Scottish Home Rule 'would save the union'
Scotland must be handed "home rule" to stop a "toxic mixture" of circumstances exploding the union, a senior Conservative MP has warned.
Sir Edward Leigh moved an amendment to the Scotland Bill which would hand full fiscal autonomy to the Scottish Parliament, ending the Barnett Formula and creating a form of effective federalism in the United Kingdom.
The Gainsborough MP said the recommendations of the Smith Commission, formed in the wake of last year's independence referendum and the basis for the Bill, had been roundly rejected by the Scottish people when they returned 56 SNP MPs from 59 Scottish seats.
As drafted, the Bill hands a series of new powers to Holyrood but it has been criticised by the Scottish National Party for not going far enough.
Under the Bill, half of the Scottish Government's budget would still come from a grant by the UK Treasury calculated on the basis of the Barnett formula, which links public spending in England and Scotland.
Sir Edward challenged the SNP to endorse his amendment, which is not supported by the Government, in the Commons division lobbies to make clear the extent of their demands.
Sir Edward said: "My amendment delivers, now, full fiscal autonomy. Real home rule and a Scottish Parliament in control of everything save defence and foreign affairs.
"If it were voted for tonight it would establish a clear principle and a way forward. The contention is clear: the new clause delivers full fiscal autonomy.
"The Scottish Parliament would have full freedom to raise all taxes as it like, not just fiddling around with bands but all thresholds, all VAT dividends, and it would have full freedom to spend this as it likes - that's what real parliaments do, that's why they are are responsible.
"The Scottish Parliament at present and even if the Smith Commission proposals are adopted is constructed in a manner inherently conductive to the culture of grievance. It will raise only 50% of what it spends, worse under the 30-year-old discredited Barnett formula which even its conceiver condemned towards the end of his life. Its block grant would depend not on need but on English levels of spending."
Sir Edward said it meant the "purse strings are still controlled by England" which he said had to change.
And he told the Commons "I genuinely want to give the Scots what they want", which he defined as freedom to run their own affairs and not blame others for problems.
"But all within the buttresses and safety of the United Kingdom," he said.
Sir Edward said a new support system could be negotiated between the UK Government and the newly empowered Scottish Government based solely on need. He said this could reflect diminishing oil revenues.
'Full fiscal autonomy for Northern Ireland, for Wales, and for Scotland - and ultimately for England'
The MP continued: "My personal view for what it's worth is if we are going to create a sustainable union we effectively have to create full fiscal autonomy for Northern Ireland, for Wales, and for Scotland - and ultimately for England - and this almost imperial Parliament would remain, determining the support mechanisms to ensure safety. In that sense I am a federalist.
"I want to create a durable settlement which is what I understand the Scottish people voted for - they want to stay part of the United Kingdom, they want to have that buttress if there is a catastrophic shock and all the rest of it. But they want to run their own affairs.
"But I believe if we maintain the current Smith formula, combined with English votes for English laws, we are creating a toxic mixture propelling the union towards collapse. We making the same mistakes as on the Irish question in the 1970s - we are giving too little, too late.
"I don't believe you can dribble out powers, with the complexity of tax powers etc... and maintain support for the union. The Smith Commission, I believe, is a rapid scissors-and-tape job in response to a vow hastily put together by panicked unionist politicians in the last days of the referendum.
"This is not a credible position. It has been rejected. So I say to the Government, there is such a thing as democracy - the Smith Commission has been rejected, we cannot just plough on regardless."
Sir Edward added: "This new clause is there. They (the SNP) can have it. Parliament can have it.
"I suspect the whips might ensure my new clause is defeated but this is an historic opportunity to give full home rule, establish the principle for Scotland which is what the Scottish people want."
Sir Edward's amendment was moved during the first day of committee stage debate on the Scotland Bill. It is not expected to carry but is one of several on the idea of full fiscal autonomy.
Tax competition would be 'good for Britain'
Sir Edward dismissed some of the arguments against full fiscal autonomy, insisting tax competition would be good for Britain and has worked in the US where it has fostered innovation.
He said: "We're told that full fiscal autonomy will result in tax competition within the union. What's wrong with that?
"That's what keeps the American states vibrant and competitive with one another, continually innovating.
"Don't we insist that our taxes here in Britain are competing with those of Europe?"
Sir Edward also denounced the "doomsayers" who warn that full fiscal autonomy would lead to a £7 billion black hole in Scotland public finances, arguing it would create a "union based on solidarity".
He said: "I believe this is an historic opportunity to cut through the negativity of the doomsayers, of the £7 billion black holers.
"Give Scotland control of its oil revenues and taxes and decide its own priorities - tax oil and encourage exploration and determine how you should tax it as the oil runs out.
"Then we are one union based on solidarity and need - the UK subsidises Northern Ireland to preserve peace, why shouldn't we on the basis of need subsidise Scotland?
