger and point. The small business bonus has cut or reduced business rates for 80,000 people. At £640 million, the Scottish Government are delivering the most effective business rate tax relief across the whole of the UK. One could make a very strong case that we have ended a tax on ill health by removing prescription charges. The hon. Gentleman’s failure to know what he is talking about was why he was defeated in Angus by my hon. Friend the Member for Angus (Mike Weir).

So far, we have not heard a single speech as to why we should not have full fiscal autonomy. I am sure that one will come, but let me focus on that matter now. The objections that we have so far heard are rather odd and almost entirely without principle. In essence, in order to say no, our opponents fall back on one or two flawed analyses of the Scottish economy, which are basically snapshots of one particular point in time.

Mr MacNeil: Was that not an extraordinary intervention from the hon. Member for South Leicestershire (Alberto Costa)? The Conservative party wants to handcuff itself and not use any of its tax powers at all, as we heard from the Chancellor only last week. Does that not show the deep malaise of understanding? When we have tax powers, they are not used all the time. For instance, in the last Parliament, VAT was changed only once. Let us hope that the Conservatives do not use that power again. The point about having tax powers is to use the power that is necessary or important to use at a particular time. Tax powers are not used willy-nilly, as the hon. Gentleman’s own Chancellor has conceded.

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Stewart Hosie: I fear that my hon. Friend was intervening less on me than on Conservative Members, but he is absolutely right. There is no argument too odd for them to deploy.

On the opposition to full fiscal autonomy, basing an argument on one or two flawed analyses is using a snapshot in time in order to say no. It is less a case of analysing all the facts to come to a considered view, and more one of finding any reason to oppose for opposition’s sake.

Ian Murray: I have tremendous respect for the hon. Gentleman, but he is letting himself down by how he is conducting this debate. If he is saying that the Institute for Fiscal Studies is wrong, why has the same figure come out of the Scottish Government’s own accounts?

Stewart Hosie: The chief of the snapshot analyses I have just described is the one from the IFS that our opponents pray in aid. They claimed in April that Scotland would face a relative deficit of £7.6 billion, which may rise to £10 billion by 2019-20, and that in itself is enough for them to say no. I also like and respect the hon. Gentleman—I will not finish the rest of that sentence. I would tell him that his argument is fundamentally flawed. In essence, our opponents’ argument is that even if the IFS figures were true, UK Government economic policy has failed Scotland and we should therefore keep economic policy in the hands of a UK Government who have failed. That simply is not credible.

It is of course true that Scotland has a deficit, and so does the UK—borrowing £75 billion this year, almost four times what the Chancellor promised borrowing would be. The majority of advanced economies run deficits, particularly in difficult times. The UK deficit in 2013-14 was £98 billion. Over the five years to 2013-14, the cumulative deficit was £600 billion. The UK was in deficit for 43 of the past 50 years, and 28 of the 34 members of the OECD were in deficit in 2013. If the deficit alone was a reason for a country to surrender its financial independence, the UK economy would be run from Berlin.

Mr Kenneth Clarke (Rushcliffe) (Con): The hon. Gentleman’s desire for independence of taxation seems to be to lower taxation, while he contemplates raising expenditure and he is fairly indifferent to deficits. Does he contemplate any kind of fiscal discipline? Our neighbours across the channel started a single currency, and they—as we would—have a single currency and a single central bank. Had they stuck to their rules on fiscal discipline, the Maastricht criteria, and to their no bail-out clause, they might have done rather better. What fiscal discipline does he propose, or does he think the English will pick up the bill whatever decisions the Scottish Government make?


Stewart Hosie: We were very clear in our manifesto that there would be increased tax yield, perhaps from a 50p rate of tax at a UK level, from a bank bonus tax, from the bankers’ levy and from a mansion tax. We supported a number of policies in our manifesto that clearly would have increased yield. We were also very clear on what we wanted to do about borrowing. We laid out explicitly that borrowing would rise, but that it would fund £140 billion of extra investment across the

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UK throughout this Parliament, as opposed to the cuts in the order of £146 billion that have been proposed by the Chancellor.

5.30 pm

That package was fiscally sustainable, workable and disciplined because the deficit and the debt would have continued to fall in every year of this Parliament. It was a cogent, coherent package that would have brought in revenue yield, spent and invested wisely, and still seen the deficit and the debt fall. That was the right approach. That anti-austerity position, which we took strongly to the Scottish people, was self-evidently supported by the majority of those who voted.

Mr Kevan Jones: Will the hon. Gentleman give way?

Stewart Hosie: In a moment.

If all the IFS and Treasury analyses do is project forward “Government Expenditure and Revenue Scotland” figures, they do not provide a meaningful description of the fiscal position in a fiscally autonomous Scotland. Whether Scotland’s budget deficit—or surplus—would be larger or smaller under full fiscal autonomy depends on a huge number of factors, not least the transition process that my hon. Friends referred to earlier; the negotiated fiscal framework between Scotland and the rest of the UK; Scotland’s contribution to UK-wide public services, such as defence, debt interest and international aid; the interaction with the UK macroeconomic framework; and, most importantly, the decisions made by the Scottish Government about borrowing, economic policy and public spending.

There would have to be agreement on the past contributions and tax receipts from Scottish taxpayers and corporates, and the shared liabilities that have accrued in terms of entitlements for individuals—for example, pensions that people have paid into through the national insurance system—to maintain the free movement of labour and an integrated single market. On liabilities, it is worth pointing out, in case anybody thinks I have forgotten about this, that we think there would have to be an adjustment to reflect UK-wide costs, such as the decommissioning costs in the North sea, because the UK Government have received the full benefit of all the tax revenue associated with that economic activity so far.

In short, the current economic situation is not a reason to say no to full fiscal autonomy; rather, it is vital, in tackling the deficit, to avoid further cuts by giving Scotland the economic levers that it needs to boost growth and increase revenues.

Ian Blackford: Does my hon. Friend agree that the key reason the UK deficit is sitting at close to £1.5 trillion is the failure to deliver sustainable economic growth over the past few years? The clear agenda behind our attempt to deliver fiscal autonomy to Scotland is that the Scottish Government are focused on innovation and skills, on driving investment into the Scottish economy, on driving productivity growth, on driving up tax receipts and on driving prosperity for the Scottish people. That is why we need these powers.

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Stewart Hosie: That is absolutely right. Trend growth in the UK over decades has not been sufficient, and private sector investment and innovation have been lamentable. My hon. Friend is absolutely right that we need these powers for a reason.

Notwithstanding what has been said, it is important to remember that Scotland is a prosperous economy. It is about far more than oil, although to listen to some of our political opponents, one would think that that was all the Scottish economy consisted of.

Ian Murray: Will the hon. Gentleman enlighten the Committee about what level of economic growth he thinks Scotland would require to balance the budget?

Stewart Hosie: We need to get trend growth up and we need to operate within a framework that will see the deficit begin to come down. I do not remember the previous Labour Opposition ever coming up with a cast-iron figure—2.75%, 3%, 3.25%, 4% or 5%—for trend growth. No one would be so silly as to put a figure on it, when it is dependent on so many external criteria.

