Scottish Affairs Committee - Minutes of EvidenceHC 377

Oral Evidence

Taken before the Scottish Affairs Committee

on Wednesday 21 July 2010

Members present

Mr Ian Davidson, in the Chair

Fiona Bruce

Cathy Jamieson

Jim McGovern

Mark Menzies

David Mowat

Fiona O’Donnell

Mr Alan Reid

Lindsay Roy

Julian Smith

Dr Eilidh Whiteford

________________

Examination of Witness

Witnesses: Rt Hon Michael Moore MP, Secretary of State for Scotland, Rt Hon David Mundell MP, Parliamentary Under-Secretary of State, and Mr Alasdair McIntosh, Director, Scotland Office, gave evidence.

Q1 Chair: If we could formally open the meeting and welcome you all to the meeting here today. Congratulations to both of you on your appointments. Secretary of State, I think you are the longest-serving Coalition Secretary of State there has ever been and David, I think, is the longest-serving Scottish Minister the Coalition has ever had. Maybe I could just say at the beginning we hope that we are going to have an on-going dialogue with yourselves because we are all working in Scotland’s interests. We would hope that we would have a co-operative relationship over a period. As I understand it, you want to make a brief opening statement and then we will move on to questioning. What we have agreed is that I will raise some issues initially and then my colleagues would each have five minutes to raise things with you and then we would have some supplementaries. Because people have only got five minutes I have stressed to them that their questions should not take four minutes and nor should your answers, so if you do not mind we will try and cut things short. Of course, the same would apply to the other two witnesses as well. I have been on the Public Accounts Committee so I have seen how senior officials stall and I do not intend to allow it here, if that is acceptable to you. Michael?

Michael Moore: Thank you very much. I appreciate your welcome and may I reciprocate in saying that we are very pleased to have this early invitation to come before the Committee and we would echo your sentiments that we want to work together, respecting your role as parliamentary scrutineers of the work of the Scotland Office but sharing with you a concern to do what is best for Scotland. If you will generously allow me a few opening remarks I will keep them brief in the spirit of your other rules of engagement. Simply to say that having passed that important milestone and being the longest-serving Liberal Democrat Secretary of State for Scotland for a long time, I am delighted to have the privilege of this role. Working with my colleague David Mundell and the officials in the Department, we are very clearly focused on an agenda which is not just to fulfil our statutory responsibility of maintaining and promoting the devolution settlement but also looking at Scottish interests as they are affected by United Kingdom Government decisions on legislation and, particularly in the current economic context, clearly the performance of the Scottish economy and what we do to support that is very, very important indeed. I am sure the Committee will be looking at different aspects of that in the course of its work. Inevitably, in the course of the next few months our focus will be on preparing the legislation to implement Calman, which is the main piece of legislation which the Scotland Office will bring to Parliament in this session, and, again, I am sure on not just today but on future occasions there will be plenty of opportunity for us to engage with you and many others.

Q2 Chair: David, do you want to say anything?

David Mundell: No, I do not particularly want to say anything other than I found my five years on this Committee serving with you, Mr Davidson, and others who are still on the Committee, to be very worthwhile, and I am sure that those people who have been appointed to the Committee will find that so as well because it is an important part in ensuring that the continuing relevance at Westminster of Scotland and for Westminster to Scotland is solidified and I am sure under your chairmanship the Committee will very much do that.

Q3 Chair: I wonder if I could start off then by seeking some clarification from yourselves about your role in relation to wider government policy. I am particularly interested in trying in clarify both the content and the process by which yourself as Scotland Office Minister had an input into, say for example, the Budget, or had an input into the Queen’s Speech because, as you know, there are a number of things that affect Scotland in those, and also how you are going to take things forward. There are issues like the review of alcohol policy and the review of housing benefit and I am genuinely uncertain as to how the Scottish dimension has been put into these discussions and how it is going to be put in in future.

Michael Moore: Just taking one part of that question, Mr Davidson, say the Budget, one of the big advantages from a Scottish perspective, although he has UK responsibility, is that my predecessor Danny Alexander moved on to be Chief Secretary to the Treasury and clearly a pivotal role in the formation of that Budget. As Scotland Secretary, along with all Cabinet colleagues, we are involved in different discussions in advance of the Budget. In keeping with what has been the case in previous Governments, the nature of those discussions is not something that we intend to discuss publicly, but I can assure you in terms of making representations on Scotland’s behalf, I see that as an important part of my job and for the future will continue to listen carefully to representations made by members of this Committee, by the House and by people outside so that we can make sure that in the round the Budget is good for the country.

Q4 Chair: May I clarify a little further. I am not clear whether The Scotland Office has prepared anything at all which would identify the differential impact of the Budget on Scotland and I am not certain whether there is any specific input that you would intend to make on behalf of the Scotland Office about the input in the alcohol review or indeed the review of housing benefit. Is there a mechanism by which you definitely do that?

Michael Moore: There are inevitably in government informal and formal mechanisms for contributing. You will be aware that the alcohol policy review is one that is being conducted at the present time. Through meetings with different Scottish stakeholders and by submissions that we can make at the appropriate moments I will make sure that Scotland’s voice is heard in that debate. However, that review is something that is open for all different people to contribute to and I am sure all submissions will be welcome.

Q5 Chair: I am still not clear, I must admit, what is it you are saying as the representative of Scotland on the alcohol review? You said that you are going to reflect Scotland’s voice. What is your interpretation of what Scotland’s voice is and how do we know and how do we contribute towards the Scottish input into that, because clearly there is a separate Scottish dimension to the question of alcohol?

