Committee
Finance Committee 25 January 2011
25 Jan 2011 · S3 · Finance Committee
Item of business
Scottish Variable Rate Inquiry
Good afternoon, everyone. Papers on the Scottish variable rate that the former finance ministers who are present today have requested and papers that the Scottish Government has released show that the Scottish variable rate was always in a state of readiness from 1999 until the current Administration took over. First, that was because the Scottish Executive was obliged to maintain that state and to inform Parliament how that would be done. As the record shows and as Lord McConnell has outlined, that is exactly what was done. Secondly, it was because 10 months is the minimum statutory period in which any incoming Scottish Government could implement the SVR.Papers that have been released show that Scottish Government officials were in discussions with HM Revenue and Customs officials in March and April 2007. The papers clearly show that officials believed that those discussions had not reached a stage at which they could or would brief ministers. As members know, I was the Minister for Finance and Public Service Reform at that time, when I was aware that the discussions were on-going. I inquired whether an incoming Administration would be able to implement the SVR at the first opportunity, to which the answer was yes, with at least 90 per cent collection in the first year and full collection in subsequent years. In common with most United Kingdom citizens, I am aware of HMRC’s powers to recover unpaid tax in subsequent years.In 2007, Mr Swinney took a decision that prevented the SVR from being implemented in 2008 and subsequent years. He compounded that by denying Parliament information, which had previously been provided. Even worse for him, he sought to blame others for the unfortunate situation. That regrettable situation was further compounded by his telling Parliament that he considered using the SVR in the financial year 2011-12 when he knew that he had taken decisions just two months earlier that made implementation before 2013-14 well nigh impossible.Those events, which are revealed in the documentation, have brought us to today’s position. I stress that I have significant regard for the Cabinet Secretary for Finance and Sustainable Growth politically and personally. However, the way in which he decided to approach the situation was unworthy and disappointing.It is more in sorrow than in anger that I present my evidence. I repeat that there is no connection between the situation that was presented to Mr Swinney on 14 May 2007 and the situation in which he now finds himself.
In the same item of business
The Convener
SNP
Item 2 is to conclude the evidence taking on our Scottish variable rate inquiry. First, I welcome to the committee three former finance ministers: Andy Kerr ...
Jack McConnell (Motherwell and Wishaw) (Lab)
Lab
I want to outline briefly, mostly from memory, what took place in summer 1999 when I was appointed as the first finance minister in the new Parliament and th...
Andy Kerr (East Kilbride) (Lab)
Lab
My evidence will be brief. I refer members to the note of 7 July 2003 from Richard Dennis. Following the election in that year, I had a straightforward role,...
Tom McCabe (Hamilton South) (Lab)
Lab
Good afternoon, everyone. Papers on the Scottish variable rate that the former finance ministers who are present today have requested and papers that the Sco...
The Convener
SNP
The cabinet secretary will have the opportunity to respond when he appears before the committee.HM Revenue and Customs told the committee that it could“put t...
Jack McConnell
Lab
I should probably answer that question, given that I presented to Parliament the bill to establish the budget cycle back in 1999, as you will remember. The b...
Tom McCabe
Lab
I am sure that the committee understands the chronology, but it is probably important to clarify it. An incoming Administration may announce its intentions i...
Andy Kerr
Lab
I have a fairly simple point to add. If a party campaigns to either increase or decrease taxation in Scotland, it will present a budget in some form that wou...
Jack McConnell
Lab
I am sorry to come back in again, convener, but it is important to remember—I have always been keen to ensure that we are clear about this—that it is possibl...
The Convener
SNP
Given the evidence that we heard from HMRC, it still bothers me that, time-wise, the bits do not quite fit.Given that it is for the Scottish Parliament to de...
Jack McConnell
Lab
The arrangements comprise the following: the creation of the legislation, which happens in the cycle every autumn, as you say; the possibility or—in my view—...
The Convener
SNP
I throw the questioning open to members.
Joe FitzPatrick (Dundee West) (SNP)
SNP
I am looking back to 1999, so I think that my question is for Lord McConnell, but if I have got that wrong, the other former finance ministers might want to ...
Jack McConnell
Lab
I will comment on what happened in the year before the Scottish election in May 1999. I do not have access to the papers on that, because the Parliament had ...
Joe FitzPatrick
SNP
I want to widen the question and ask about the other money. I think that we reckoned that, over the piece, £25 million was spent on the SVR. When that money ...
Andy Kerr
Lab
We should bear in mind what Lord McConnell said in response to your previous question about predicting the cost of information technology systems, which is a...
Tom McCabe
Lab
As I said, I was aware that discussions were on-going. I was never under any illusion that if there was to be a substantial overhaul of the infrastructure fo...
Joe FitzPatrick
SNP
That deals with the issue as far as the capital is concerned. At the end of the day, we had no assurances.As far as readiness is concerned, Sarah Walker told...
Jack McConnell
Lab
Who is Sarah Walker?
Joe FitzPatrick
SNP
She is from HMRC—she gave evidence two weeks ago.
Jack McConnell
Lab
That is different from what the convener said. The convener said that HMRC’s evidence was that if a decision had been made in May or June 2007, it would have...
Tom McCabe
Lab
I might be able to clarify that. As I said, the position was that the discussions were on-going. Officials were not in a position in which they felt that the...
The Convener
SNP
Let me clarify something. Tom McCabe said to Sarah Walker:“But it was possible to implement the system in 2008—you could have done it.”Sarah Walker replied:“...
Tom McCabe
Lab
If that is what she said, convener, she may have been confused. Her reply contradicts the ministerial briefing note that was given to incoming ministers on 1...
The Convener
SNP
That will be noted in the Official Report.
Joe FitzPatrick
SNP
I think that we are taking off, because that was not the point that I was trying to make. My question was whether given Sarah Walker’s evidence to the commit...
Jack McConnell
Lab
Yes.
Andy Kerr
Lab
Yes.
Tom McCabe
Lab
Yes.
Joe FitzPatrick
SNP
That is useful. What checks did the ministers make over the years when they were making payments to HMRC to ensure that there was 10-month functionality, giv...