Our political opponents dismiss the Scottish economy, saying that it is all about oil. They seem to forget that in two of the past four years our deficit was smaller than that of the UK. In the past 34 years, tax revenue per person has been higher than in the UK. Indeed, in the last full year, including our geographic share of the North sea, it was more than £10,000 per head compared with £9,700 in the UK. Even without North sea oil, output per head is almost identical to the UK. We remain the third most prosperous and productive of the 12 so-called regions of the UK, and, including a geographic share of oil and gas, our output per head is higher than the UK average, even today.

Andrew Gwynne: I am listening carefully to the hon. Gentleman’s argument. It is clear that amendment 89, which is in his name and the names of his colleagues, would enable the Scottish Parliament, at some stage, to legislate to allow for those powers to be drawn down, either in part or whole. What timescale does he envisage for the Scottish Parliament to move to full fiscal autonomy, rather than, perhaps, partial fiscal autonomy? What does he envisage being the interim arrangements were it to draw down only some of those powers?

Stewart Hosie: I would like the Scottish Government to be in a position to draw down the powers as quickly as possible. Obviously, to draw them all down and use them would require transitional arrangements to be in place.

Mr Kevan Jones: Subsidies.

Stewart Hosie: I will come back to that in a moment.

It would require the tax system to be fully functioning and for there to be an agreed macroeconomic fiscal framework across the whole of the UK. That would require agreement between the Scottish Government and the UK Government—that is to say, there would be other people at the table who had to say yes to things—so it is not possible to put a hard and fast timetable on the powers. If, however, we can agree on full fiscal autonomy tonight, and the Scottish Government’s ability to draw down the powers at the right time, then with good will we can get agreement on the fiscal agreement and the overarching framework, and we can all get to work.

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Ian Murray: The hon. Gentleman is being incredibly generous with his time. Will he tell the Committee why, if full fiscal autonomy is so good for the Scottish budget, he will not support new clause 3, tabled by the hon. Member for Gainsborough (Sir Edward Leigh)?

Stewart Hosie: I want maximum power for Scotland. I want it as quickly as possible. I am not like the British Labour party, which keeps saying no and, in the absence of no, says delay with yet another commission. If the hon. Member for Gainsborough (Sir Edward Leigh) presses new clause 3 to a vote, we will support it. Here is the thing: I hope the hon. Member for Edinburgh South (Ian Murray), who is grinning like a Cheshire cat, will now get to his feet and tell us whether he intends to back the Government tonight in opposing powers for Scotland. The silence is deafening.

Let me continue with more of the arguments our opponents deploy against full fiscal autonomy. When they argue against more powers they say that they would require further cuts, but that argument is completely flawed. It would suggest that the Scottish Government are protected from Westminster cuts at present, which simply is not true. Cuts in the previous Parliament actually took place at a time of rising North sea revenues.

Alberto Costa: I thank the hon. Gentleman for his generosity in giving way to me a second time. In the lead-up to the Scottish referendum, he very articulately and eloquently put all those points to the Scottish electorate, yet the Scottish electorate resoundingly rejected them. Had the referendum gone his way and there was a yes vote, he would have had to have been in a position today to set a timescale for everything he is arguing for.

Stewart Hosie: The hon. Gentleman is right about one thing: we did not win the referendum. There was, however, an election that we did win, so we are not bringing forward another mandate for independence; we are bringing forward provisions for full fiscal autonomy. I hear Tories pontificate right, left and centre about responsibility, but when it comes to full fiscal responsibility for Scotland, all of a sudden there is silence. They just sit on their hands and say no.

David Mundell: Why then did the SNP not table the new clause in the name of my hon. Friend the Member for Gainsborough (Sir Edward Leigh)? If the hon. Gentleman wants that full-blooded proposal, why did he leave it to the Tory Benches to propose what he claims is an SNP policy?

Stewart Hosie: I can almost hear Professor Adam Tomkins, the Tory adviser to this Tory Minister, coming up with that daft question. I say this to the Minister: our amendment 89 would deliver full fiscal autonomy in a way that makes sense.

Our opponents argue that full fiscal autonomy would lead to more cuts to the Scottish budget, which is ridiculous when one considers that between 2009-10 and 2013-14, at a time when the North sea was generating £32 billion in oil revenues, the Scottish Government’s budget was cut by about 9%. According to the Institute for Fiscal Studies, prayed in aid by Tories and Labour alike, the cuts of more than 5% implied in 2016-17 and 2017-18—in this Parliament—will be twice the size of

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any cuts over the last Parliament. The UK Budget showed that implied cumulative cuts to day-to-day spending on public services in Scotland over this Parliament could amount to £12 billion in real terms compared with 2014-15. In the absence of full fiscal autonomy, therefore, we are not protected from cuts. Rather, we suffer a double blow: continued austerity and an inability to grow the economy and increase tax yields in the way that Scotland requires.

Chris Philp (Croydon South) (Con): The hon. Gentleman mentioned that tax receipts in Scotland are on average 3% higher per head than in the rest of the UK. Public spending in Scotland, however, is more than 10% higher. The reason, of course, is the Barnett formula. Will he confirm that under his proposals the Barnett formula would be done away with, and will he explain where the extra money would be found? Would it be tax increases or spending cuts? If so, where from?

Stewart Hosie: It is extraordinary! UK debt is £1.5 trillion and the Government are borrowing £75 billion more this year than UK tax revenue would allow, and they have the audacity to question whether the Scottish Government, who have balanced the books every year, could do so in the future. If we have the right tools and levers, of course we can do the job. The hon. Gentleman’s argument is fundamentally that there would be a cost to Scotland of full fiscal autonomy. As we have seen, our opponents tend to quote figures for this financial year, whereas we would move to full fiscal autonomy only over the medium term.

The second key issue, as the IFS has said on many occasions, is that our opponents fail to take account of the potential positive impact on Scotland’s economy of full fiscal responsibility. The entire point of FFA is to empower our Parliament to take decisions for the benefit of Scotland’s economy to deliver full tax and investment powers and to enable Holyrood to make better spending decisions.

Wayne David: This is an important point. The hon. Gentleman says he is in favour of moving towards fiscal autonomy, but only in the medium term. How long is the medium term?

Stewart Hosie: I support moving to full fiscal autonomy because, as the N-56 think-tank said, it produces an opportunity, not a threat. There was a time when there were 40 Scottish Labour MPs sitting behind the Opposition Front Bench shouting their heads off, but now there is barely a whimper, barely a squeak—not a cogent, credible argument from a party about to get into bed with the Tories to say no to Scotland.

5.45 pm

The N-56 report said that full fiscal autonomy was an opportunity and not a threat. It also said that Scottish GDP could increase by 86% from a baseline of £153 billion in 2012 to £282 billion over 25 years, elevating Scotland to become one of the top five wealthiest countries in the world. [Interruption.] The four Labour Front Benchers are having a wee quiet giggle while SNP Members want Scotland to be one of the top five wealthiest countries in the world.

