Holyrood 'Must Raise Spending Cash'

8 June 2015, 19:24 | Updated: 8 June 2015, 19:26

For Holyrood to become the "powerhouse parliament'' it aspires to be, it must be accountable for raising more of the money it spends, according to Scottish Secretary David Mundell.

Scotland's only Tory MP said the "missing link'' between spending powers and accountability that had been a "flaw'' within the devolution settlement from the outset had to be fixed.

But he insisted there was no case for full fiscal autonomy in light of the Institute of Fiscal Studies (IFS) projection it would leave the country with a £7-10 billion gap in its finances.

Introducing the Scotland Bill in the House of Commons, Mr Mundell confirmed the Government's view that it does deliver in full the Smith Commission agreement, signed by all parties represented in the Scottish Parliament following last years's independence referendum.

He added: "I anticipate this Bill will be a very stable settlement for Scotland since it was signed up to by all five of the political parties represented within the Scottish Parliament, including the SNP.

"Of course it doesn't mean the devolution settlement is or ever was perfect. From the start the settlement contained an imbalance, with the Scottish Parliament responsible for spending money which another parliament was chiefly accountable for raising.

"It is one of the most important features of this Bill, that it seeks to redress that balance.

"The central aim of the Smith Commission was to address the flaw which had existed within the devolution settlement right from the outset and make the Scottish Parliament more accountable for raising the taxpayer's money which it spends.

"The significance of this point should not be overlooked ... Prior to fully implementing the Scotland Act 2012, the Scottish Parliament controlled almost 60% of public expenditure in Scotland yet it was only responsible for raising around 10% of the funding.

"I didn't believe that was sustainable and nor did the people of Scotland.

"For Holyrood to be a powerhouse parliament that it rightly aspires to be - and that this Government wants it to be - it must be accountable to the people of Scotland for raising more of the money it spends.

"The Bill before us today is about ensuring that that missing link is fixed.''

Veteran Conservative Sir Edward Leigh (Gainsborough) said he was concerned the Bill did not get to the "kernel of the problem'', meaning it would not be the "end of the story''.

He added: "The Scottish Parliament will only raise about 50% of what it spends so therefore they are fundamentally a spending parliament not a tax raising parliament and therefore actually there is a good Conservative case to be made for full fiscal autonomy.''

Mr Mundell replied: "I don't believe there is a Conservative case, or any case, to be made for an outcome that would leave Scotland with a £7-10 billion gap in its finances, which would affect every school, every hospital, every person in Scotland.''

The minister also denied the Bill contained a veto in any areas, referring instead to a "mechanism'' to allow two governments to work together on matters of "shared interest''.