Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Simon of Glaisdale: Would the noble Lord not accept that, if the tax varying power is answered in the White Paper in the affirmative, it is liable, whatever it says in the White Paper, which has no statutory authority, to misinterpretation by those who do not want a limited parliament in Scotland?

Lord Mackie of Benshie: I think the White Paper and all the people who will be talking about the White Paper throughout Scotland will explain fully what is meant. If you are going to put more into this Bill, which is a simple Bill about a referendum, you are only going to confuse the issue.

Lord Renton: We are really concerned here with the exact meaning of certain important words. I hope that the government spokesman when replying to this interesting debate will tell us in the first place exactly what the Government think the expression "tax varying" means. I would have thought that prima facie it means the power to alter existing taxes only and no power to introduce any kind of new tax. Perhaps the government spokesman would let us know whether that is so.

Personally I hope there is no parliament with any tax varying powers and that people will vote that way, but if they are to be voting on this at all I think they would expect to be able to vote for a parliament to raise or lower existing taxes and to introduce new ones. The word "varying" may or may not mean that. I think we should be told what it means. But because of the uncertainty I really do not think it ought to remain in the Bill.

1 Jul 1997 : Column 141

The question is: what should be put in its place? I am sorry to have to say, because I have an immense regard for the noble and learned Lord, Lord Simon of Glaisdale, and immense gratitude to him for the support that he always gives to the improvement of the wording of statutes, that I am a bit worried about his alternative, which concerns limited power--it does not say in what way it is limited--to raise or lower basic rates of income tax. Of course it must be my ignorance but I do not know how a basic rate of taxation differs from any other rate of taxation. If there is a difference perhaps we should be told. But I do not find it satisfactory to have that phrase. I do not think that people would understand it well enough and it does raise a doubt as to the meaning of the expression "limited power".

Now I come to the alternative proposed by the noble Earl, Lord Perth and the noble Lady, Lady Saltoun of Abernethy. They suggest that there should be power to raise or lower taxes. That sounds fine and I would prefer it to "tax varying", but we have to bear in mind that, unless I am wrong, it would not include a power to introduce new taxes unless--and it is arguable--the word "raise" is itself ambiguous. It may be that we use in ordinary conversation the expression "raising taxes". We do not necessarily mean increasing taxes; we mean the power to tax, and that includes the power to impose new taxes. So it may be that the amendment moved by the noble Earl meets the requirements in its ambiguity: in other words it includes the power to raise existing taxes and the power to introduce new ones.

Lord Rees: I rise with a certain diffidence to intervene in this debate because I am very conscious of the stern rebuke from the noble Lord, Lord Thomas, about shilly-shallying and also of the stern rebuke of the noble Lord, Lord Taylor of Gryfe, for whom I have warm regard, that we should exercise a certain self discipline. Perhaps I may say at the outset that if the debate has gone a little wide on this amendment and on earlier amendments it is entirely brought on by the approach of the Government to this very important piece of legislation. Had the Government produced either a White Paper or preferably produced and taken through both Houses a Bill to introduce devolution, then we would know exactly what it is we are to consider and what we are to commend to our fellow countrymen in England, Scotland and Wales. As it is, we are left almost totally in the dark. The debate has gone a little wide, therefore, because before we know exactly the powers, scope and mechanism of the referendum we must guess a little bit about what will be the proposals on which the people are to be asked to vote.

This is a particularly important question which is raised by the amendment of the noble and learned Lord, Lord Simon of Glaisdale, regarding taxing powers, because taxing powers are fundamental to the structure and organisation of the contribution of any legislative body. Some hints have been made at various points over the past few months by the Prime Minister, and indeed beforehand when he was Leader of the Opposition. We understand that even a Prime Minister with such a powerful majority as he evidently has in another place really must not presume too far. After all, he cannot

1 Jul 1997 : Column 142

speak for both Chambers of the legislature and there may even be Members on his own Back-Benches--indeed, there is evidence that there may be some--who are a little unhappy about the measures that he has in mind.