Michael Moore: I think we would all accept the sad truth that the impact of alcohol and its misuse in Scotland and across the UK is a particularly tragic one, whether it is in terms of health problems - and we have seen NHS Scotland reports on this just this week - or the social consequences of alcohol misuse. Clearly this is an issue that we have to tackle. We can operate both as a channel for different groups who wish to ensure that their voice is being heard in the review directly or those who do not choose to go directly to the review itself, and I will reflect on any representations made to me and, as I understand how the review is developing, make sure that the Scottish perspective is taken account of. I am not undertaking a specific piece of work at present.

Q6 Chair: That is what I want to clarify. I understand your role as a postbox in a sense: people tell you things; you pass them on and it goes into the review. What I am not clear about is whether the Scotland Office does any specific piece of work on something like that relating to Scotland.

Michael Moore: If I may slightly take issue with the idea of the postbox. We are not simply passing on things. We will consider them ourselves and make decisions as ministers about what we think is important.

Q7 Chair: Will you share those decisions with us?

Michael Moore: I would be happy to do so at the appropriate moment, yes.

Q8 Chair: That would be very helpful. We have been discussing ourselves how we want to have an input into something like that and if we had an input into your input that might obviate the need for us to have our own hearings. I can see how if there was co-operation between us it would only strengthen the position.

Michael Moore: I am happy to explore how you would find that useful.

Q9 Chair: Similarly, say, with the housing benefit review the same thing would apply there?

Michael Moore: I would be happy to work with you to work out the most appropriate way to ensure that you are confident that the Committee and others are getting their voice heard on that. May I stress one other point, the major reason why there is not a huge amount of policy work going on in the Scotland Office is that we are in the scheme of things in UK government a relatively small department and so taking on huge amounts of policy work is not something that we would do as a matter of course. I have some very, very hard-working officials who are making sure we are across the subjects at all times.

Q10 Chair: I am sure that they are very able and very hard-working but what I want to clarify is whether or not the Scottish input into, say, the alcohol review is handled by yourselves or by somebody else because clearly, as we agreed earlier on, there is a Scottish dimension to that, not least in terms of caffeinated drinks, and I really want to be certain that there is some way these issues are being picked up because there is a fear that if something is decided at Westminster the Scottish dimension will not be adequately reflected.

Michael Moore: I take it as my responsibility to ensure at the end of this process you and colleagues do not feel that is the case and there has been a proper mechanism. I appreciate you will choose for yourself whether or not you wish to conduct an inquiry and call experts before you. Bear in mind the Scottish Government itself will undoubtedly make representations directly to that review. I have not asked them if they are but I would be surprised if they did not and also other groups, whether it is the Scotch Whiskey Association or whatever.

Q11 Chair: The other major issue is the question of the defence review. Similarly, I am not clear whether the Scotland Office will be making a formal contribution to that internal government debate representing the Scottish interests. There are Scottish producer interests in that which go beyond defence matters. Will you (a) make a contribution and (b) if so, will you share it with us and have a dialogue with us about what that is?

Michael Moore: I am happy to have that discussion with you and to make sure that we feed to the Committee any relevant material that comes to us to ensure that in your deliberations you are as well-informed as possible. I will have a number of conversations, indeed I already have had conversations with the Secretary of State and other ministers about the defence review, where it was getting to, what the policy baselines are, and how that will then flow through to capabilities and the like. The brief exchange this morning in the Chamber, I am making it my business to get around the different parts of the Scottish defence industry as well as different Scottish defence installations to ensure that I am as well informed as possible in the course of that debate.

Chair: I would turn first of all to Lindsay Roy.

Q12 Lindsay Roy: Welcome, Secretary of State. I understand the challenges and pressures of a new job and invariably it involves a steep learning curve, as I found out in my change of career. Nevertheless, we are here to hold you to account. I want to focus on three things: the Respect Agenda, the constitutional issue and in particular the elections. Can you tell us what consultations you have had with the Deputy Prime Minister as Secretary of State for Scotland prior to the constituency review of boundaries in Scotland?

Michael Moore: We have had discussions about the direction of government thinking. This has been discussed in different parts of the machinery of government but we were clear from the Coalition Agreement that we would be looking to reduce the number of Members of Parliament and equalising the votes across the country, whether that be Scotland, England, Wales or Northern Ireland

Q13 Lindsay Roy: As I understand it, the proposed norm apparently is around 75,000 but already exemptions have been mooted for the Western Isles and for the Orkney Islands. Are there other exemptions being mooted in Scotland as well?

Michael Moore: No, you are absolutely right, the two specific ones that we have highlighted are for Orkney and Shetland on the one hand and the Western Isles as well. We have also said that there will be an upper geographical limit to the size of any constituency of 13,000 square kilometres. That will help to ensure that we do not create any new seats as a consequence of the plan to have a 5% variation on 75,000 or thereabouts that are larger than the largest at the moment, which is the one represented by Charles Kennedy.

Q14 Lindsay Roy: With that dispensation being mooted, is it the case that the other constituencies in Scotland will match the 75,000 norm or will they be larger to compensate for the smaller constituencies that you have mentioned?

Michael Moore: I do not believe the variation across the balance of the Scottish seats will be hugely significant. The calculation will be done to ensure that all seats fit either 5% above or 5% below but in doing so do not breach that upper geographical limit.

Q15 Lindsay Roy: So we are not going to be disadvantaged in Scotland then?

Michael Moore: No.

Q16 Lindsay Roy: That is very helpful. This is not a question of Lib Dem seats but how many seats do you feel Scotland is expected to lose by 2015? If there are any losses, where are they likely to occur?

Michael Moore: The specific work on the shape of the new map will be the responsibility of the Boundary Commission in due course so I am not in any better position than you yourself to establish where that would be. At present, there is a huge range of seat sizes in Scotland. My own, which is a large rural seat of about 1,500 square miles, has an electorate of 75,000, David’s neighbouring seat has about 65,000 or 66,000, so there is quite lot of variation even amongst the rural seats. As to the numbers, that again depends specifically on what the electoral register looks like at the beginning of December this year, but I think, broadly, we will be looking in Scotland at a reduction to 52 seats as a result of this review

Q17 Lindsay Roy: Is there any push through the Scotland Office to enhance the register roll because we understand that in a number of areas there are huge numbers of the population who have not registered?