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Geoffrey Clifton-Brown (The Cotswolds) (Con): The hon. Gentleman said that he will increase the deficit to spend to invest—where have I heard that phrase before?—but while Scotland is a member of the sterling area, would he expect the Bank of England to guarantee whatever sterling debt his party incurs?

Stewart Hosie: First things first: the central bank does not guarantee debt. It sets the base rate, but the gilts are issued by the UK Government. It would be UK debt, which is precisely why we need an agreed fiscal framework within which we operate. I would have thought that that is just common sense.

Mr Rees-Mogg: Will the hon. Gentleman give way?

Stewart Hosie: No. I have been very generous. I think I will stop being generous now.

In order to deliver full fiscal autonomy, amendment 89 would allow the Scottish Government to remove the reserved status of certain key areas, and allow that Government to have legislative competence over them. It would do so at an appropriate time, ensuring that the systems and the framework under which full fiscal autonomy would operate are fully in place.

We know we need full fiscal autonomy. We know how full fiscal autonomy will work. The Scottish people have voted for maximum powers, and we are here representing that view. Amendment 89 is the way forward to deliver the fairness, the justice and the economic levers that the Scottish Government need. I hope there will be huge support for it tonight. I commend the amendment to the Committee.

Mr Kevan Jones: It is a privilege to serve under your chairmanship, Sir David.

We have seen a remarkable event tonight—I never thought I would see such an event. The Scottish National party is having a love-in with the hon. Member for Gainsborough (Sir Edward Leigh) and the right hon. Member for Wokingham (John Redwood). Love does not come to mind very often when we think of the right hon. Gentleman, but tonight he is the darling of the SNP. The hon. Member for Dundee East (Stewart Hosie) has just lectured the Labour party about voting with the Conservatives. If he supports new clause 3, tabled by the hon. Member for Gainsborough, he will vote with them.

The hon. Member for Dundee East should cut the general election rhetoric and get down to the details. The debate is a serious one, as my hon. Friend the Member for Nottingham North (Mr Allen) has said. It is not just about Scotland, but about the devolution of powers and how we settle them for the rest of the United Kingdom. The hon. Member for Gainsborough put the SNP behind the eight ball. His is a clear proposal for moving to full fiscal autonomy or responsibility. I notice that the hon. Member for Dundee East changes things—he goes from “autonomy” to “responsibility” whenever he wants—but the hon. Member for Gainsborough is very clear that he is proposing full fiscal autonomy.

The argument being put forward is that that is what the Scottish people said at the general election. I do not accept that. In the referendum, the Scottish people said that they wanted to be part of the United Kingdom.

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A responsibility of being part of the United Kingdom is that certain things will be done across the four nations of this great nation of ours.

It is difficult for Scottish National party Members. If something is said by Scottish nationalists, it has to be true, and no one dare ever say that something they are saying is not true. The hon. Member for Dundee East argues that amendment 89 is a movement to full fiscal autonomy or responsibility, but it is not. It would give the power to the Scottish Government to draw down those powers. Why is amendment 89 not framed as clearly as the proposal of the hon. Member for Gainsborough? His proposal would give the powers straight away, with the consequences for the Barnett formula and the support that that gives to the Scottish Government.

It is nothing new for the Scottish nationalists to want to have their cake and eat it, but many of my constituents—and, I am sure, those of other Members—will not accept an arrangement that would allow the Scottish Government to legislate for full fiscal autonomy for which they were expected to pay. That would be not only wrong, but totally unfair on the rest of the United Kingdom.

Dr Whitford: We await the granting, in 2016, of the powers that were recommended by the Calman commission in 2009. The devolution of small amounts of power will have taken seven years. It is not as if, having voted for full fiscal autonomy, we would get it next week—it is simply a matter of common sense that the process takes time—but we want it as quickly as possible. The delay following the Calman report happened here.

Mr Jones: What the hon. Lady has said is not unusual. It is part of the blame culture. Apparently, if things do not happen in Scotland, it is because wicked Westminster—meaning parliamentarians, among others—is somehow preventing them from happening. At the time of the independence referendum, the SNP stood on its platform arguing that Scotland could be a separate, independent nation in 18 months. What has changed?

Amendment 89 is rather mealy-mouthed. As I have said, the Scottish Government will draw down the powers when they want them. There will be what the hon. Member for Dundee East described as a transitional period, and we all know what that means. It means a period during which the Scottish Government could draw down powers that would enable them to make changes in Scotland, while retaining elements such as the Barnett formula. Well, I am sorry, but that will not happen—and the hon. Member for Dundee East, and the rest of the SNP, will blame big bad Westminster because it has prevented them, or the Scottish people, from being given those powers. The proposal from the hon. Member for Gainsborough is very simple. It means full fiscal autonomy along with all its consequences, rather than a “drip, drip, drip” process over a period during which the rest of the United Kingdom would be expected to fill any gap resulting from the Bill.

Andrew Gwynne: I suspect that my hon. Friend is right in his analysis of where amendment 89 would lead us. To be fair to the hon. Member for Dundee East (Stewart Hosie), he was very candid about the transitional arrangements that he envisaged, which would involve

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the Westminster Government, the Scottish Government and, perhaps, others sitting around a table with the aim of agreeing on a framework for the drawing down of partial powers. But would we not expect the framework to be specified in the Bill, so that people in all four parts of the United Kingdom could be certain about what those transitional arrangements would be?

Mr Jones: I entirely agree. If we are to give the Scottish Government more powers over entire areas of taxation, including the raising of money that they will actually spend, we cannot do that twice. They cannot have the ability to raise revenue and, in addition, a top-up power allowing them to make some of the difficult decisions that they will have to make. The hon. Member for Dundee East seems to think that, overnight, Scotland will be turned into some beautiful paradise on a par with Switzerland—[Hon. Members: “Hear, hear.”] I must say that, in terms of beauty, it already is.

George Kerevan: The SNP won the majority of the vote on 7 May on the basis of a clear commitment to go beyond the proposals of the Smith commission. What we are trying to decide now is how far beyond Smith we should go. The hon. Gentleman seems to be rejecting that, while not coming up with a positive argument about what we should be doing.

Mr Jones: I am not, actually. I agree with the hon. Gentleman. I doubt that most people were thinking about the Smith proposals when they voted. That is not the way in which the debate in Scotland has been portrayed over the last few years. Romanticism has taken over, obscuring the practical issues that will face the Scottish economy whether we like it or not.

The hon. Gentleman cannot have it both ways. He cannot argue that he wants Smith-plus without making clear what that means. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) pointed out, what the hon. Member for Dundee East has proposed in his “trickle-down” amendment cannot be done in a vacuum by people who have no idea what the transitional framework is.