"I am very happy with that - are we not brothers and sisters in this union? Should we not help each other if needed?
"Our principles should not be the politics of fear, but I believe a statesmanship of hope."
The SNP has tabled its own amendment with the aim of giving Scotland full fiscal autonomy, but it differs from Sir Edward's in that it gives power to the Scottish Parliament to move towards that position, rather than imposing it immediately.
The party's Westminster leader Angus Robertson has also tabled amendments which would implement the Smith recommendations "in full" and devolve powers over job creation and welfare.
SNP has 'clear mandate'
Mr Robertson said the SNP has a "clear mandate" for its approach after taking 56 of Scotland's 59 seats at the general election but was not drawn on Sir Edward's amendment.
He said: "The Scottish National Party has submitted a series of amendments to the Scotland Bill... based upon a three pronged commitment outlined in our manifesto for the UK general election.
"Firstly, delivering on the Smith agreement in full, secondly devolving additional powers in priority areas such as job creation and welfare protection, and thirdly enabling the Scottish Parliament to move to a position of full fiscal autonomy.
"This approach was backed in record numbers by voters in Scotland in May, giving the SNP a clear mandate for change which the UK Government must recognise and must act upon."
New financial settlement also crucial to England
Conservative former minister John Redwood said the thinking behind work to draw up a new financial settlement should be shared with MPs.
He said: "The new financial settlement is crucial not just to the SNP and their representation to the Scottish people, but it is also crucial to the people of England.
"And I find that the more home rule that is on offer and the more we hear the Scottish voice, the more I have to be not an advocate of the union but an advocate of England because someone needs to speak for England.
"Someone needs to say that the consequences of much enhanced Scottish devolution - and some fiscal devolution as well - are quite serious for England, and England needs to be in the debate and discussion, just as Scotland does, because this is our joint country, and a very major change in its arrangements will have a very fundamental impact on England."
The Wokingham MP said he was attracted to Sir Edward's idea to "get ahead of the Scottish appetite for home rule" and grant full fiscal devolution, but added: "I think we do need to ask how feasible that is and what are the consequences for Scotland and for England.
"If, for example, Scotland wants to be part of common welfare and pension guarantees then there is some limitation already imposed on the spending side of full fiscal devolution, and we have to think about the position of England if there are cross-guarantees been offered to some part of that welfare package."
Senior Labour MP Graham Allen (Nottingham North) said no devolution measures had been perfect but offered progress.
The former chairman of the political and constitutional reform committee said: "One of the key things is to say, from the benches which represent England, in my own case the city of Nottingham, that nothing in this Bill should be something which cannot apply the liberation of the progress to a city like the one I represent.
"Nothing in my city should be anything that restrains or inhibits the progress I would love to see my friends in Scotland achieve too.
"This is all about devolving power, and I don't wish to the sour the atmosphere at all, but sometimes separatism and devolution are sworn enemies and I hope this isn't one of those occasions.
"I hope we can all see devolution as a part of a process and I imagine if we continue this process then we may end up in a place which is better for everybody, and we may end up with the sort of liberation of our localities and our communities which all of us want, whichever nation we represent in the union."
SNP Treasury spokesman Stewart Hosie confirmed his party would vote for Sir Edward's amendment - if it was pushed to a vote.
The Gainsborough MP spent time talking to Commons clerks shortly after the revelation. Backbench MPs often withdraw amendments tabled for debate at committee stage on the basis they are brought forward primarily for discussion and are unlikely to pass without government support.
Mr Hosie made the SNP announcement after confirming he would like to see the Scottish Government "draw down" powers for full fiscal autonomy as soon as possible.
The SNP version of the plan would create enabling legislation to put the power in Holyrood's hands to take tax and spend powers when ready, while Sir Edward's would likely expedite the process. Neither amendment is likely to pass a Commons vote.
Mr Hosie said: "Obviously in order to draw them all down and use them requires transitional arrangements to be in place.
"If we can agree this tonight, if we can agree full fiscal autonomy and the Scottish Government's ability to draw down the powers at the right time, then we can get the agreement, the fiscal agreement, on the overarching framework and we can all get to work."
Shadow Scottish secretary Ian Murray challenged Mr Hosie to spell out the SNP position on Sir Edward's amendment.
Challenge to Labour
Mr Hosie said: "I want maximum power for Scotland. I want it as quickly as possible. I'm not like the British Labour Party who keep saying no and in the absence of no say 'delay with yet another commission'.
"If (Sir Edward) presses his amendment to a vote we will support it."
Mr Hosie issued a challenge to Labour: "I hope (Mr Murray) who is grinning like a Cheshire cat will now get to his feet and tell us if he intends to back the Government tonight in opposing powers for Scotland."
Mr Murray kept his seat, prompting Mr Hosie to add: "I think the silence is deafening."
Scotland Secretary David Mundell questioned why the SNP had left it to a Tory backbencher to set out its position in an amendment.