Michael Moore: I know this is a concern which has been particularly raised by Labour Members but is a legitimate issue for all of us to be concerned about. It should not be the case that people who ought to have the vote are not on the roll but ultimately it is a voluntary decision; we do not make it compulsory. There is a responsibility on local authorities to seek to get people registered and as public figures I think there is a responsibility on all of us to do our bit to ensure that nobody is disenfranchised, but there will be no additional specific responsibility placed on us or others to do that.

Q18 Lindsay Roy: Did you consult the Scottish Government and First Minister about the proposed AV referendum dates or the next general election dates in 2015 and, if not, is that not a basic error of judgment given the Respect Agenda?

Michael Moore: One is caught, if I may say so, between always being able to achieve the spirit and rules of the Respect Agenda on the one hand and also our responsibility to inform the House of major issues policy and the judgment, which I hope at least in this place might be accepted, is we believed it was important to inform the House of Commons about this because we are proposing a fairly radical change to the electoral system for the United Kingdom. I think you might have had, not to put words in your mouth or anybody else’s, some issues if this had been announced publicly without coming to the Commons first. As far as consultation is involved, I have written to the First Minister and to other senior politicians in the Scottish Parliament and to some in the House of Commons too (but all Members are welcome to respond) asking for views about 2015 and what we might do about the particular issue of the two dates of the elections coinciding.

Lindsay Roy: Just a yes or no.

Q19 Chair: If I may say, Secretary of State, the answer to that question was no.

Michael Moore: Apologies. We came to the House of Commons first so, no, we did not go to the Scottish Government first.

Lindsay Roy: The point I am making is there could be confidential consultations.

Q20 Mr Reid: Welcome Secretary of State and congratulations. I want to follow on from the line of questioning from Lindsay Roy that there are some exemptions to the rule about constituencies being within 5% of the quota. Can you tell me what criteria were used to determine the exemptions?

Michael Moore: The historic recognition in legislation for the Scottish Parliament of the situation of the Orkney Islands and a recognition, perhaps slightly later in the day after that legislation, that the Western Isles presents similar characteristics in terms of its geography and accessibility.

Q21 Mr Reid: There is another exemption you mentioned earlier about the 13,000 square kilometres on the mainland. What was the reason for that?

Michael Moore: Again, as I mentioned before, the fact that we currently have the largest land mass represented by any Member in this House at the present time, which is that of my colleague Charles Kennedy, I have not measured it specifically myself but I understand that 13,000 square kilometres is the land mass that he represents, and the basic approach is that is currently a manageable size for a constituency and that should be the benchmark for the future and nothing should be created that is larger than that.

Q22 Mr Reid: In terms of manageability you seem to be suggesting that the only criterion is the geographic size but would you not also accept that if a constituency has a lot of peninsulas and islands that also would give management issues even though it might not be quite as large as the 13,000?

Michael Moore: There are a range of challenges for all of us who represent not just Scottish seats but the United Kingdom. I respect the way that you have represented your seat with a number of these challenges that you are highlighting now over more than nine years. I certainly would not want to make that any more difficult for you or anybody else, but a decision had to be taken. We were seeking to minimise the number of exceptions that we would place in the legislation. I recognise you may not quite agree with where we have drawn that boundary but this is a piece of legislation, it will come before the House and there will be consultation, and I am sure you will make the case there as well.

Q23 Mr Reid: In the past, the independent Boundary Commission have decided that the island seats that you mentioned should be less than the average and they have also decided that the Highlands mainland should have constituencies slightly less than the average. Why was it not decided just to leave these decisions to the independent Boundary Commission rather than trying to impose the Government’s own rules?

Michael Moore: In the past, the Boundary Commission reviews have not necessarily been in kilter with one another. The difference this time however fundamentally is the Government has taken a decision as reflected in the Coalition Agreement that we should equalise the number of electors in each constituency across the country as far as possible so that we get a House of Commons which more fairly reflects the population of the country as a whole, and that was the primary approach to the legislation.

Q24 Mr Reid: I just want to move on to one other area of questioning. Like other government departments you have been given a target figure, I believe, of either 25% or 40% of cuts to make.

Michael Moore: All government departments, as was publicly stated by the Chancellor and my predecessor Danny Alexander, have been given very challenging targets for the spending review and like other departments we made our submissions to the Chief Secretary last Friday.

Q25 Mr Reid: Given that your department is largely made up of a group of civil servants here and in Edinburgh, a 25% or a 40% cut would seem to suggest that the only thing you can do is cut your civil servants by that amount. Is that what you are looking at or is there anything else you can do?

Michael Moore: I am not at liberty to disclose, I regret, the details of the submission you have made but you make a very interesting point.

Q26 Mr Reid: Would you sell Dover House?

Michael Moore: It is not ours to sell.

Q27 Jim McGovern: Thank you, Chairman. Michael, I would like to welcome you to your new position. I did not realise you were the longest serving Liberal Scottish Secretary.

Michael Moore: I said for a while.

Q28 Jim McGovern: Your predecessor must have been the shortest in his position. The last Liberal that I am aware of in Dundee was Winston Churchill who was MP for Dundee from 1908 to 1922. He got chased out of Dundee because he had no interest in Dundee or indeed in Scotland. I would hope that you would have an interest not only in Scotland generally but in Dundee particularly. How do you view the ramifications of the UK Budget for Scotland?

Michael Moore: On the specifics, if I may just anticipate the question here about the computer games industry and tax breaks.

Q29 Jim McGovern: You have got it.

Michael Moore: First of all, I am looking forward to being in Dundee and meeting with different representatives of all the many different industries and parts of the service sector that the city represents. It is a fantastic example of Scottish enterprise and how the city has evolved over very many years from Jute, Jam and Journalism to being representative of so much more.