Whether we like it or not, the Scottish economy faces issues that have nothing to do with who is in either Holyrood or in this place. Those issues are an ageing population and the decline in the working population, which is expected to drop by 3% over the next 15 years in Scotland while rising by 5% in the rest of the United Kingdom. If that does happen, the tax base in Scotland will contract when it has full fiscal autonomy, and if there is no backdrop of Barnett money, or some other pool of money on which to draw, hard decisions will have to be made. When working people in Scotland wake up to the fact that what is being proposed is not Barnett plus full fiscal autonomy, but full fiscal autonomy or independence on its own without the existing safety net, and when they become aware of some of the tough decisions that the Scottish Government will have to start making, they may think differently about what is being recommended tonight by the Scottish nationalist party. [Hon. Members: “Scottish National party.”]I am sorry. I am not known for my delicacy when it comes to not wanting to offend people, but the over-victimised mentality that some Members bring to the Chamber, and to this debate in particular, is irritating, to say the least.

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Andrew Gwynne: My hon. Friend is making an important point. We must focus on the nature of the transitional arrangements that would lead to full fiscal autonomy, and I am none the wiser about what the SNP is proposing. Is it proposing a proportionate change in the Barnett formula, aligned with the amount of tax that they will draw down in their move to full fiscal autonomy?

Mr Jones: I agree with my hon. Friend that the position is not clear, but I think that the SNP wants to move to full fiscal autonomy while retaining the majority of Barnett, and I am afraid that that is not going to happen. Of course, when a United Kingdom Government say no to it, we will hear what we usually hear from the Scottish nationalists: wicked Westminster is preventing Scotland from getting what it needs. That is the nub of the problem. That, I think, is why the SNP has retreated from its 18-month target for full independence, and now wants a fudge that will get them through the next few years.

The real issue, for me, is this. I support the people of Scotland in their wish for more devolution, but I do not support a system that is not good for individual members of the Scottish public, and is also unfair on my constituents and others.

My hon. Friend the Member for Nottingham North raised the broader issue of whether we need to have a debate about devolution in this country. I think that we do. I do not take his dewy-eyed approach; I think that there are times when, in any type of organisation, responsibility must stop at a certain level. If we did not take that approach, we would be devolving power to something like a French commune, and creating a system of street-level decision-making. However, it could be argued that in a country such as ours, which has a very centralised system, there is a need for a movement towards the devolution of powers.

What we saw in the north-east in 2005 was a clear decision by the people that they did not want another tier of government when they rejected the regional assembly approach, and I have to say I think most places do not want more politicians. The Chancellor’s proposal is to devolve certain things to the north-east of England only if it has an elected mayor whose jurisdiction stretches from Berwick all the way down to the Tees. Again, that is looking at the structure of things, rather than asking people. The Conservative party machine in the north-east has gone into overdrive this weekend with Mr Jeremy Middleton, a failed Conservative parliamentary candidate who cannot get elected anywhere in the north-east under the Conservative banner, now leading 60 business leaders saying the north-east’s elected councillors and others need to sit up and listen to the Chancellor and get on with having an elected mayor for that huge region. Well, I am sorry but we in the region need to have a debate about how we devolve those powers and I gently say to business, “Do not be used by someone like Mr Jeremy Middleton who clearly has a political agenda of his own. Get involved and work with local councillors and others to determine and support the future.” [Interruption.] There is a cynical side to the Government’s approach to the devolution debate, which is—[Interruption.]

6 pm

The Temporary Chair (Sir David Amess): Order. A mobile phone is going off. I hope the hon. Member responsible will adjust it. I call Mr Graham Allen.[Interruption.] No, Mr Kevan Jones.

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Mr Jones: I would not want to insult my hon. Friend the Member for Nottingham North in that way.

There is a cynical side to the Government’s approach to devolution and it goes like this: “You devolve powers because you devolve responsibilities, but you don’t devolve the funds to actually undertake them.” The Government want to contract Whitehall but they are not going to devolve the money to the English regions; they are going to devolve the responsibilities and then say to the various local bodies concerned that they are responsible for the failure to deliver at the local level.

Andrew Gwynne: We are here today primarily to debate the Scotland Bill, which we support, but my hon. Friend is right to point out that it has far-reaching consequences for every part of the UK, including his constituency and, indeed, mine as the Government are proposing quite extensive devolution powers to Greater Manchester. Is that not precisely why we need to have a proper debate within the framework of the constitutional convention to decide what the English answer to the English question is, as well as deciding what this place is going to do on the UK-wide question?

Mr Jones: I agree, and we need to get away from the cynical approach of this Government who talk about devolution and about devolving decision making but with no funds attached to that.

Ian Paisley: Getting back to the Scotland Bill, I agree with the thrust of what the hon. Gentleman is saying in that we should know what this costs. We have a proposal tonight to devolve all these fiscal powers, but we do not know what the cost will be for the ordinary Scot or indeed for the rest of us. When corporation tax powers were devolved to Northern Ireland, we were shown the bill of fare, and it is going to cost us £250 million a year to do that. What is it going to cost the ordinary Scot if there is devolution of all these fiscal powers?

Mr Jones: The hon. Gentleman raises an interesting point, which illustrates why the later amendment seeking to quantify the cost is needed. If we are going to take these decisions in the long-term interests of the Scottish economy and its people, they need to know that. I am a former trade union official and I never went into negotiations without knowing what the costs of the outcome would be. The problem with the Scottish nationalists’ proposals is that they do not know what the ultimate costs will be.

Amendment 58 in the name of the hon. Member for Moray (Angus Robertson) proposes that the phrase that the Scottish Parliament is recognised as

“a permanent part of the United Kingdom’s constitution”

replace the current wording in clause 1, which states:

“A Scottish Parliament is recognised as a permanent part of the United Kingdom’s constitutional arrangements.”

We have a problem with that, as I tried to tease out in my interventions on the hon. Gentleman: what is the definition of the United Kingdom’s constitution, because we do not have anything called that? If that amendment passes, there would be a feast day for lawyers in trying to identify what the constitution is. If we had a written constitution, the Scottish Parliament could be a permanent part of it, but we do not have a written constitution and I am at a loss to know how this would be interpreted as

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things currently stand. The amendment has been tabled so it is in order, but I am not sure of its practicality and uses, and I am not sure that the hon. Gentleman understands how this would be interpreted and whether it will be left to a court to decide how the UK constitution is to be defined.

Patricia Gibson: Does the hon. Gentleman agree that the best time to raise any concerns and questions about costs and the definition of the word “constitution” would have been when Gordon Brown was going around Scotland making a vow about creating a powerhouse Parliament?

Mr Jones: I am not sure what the point of that intervention was. I am talking about an amendment proposed by the hon. Lady’s party, and I think it is deficient. The onus is on the hon. Gentleman who moved it to explain to the Committee what its reference to the United Kingdom’s constitution actually means. He clearly does not have a clue what that means, and the danger is that there could be a challenge and that would lead to lots of work for lawyers—and as Members know from me of old in this place, I am not one for feeding lawyers.

This Bill is a major move forward.

Andrew Gwynne: Will my hon. Friend give way?

Mr Jones: No, as I am about to finish.

My hon. Friend made the point about the rest of the United Kingdom and there is a need for that convention. If we do not get that, we will have this patchwork quilt of so-called devolution which will not be in the interests not only of all of our constituents but of the UK as a whole.


