Meeting of the Parliament 17 June 2014
When Iain Gray pontificates about hiding things, I cannot help but reflect on the fact that his party has established a cuts commission that will not report until after the referendum.
I turn to the matter at hand. The agreement is important because it will allow Parliament to scrutinise the Government’s budget proposals in a transparent and open manner. It is clear that we will from time to time need to update the agreement in the light of new developments. The Scotland Act 2012 and the devolution of landfill tax and stamp duty land tax, as it was, and which will be known in the future as land and buildings transaction tax, are instances of that.
We know that Parliament is putting in place measures to take forward devolution of those powers by passing the Landfill Tax (Scotland) Bill and the Land and Buildings Transaction Tax (Scotland) Bill. We are getting on with the Revenue Scotland and Tax Powers Bill and of course the Government is putting in place arrangements to establish an independent fiscal commission, which will further enhance and aid parliamentary budget scrutiny.
It is correct to update the written agreement to reflect the new reality. Indeed, the agreement states:
“In respect of the two devolved taxes, the Draft Budget will include a commentary on the expected income, including tax receipt forecasts and the assumptions, rates and thresholds on which they are based. The commentary will also reflect the views of the Scottish Fiscal Commission on the level of receipts.”
All the work that we are undertaking as a Parliament will be reflected in the new agreement.
I turn to another important consequence of the Scotland Act 2012—the block grant adjustment. That is also reflected in the written agreement, to which Mr Brown referred. Paragraph 23 of the agreement states:
“The Scottish Government will provide information about the calculation of adjustments to the Scottish block grant carried out by HM Treasury.”
The UK Government command paper, which informed this Parliament’s and the Westminster Parliament’s consideration of the Scotland Act 2012, said:
“When the smaller taxes are devolved, currently planned to be April 2015, there will be a one-off reduction which will then be deducted from the block grant for all future years”.
In its most recent report on implementation of the Scotland Act 2012, the UK Government reported a change in that position; it now wants to reduce the block grant baseline and to adjust the Barnett formula. That could involve an adjustment year by year, and not just the one-off adjustment that was expected by this Parliament, and by the Westminster Parliament, when we agreed the Scotland Act 2012.
David Gauke, the Exchequer Secretary to the Treasury, told the Finance Committee last week that it would be a one-off adjustment because it was being agreed on a one-off basis, one time, and that the Barnett formula was not being changed, merely “updated”. I posit that that is just semantics; the UK Government seems to be clearly shifting the goalposts away from what Parliament agreed when we agreed to the Scotland Act 2012.
This is an important matter for the agreement that we are debating today; the block grant adjustment will be an important part of Parliament’s budget scrutiny. I hope that the Westminster Government will play fairer than it seems to be playing at the moment in agreeing this matter with the Scottish Government. I think it is important for this Parliament to emphasise that it should be agreed soon because it will affect this coming budget process. It is important that that message comes out of this debate.
I commend the agreement and welcome the approach that has been taken by the Scottish Government in working with the Finance Committee to put the agreement in place, because it is very important for this Parliament that such an agreement be put in place to ensure that we can thoroughly scrutinise the coming budget and future budgets.