Murdo Fraser MSP is Deputy Leader of the Conservatives in the Scottish Parliament and responds here to yesterday's article by Lord Forsyth of Drumlean.
The Scotland Bill, currently being steered through the House of Commons by Michael Moore MP and David Mundell MP, implements the proposals of the Calman Commission. The tax changes in the Scotland Bill will devolve part of the basic rate of Income Tax, together with Stamp Duty, Land Tax and Landfill Taxes. Taken together with the existing taxes which are devolved, namely non-domestic rates and Council Tax, the Scottish Parliament will in future control roughly 30% of the Scottish Government’s total Budget of around £30 billion.
The Bill provisions represent a major extension of the Scottish Parliament’s tax powers. What the Scotland Bill will do is create, for the first time, a Scottish Parliament in which politicians can be held to account for how a sizeable proportion of the money that they spend is raised. For the first time, politicians in Scotland will require to set an Income Tax rate to fund their spending plans, a rate which may or may not be in line with that which is payable south of the border.
In future, all Scottish political parties will have to set a real Budget, naming a total figure which will balance spending decisions against decisions on how much tax should be raised, and from whom. And no longer will Holyrood politicians of any persuasion be able to indulge in the lazy London blame game. There will be new opportunities for those of us who believe in lower taxes to present our case.
It is worth putting that 30% figure in some international context. In the provinces in Canada, the cantons in Switzerland or states in the USA, the lower level of Government raises between 60-70% of its total spending. In Australia, the provinces raise around 55%.
Lord Forsyth has articulated several concerns about the Scotland Bill. He believes we are sleepwalking towards independence, that there will be a black hole to fill in Scotland’s finances when these changes are implemented and that these changes should be debated in a Scotland-wide referendum. Let me address these points in turn.
Firstly, it is worth reflecting that the Conservative Party in Scotland – led by Lord Forsyth – argued that the formation of a Scottish Parliament would lead to independence. Far from there being evidence that the creation of the Scottish Parliament has increased support for independence, the evidence suggests that public opinion has gone the other way. On many counts, support for independence today is the lowest it has been in the last 20 years.
And nobody seriously argues that Ontario is about to secede from Canada because it has a high degree of local tax autonomy, nor do we argue that Delaware is about to leave the United States, or that Queensland will declare independence from Australia.
Secondly, the UK Government – in the form of Lib Dem Chief Secretary to the Treasury Danny Alexander – has guaranteed that Scotland will not lose out when the changes come into force. There will be no black hole to contend with as soon as we have more control over our finances. Of course, the total level of money we have to spend thereafter will depend to a greater extent on decisions taken in Scotland.
And finally, there is no need for a referendum on tax-varying powers because Scotland has already voted in favour of the principle – it was the second question on the ballot paper in the 1997 referendum, which was approved by the Scottish people.
We all know that around 55% of the Scottish economy today is in the public sector, much higher than the UK as a whole. That situation has been created, and fed, by a system of funding through a fixed block grant. This provides no incentive for politicians to worry about the underlying strength of the economy or how our public services are funded. That has to change, and the Scotland Bill is a mechanism for change.
As Conservatives we aspire for responsibility and decision-making at the most local level. As Conservatives we want to use these new responsibilities to create a low-tax, dynamic and enterprising Scotland. Look at it this way – if the Scottish Parliament is deciding tax rates in Scotland, and if we want to have more hand outs, then we will have to raise taxes ourselves to pay for them.
These changes will happen and will change the culture of Scottish politics. Rather than sitting on the sidelines and grumping and grumbling about the inevitable, we should see them not as a threat but as an opportunity. I believe that the Scotland Bill proposals are good for Scotland, good for the Union, good for the Scottish Conservatives, and so we should join with David Cameron with embracing them.