Mr Christopher Chope (Christchurch) (Con): The last two and a half hours have been fascinating, and show what this Chamber should be about. The Government and the Opposition Front Benches have come in with their own ideas and during the course of the debate it has become apparent that the new clause of my hon. Friend the Member for Gainsborough (Sir Edward Leigh) has captured the imagination of the Committee and has superseded amendment 89 proposed by the Scottish nationalist party, and I say to the hon. Member for Dundee East (Stewart Hosie)—[Interruption.] I say to the hon. Member for Dundee East that I think he has made a very wise decision in saying he is going to bring the full weight of his party in Parliament behind my hon. Friend’s new clause. It is much clearer than his party’s amendment. The hon. Gentleman should get credit for that. Governments and official Oppositions are often reluctant to change the line they have taken when faced with strong arguments against it.

In the course of this debate, my hon. Friend has shown that new clause 3 finds favour with a large number of Members across this Committee. I support it because it would do what is stated in the explanatory statement:

“entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.”

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So, by giving full fiscal autonomy to the Scottish Parliament, we would also be giving it full fiscal responsibility. As my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), the former Chancellor of the Exchequer, said in an intervention, that is an important and worthwhile matter.

My constituents are worried about the mix and match approach, however. When I had the privilege of being a member of the Political and Constitutional Reform Committee, we took evidence in Scotland. One of the most telling pieces of evidence came from an academic—I cannot remember which university he came from—who said that shared responsibility would be a recipe for conflict. That has been the problem: for too long, we have been sharing these responsibilities between one part of the United Kingdom and another, with one part being played off against the other. That has meant that those wanting to promote a particular agenda have been given ammunition, because they have been able to argue that the sharing of the responsibility has been ill defined. It is almost invariably ill defined and open to interpretation. Indeed, some of the evidence we heard suggested that such disputes would ultimately have to be determined by the courts. It was suggested that the courts in the United Kingdom would determine what Parliament had decided on a particular split or shared responsibility. What a recipe for conflict and division!

The new clause tabled by my hon. Friend the Member for Gainsborough has great clarity and takes the debate forward by leapfrogging other proposals. Obviously it could not be implemented instantly, but it would not leave the matter of when to introduce full fiscal autonomy to the discretion of the Scottish Parliament, as amendment 89 proposes. Instead, new clause 3 would ensure that this Parliament would agree now on full fiscal autonomy for the Scottish Parliament. That would be a good way for this Parliament to say to the Scottish people that we respect their decision in the recent general election and that we respect the decision of their elected representatives, as enunciated by the hon. Member for Dundee East, to support this new clause.

I hope that new clause 3 will also find favour with the Secretary of State for Scotland, whom I am delighted to see sitting on the Front Bench preparing to respond to the debate. He gave evidence to the Political and Constitutional Reform Committee on several occasions during the last Parliament. At that stage, only some members of the Committee—I included myself among the optimists—thought that it would not be long before he became a fully fledged Secretary of State for Scotland. It is wonderful that that has come to pass.

This is an important debate, not least because it will sort out the problem of the Barnett formula by effectively abolishing the need for it. The formula is very unpopular with my constituents because, whenever they argue for free prescriptions, free long-term care for the elderly or free university tuition, they are told that these things cannot be afforded in England, yet they somehow can be afforded in Scotland. At the same time, however, they point out that they are paying £1,600 a head to Scotland, so it cannot be a matter of those things being unaffordable in England; rather, it is something to do with the Barnett formula. The new clause would resolve that issue and help to bring the United Kingdom back together with less conflict than there would be if we allowed the “too little, too late” agenda to be perpetuated.

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6.15 pm

It has been some time since I had the privilege of being an undergraduate at a Scottish university, but even then there were early stirrings of dissatisfaction among the Scottish people about the constitutional arrangements affecting them and the rest of the United Kingdom. Since then, this Parliament and the majority of my English colleagues have embarked on a process of continuous appeasement, which has not provided a satisfactory solution. My hon. Friend the Member for Gainsborough’s new clause gives us the opportunity to do away with all that little-by-little continuous appeasement, whereby we feel forced to do this or that. The new clause allows us to take the initiative and to give the Scottish people what they want. It also allows us to give them the responsibility that will go with that power. That is why I am an enthusiast for new clause 3.

Pete Wishart (Perth and North Perthshire) (SNP) rose—

Hon. Members: Hear, hear!

Pete Wishart: I thank you, Sir David, for calling me to speak, and I thank my Back-Bench colleagues. Have not we been blessed on this first Committee day of the Scotland Bill? We have had contributions from the hon. Member for Christchurch (Mr Chope), from the hon. Member for Nottingham North (Mr Allen)—who unfortunately is no longer in his place—and from the hon. Member for North Durham (Mr Jones). What have we done to deserve such good fortune today? We have all very much enjoyed their speeches. This just goes to show how different these debates are now. My hon. Friend the Member for Moray (Angus Robertson) and I are veterans of Committee debates on Scotland Bills, and we remember the braying, the aggressive shouting down and the interventions by 40 Scottish Labour Members of Parliament. They are no longer here. This is the salutary lesson of today’s Committee debate. We are now in the new Scotland, which has made certain critical decisions about how it wants to be governed and how it wants to progress with its constitutional agenda. The challenge for this Government, and for those on the Labour Front Bench, is to respond to that. They can ignore my hon. Friends who are sitting on these Benches in such great numbers—we represent 56 of the 59 seats in Scotland—and they can ignore the fact that the SNP secured more than 50% of the vote. They can pretend that we do not exist and hope that we go away, but we are going nowhere. We are going to be here on Committee days, demanding that the Scottish people secure what they voted for in overwhelming numbers.

I support my hon. Friend the Member for Moray in setting out the three key principles that we are advocating. The critical one—the one that we have to secure—is that the Scottish people get what they voted for and what they expect from this House, which is to have the Smith commission proposals delivered in full, alongside everything that was promised to the Scottish people in what Gordon Brown, the former right hon. Member for Kirkcaldy and Cowdenbeath, called the “vow plus”, including federalism and home rule.

Mr MacNeil: My hon. Friend mentions the vow plus and the promises made to the Scottish people. In reality, these powers are wanted not only by the yes voters but

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by the no voters as well. The fact is that 100% of the people of Scotland voted for these powers. Whether they voted yes or no, they voted for this.

Pete Wishart: My hon. Friend always gets right to the heart of the matter. We know that everything in this Bill that we have been trying to secure is supported by the Scottish people. It is also supported by the massed ranks of SNP Members here, and by the 60% of the Scottish people who want everything devolved to the Scottish Parliament other than foreign affairs, defence and treason. The hon. Member for Gainsborough (Sir Edward Leigh) forgot to mention treason in his list of powers that would remain reserved. An opinion poll last week showed not only that we won more than 50% of the vote but that we are now on course to win 60% of the Holyrood vote next year. It showed that there is a clear desire to ensure that we move forward progressively.

I shall turn to the central issues in the Bill, starting with the permanence of the Scottish Parliament. That was about the most useful thing to emerge from the Smith commission’s report. It followed the vow that was reported in the Daily Record as stating that the permanence of the Parliament should be a predominant issue. We were disappointed that the draft Scotland Bill could not find an appropriate form of words to encapsulate that proposal. The thing that has struck me is the Scottish people’s surprise that this House could actually do away with the Scottish Parliament. I do not think that people really believed that that was the case. We have to resolve this issue.

