Peers threaten to block Scotland bill until details made clear
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Version 0 of 1. Senior peers are threatening to obstruct a key piece of legislation to give Scotland greater tax-raising powers in a row over secret talks over new fiscal arrangements between Holyrood and the Treasury. The influential House of Lords economic affairs committee is to put down a motion calling for the Scotland bill, due to hand Holyrood powers over £11bn worth of income tax, to be suspended until parliament is shown the full details of a deal over how Holyrood is to be funded. The Treasury and Scottish government are in the midst of complex, closed-door talks on the so-called fiscal framework to agree how Holyrood will be funded by the UK government once its sweeping new tax and welfare powers are in place. The framework was due to be published this autumn and is now delayed until after Christmas, with Treasury ministers busy with the comprehensive spending review. The committee claimed that secrecy about the details of the deal made it impossible for the Lords to take an informed view of the Scotland bill’s implications; unless its flaws were dealt with, it risked destabilising the UK, its report said. It said the new tax and welfare measures were botched and being rushed through as a political gesture in the wake of last year’s Scottish independence referendum, which the pro-independence campaign would have won with a five point swing. It is preparing to lodge a motion in the Lords in mid-December at the committee stage of the bill, calling for the bill to be suspended until the framework has been published. With ministers determined to see the bill in law before next May’s Scottish parliamentary elections, UK government officials believe the committee is unnecessarily worried: the framework is due to be agreed in January or early February, before the bill leaves the Lords, they said. Lord Hollick, the committee’s chairman, said the bill “has the potential to fundamentally change the UK and impact on us all both politically and economically. “It is crucial that what is proposed is stable and sustainable. Parliament is being asked to pass the bill before we are told full details about the fiscal arrangements that will underpin this new era of devolution. That cannot be right. “We are calling on the progress of the bill to be halted until the details are agreed and published. That would at least allow peers the opportunity that MPs were denied of scrutinising and amending this important legislation as informed participants.” The framework – which will be essential to ensuring Scotland’s devolved government remains financially viable but also responsible for its own mistakes, is intended to give Holyrood the freedom to set tax rates and change welfare payments, while still being partly-funded by the Treasury under the current Barnett formula. Related: What is the Barnett formula and how does it work? The talks also focus on new borrowing powers for the Scottish government. The Lords are deeply sceptical that financial markets would believe it if the Treasury claimed Scottish ministers were wholly liable for any borrowing. The framework has to ensure that Scottish ministers are responsible for fiscal mistakes they make, while protecting Holyrood from economic forces or Westminster policies it cannot control. There were complex issues such as accounting for different rates of population growth or Scotland’s protection from a UK-level recession, and Scotland’s protection from a collapse in world oil prices. The committee cited witnesses arguing those arrangements were “unworkable”, before again widening the debate over Scotland’s funding by calling for the Barnett formula to be scrapped. It said the current formula was unfair: Scotland received £10,374 per head, while Wales just £9,904 and England £8,638. Scottish and UK ministers disputed the committee’s central findings. A UK government spokesman said the inter-governmental talks on the framework had been constructive, with both sides agreeing not to comment until it was published. He said the bill was a clear manifesto commitment from all major parties – including the Tories and the Scottish National party. John Swinney, the Scottish finance secretary, said removing the Barnett formula was unacceptable but he agreed it was essential the framework did not undermine Scotland’s finances. Swinney said it was not for the Lords to dictate terms but for the Scottish parliament. “Of course, the key vote that matters will not be in the unelected House of Lords – it will be in the Scottish parliament,” Swinney said. “We have made it clear we will only support a legislative consent motion [for Holyrood to approve the bill] if there is a satisfactory and fair fiscal framework agreed between the Scottish and UK governments – we will never sell the people of Scotland short.” |