Q30 Chair: This is stalling I think. We know the virtues of Dundee.

Michael Moore: For a man from the Borders via Galashiels I appreciate that. I apologise, I am not attempting to stall; I am simply trying to reassure Mr McGovern that I understand the importance of Dundee. In terms of the computer games point, I understand your disappointment and that of the industry, and I look forward to seeing you with representatives from the industry tomorrow specifically to discuss that. The judgments in the Budget had to be made for the UK as a whole and looking at what we could afford in the context of the deficit in the public finances and the need, with urgency, to tackle that and get ourselves back on a sustainable route to recovery. We took a judgment that the tax relief being offered for the computer games industry and other areas was not something that was sustainable. However, there were broader issues in the Budget which will help not just the computer games industry in Dundee but many other sectors as well through our proposals to reduce corporation tax over the course of this Parliament, to ensure that we reverse some of the decisions that have been taken on national insurance by the previous Government and also to help new-start businesses particularly to get some help with offsetting their NI costs for some of their employees, plus, as you would be aware, my colleagues at DCMS have announced a fund which will be managed by Abertay University specifically to help the computer games industry. There is a range of measures there. I appreciate they are not as ambitious as you want but that is the context in which the decision was taken.

Q31 Jim McGovern: They are not as ambitious as the previous Government’s commitment and support. For example, the film industry gets tax breaks of £110 million a year and the money that that brings into the UK economy is pretty similar to the computer games industry so why can they get £110 million a year and the computer games industry cannot get £50 million a year, which is what was promised by the previous Government?

Michael Moore: I think again looking at the history of the support that has been given to the film industry and some of the specific structural challenges facing it, particularly in the context of Hollywood and other parts of the globe, the decision was taken that that was a legitimate area to continue to support. I hear what you are saying and I know that by the time we have finished our discussions today and tomorrow we will hopefully be able to reassure you that the computer games industry is a very important part of how we see the Scottish and UK economy growing.

Q32 Jim McGovern: £5 million is obviously welcome and I am sure Abertay University would welcome that but it is pretty much a drop in the ocean, is it not, compared to £110 million?

Michael Moore: Please, I do not intend to pretend that these numbers are equivalent, but I would not want it to go without remarking that we have provided that funding as well.

Jim McGovern: Thank you.

Q33 Fiona Bruce: Good afternoon. As a new member of this Committee I would be interested to know from you also as a new Minister in place how you are approaching your role differently from your predecessor? I exempt your immediate predecessor in that.

Michael Moore: It is probably best to leave the Chairman and others who have been here longer to make these observations over time. I have got on well with my immediate predecessor and Jim Murphy as well. When I was in Opposition I found him to be an accessible Secretary of State when there were different issues that I wanted to raise with him and I pay tribute to him for that. He met with me in Edinburgh to discuss issues relating to banking problems affecting constituency companies of mine in the months before the Election and I am aware from others that he did that. I think there is some useful practice from Jim Murphy’s time which I can follow on, and I hope to be accessible and also get out in Scotland as well as out and around Whitehall making sure that we are on top of the issues affecting the Scottish economy and other policy matters from a UK perspective. Through that we will, I hope, serve Scotland to the best. The other bit that perhaps does distinguish me from Mr Murphy is that we are engaging with the Scottish Government on a different basis. It is not quite the same "in your face" approach to the policies there because we have differences of political opinion between ourselves and the Scottish Government, but I think we have common cause in wanting to ensure that Scotland is properly served at Edinburgh level and in London.

Q34 Fiona Bruce: Thank you. That very neatly brings me on to my next question and subsequent questions which will focus on the economy. I would like to probe a little more deeply the question I asked you earlier today. I mentioned about the fact that trade and industry is a reserved matter and economic development is devolved and I wanted to seek out how you were proposing to co-work with your counterparts in Scotland in the interests of regenerating particularly the private sector and job creation? It is the mechanics of that joint working to add value to what you both want to do that I am interested in.

Michael Moore: Again, this is something that was done previously which is yet to be explored since the Government changed where a particular initiative that was taken was to get the First Minister and the Secretary of State for Scotland, the CBI and the STUC together under the so-called Quadrilateral Arrangement. That is something I am open to looking at to see whether that has an on-going role for us. I think it meets the particular test you set about us using the different levers at our disposal in policy terms to make sure that we are working hard on the economy together. Through the Finance Quadrilateral Meeting which the Chief Secretary of the Treasury hosted last week, which brings together the finance ministers from the devolved administrations and the territorial secretaries of state (as we know ourselves in the jargon) there are plenty of encounters with people like John Swinney and others. I think it is important that we work together and make sure we work in partnership and not competing.

Q35 Fiona Bruce: I am interested for you to touch briefly on what you might perceive as particular challenges in Scotland affecting the economic revival that we all need to see and how you can input into meeting those?

Michael Moore: We have clearly got at the moment some particular challenges with unemployment. Every person who is unemployed is an absolute tragedy and in each of our constituencies, whether they are in England or Scotland, there have been a lot of sad announcements in the private sector and elsewhere. There is a whole range of reasons behind why some of these decisions have had to be taken by companies: some going bust, some strategic reorganisations of the business, but in amongst some of the difficult news there is still lots of good evidence of the private sector growing in Scotland. We have had Barclays Capital, for all that they have announced decisions about the former Standard Life Bank in Edinburgh, investing a lot in Scotland to create the support for Barclays Wealth and other parts of their business. We have seen the exciting partnership between Scottish and Southern Energy and Mitsubishi Industries announced. Making sure that Scotland is attractive for inward investment - and I believe that is about getting the fundamentals of the economy right - is really, really important. Tackling our business birth rate is really, really important and some of that is about the micro measures such as the National Insurance support that has been announced, some of it is about Business Gateway, which is a devolved responsibility, making sure businesses get support to get off the ground. Certainly from own constituency perspective I think creating lots more small businesses is really an important way for the economy to develop.