The Scottish Parliament is now the key focus of the national debate on our nation and our political culture in Scotland. As we have continued to secure more and new powers for the Scottish Parliament, it has become an intrinsic feature of what we are about as a nation. The fact that this House can simply decide, perhaps on a whim, to abolish the Scottish Parliament is totally unacceptable to the Scottish people and has now to be put right. We have this one opportunity to address it by getting our amendment through this evening—we could sort this out.

I pay tribute to the right hon. Member for Orkney and Shetland (Mr Carmichael) because he recognised that situation when he was Secretary of State for Scotland. He said—I paraphrase him and I will let him intervene if I have this wrong—that something must be done about it. It was then thrown over to the new Secretary of State to pick up; it now falls in his lap, and he has to address it and ensure that we get what we want, which is the permanence—

Mr Alistair Carmichael: Does the hon. Gentleman accept, however, that by doing this through primary legislation any solution—any form of words—is always going to be imperfect, and that the only way we will genuinely recognise the political reality that is the permanence of the Scottish Parliament is through a written constitution, and for that we need a constitutional convention?

Pete Wishart: There is very little I would disagree with the right hon. Gentleman about on these things, and I agree that there is a real requirement for a written

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constitution in this country. But let me suggest another way we can get the permanence for the Scottish Parliament, as set out in our amendment 59: by putting this to the Scottish people in a referendum. The only way then that the Scottish Parliament would ever be abolished or done away with would be on the say-so of the Scottish people, as a directly expressed desire through a referendum. I hope the right hon. Gentleman supports us in that amendment this evening, because it is the way to go forward.

That deals with the permanence issue. We have not heard much about another matter, despite several of my friends from south of the border having spoken in this debate. I refer to new clause 2 on the constitutional convention, which I believe the hon. Member for Edinburgh South (Ian Murray) is still to speak to. That has been a long-standing policy of the Labour party and it was central to its manifesto at the last election—I have to say that Labour did not have a great deal of success when it was put to the people of England. My problem with this idea that Scottish devolution and our constitutional journey should be mashed together with a UK-wide look at the constitution is that it would slow down our very clear progress and our clear statement of where we want to go. The cause of English devolution moves at an almost glacial pace, and any suggestion that we have to be slowed down, as England rightly works out what it wants to do, has to be rejected this evening. Just piggy-backing Labour’s concerns about a constitutional convention and about English devolution on to a Bill about Scotland, and the things we were promised in the vow and that were progressed with the Smith commission is totally unacceptable. I say to the Labour party: do the work yourselves. There is no need to bring it to a Scotland Bill in order to progress this agenda. Bring in your own piece of legislation. Bring it in however you like and we will play a part in that. There are interesting things to be discussed on the further progress of constitutional change all over the UK.

Stewart McDonald: The hon. Member for Nottingham North (Mr Allen) earlier described the Bill as the property of the Union. Is not part of the problem that this is viewed through the prism of the Union? What is needed is a radical vision, which was once the territory of the Labour party but which we are now offering tonight.

Pete Wishart: My hon. Friend is, again, spot on. We always seem to get here in Scotland Bills: there is a debate in Scotland where we think we have managed to reach some sort of agreement about a way forward, but when it comes to this House all of a sudden we get caught up in “English votes for English laws” and with English devolution. Those are important things that have to be debated, but somehow they find their way into a debate we are having in Scotland about what we think we are entitled to and what the Scottish people have decided they want by sending so many of my hon. Friends here.

Ian Paisley: I have some sympathy with what the hon. Gentleman is saying but surely he accepts that this is a debate for all of the peoples of all of the United Kingdom and that all these issues counterbalance each other? That is why these other issues get brought into the debate. Surely the hon. Gentleman recognises that—have some generosity on that point.

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Pete Wishart: I am not disagreeing with the hon. Gentleman; he probably heard me say that these issues are important and have to be looked at and considered, because they are the things that make all the rest of it work. What we are debating tonight is a Scotland Bill that is the end part of a proposal by the former Prime Minister, the previous leader of the Labour party, the previous leader of the Liberal Democrats and the leader of the Conservatives—it was promised in the vow.

Ian Paisley rose

Pete Wishart: I am not going to give way again, because I know a lot of people want to get in and I want to make some progress. These issues are all important, but tonight is Scotland Bill night and these are the sorts of things we are considering.

Unfortunately, the hon. Member for Nottingham North is not in his place—[Interruption.] He is here—well, perhaps he wants to take his place. We are always very grateful for the concise way in which he puts his wide range of views. He is always interesting to listen to and is always innovative and creative. Again, we give him a lot of congratulation on the way he so rapidly went through his constitutional tour de force. The hon. Gentleman talked about his new clause 8, and I was particularly attracted when he invited the Scottish Parliament to take a proportional share of Members of the House of Lords as part of his long-term constitutional reform. With a deal of candour may I say to him that the House of Lords is perhaps the most absurd, ridiculous legislature in the world? It is bloated beyond redemption and the last thing that place needs is more Members. What it needs is total abolition, and that cannot come soon enough.

The hon. Member for Gainsborough has put forward his helpful new clause 3. As the hon. Member for Christchurch rightly identified, it has got quite a bit of attention, and not only today—we have done nothing other than debate this for the past few weeks and months. If we swapped the three words “full fiscal autonomy” with the word “independence”, we would see that we have been having this debate for the past four, eight, 15 or 20 years. The same themes seem to be revisited when we talk about full fiscal autonomy or independence, and it is the same adversaries: the Scottish National party, and the old amigos of Labour and Conservatives getting together to tell us once again how we are too poor, too wee, too unimaginative, not just to have independence, but to run ourselves fiscally within the United Kingdom. What next? Where do we go to? Can we not run local authorities properly without being too wee, too poor or too unimaginative? [Interruption.] I see that the hon. Member for Edinburgh South does not want to intervene but I give way to the hon. Member for Gainsborough.

Sir Edward Leigh: I am not saying that.

Pete Wishart: Sorry, I was expecting a bit more of a substantial contribution from the hon. Gentleman, and I am almost disappointed we did not get some more fulsome prose from him. I thought he made quite a good case for his new clause, but I say ever so gently to him that we favour our amendment, because it is the way we should be doing this. It seeks to give time for the Scottish Parliament to progress towards full fiscal autonomy. If we suppose Government Members are right that

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there is this huge deficit that we keep hearing about again and again, surely they should be working with us, through a fiscal framework, to work towards full fiscal autonomy. Surely what should happen is a process that starts by giving us the important early new powers—powers over the minimum wage, national insurance contributions and welfare. There is a process of moving towards this. If they are right about that, what is wrong with working with us to try to achieve and secure it? Surely that is how we should be doing this. As I have said, the themes are the same; oil and gas is a burden and a curse with independence, as it is with full fiscal autonomy. It is as though they have learned absolutely nothing, because these were the very themes put to the Scottish people during the general election campaign. I am not trying to speak for the Scottish people, but on the doorstep I was hearing that there is a tiredness and a deep despondency among the Scottish people at being told that they cannot do something, that they are in such a diminished position that we cannot take responsibility. That argument does not work any more. We have been through a process of national self-definition, of finding ourselves and of ensuring that we try to do something different.

