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28 September 2011

Progress made on Scotland Bill, but “still a long way to go”

Exchequer Secretary to the Treasury, David Gauke yesterday gave evidence on behalf of the UK Government to the Scotland Bill Committee.  The Committee asked the Minister about a range of issues relating to the implementation of the Scotland Bill.

During the committee session, the Minister was clear that the UK Government believes that the Scotland Bill package as it currently stands is the right one for Scotland, saying:

“This is a big increase in responsibility for the Scottish Government, and therefore increases the accountability of the Scottish Government to the Scottish people”

He welcomed the progress made in this morning’s meeting of the Joint Exchequer Committee, saying:

“I’m pleased we have made progress on the high level principles of the block grant.  It was a useful forum where we could discuss the key issues... [But] there is more work to be done on the details and I hope that we can continue to work constructively with the Scottish Government on this.”

However, the Minister expressed concern that the Scottish Government has to date focused too much on requesting additional powers, rather than on implementing its existing powers, saying:

 “It’s a great pity that the focus of the Scottish Government is on Corporation Tax rather than the bread and butter issues of full control of Stamp Duty Land Tax and Landfill Tax...There is a lot of work on implementation that needs to be done.

The focus of the UK Government is on implementation, the focus of HMRC is on implementation.  We hope the focus of the Scottish Government is on implementation of the things they are responsible for.”

He also pointed to the Scottish Variable Rate where the Scottish Government had had powers, but had never used them.

The Minister argued that the Scottish Government has not yet provided sufficient analysis behind its argument for additional powers, such as the devolution of excise duties.  On Corporation Tax, he said:

 “There have been a couple of papers, but frankly they are inadequate...they don’t address some of the fundamental questions... There is no recognition that if Scotland were to have powers over corporation tax and corporation tax were to be cut, that would involve a reduction in the Block Grant.”

He went on to express disappointment that these papers are not “an open, straight-forward assessment” of the implications of devolving corporation tax powers. 

He also questioned whether the Scottish Government has done much work with tax professionals to understand the implications of the devolution of corporation tax.

Summing up, the Minister was clear that the UK Government wants to work as constructively as possible with the Scottish Government and the Scottish Parliament.  Concluding his evidence, he said:

“This is a big step forward for Scotland.  It is an opportunity for the Scottish Government to take much greater responsibility, an opportunity for the Scottish people to hold the Scottish Government to account in a much clearer and more straightforward way...

But there is still a long way to go on implementation, and I have highlighted some of my concerns about the Scottish Government’s progress on some areas of implementation.”

Notes for Editors

1. The Scotland Bill takes forward the recommendations of the Calman Commission and sets out the single largest transfer of fiscal powers from Westminster in the history of the UK.

2. The proposals set out in the Scotland Bill were the result of a long period of consideration and have been subject to intense scrutiny on both sides of the border.

3. The Scottish Government has requested a number of additional powers from the UK Government outside those granted by the Scotland Bill.  The UK Government has stated that it will consider the Scottish Government’s proposals concerning these.  

4. On 5 September 2011, David Gauke wrote to Scottish Ministers setting out some of the risks and costs associated with devolving corporation tax and asking the Scottish Government to make clear its view on a number of key points.

5. The first meeting of the Joint Exchequer Committee took place today.  This represented the first stage in implementing the powers in the Scotland Bill and its associated package of measures.

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