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21st July 2010 - Evidence Session with the Secretary of State for Scotland - The Rt Hon Michael Moore MP

Please note that the following transcripts are taken from the uncorrected evidence published by the House of Commons Scottish Affairs Select Committee

Calman Commission (watch)

Q52

David Mowat: I too welcome the three of you and congratulate you on your roles. At the start of your remarks, you mentioned that one of the things you were working on was the implementation of the Calman Report. One part of the report – and I quote from it – is that the present system for calculating the block grant by the Barnett formula is not well related to need but could continue as a proxy to need until such time as a thorough assessment is done across the UK around need. I would be interested in your views as to what the timing of such a thorough assessment might be.

Michael Moore: We have set out in the coalition agreement that our priority is to tackle the deficit. As you and everybody else on the Committee will be aware, that is a very big challenge. We have set out the first part of that in terms of the budget measures that were introduced a few weeks ago, which we completed in our votes last night. The spending review will be the next stage of that and, frankly, until we have the public finances back on a more secure footing, it is not our intention to explore the Barnett formula further, but in time we do want to see it reviewed. The needs based approach is the one that I think most parties agree with.

Q53 David Mowat: Would you imagine that the thorough assessment that Calman referred to might take place during the course of this Parliament?

Michael Moore: I would be reluctant to speculate. It will be done as soon as is appropriate in the context of tackling the problems with the public finances.

Q54 David Mowat: Just as a sort of corollary to your answer there, why would our determination to get the deficit under control, which I completely agree is the principal issue that the coalition has as an incoming government, be dependent? That would seem to me to be mutually exclusive to a thorough assessment of need in relation to the block grant.

Michael Moore: I think it is simply a question of resources, time allocation and actually just the energies of the ministers involved and perhaps of Parliament too in considering the issues that flow from that major challenge, an unprecedented size of deficit in peace time history and that is the judgment we have taken. That is the order of priority. We tackle the deficit first and then, when we are in calmer waters, we can make what I would hope would be a good, rational assessment of the Barnett formula and whether it is still appropriate.

Q55 David Mowat: Thank you. One of the questions that we touched on earlier was the Scottish economy and possibly the need to rebalance it towards more activity in the private sector, inward investment and all the rest of it. Do you think that the level of the block grant could be an impediment to that rebalancing?

Michael Moore : Not per se, no.

Q56 David Mowat: The reason I ask the question is that there is an element of displacement of resources.

Michael Moore : I appreciate we can get into some fairly serious economic territory which I am not sure how well equipped I will be to cope with on this particular occasion. Yes, I appreciate there is an argument about displacement, about the public sector and so on. Let me be clear, as I hope was obvious from my answers in Scottish questions earlier today, that I certainly believe that the private sector has a very important role to play for Scotland and the UK as a whole in terms of generating the growth which will fund future public services. If we do not create the wealth, none of us round this table can possibly tax it and spend it. We have to get that order of priorities right. The degree to which there is displacement going on, I would humbly suggest, is a debate for another day.

Tax Powers of the Scottish Parliament (watch)

Q100

David Mowat: Just as a thought on the last discussion on the balance between fairness and efficiency, I suppose as an observation that does apply everywhere in the UK. It is not a Scotland issue specifically. That obviously matters everywhere. I wanted also to ask about Calman though which again you said that you were implementing. When do you expect the point on income tax to come in, in terms of actually being implemented?

Michael Moore : This is obviously work that is ongoing at present in terms of developing the mechanisms. The Calman Report itself said that there would need to be a phased implementation. Our plan is to have this implemented by 2015 to allow sufficient time for all those affected to adapt to it. I think that is about the right scale of time to do this properly.

Q101 David Mowat: Is there likely to be the ability of the Scottish Government to borrow on the capital markets at the same time as that, or is that separate?

Michael Moore : Borrowing powers again are a fundamental part of Calman. They are particularly being worked on at the moment. We are looking at all these different issues. On Monday I will, with David Gault, the Exchequer Secretary, be meeting with the high level implementation group focused on finance in Edinburgh, looking at a lot of these particular issues and making sure that we understand what the financial stakeholders think about the plans as we develop the plans through to the autumn, when we will publish the Bill.

Q102 David Mowat: It is possible at that time there would be those increased borrowing powers?

Michael Moore : We will set out the plans.

Q103 David Mowat: That is under review, as it were?

Michael Moore : Yes.


West Lothian Question

Q104 David Mowat: As a supplementary to that then, obviously that is quite a wide extension in terms of devolution. Does the Scotland Office or the coalition think there is an implication for the West Lothian question in terms of that implementation that you are now moving ahead with?

Michael Moore : A question raised on the floor this afternoon, of course. There is a lively and perfectly reasonable debate about the West Lothian question that has existed ever since devolution began. I do not know that this particular set of proposals is necessarily going to change it particularly. We have said there will be permission to look into the issues arising from the West Lothian question in all its complexities. We will certainly take account in that of the further devolution that we propose.

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