Mr MacNeil: That despondency and disbelief among the Scottish people becomes even stronger when we look at those islands close to Scotland. The Faroe Islands, for example, have 50,000 people and full control of their taxes. The Isle of Man has 80,000 people and full control of its taxes. Scotland, which is the size of Denmark, cannot have full control of its taxes, because the Government say so. That time is now over.

Pete Wishart: I am grateful to my hon. Friend for his intervention. He is a great champion and passionate advocate of the island nations. This evening, we invite this Committee to support us in the next stage of Scotland’s constitutional journey, which is about securing more powers, making our Parliament permanent, and granting full fiscal autonomy to our nation so that decisions about how we run our country are made in Scotland by the elected Members who represent the people of Scotland. Tonight, I invite the Committee to support us in that effort.

6.30 pm

Tommy Sheppard (Edinburgh East) (SNP): We are talking here about the government of Scotland, so I hope it is not contentious to say that what should be uppermost in all our minds are the views of the people who live there. I am very much in favour of evidence-based policy, by which I mean that we should try to make things right according to the facts of the situation. We are in a fortunate position in this debate because we do not have to guess what the people of Scotland think, as they have been consulted quite extensively over the past year.

We are having this debate today because of the referendum that took place on 18 September, when the people of Scotland voted on whether they wanted to be an independent country. They decided by 55% to 45% that they did not want to be an independent country and leave the United Kingdom, and I respect that result and that opinion. But no one can deny that one thing that swung that vote in favour of the no campaign was the intervention by the leaders of all

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three Unionist parties who promised substantial new powers for Scotland should it decide to stay within the United Kingdom. The vow that was published and signed in

The

Daily Record

and promoted the length and breadth of the country was definitely a major factor on which the outcome of that result depended.

The response was to set up the Smith commission, and Lord Smith has now reported and given his view. We took part in that commission and we signed up to it, but we made it very clear that the Smith commission is a floor, not a ceiling, on the ambition of Scotland for additional powers. We made that clear from the word go. We argued for that in the run-up to the election. There was a raging debate during the election campaign about whether the Smith commission was an adequate response to the wishes expressed by the people of Scotland in the referendum. We said that it was not, but that it was a start and that we needed to go further to satisfy the aspirations and hopes that were given to us by the Prime Minister, by Gordon Brown and by others who said that we would get substantial new powers. They said that we would have home rule and that it would be as near to federalism as possible. That is what the people of Scotland were promised, and the Smith commission does not add up to that. We took that argument and put it before the Scottish people in a general election, and we asked them to say whether they agreed with our analysis that we should go beyond the current Smith commission. What happened? They voted for us. They voted for us not just by a little bit but by a lot. More than 50% of the people who turned out at that election voted for members of the Scottish National party—I ask Members to try to get the name of our party right.

The question now is: does the Bill before us respond to what happened at the general election. I must say—the Secretary of State can correct me if I am wrong—that the Bill looks as though it was drafted before the election; its clauses are very similar to those that were published in January. The speed with which the Bill was published makes me think that there has been very little reflection over what happened at the election, and over the views of the Scottish people. Very little has been included in the Bill in response to those things.

I ask the Secretary of State and the Government to consider making changes to the Bill so that it reflects the views of the people of Scotland, delivers the promises of the Smith commission and, where possible, goes beyond the commission to do things on which Smith is silent—I am talking about the administrative changes that the third sector and specialist organisations in Scotland are asking for and that could easily be granted—and responds to our argument for granting substantial new powers that would be tantamount to the vow that was made.

One thing the Secretary of State could do quite easily is say, “We will accept the amendments about the permanence of the Scottish Parliament, albeit within our flawed and unwritten constitution.” The Government could make a statement that “This Chamber agrees that the Scottish Parliament will never ever be taken away without a referendum of the people who live in Scotland.” It would cost the Government nothing to accede to that amendment, so why do they not do it? They would be demonstrating some respect towards the people who have sent us to this Chamber to argue these points.

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Let me turn now to the issue of full financial autonomy. Last week, I was in the strange position of finding myself misquoted by the Prime Minister, the Secretary of State, shadow Ministers and—just to complete the pack—the leader of the Scottish Liberal Democrats in the Scottish Parliament. I did not know whether to feel victimised or honoured. I am delighted, both in recent press articles and in this Chamber today, to be able to put the record straight. I am absolutely committed to the idea that the Scottish Government should be responsible for raising the revenues that they spend. To be honest, that should be a non-contentious point. In any structure in the world where there is a federal relationship and a federal-type Government, or even a devolved Assembly, those arrangements are commonplace. I have yet to hear the argument against that view.

Ian Paisley: I thank the hon. Gentleman for giving way. Indeed, he is my hon. Friend, as he is both a canny Ulster man and a County Antrim man. Of course he will know in his heart—the heart of a County Antrim man—that before a person can say that they want to spend money on something, they should know the price. Does he agree that, before we vote on his party’s amendments tonight, it is important that we know the price, especially for corporation tax? What will it mean for the ordinary Scot?

Tommy Sheppard: I am a Derry man as it happens. If the hon. Gentleman wants to make a point of such substance, perhaps he should indicate to the Chair and take part in the debate. What we are talking about is a matter of political principle. It is about the direction in which we want to go forward. It is entirely possible, with good will, to put in place proper fiscal arrangements.

I wish to turn to the amendment of the hon. Member for Gainsborough (Sir Edward Leigh). I have not been in this job long—

Ian Murray rose

Tommy Sheppard: May I deal with this point, and then take an intervention? I have not been in this job long, but I am surprised—I expect I will be surprised by various things over the next five years—to find such a passionate and eloquent exposition from the Conservative Back Benches of a position with which I agree. I suspect that there is little else on which the hon. Gentleman and I would agree. On this point, he makes his case very well. However, I wonder whether there is an element of mischief at the back of his mind. Perhaps he believed the propaganda from his own Front Bench several weeks ago that we were weakening in our commitment to full financial autonomy, and he thought that he might embarrass us in this debate today. I must reassure him that we are not lukewarm and our commitment is not weakening. In fact, we like the idea so much we have brought our own amendment before the Committee. I am intrigued at the suggestion that all we need to do is vote for it—

Sir Edward Leigh: I am completely sincere. I believe that the case for full fiscal autonomy is unanswerable in logic.

Tommy Sheppard: I am pleased to hear it. I therefore expect the hon. Gentleman to vote for our amendment later.

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Sir Edward Leigh: Vote for mine.

Tommy Sheppard: Why do we not do a deal? I will try to ensure that all my colleagues vote for the hon. Gentleman’s amendment, if he makes sure that all of his party do as well. Perhaps we can have it sewn up by 10 o’clock this evening. The strange thing about this debate so far—

Sir Edward Leigh: This is very important. The hon. Member for Dundee East (Stewart Hosie) made an absolute commitment that he would vote for my new clause. I will press it to a Division and at 10 o’clock I expect to see the hon. Member for Edinburgh East (Tommy Sheppard) in the Lobby.