Q36 Julian Smith: Well done, Secretary of State. You have been handed a nightmare of a poisoned chalice. Can you tell us a bit more about the legacy you have been left with?

Michael Moore: I am trying to work out what you mean by that. I pick up the signals very quickly. As a Government our huge challenge is the scale of the deficit, £155 thousand million. I say it in that way rather than £155 billion because I think sometimes people are a bit blasé about that number. It is a huge number, £2,500 for every man, woman and child across the whole of the United Kingdom, and that is just one year’s gap between tax revenues and what we are spending on public services. Whether you approach this from the point of view of worry about the economy or the sustainability of our public services, you have no option but to tackle that deficit because if we do not generate new wealth which pays the taxes that fund the next generation of public services we will be in real trouble. It is not just about the interest charges that will forced upon us if we were not seen to be tackling that in terms of the way the international markets and others would react; it is also dealing with the overall debt position because if we do not tackle that build-up of debt we either have to look to a future full of tax increases or reduced public services. We have had some really difficult decisions to make over the last few weeks, but we have set out a clear direction and we have got a whole plan to ensure we reduce that. I apologise, Chairman, for overstepping my time allocation.

Chair: Members were asked earlier on not to ask questions along the lines of how many miracles did you achieve before breakfast. I do not mind you responding but we need to move on a bit.

Q37 Julian Smith: There have been some exciting Budget decisions. You mentioned the scrapping of NI for new business start-ups and the lowering of corporation tax over the lifetime of the Parliament. These are great opportunities for Scotland. How additionally are you looking to encourage inward investment into Scotland?

Michael Moore: I think it is important that Scotland’s voice is being heard positively and constructively overseas. The Foreign Secretary has been very clear that he wants to see all ministers, and the Prime Minister has absolutely endorsed this, use every opportunity to talk to overseas representatives and businesses and make sure that we demonstrate that Britain is getting to grips with its underlying problems and is still a very good place to do business. I think the corporation tax proposals, which will maintain our competitiveness as a place to locate businesses, will be one of the key issues for the next few years.

Q38 Julian Smith: Financial services are one of the biggest employers in Scotland. Is the bank levy the Government is imposing a worry for you in terms of retaining those tens of thousands of banking jobs?

Michael Moore: No, because I think the reaction from the financial services sector has been not necessarily wildly excited or overwhelmed at the prospect of this but they have recognised that over the past few years the taxpayer has had to make a huge contribution to ensuring that some of these institutions stayed alive and it is right and appropriate that they should now, having done so, contribute to the public purse. As far as Scottish financial services are concerned, I met on Monday with senior representatives under the umbrella of Scottish Financial Enterprise and it is really encouraging to hear their plans and just to see the way Edinburgh in particular, but it is true of Glasgow and other places too, has been transformed by the success of financial services over the last couple of decades.

Q39 Julian Smith: Moving on to small business, in 2007 the Federation of Small Businesses described Scotland as the worst-performing small country in Western Europe. Do you think things have changed?

Michael Moore: I guess people might say there is a mixed picture. It has been a difficult few years for businesses, large and small. As I said in response to Ms Bruce’s question before, I think small businesses are absolutely essential to getting us going. Years ago, as the Chairman will remember, in the Borders the key to what became a very successful industry, the electronics industry (sadly largely now gone but for a long time very, very successful) was that it was built on the basis of businesses started in garages, and we need more of those success stories.

Q40 Julian Smith: In terms of business rates, Secretary of State, can you reassure new and existing small businesses in Scotland that you will be thinking about the struggle that there is in paying rates particularly at this time and anything you can do to reassure them?

Michael Moore: Business rates is of course a devolved matter and something for the Scottish Government. There has obviously been a fair bit of controversy over the new arrangements that have been made. I have expressed views as a constituency Member of Parliament on that very subject but in respecting the Respect Agenda I will contain my remarks.

Julian Smith: Do not be too respectful, please!

Q41 Dr Whiteford: Welcome, gentlemen. I would like to turn to investment in renewable energy and also our collective efforts to tackle climate change and the barriers that are caused to both of those by Ofgem’s electricity transmission charge scheme. This is an issue that I know you have taken an interest in in the past. It is also something that particularly affects my constituency, but just for the benefit of other Members, Peterhead Power Station currently pays around £29 million a year in transmission charges whereas a similar facility based here would attract public subsidy of £3 million to connect power to the Grid. It seems to me that that is a rather nonsensical situation in that it is disincentivising investment in the very parts of Scotland most able to produce renewable energy but it is also something that I know has been considered by committees of this House in the past. The Energy and Climate Change Committee has called for an independent review of electricity transmission charging and what I really wanted to ask as a starter was will you back this call? Are there other things that you can do to push that process forward and, if so, when and how?

Michael Moore: I think the debate on this has certainly moved on. You are absolutely correct to highlight this, particularly in the context of renewables, and not just the land-based wind farms but the prospect of huge developments offshore, be it turbines, wave or tidal. In Scotland we have clearly got great potential there and already some of that is being investigated and realised. As you rightly point out, it was the previous Committee for Energy and Climate Change that looked at that and has made recommendations. As far as I am aware, and I would have to check it has not been overtaken since I last looked at the papers, my colleague Chris Huhne and others will be replying to the recommendations about that. There are reviews by Ofgem and others in prospect and the National Grid itself. I have met Scottish and Southern Energy, I have met Scottish Power and I have met Scottish Renewables. There is a consistency to the theme and I am glad to hear you are supporting that too.

Q42 Dr Whiteford: Can I add to your list there. It not just the Energy Committee, it is the Chamber of Commerce, the CBI, the STUC; all these organisations have called for a change to the transmission charge regime. How do you intend to involve the Scottish Government in that process given the mix of reserved and devolved powers that are involved?

