12:03 Tuesday 01 March 2016
A FORMER Scottish secretary has torn into the funding deal between the Scottish and UK governments, branding it “unfair” for other parts of the UK.
Tory Lord Forsyth of Drumlean said the fiscal framework should be debated and approved by the Lords and the Commons before extra powers were devolved to Holyrood.
In report stage debate on the Scotland Bill, he said it was extraordinary that something as important as the future financial arrangements for the whole of the UK should be decided in this way and only disclosed to peers at the 11th hour of consideration of the legislation.
“The agreement which has been struck is so unfair to other parts of the UK,” Lord Forsyth told peers.
The Government had agreed to give the Scottish Government £200 million as a one-off payment to meet the administrative costs of additional powers in the Bill – equivalent, he said, to the entire forecast costs of setting up an independent government north of the border.
Lord Forsyth said there was a further £65 million a year to administer the change and asked why this was necessary and how the figure had been reached.
Likening the SNP to a “parcel of rogues”, he said they had been “passing the begging bowl” to UK ministers “in secret” and requiring “huge sums of extra money”.
The agreement between the Scottish and UK governments on the new fiscal framework was agreed last week after months of talks.
The details confirm the “no detriment” principle and that an independent review of the block grant adjustment will be held by the end of 2021.
The Scottish Government said there will be £200 million to support the implementation of new social security powers, and Scotland’s capital borrowing limit will be increased to £3 billion, with an annual borrowing limit of £450 million.
Lord Forsyth said, if the deal was brought in, there would be no ability to get rid of the controversial Barnett funding formula and get a fairer formula for all parts of the UK because Scotland would have a veto.
He said fairness was compromised because the agreement compensated Scotland for having a lower tax capacity than the rest of the UK.
“Basically what has happened here is that a deal has been struck which is not fair to the whole of the UK. It has been done in secret and there has been no opportunity for both Houses to discuss it.”
Another Tory former Scottish secretary Lord Lang of Monkton was also highly critical of the deal, warning there was no case for a subsidy for “demographic risks,” which could only be justified as a “political bung”.
He said “kicking the can down the road,” as the deal did, was not a solution to the problem of “weaning the Scottish Government off separation”.
The Bill was “intended to introduce accountability over spending and this measure undermines it. It was intended to remove the grievance culture, this measure will revive it when the Scottish Government will try to enshrine it permanently five years hence.
It perpetuates the dependency culture – the constant protection from the consequences of their own actions as enshrined over the years in the devolved Parliament.
“It may secure the implementation of this Bill and that is desirable but it does not secure very much else,” Lord Lang warned.
Former Liberal Democrat leader Lord Campbell of Pittenweem warned that a judicial review might be triggered if either government made a decision which did not pass the test of “reasonableness” and this could bring the validity of the agreement under “considerable scrutiny”.
Independent crossbencher Lord Kerr of Kinlochard said the review of the block grant adjustment was “kicking the can down the road not just to 2021” but beyond, which was a “serious mistake”.
Tory the Earl of Caithness said Scotland had a good deal before the agreement and now had a better one.
“It won’t end the blame game. The blame game will continue,” he said.
Former cabinet secretary and independent crossbencher Lord Turnbull said: “We have been blackmailed by threats of a second referendum if the Smith Commission wasn’t implemented in full.”
He said it was time for UK ministers to lose their fear of a second independence referendum, insisting: “A lot of this is bluff and in future negotiations we shouldn’t be intimidated by it.”
Labour’s Lord Hollick warned the situation was a “mess” and insisted SNP tactics had left “us in a very unsatisfactory position”.
For the Opposition, Lord McFall of Alcluith said the Bill amounted to the biggest ever transfer of powers to Scotland and it had demanded goodwill and compromise to get to it.
He commended the Government for its work, saying there was a political momentum in Scotland which the Government had responded to.
Scottish Office minister Lord Dunlop said it wouldn’t be appropriate to subject the framework to the approval of both Houses because many aspects of it were administrative rather than legislative.
He said that for a transitional period the UK government was bearing “population risk” under the deal but even in this period the Scottish Government “bears economic risks”.
Lord Dunlop said: “How much the Scottish Government has to pay going forward with this substantial act of fiscal devolution will depend ultimately on the decisions that are taken by the Scottish Government and how well the powers they will get are used.”
He warned that if a deal had not been reached “we would have lost something quite significant – the transfer of these powers and the greater fiscal responsibility sent to the Scottish Parliament”.
The minister promised peers an annual report on the operation of the fiscal framework, which could be debated in both Houses.
Lord Forsyth’s bid to block the Scottish Parliament’s tax setting powers until both the Commons and Lords had approved the fiscal deal was rejected by 145 votes to 29, Government majority 116.