Tommy Sheppard: If the new clause is moved, the hon. Gentleman will see me there, for sure. I hope that I will see him in the Lobby to vote on our amendment.

The interesting thing about the debate so far is that the case has not been made against full fiscal—

Ian Murray rose—

Tommy Sheppard: Is this perhaps on the subject of the hon. Gentleman’s misrepresentation of my views?

Ian Murray: I am grateful to the hon. Gentleman, who has just confirmed that he will walk through the Lobby with the hon. Member for Gainsborough (Sir Edward Leigh). He said on the radio—I was on with him—that the delivery of full fiscal autonomy for Scotland would be utterly devastating. Does he stand by those comments?

Tommy Sheppard: The hon. Gentleman must apologise for misquoting me. I said—[Interruption.] Yes, I have the transcript as well as the hon. Gentleman. I said in the context of a debate that if this was done wrongly it would be possible to get it wrong. To my mind, that is a tautology: if we do not do something right, we get it wrong. The hon. Gentleman then decided that that somehow meant that I was against the whole principle of full financial autonomy and took to the Twittersphere to promote that. It does not, I am not and the fact that he had to do that shows the paucity of the arguments against our proposals.

We have yet to hear the argument against full financial autonomy for the Scottish Government, and I hope that we shall before the debate concludes. We have heard talk of a black hole, which other people will regard as a deficit when in fact it pertains to all economies at this point in time. We have heard that a policy of principle should be based on a snapshot from one point of time in an academic survey of what might happen in a year that will not even be covered by the process. That has somehow been extrapolated into an argument of principle against the proposal. It is not. If it was, would that mean that if there was not a deficit but a surplus in the Scottish budget, as there has been on many occasions, the policy would be flipped again and autonomy would suddenly become okay? We need to hear the arguments of principle against the proposal.

The difference between us is that, although there is a deficit in the Scottish budget, the SNP believes that it is possible for Scotland to prosper if it has control of its

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own resources, if it can manage its own economy, if it can grow its own revenue base and if it can steward its own budgets properly. Full financial autonomy would mean that the people of Scotland could get the benefits of that economic growth. That seems a laudable objective.

Mr Kenneth Clarke rose

Tommy Sheppard: I am sorry, but I am just coming to the end of my speech.

My hon. Friend the Member for Dundee East (Stewart Hosie) has given some clear examples of how economic powers could be deployed. If Members, many of whom are on the Labour Benches although some might be on the Government Benches, are against that in principle, they need to tell us. If they are against it just because of the economics that might pertain to it, it is entirely possible to make an argument about equalisation measures and other mechanisms that could be introduced if we wanted it to happen. They need to tell us why on principle they do not want it to happen. I hope that we will hear that before the night is out, but in the meantime I commend the amendments to the Committee.


Ian Murray: May I personally congratulate the hon. Member for Edinburgh East (Tommy Sheppard) on his stunning victory at the general election? I miss my colleague, Sheila Gilmore, whom I wish well, but I congratulate him.

It is a great pleasure to speak in support of our amendments. I could not help noticing that Lionel Richie was in the Gallery earlier, and I hope he enjoyed the first part of our debate as much as we enjoy his music.

These days in Committee are important in ensuring that the Smith agreement is delivered in full in both spirit and substance, as we said consistently on Second Reading. It is also essential to ensure that we go further than the Smith agreement, as Labour has said time after time, and we have set out a number of clear improvements.

Scotland has had an in-depth and passionate debate about its future and concluded that a fair and more prosperous Scotland is best delivered by shared tax and spending across the UK, with Scotland taking more control over the levels of tax and spending alongside greater accountability. I agree with the hon. Member for Perth and North Perthshire (Pete Wishart) that if anyone is under any illusion that the centre of political gravity in Scotland is not at Holyrood, they have not grasped the modern political landscape in Scotland. That is why the clauses and amendments recognise the Scottish Parliament as the seat of political power and the catalyst for change in Scotland. Our amendments attempt to deliver that change. This is a great responsibility on us all, but in the end it is much more important that we debate how powers are used than where they lie. We have tried to tease out some of those issues in interventions today, but without much success.

6.45 pm

Clause 1 conveys the permanency of the Scottish Parliament as an institution. We agree that that is a critical part of ensuring its permanence as an integral part of Scottish life, but our amendments would improve the Bill beyond the proposals of the Smith commission. As I said last week on Second Reading, this Bill is the latest staging post in a long and sometimes arduous, but always exciting, devolution journey. As a passionate

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believer in the principle of devolution in delivering a strong and vibrant Scottish Parliament, I hope that this staging post delivers the most powerful devolved Parliament in the world.

Our journey began with the Scotland Act 1998, drafted and delivered by a Labour Government and crowned by Donald Dewar’s now infamous pronouncement:

“There shall be a Scottish Parliament.”

Further steps that we have taken along our devolution journey have served only to enhance the Scottish Parliament’s potential. The Calman commission on further devolution, the recommendations of which were codified in the Scotland Act 2012, transferred further powers and placed the Parliament on a firmer footing. Then came last year’s referendum, in which the people of Scotland voted decisively to remain part of the United Kingdom.

Mr MacNeil: At the time of the referendum, the yes side included full fiscal autonomy in its proposals. After the vow, the no side also included full fiscal autonomy. What has changed since the referendum that has made the no side resile from that? The vow was as near to federalism as possible, and it would have included full fiscal autonomy. Why does the hon. Gentleman now want to leave those powers in the hands of the Tories at Westminster rather than with the Parliament of the Scots in Edinburgh?

Ian Murray: There is a very simple answer to that question. We all want what is best for Scotland. The latter part of my speech sets out how full fiscal autonomy would be bad for Scotland according to all the information we have. We can either have a sensible debate in this Chamber about our fundamental principles on people’s lives and livelihoods in Scotland, or we can have a political knockabout on who will vote with who, who prefers who and who said what to whom during the referendum debate. The Bill is critical to future livelihoods in Scotland, and if all we can get from those on the SNP Benches is simple party point scoring we will get no further forward in improving the Bill.

To answer the question asked by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), we are here today because the vow put together the Smith agreement. The five political parties, including the SNP, which was represented on the commission, have come forward with proposals that are now in the Bill. Labour wants to take the Bill a little further. I keep emphasising that and I emphasised it consistently on Second Reading.

Ian Blackford rose

Ian Murray: I am going to make a little progress, but I will come back to the hon. Gentleman if he wants to intervene a little later.

As Labour said at the time of the referendum, and as we have said many times since, the no vote was not a vote for no change. Labour played an active part in the Smith commission, the recommendations of which bring us to where we stand today, considering the Bill. It was a compromise position and with all good compromises there will be some gains and some losses. I hope and believe that the Bill will strike the right balance, affording the Scottish Parliament the power to make a real difference to people’s lives while ensuring that Scotland remains part of and secure in the United Kingdom.