Michael Moore: The Scottish Government have already been making representations on that. I have had discussions with ministers about it pretty early on, so it is no surprise that that is on their list too. It is a good example where hopefully we can all work together as Scots to ensure that we are making the case in the reviews that are underway and that we get the right result.

Q43 Dr Whiteford: A last one on this. I am of the view that the current arrangements are against the spirit and quite possibly against the letter of the 2009 EU Renewables Directive. Will you look into that?

Michael Moore: I will be happy to take that away.

(The Committee suspended from 3.45pm to 3.55pm for a division in the House)

Q44 Dr Whiteford: On a completely different tack, I wanted to ask about Lottery funding in relation to the Olympic Games and the fact that Scotland is going to lose £150 million in Lottery funding over the next four years due to money being diverted into the Olympic Games. I have a concern about that, not just because it is taking money away from grass roots Sport Scotland but also in the context where we are looking at big cuts in public spending, the so-called big society and greater pressure being put on community organisations and voluntary sector organisations likely to be most dependent on Lottery funding. I just wondered if you had any thoughts on how we compensate that, how Scotland can get the Barnett consequentials from the regeneration money that is going into the Olympic Games and if you will consider giving similar support to the Commonwealth Games coming to Glasgow in 2014.

Michael Moore: First of all, I recognise the important work that the Lottery funds have done in so many different aspects of life. I speak as somebody who, many years ago, was quite sceptical about the setting up of the Lottery but, the more letters I have signed off to constituency groups over the years who have succeeded in getting awards from different parts of the Lottery, the more I have appreciated, quite apart from the obvious attractions of the Lottery itself, the good byproducts that it creates in places all over the country. The decision on the Olympics was obviously taken some time before the government came into place. We do not have any intention of changing that. On the regeneration funding and the Barnett consequentials, that is obviously not an area which has been an area of disagreement, if I may put it that way, between the Scottish Government and the United Kingdom Government for some time. That discussion is ongoing. It has been raised in the Joint Ministerial Council and on many occasions bilaterally. That is something that will continue to be discussed in the context of the spending review which is underway at the present time.

Q45 Dr Whiteford: Do you have anything to add about the impact on voluntary organisations that are going to lose out because of this at a time when the demands placed on them are going to be going up?

Michael Moore: I regret any loss that there is to any group for whatever reason. I regard the Olympics as something for the whole of the United Kingdom and I hope that people from Scotland as much as other parts of England will be able to participate and get the benefits in legacy terms from what happens in 2012. I would not take a particular view that says Scotland gets nothing out of these Olympics. Far from it, but that process is time limited in terms of the funding being diverted and there will be the opportunity for those funding streams to re-emerge in due course.

Q46 Cathy Jamieson: Welcome everyone. Could I perhaps start by following up the issue of Lottery funding? The Secretary of State has mentioned issues about what has happened and decisions that were taken in the past, but is it not the case that there will be decisions to be taken about the future in terms of Lottery funding, both regarding the way that the split is made across the UK, what is likely to come to Scotland, and under the current proposals is it not the case that it looks like Scotland may be set to lose out yet again? Indeed, some of the most vulnerable groups and the poorest groups in our communities would be the ones who would lose out on the potential to apply for grants. Would the Secretary of State therefore make representations to those concerned to ensure that Scotland does not get the double whammy of losing out on both counts?

Michael Moore: May I reciprocate by welcoming you to your new position? I am sure it is a fascinating contrast to what you have experienced before. As far as the specific proposals that are coming forward are concerned, I am very happy to talk further about any particular aspects of the proposals that are causing you or other members of the Committee, or indeed any Member concerned, and about what impact that will have. I have met representatives from different parts of the Lottery who have made some important points about administration costs and so forth. Those are things that we will make sure are understood and being considered but in the end DCMS will make the decision on this. I believe, in their motivation, they are absolutely determined to ensure that funds get to the most appropriate places.

Q47 Cathy Jamieson: I welcome the Secretary of State’s reassurance. We certainly will want to pursue that further. On a similar theme about people who are perhaps the most disadvantaged in our communities getting access to money that was intended to benefit them, I wonder if I could raise two specific points, firstly, in relation to child trust funds for looked after children which were not given as a Barnett consequential but were given directly to the Scottish Government to pass on to looked after children. My understanding is that a considerable amount of that money has not gone to those looked after children. I wonder if the Secretary of State would say what the government’s view of that would be and also what the government can do to pursue that and ensure that those young people get the money that they are due. In a slightly different vein, there were Barnett consequentials of some £34 million which were intended for the purpose, as far as the UK Government was concerned, of benefiting disabled children. Of course we are aware that the Scottish Government has taken a decision to use that differently. Would the Secretary of State therefore consider in future tracking how money sent across to Scotland, whether it was in the form of the Barnett consequentials or indeed separately, to ensure that the money goes where it is intended, particularly where that is supposed to benefit vulnerable people?

Michael Moore: Two very huge policy issues there that you raise. If I may just separate them out in the way you did, on the first, I do not know how many of these cards I am allowed to use but I do not know the technical answer to that particular point. May I take it away and make sure that you and others get the response?

Q48 Chair: You will write to us?

Michael Moore: I will write to you and make sure that we get you the answer on that. Secondly, on the issue of tracking that money, I am afraid I take a slightly different view of the devolution settlement. I do not believe that to be in the spirit of what the devolution settlement is. I do not know what you thought as a minister if people in London had been tracking the consequentials of some of their money and you had been spending it on something that they did not spend an equivalent on. These are legitimate debates but I would not propose to set up any kind of tracking mechanism as far as that is concerned.

