Hansard

While listening to Jackie Baillie’s speech, I was interested by her trying to conjure the image of a mystery thriller. Unfortunately, during the course of her speech the only image that I could come up with was of Jackie Baillie standing outside a room with a cup pressed against the door, trying to listen in on what was happening behind it.

There is a balance to be struck. The point was made by the convener of the Finance Committee that we do not want a situation in which the Scottish Government is, essentially, outlining its negotiating position in full, in public. One of my difficulties is that although I listened very carefully to Jackie Baillie’s speech, I did not hear any detail on the kinds of things that Jackie Baillie wants the Scottish Government to lay before Parliament for scrutiny. I appreciate that she had only a certain amount of time, but I suspect that she could have at least given us a flavour of those things, as part of this process, which might have given us an indication of what she expects from the Deputy First Minister.

For me, the questions around the fiscal framework come down to flexibility, fairness and transparency. Flexibility is an issue in so far as, if we are to have new powers devolved to us, we must have the ability to use them for the betterment of the people of Scotland. The fiscal framework will determine the flexibility that the Scottish Government has to use the financial powers that will be available to it in order to deliver on that.

That is why the UK Government’s command paper and the subsequent comments by the Secretary of State for Scotland not sitting well together—as I have said previously—needs to be bottomed out. Paragraph 2.2.5 of the command paper is very clear:

“In the context of Scottish devolution, the fiscal framework must ensure that Scotland contributes proportionally to the overall fiscal consolidation pursued by the UK Government.”

Essentially, that ties Scotland to the austerity agenda. However, at the Devolution (Further Powers) Committee, the secretary of state was explicit that the fiscal framework is not intended to restrict the flexibility of the Scottish Government.

Two different positions are being articulated by the UK Government; it is important that the two positions be explored forensically to determine what exactly the position will be in relation to the fiscal framework and the ability of the Scottish Government to operate within it and to use the powers that are being granted to it.

That is equally true when it comes to borrowing powers which, as has been highlighted, are not explicitly mentioned in the Scotland Bill, although we know that borrowing powers are to come to the Scottish Parliament. There is a question about those powers: will they be supplementary to the current capital DEL budget, or will they be in place of the capital DEL budget? That is a not immaterial consideration. If the powers are to replace capital DEL, we will face a revenue hit simply to stand still as far as capital expenditure is concerned. To go beyond a standstill would incur a further revenue hit. That is a material consideration in relation to how fair and flexible the fiscal framework will be.

Independent arbitration is important. Gavin Brown says that he does not agree that independent arbitration is needed. The weight of evidence that came before the Finance Committee indicates that having the Treasury as sole arbiter—I think that that was the term that we used in the report—or as judge and jury on such matters does not suggest an image of fairness in how the fiscal framework will be dealt with. If the Treasury has an interest in the outcome and is also the ultimate decision maker for that outcome, it does not take too much of a leap of logic to suggest that it will serve its own interests rather than necessarily reflecting on the balance of interests and coming to a conclusion on that basis. I therefore think that having an independent arbiter would be important for ensuring that the Treasury plays fair in the process and does not simply look after its own interests, to the detriment of the abilities of this Parliament to exercise the powers that are being devolved to it.

Also on the subject of fairness, both the Finance Committee and the Devolution (Further Powers) Committee have spent a long time trying to come to terms with what exactly the second no-detriment principle will mean in practice. We are still a long way from getting to that point. The point about a high-level principle is fair enough, but the difficulty lies in knowing in what circumstances it would apply and what element of future proofing there will be around it, so that, for instance, an outcome five years hence is not traced back to a decision that was taken now, and a call for compensation made under the no-detriment principle. There has to be some indication of the period of time over which a no-detriment principle applies when the second no-detriment principle is being examined.

On transparency, the Devolution (Further Powers) Committee did some work and published a report on intergovernmental relations. One of the recommendations that the committee has come up with is that intergovernmental relations and scrutiny, examination and exploration of those relations should become a responsibility of a committee of the Parliament. The committee also said that that should be done both before and after formal meetings of the two Governments. My question is this: although it is fair enough for us to take those steps in this Parliament, what is happening at the other end? How do we ensure that appropriate scrutiny is applied to intergovernmental relations at the Westminster end of the process? Our ministers are coming to our committees and are talking about both the discussions that they are going to have and the outcomes of discussions, so scrutiny has to be applied to the role of the Westminster Government in that respect, too.

We cannot compel Treasury ministers or any Westminster Government minister to attend a committee meeting here, but that power exists for Westminster Parliament committees. It may be worth their while to explore how they would scrutinise intergovernmental relations.

I pay tribute to the clerks for supporting the committee’s work on outlining the areas around the fiscal framework that really need to be probed. One of the things on which the Scottish Government is focused—and that we should support it in—is ensuring that flexibility, fairness and transparency lie at the heart of the fiscal framework that we hope will be presented to Parliament once the negotiations have been concluded.