Taxation (Hansard, 27 March 1996)

§ 1. Mrs. Gorman
To ask the Secretary of State for Scotland what representations he has received about taxes paid per head by people living in Scotland and the public expenditure per head spent there. [21319]

§ The Secretary of State for Scotland (Mr. Michael Forsyth)
I have received lots of representations on the subject.

§ Mrs. Gorman
I thank my right hon. Friend. Is he aware of the report published by the Institute of Fiscal Studies about taxation as it will affect the regions should we have devolution in Scotland? It predicts that the basic rate of tax in Scotland would rise from 25p to 36p in the pound and that the top rate of tax in Scotland would rise from 40p to 58p in the pound. Does my right hon. Friend agree that the people of Scotland know very well that it would be madness to opt for devolution?

§ Mr. Forsyth
The Institute of Fiscal Studies issued a report today which examines the effects on income tax on the basis of its assumptions about the implications of devolution and regional assemblies. The figures that my hon. Friend has cited seem to correspond with the predictions of the Institute of Fiscal Studies. I do not have responsibility for the institute and its conclusions—which are not always helpful to the Government. However, on this occasion they reflect the dangers of devolution that we have drawn to the attention of the wider public and the taxation consequences for the Scottish people.

§ Mr. Connarty
Is the Secretary of State aware that the tax that everyone in Scotland is talking about—the 23rd Tory tax and the second Forsyth tax—is called the council tax? It will go massively through the roof in most local authorities in Scotland, not because of overspending but because of massive underfunding by the Government on reorganisation which the Secretary of State's party forced upon the unwilling people of Scotland.

§ Mr. Forsyth
The hon. Gentleman is a former leader of Stirling district council and a former parliamentary candidate in Stirling, where he was unsuccessful—twice. I am sure that he will be interested to know that when I visited the Central region and the new unitary authority to receive a briefing as to why council tax in Stirling is projected to increase by 18 per cent. I was told that, if the previous council had not spent the balances, the increase would be 4 per cent. The profligacy of councils in the current year has led to big increases in council tax. They are not Conservative councils, but Labour councils, and the hon. Gentleman should take responsibility for them.

§ Mr. Devlin
Will my right hon. Friend confirm to the House what he told me in the Scottish Select Committee—that public expenditure in Scotland is 35 per cent. higher per head of population than in England? Does he seriously expect my electors in the north of England 1012 to cough up for that level of transfer if the Scottish people are given their own Parliament and their own tax-raising powers?

§ Mr. Forsyth
My hon. Friend is right: the expenditure on those elements of the Scottish block is about one third per head higher in Scotland than it is in England. My hon. Friend is also right to draw attention to the dangers—should a Scottish Parliament, with tax-raising powers, be established—of assuming that English Members of Parliament would continue to vote more for a Scottish Parliament than for their own constituencies. There is also the possibility of conflict which would lead to the break-up of the United Kingdom; that is no doubt why the hon. Member for Banff and Buchan (Mr. Salmond) is so enthusiastic about the proposals.

§ Mr. Wallace
What assessment has the Secretary of State made of public expenditure per head in Scotland if the Government were to introduce an immediate intervention buying scheme for beef? I am sure that he recognises the importance of the industry to Scotland, not only in terms of farming but in terms of meat processing and slaughterhouses. Does he accept that the urgent introduction of an intervention system is the minimum action necessary to get the Scottish meat trade moving again?

§ Mr. Forsyth
I agree with the hon. Gentleman that the crisis facing Scotland's farmers is very serious. I had an opportunity to discuss the position with the Scottish National Farmers Union this morning. It put a number of proposals to me, which I said that I would discuss with my right hon. Friend the Prime Minister and my colleagues later today. I was also able to give the union an assurance that we would underwrite and take part in an initiative to help restore confidence in Scottish prime beef and that we would ensure that there is a co-ordinating committee within the Scottish Office drawing all interests together.
I am extremely grateful to the hon. Gentleman for the responsible view that he and his party have taken on a matter of great concern to people not only in farming but in all the downstream industries that are affected in Scotland.