Q49 Cathy Jamieson: I will resist the temptation to answer as a former minister, given that you are now the person answering the questions and I have the opportunity to ask them, which I am going to take. I have one final, small point. I asked a question of the Work and Pensions Minister on Monday in relation to the Future Jobs Fund. I was keen to know how the evaluation of the impact of the Future Jobs Fund was to be made and I was surprised to discover that the numbers of people supported by the Future Jobs Fund did not appear to be collected constituency by constituency, according to the answer that he gave me. I think that has particular implications for Scotland and I wonder – again, I heard what the Secretary of State said today at Scottish questions in relation to the Future Jobs Fund – if you would look at that particular issue and ensure that that is built into any evaluation of its effectiveness.

Michael Moore: Let me take that away.

Q50 Chair: We can have two separate letters.

Michael Moore: For the sake of efficiency, I may seek to combine them.

Q51 Chair: No. We would prefer it separately because you might have the information and there will be other issues that we ask you to write to us on and we do not want everything being held up until the last one is completed. It will be quicker. I have worked with civil servants before and I think as soon as the answer is ready for any of the questions ---

Michael Moore: If I may rush to the defence of my esteemed colleague here, in the spirit of working in the Scotland Office, we will endeavour to get all the answers to you as quickly as possible but we will do them as quickly as we get them and not hold them back.

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.

Q57 Mark Menzies: Huge focus has been given to rebalancing the Scottish economy and reducing the burden of the public sector. Can you talk me through the efforts that have gone into attracting inward investment into Scotland and if we have had any input into recent prime ministerial visits to the United States or the up and coming visit to India?

Michael Moore: These are done on a UK-wide basis. As I said in answer to an earlier question, both the Prime Minister and the Foreign Secretary have been explicit in terms of government policy and foreign policy that making sure that Britain is open for business is a clear message of all our overseas visits and all our engagements with businesses. Scotland has a great record on this in the south of Scotland, with industries built on the importation of rare cashmere fibres for our knitwear industry which are then, once they are made into some of the world’s finest manufactured goods, exported all over the world. If we look at the life sciences, if we look at the defence industries, the technologies that have been nurtured and developed in Scotland are world class. We want to see more of that. I fundamentally believe that is about making sure we sort out the economic difficulties of the country as a starting point, making sure that businesses find us an attractive place to invest. That applies not just to those who might do it as inward investors but to those who are already here, of whom we want to encourage more to be in business.

Q58 Mark Menzies: The Minister has been very quiet, so feel free to contribute.

David Mundell: The coalition speaks with one voice and it is very important that we understand that.

Q59 Mark Menzies: I was born and bred in Ayrshire. If you live in some of the areas that are on the edge of the central belt or further afield in Scotland, you can sometimes be conscious that you feel as if you are not always at the forefront of inward investors’ minds. What are the specific things that we are doing in order to create investment havens where an inward investor could come and think, "I am going to invest in Irvine, Dumfries" or wherever? What is concerning me is you have potentially the Prime Minister going out and talking in India for example, but what is the detailed follow-up for an Indian investor to think, "Right, this is who I go and speak to at the Scotland Office" or even the Scottish Government, "and this is the site we invest in. This is the sort of follow-up, detailed help that I would get", so that the investment actually becomes real and happens?

David Mundell: One of the things that we would both agree on is that we want this government to be a less urban government than its predecessor, because I think we need to have a UK government for the whole of the UK and for the whole of Scotland. Whilst there are serious, legitimate issues arising in urban Scotland, there are also significant issues within rural Scotland and I think it is very important that they are reflected here in Parliament. I think we have sought to do that in terms of getting out and about in Scotland. I certainly have been up in Shetland where there is a very significant economic development coming there, with the gas fields to the west of Shetland coming on stream, in the western Highlands, with renewable projects, but also the issues that Dr Whiteford raised are alive there. Last week I visited the Carbon Centre which is an offshoot of Glasgow University campus in Dumfries. There are significant things going on within Scotland outwith urban Scotland which we need to play our part in promoting. I think the coalition agreement set out a number of policies to address some of the things which have held rural areas back. We are addressing the potential for derogation of fuel duty in relation to rural areas, as one such example. I think that we can give a commitment as a coalition government to being a government for the whole of Scotland, particularly addressing the issues of non-urban Scotland.

Michael Moore: Just picking up on the specifics about if the Indian businessman likes what he hears from the Prime Minister and asks, "How do I make a reality of that?" that is about teamwork. It is about ensuring that, within the UK government here in Whitehall, the Scottish Secretary, the Business Secretary, all those who have a stake in this, are working together to ensure that we make the introductions and the contacts, but also that we work with Scottish Development International and others who are part of the Scottish Government to ensure that all that information is shared. The First Minister was in China very recently doing his bit to promote Scotland. I have been approached to be part of trade missions too and I will go very reluctantly. Being serious, I am very happy to do my part in what is going to go on there, so all of us play a role and we need to talk and work together to make sure that is effective.

Q60 Mark Menzies: My final question is something that Dr Whiteford has already touched on but it is about Scotland’s green economy. My particular concern here is Scotland is very good at inventing and refining some of the new green technology such as wave and tidal. I am just anxious that we are able then to manufacture the actual end product and, as has happened so many times in the past with many things, we do all the heavy lifting; we get the design, but then it is manufactured in Germany or somewhere else. I just wonder what the current thinking is in order to make sure that we actually start making the stuff as well.

Michael Moore: We have had a habit across Britain as a whole over the years of developing great technologies and not always capturing them in this country. One might say that some of the early, renewables technologies are good examples of things that we have let fly. That is an area that I am happy to work on with government colleagues and the Committee in seeing what we need to do to make sure we do it more effectively. We do not have the monopoly on good ideas in that area but I think I would agree with you that, very clearly, there is an urgency about making sure we trap that technology and exploit it here.

