HC Deb 03 July 1996 vol 280 cc955-7
3. Mr. David Shaw

To ask the Secretary of State for Scotland if he will make a statement on levels of public expenditure in Scotland. [34171]

The Secretary of State for Scotland (Mr. Michael Forsyth)

Public expenditure in areas for which I am responsible in Scotland is more than 35 per cent. higher per head of population than on the equivalent services in England.

Mr. Shaw

Can my right hon. Friend tell me what would be the impact of a Scottish Parliament on public expenditure? Would current public expenditure in Scotland be sustainable without a tartan tax, or is a tartan tax inevitable if there is a Scottish Parliament?

Mr. Forsyth

The present arrangements ensure that Scotland has about 35 per cent. more per head of population than England. Local government, for example, gets 45 per cent. more per head of population in grant than England. If a Scottish Parliament were to be established, as the constitutional unit has pointed out, there would have to be some assessment of a formula to determine the expenditure of the Scottish Parliament, which would still be decided in Westminster, where the office of Secretary of State would no longer have any meaning—if, indeed, it was in existence—and where the number of Scottish Members of Parliament would be reduced. That seems to me to be putting at risk the health service, the education service and the caring services in Scotland, but the Labour party is prepared to do that because it puts its politics and its party before the interests of its country.

Mr. Canavan

Will the Secretary of State point out to the hon. Member for Dover (Mr. Shaw) that if we take into account public expenditure on, for instance, the civil service, Ministry of Defence contracts and London Transport, public expenditure per capita in London and the rest of the south-east is greater than it is in Scotland? Public expenditure should be distributed throughout the United Kingdom on the basis of need rather than the mythology propagated by the hon. Member for Dover.

Mr. Forsyth

The hon. Gentleman will forgive me if I do not agree that it should be distributed solely on the basis of need. A recent "Social Trends" survey showed that Scotland enjoys a standard of living unequalled in any other part of the United Kingdom except the south-east of England. As for his point about London, the public expenditure figures for Glasgow are even higher than those in England, but that is not a fair test. The hon. Gentleman must get his mind around the fact that public expenditure in Scotland greatly exceeds the revenue raised there. If he favours a separate parliament raising its own revenues, he must accept that we would either have to pay high tartan taxes or allow our services to be decimated. In fact, we would have to do both.

Sir Hector Monro

In a year involving an exceptionally difficult financial settlement, my right hon. Friend did a magnificent job in maintaining a high level of block grant from the Treasury. What does he think would happen if there were no Secretary of State to fight for Scotland, which is what Labour proposes?

Mr. Forsyth

I can hardly disagree with my right hon. Friend's flattering comments, but in any event he has made an important point which transcends party interests and is important to Scotland. The office of Secretary of State for Scotland is powerful in relation to Scotland and its interests. [Interruption.] I am sorry that the hon. Member for Fife, Central (Mr. McLeish) does not think that that is the case. He should cast his mind back to Willie Ross and other Secretaries of State for Scotland who have done a tremendous job in fighting for Scotland's interests. The hon. Gentleman would toss that aside for a pigmy parliament in Edinburgh.

Mr. Chisholm

Can the Secretary of State confirm that the principle of the Barnett formula, which determined the level of public expenditure in Scotland in relation Ito expenditure in the rest of the United Kingdom, has never been called into question in any of the last 17 years by Lady Thatcher, the right hon. Member for Enfield, Southgate (Mr. Portillo) or any other Conservative politician hellbent on slashing public expenditure? Is the Conservative party now saying that Scotland gets more than its fair share, or is it simply punishing Scotland because it wants a greater say in its own affairs?

Mr. Forsyth

I welcome the hon. Gentleman to his Front-Bench responsibilities. I understand that he has been put in charge of the referendum campaign in the unfortunate event of a Labour Government; I hope that he will show the same enthusiasm for a "no" vote as he did on the last occasion.

I do not wish to embarrass the hon. Gentleman further on his first day out, but when he has an opportunity to examine his brief he will discover that the Barnett formula—which gives us our share, relative to population, of any increase in English expenditure—brings Scottish and English expenditure into line. He is advocating bringing Scottish expenditure into line with English expenditure, which must mean a tartan tax.

The point is that the existing level of expenditure has been agreed, and is historically there. If we had a parliament whose funding was determined down here, there would have to be some kind of assessment of need. I can tell the hon. Gentleman that many people in the Treasury will be delighted to hear his words, but they are not words that will ever come from the Conservative party, because we stand for Scotland's interests.

Mr. Dunn

Given that there is a link between Government income and public expenditure, will the Secretary of State confirm that we have no plans to tax 16 to 18-year-old students, to impose an employment tax or a tartan tax and, more significant for rural dwellers in Scotland, to tax the motorist?

Mr. Forsyth

I agree entirely with my hon. Friend. I am proud of our record in Scotland in sending youngsters from school to higher and further education. Far more youngsters are doing that. That is one of the reasons why we commit far more resources in the settlement that we were able to achieve last year and in previous years. I can think of nothing more disastrous than a tartan tax and a teenage tax, which would remove child benefit from children over the age of 16 still in higher education, as Labour Members wish to do. That would hit Scotland harder than any other part of the United Kingdom because more of our youngsters seek the opportunity of higher and further education.