The cabinet minister said: "Why didn't the SNP bring forward the amendment (Mr Leigh) has if you wanted that full blooded proposal? Why did you have to leave it to the Tory benches to put forward what you claim is your policy?"
Mr Hosie pointed to his own party's amendment, adding: "It will deliver full fiscal autonomy in a way that makes sense."
Earlier in his remarks, Mr Hosie defined full fiscal autonomy as Scotland being able to collect all of its taxes and fund all of its spending.
He added: "It's not simply about responsibility for taxation, it's about responsibility for all spending outwith limited and agreed areas.
"We need and we deserve the bulk of decisions to be taken as close to the people as possible and more importantly we need these decisions to be taken in line with the aspirations and democratic choices of the Scottish people.
"We believe in the transfer of more power to Scotland not as an end in itself, but because the Scottish Government can exercise those powers to the benefit of Scotland's economy and society.
"It's not all about tax. It's about other decision-making, for example, the minimum wage. We support a rise in the minimum wage ... we currently don't have the power in Scotland to do that."
Mr Hosie refused to say whether the Scottish Government would increase corporation tax when asked, adding: "We have just come out of the 2015 election, I'm not going to write the 2016 manifesto."
Asked how many times the Scottish Government had exercised its powers to increase or decrease income tax in the past eight years, he pointed to the small business bonus and abolition of prescription charges.
Tory Christopher Chope (Christchurch) said he would also back Sir Edward's amendment, saying it would be a "big way" for the UK Parliament to respect the Scottish people's decision to overwhelmingly vote in favour of the SNP at the general election.
He said: "So Sir Edward's amendment has great clarity and it takes the debate leapfrogs.
"Obviously it can't be done instantly but it means instead of, as (SNP) amendment 89 does, which says this issue should be left to the discretion of the Scottish Parliament as to when they want to take on full fiscal autonomy, this would say that this Parliament now is saying we agree that there should be full fiscal autonomy for the Scottish Parliament.
"That would be a big way of this Parliament saying to the Scottish people that we respect the decision of the Scottish people in the recent general election and we respect the decision of their elected representatives as enunciated by Mr Hosie that they are going to support this new clause."
The SNP's Pete Wishart (Perth and North Perthshire) said his party ultimately favours its own amendment on full fiscal autonomy, but it is still expected to vote for Sir Edward's if it is pushed to a vote.
Mr Wishart said: "I thought Sir Edward made quite a good case for his amendment this evening but I think what we favour is our amendment.
"I think that's the way that we should be doing this, it's to give that time for the Scottish Parliament in order that we progress towards full fiscal autonomy."
Tommy Sheppard, the SNP MP for Edinburgh East, said last week he was "misquoted" on his position on full fiscal autonomy by the Prime Minister, Scottish Secretary, Labour's frontbench and Scottish Liberal Democrats leader Willie Rennie.
He said: "I didn't know whether to feel victimised or to feel honoured to be honest, but I'm delighted in recent press articles I've written and here today to put the record straight.
"I absolutely am committed to the idea that the Scottish government should be responsible for raising the revenues which it spends.
"It seems to me that ought to be a non-contentious point to be honest."
Mr Sheppard said he agreed with Sir Edward's position, adding he hoped the Tory MP would vote for the SNP's amendment.
He told Sir Edward: "You say vote for yours but why don't we do a deal then? I'll try and make sure all my colleagues vote for your amendment if you make sure all of your party votes for it as well and then maybe we can have it by 10 o'clock this evening. Maybe that would be possible."
Mr Sheppard if Sir Edward put his amendment then he would vote for it, adding: "I'm hoping I shall see you in the lobby when it comes to voting on our amendment as well."
'Bit of a fudge'
Sir Edward later described the SNP's amendment on full fiscal autonomy as a "bit of a fudge", adding it "slightly kicks it into the long grass".
He said: "It's a bit like St Augustine saying 'let me stop sinning, but not quite yet'."
Shadow Scottish secretary Ian Murray added: "It reminds me of 'what do we want, full fiscal autonomy, when do we want it, we're not quite sure' I think is the summing up of their position."
For Labour, Mr Murray reiterated there is a need to go beyond the Smith agreement.
He said: "Scotland has had an in-depth and passionate debate about its future and concluded that a fairer, more prosperous Scotland is best delivered by shared tax and spending across the UK, but with Scotland taking more control over the levels of tax and spending alongside greater accountability.
"If anyone was under any illusions that the centre of political gravity was not at Holyrood ... then they're not grasping the modern political landscape in Scotland."
The SNP's Patricia Gibson (North Ayrshire and Arran) said the powers in the Bill and Smith Commission are "utterly inadequate", noting the Scottish parliament did not have the power to ban parking on pavements.
Mr Murray said Labour planned to bring forward amendments on parking, adding: "Let me give this commitment - if you bring an amendment forward on parking on pavements, we will sign it. There's a commitment if you want to do that."