However, we understood from the Prime Minister that a Scottish parliament--that is, if such a parliament were established or re-established, and I do not enter into that argument again--is to have powers to reduce or raise income tax by up to a figure of 3 per cent. or 3p in the pound. So far as concerns the reduction of taxes, there is no evidence as to how far such a parliament might reduce taxes. Even that raises a whole raft of questions. Let us assume that the Government of the day have in mind the raising or the reduction of direct taxation. However, that is not what the Bill says. In Clause 1(1) it refers to,

    "tax-varying powers of a Scottish parliament".

If they choose in the first clause of the legislation to use different words from those used by the Prime Minister, we must attach some significance to those words; in other words, what exactly are those "tax-varying powers"? To what tax do they apply? If it is direct taxation--for example, income tax--does it also apply to corporation tax? Let us at least simplify the debate for this evening and settle for income tax.

If taxes are to be raised, that will give rise to tremendously delicate questions as to how you define the kind of income on which the impost is to be increased in Scotland. How do you define Scottish income? If that particular sort of income happens to be taxed south of the Border, or even in Wales or Northern Ireland as well, will there be double taxation? These are very technical questions, if the income tax is reduced in relation to Scottish income tax, however defined.

Can the Minister say how the deficit is to be made up? Will the Scottish parliament be entitled to look to UK legislature to increase the funds passing to Scotland because the direct taxation on which the services have been calculated will be reduced by the Scottish parliament? As I said, these are very technical questions, but I believe that the country is entitled to ask them before it is asked to vote on the referendum. We need to know how such a question will be tackled.

I move on now to indirect taxation. If you have different rates of indirect taxation--for example, VAT, Customs duties and excise duties--north of the Border from what applies south of the Border, there will be considerable distortion in what up until now has been one unified market. Will the Minister defend this evening, or indeed at some later stage of the proceedings--if we get that far--such distortions in the UK market? Is he prepared to explain to us how Scottish consumers would be happy with such a situation? There are many such questions to which no answers have so far been given. We have been fobbed off and told that we will discover the answers some time in the course of July from the White Paper.

However, will those questions be answered in that White Paper? My pretext for raising the issues today is that we will need very clear answers to them. Moreover, we shall need time to consider them because they are

1 Jul 1997 : Column 143

technical questions which, if they were tackled in any finance Bill, would need a great deal of professional input. I speak as someone who, for good or ill, in both opposition and government, has had to criticise and defend finance Bills. Therefore, I hope that those questions will not be brushed aside. I believe that the noble and learned Lord, Lord Simon of Glaisdale, has performed a signal service in indicating to the Government Front Bench why this is not just a Bill about the mechanics of a referendum. Because of the way in which the Government have chosen to approach the legislation, we must have much more detail about the actual devolutionary measures which they have in mind.

Baroness Carnegy of Lour: My noble friend has made a very important speech. It is no good saying that such matters are irrelevant to a referendum; indeed, they are absolutely relevant and will have a great effect on how people vote. Certainly by the time the White Paper is published, in good time for the whole thing to be explained to people, we hope that we shall know the answers to those questions, even if we do not have them this evening.

For the direct purposes of the amendment, I do not know if the phrase,

    "to raise or lower taxes",

as suggested by the noble Earl, Lord Perth, is clearer than "tax-varying powers"; perhaps it is. However, in his amendments, the noble and learned Lord, Lord Simon of Glaisdale, suggests that the wording should refer to the,

    "power to raise or lower basic rates of income tax".

n Second Reading, I believe I understood the noble Lord, Lord Williams, to confirm in his summing up that the 3p, plus or minus, income tax suggested by the constitutional convention was the chosen method that would be included in the White Paper. I believe I understood him to confirm that fact, although I cannot actually spot it in my copy of Hansard at present. Perhaps the Minister will confirm in his reply that that is the case.

If that is indeed so, is it perhaps more accurate to use the wording suggested by the noble and learned Lord, in Amendment No. 61A? If the 3p is put on the basic rate, even I can see enormous complications in such an arrangement. However, if that is to be in the White Paper, it is possible that the wording suggested is clearer. I should be most interested to have clarification of what the Minister said on Second Reading and, if possible, an explanation of whether or not the alternative wording suggested by the noble and learned Lord, is better.

Next Section Back to Table of Contents Lords Hansard Home Page