§ 1. Mr. Graham Brady (Altrincham and Sale, West)If he will make a statement about the technical measures to allow tax-varying powers to be introduced in Scotland. [61263]
§ The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish)The Government are working to ensure that the tax-varying power will be fully in place and available for use by the Scottish Parliament from April 2000. The Inland Revenue has consulted widely and is continuing to work with a group of industry representatives on the measures required for implementation of the Scottish variable rate.
§ Mr. BradyI thank the Minister for that reply. It will obviously be an expensive and inefficient process to administer a Scottish tax. The Government claim to be opposing vigorously proposals in Europe to harmonise taxes with the United Kingdom, on the grounds that such harmonisation would be bad for the United Kingdom. Will the Minister confirm that it would also be bad for Scotland if its tax levels were higher than England's?
§ Mr. McLeishThe Scotland Act 1998 has been premised on the basis that we want to provide a level playing field across the United Kingdom in the regulatory powers affecting industry. Moreover, I remind the hon. Gentleman that, on 11 September 1997, the Scottish people decided that they would like the Scottish Parliament to have power to vary the basic income tax rate. That power was endorsed by the Scottish people, and we are in the process of implementing our commitment 126 on it. We believe that it is right for the Parliament to have such a power, and it will be up to the Parliament and the parties in it to decide whether to use it.
§ Mr. John Home Robertson (East Lothian)I do not think that my hon. Friend needs to take any lectures on expensive and ineffective taxation from those who gave the poll tax to Scotland. May I try asking my hon. Friend a hypothetical question? If he were minded to set up a Scottish army, Scottish navy and Scottish air force, and to establish Scottish embassies around the world, does he think that he would be able to do so from revenue of threepence on income tax?
§ Mr. McLeishI shall resist the temptation to go down that particular road. However, I think that the House might be interested to know that the Labour party has ruled out use of the tax when we are elected to Holyrood, whereas the Scottish National party is still dithering and confused about whether it might use it. Suffice it to say that, in a recent weekly publication, the SNP suggested that if it did not use the Scottish variable rate, it might want to consider
purging quangos and taking a closer look at … Scotland's enterprise network to find extra resources.The real challenge is for the nationalists to come clean on the Scottish variable rate.
§ Mr. James Wallace (Orkney and Shetland)Will the Minister of State confirm that the tax-varying powers, if used in full, amount to £450 million? Will he confirm also that further sums should be within the Scottish Parliament's direction, but that, according to media reports today, United Kingdom Departments are trying to find ways of not informing the Scottish Parliament about those funds? Will he say what action the Scottish Department has taken to ensure that the Scottish Parliament will not be short-changed, and that the concordats will be honoured in both spirit and letter?
§ Mr. McLeishIt has always been the case, and always will be the case, that we will get what we are entitled to. There is no plot to snatch back funds from the Scottish Administration.
§ Mr. John McAllion (Dundee, East)Is not a vote in favour of a tax increase by the Members of the Scottish Parliament currently the most important technical provision allowing a tax increase in Scotland? Does my hon. Friend agree that, although such a vote would grab headlines in Scotland, it might not do the same elsewhere in the United Kingdom? Does not that fact make the case for a separate Scottish "Six O'Clock News" programme broadcast and controlled from Scotland, and underline the boneheadedness of those in the BBC who are trying to prevent such a separate Scottish broadcast?
§ Mr. McLeishI am, yet again, being tempted down another road, which I shall again resist. On the important issue of taxation, suffice it to say that the Scottish people endorsed the measure on 11 September, and that we have been working very hard with the Inland Revenue and the business community to ensure that it is a success. Regulations will in the near future be laid before the House, putting the flesh on the bones of the measure.
§ Dr. Liam Fox (Woodspring)The Minister of State will undoubtedly be aware of Scottish Life's estimates of 127 the compliance costs—£170 million—of the tartan tax, regardless of whether it is used. Will the Minister tell us what discussions he and other Ministers have had with the Inland Revenue on compliance costs, and on who will pay the required sum? Will it be paid out of the Scottish block or by United Kingdom taxpayers as a whole?
§ Mr. McLeishThroughout the process of discussing the Scottish variable rate and other matters in the Scotland Act 1998, we have been in close consultation with the Inland Revenue and with the business community. Of course we have also dealt at length with the assurance industry. We are working with a consultative group of industry representatives on formal compliance cost assessments for future publication, and we are fully aware of the concerns that have been expressed by the life assurance industry. It is one area in which dialogue has met with success.
We are convinced that we shall have the Scottish variable rate power available from April 2000, which is what matters to Scots. I can reassure every hon. Member that it will be done in an efficient way, to ensure a value-for-money approach at all times.
§ Dr. FoxThat was an answer that we can chew over in Hansard to see whether we are any the wiser. Does the Minister agree that the real danger is that of backdoor taxes, with different groups competing to spend Scottish taxpayers' money? Keith Geddes, the president of the Convention of Scottish Local Authorities, suggested a bed tax on tourists, Lord Steel suggested a caravan tax for visitors and Scottish Natural Heritage has suggested a sightseeing tax around Loch Lomond. Will the Minister give a commitment on behalf of the Labour party to rule out not only the use of the tartan tax, but an increase in the overall burden of tax on the Scottish people via the Scottish Parliament?
§ Mr. McLeishThose concerns were brought to the House early in the debate on the Scotland Bill. It is now an Act, published on 19 November, but the Conservatives appear to have learnt little. The power exists to vary the Scottish basic rate of income tax. We think that that coincides with the wishes of the Scottish people and with the wish of the business community not to be inundated with new taxes. That will be the settlement for the Scottish Parliament. We shall have it in place by April 2000.
§ Mr. Dennis Canavan (Falkirk, West)Will my hon. Friend remind the Tory party that the people of Scotland voted in the referendum just last year for a Scottish Parliament with the power to vary tax? Does he agree that there is a strong case for the future development of fiscal autonomy for the Scottish Parliament, to give its Members the responsibility for raising the money that they want to spend on important services such as the national health service and education, instead of being dependent on decisions taken by the United Kingdom Government or votes in this House?
§ Mr. McLeishMy hon. Friend is right to point out that the Scottish people have endorsed the Scottish variable rate—it is important to underline that. It is also important to stress that the use of the variable rate is a power available to the Parliament. Any party can stand on a 128 manifesto to raise that money and spend it. The Labour party has decided not to stand on such a policy. I challenge the nationalists to come clean and say whether they would use the Scottish variable rate. If not, what other sources of funding would they have?