HC Deb 05 June 1996 vol 278 cc601-3
10. Mr. Ian Bruce

To ask the Secretary of State for Scotland what estimate he has made of the effects on public finances of making per capita funding from the Treasury for the health service and local government in Scotland the same as the average for England. [30080]

Mr. Michael Forsyth

Health and personal social services spending would fall by 20 per cent., and local government aggregate external finance grant by some 30 per cent., if funding was on the same per capita basis in Scotland as in England.

Mr. Bruce

Has my right hon. Friend thought that it might well be a winning policy in the rest of the United Kingdom to introduce a tartan tax to allow Scotland to have its independent tax-raising Parliament which would then raise taxes to pay for that extra funding? Has he made any estimate of just how much the tartan tax would have to be to pay for that additional spending in Scotland?

Mr. Forsyth

If I understand my hon. Friend's question correctly, he is asking how much we would have to raise through a tartan tax in order to make up for the additional expenditure that we enjoy in Scotland over and above what would be spent if we had the same level of spending in England. It would be about £3.5 billion. I think that 1p on income tax raises about £130 million, so my hon. Friend can work it out for himself. He began by asking whether I thought that it would be an election-winning strategy. From what I hear, the right hon. Member for Sedgefield (Mr. Blair) considered the notion and decided that it certainly was not.

Mr. Dalyell

The Secretary of State will have no problem whatsoever understanding my question; it is very simple. What is the Scottish Office's notional figure per capita for the cost of local government reform?

Mr. Forsyth

I should be happy to give the hon. Gentleman an estimate, if not a notional figure, of the cost of local government reform, and I should be happy to write to him. There is one question that his colleagues seem to have difficulty understanding-it is the question that he used to ask repeatedly but which I understand he has now been prevented from asking; the famous West Lothian question.

Mr. Bill Walker

Does my right hon. Friend agree that a critical part of the spending differential between the health service and local government in Scotland are the funds that have been spent on care in the community? If the funds are not used properly, we end up with blocked-off beds in the health service and care in the community is starved of money. Does he agree that the inquiry currently being held on Tayside will help to unravel some of the ghastly aspects of this problem?

Mr. Forsyth

I cannot anticipate the results of the inquiry. Suffice it to say that Scotland enjoys considerably higher expenditure per head on health than they do in England. If we had a tax-raising Parliament, or indeed a Parliament without tax-raising powers, there is no doubt that that funding would be called into question. Opposition Members who support that change are putting at risk the funding of vital services.

Rev. Martin Smyth

Will the Secretary of State admit that the comparison between a nation of 48 million people and one of 5 million or 6 million people scattered over a large area is not adequate to address per capita spending? Should not the needs of a scattered community, rather than that false comparison, be borne constantly in mind?

Mr. Forsyth

I certainly agree that it is important to take account of needs and the range of services. My hon. Friend the Minister responsible for local government, the Member for Kincardine and Deeside (Mr. Kynoch), has undertaken a study to find out why local government in Scotland spends about 45 per cent. more per head than local government in England. It will be interesting to see where the resources are going.

At present, our funding is determined by a formula, and not as a result of any needs assessment. The point that I was making to the hon. Member for Hamilton (Mr. Robertson) was that setting up a Scottish Parliament would undoubtedly result in pressure from this House for some proper needs-based assessment of expenditure in Scotland. My advice to the hon. Member for Belfast, South (Rev. Martin Smyth) is that we should leave things as they are and not risk the changes that would result from the setting up of such a wind machine in Edinburgh.