Q61 Fiona O'Donnell: Welcome to everyone from me as well. You may remember, Secretary of State, that we gathered in the first week a bunch of Scots, as we often do flock together on the terrace and I remember we teased you that the phone did not ring for you that evening, so I am very pleased for you that it has.

Michael Moore: Thanks.

Q62 Fiona O'Donnell: I was heartened by your response to the other Fiona about how you are going to approach your role. You said that you would listen carefully to representations. I wanted to begin by asking what discussions you have had with the Scottish Council for Voluntary Organisations about the Future Jobs Fund.

Michael Moore: I met with Martin Syme and colleagues very early on after I was appointed to talk about that. I explained the decision that had been taken. Let me not put words in their mouths. I am not going to play down the disappointment they have because they were big participants in this, but they are a very strong, professional organisation that pull together a hugely important part of Scottish society and I think they are essentially pragmatic. As we bring forward our own proposals under the work programme, I am confident that SCVO and others will play a very big part in that.

Q63 Fiona O'Donnell: I would add to pragmatic maybe disappointed and anxious, having seen the recent report into how the Future Jobs Fund has been delivering for young people across all 32 local authorities in Scotland. What assessment did you undertake of the benefits of SCVO delivering the Future Jobs Fund?

Michael Moore: There was no specific assessment of SCVO in isolation. The judgment was made between DWP and the Treasury and at government level, basically saying, "Is this a sustainable model? Can we afford the huge investment per temporary job that is created? Is that sustainable in the light of our current financial situation?" Our judgment was that it was not those things and therefore we are running out the programme through the course of this year to the beginning of next year. I think sometimes the sense in the public debate is that it has just stopped and, all of a sudden, there is this huge gap. That is not the case. There are still places available and people are taking advantage of those places daily. Our proposal is, as was remarked on in Scottish questions earlier today, to simplify the provision for those who are looking for work and to ensure that we do it on a more financially sustainable, more targeted basis.

Q64 Fiona O'Donnell: You described it as short term. I think the placements may be short term but I think the benefits are long term. The difference with SCVO is it is not just a benefit to the young persons employed but also they set the criterion that it has to benefit the community and I think that needs to be borne in mind as well. All the young people and employers have been positive about their experience. What is the position now with the government’s work programme for Scotland?

Michael Moore: That is currently being developed. The Secretary of State will make an announcement about that at the appropriate moment, so I am afraid I am not able to pre-employment that with any discussion of it just now.

Q65 Fiona O'Donnell: Can you confirm if the third sector will be able to tender for the new scheme when it is up and running, because they are concerned that they may not be able to enter the tendering process?

Michael Moore: Again, I want to be really careful. I appreciate these are entirely legitimate questions and I do not want to fall foul of this by being evasive or unhelpful. The details of all of it will be announced at the appropriate time and as quickly as possible. I, for one, would hope and expect that the voluntary sector will continue to play a very important role in this. Whether they do it the specific way that you are suggesting is up to the design of the scheme, but I do not see a position where they will not have a role.

Q66 Fiona O'Donnell: You described it as not being sustainable. When you are looking at the new scheme, I am just wondering now what is the price on a young person’s future prospects? At what point does it become unsustainable?

Michael Moore: I do not have a particular figure in mind. The judgment that has to be made – and it is a difficult one – is can we afford this level of provision for these individuals in this way indefinitely. I do not think that even the Labour Government before the election envisaged this going on for ever. It was designed specifically in the context of a recession, so there was going to come a point, even had the Labour Party won the election, where they would have had to review this. It is a very big, per head, contribution required for it. Our challenge is to ensure that the successor is sensitive to the needs of young people, recognises the need, not just for them but for the communities in which they will get their work experience or will find jobs, and builds on that in a sustainable fashion. Those are the tests I think that are relevant and hopefully will be met.

Q67 Fiona O'Donnell: Talking more broadly now about the voluntary sector in Scotland, I will maybe turn to your mainly silent partner today to talk about the big society in Scotland and how you see that being delivered by a voluntary sector that is going to be hit to the tune of £7 million by your increase in VAT and also by the fact that the voluntary sector in Scotland for its funding relies upon 42 per cent of it coming from the public sector. How do you see the big idea of the big society happening in Scotland when the voluntary sector faces these challenges?

David Mundell: I am going to be leading on the big society for the Scotland Office on the broader, Whitehall initiative. I am confident that the underlying philosophy of the big society to a large extent already exists in Scotland.

Q68 Fiona O'Donnell: It exists but it is under threat.

David Mundell: It exists but I do not think, with respect, that we should always see the voluntary sector in the context of funding. There are significant funding issues. Many of those are decisions which will require to be taken in the Scottish Parliament and by local authorities within Scotland where they will have to face up to difficult decisions and set out their priorities in terms of how services are delivered. I personally have been a great believer, as I think you were alluding to, that the voluntary sector is in many circumstances the organisation best able to deliver services. I think there is still a significant way to go in Scotland, convincing other levels of government that those services could be better and more financially efficiently provided by the voluntary sector, rather than the government, the health service or the local authority themselves seeking to replicate the service.

Fiona O'Donnell: I think Scotland is there already, given that the voluntary sector came second behind doctors in terms of who Scottish people trust.

Q69 Chair: Closely followed by MPs, I believe. I think Mr McIntosh has played an absolute blinder. Nobody has disagreed with a single thing he has said throughout the whole afternoon. Can I just be clear about the budget? Are you saying to me that there has been and there is intended to be no analysis of any differential impact of the budget upon Scotland?

Michael Moore: That is not currently the plan of the Scotland Office.

Q70 Chair: Secondly, relating to the boundaries, I understand that Alistair Carmichael and the Western Isles seats are being, as it were, saved for posterity. When this was raised, Charles Kennedy raised the question of his own seat. I understand he felt that he was being saved. Does that mean that his seat, as it is presently constituted, would be retained, which would then have a knock-on impact, or that other seats would be adjusted and that could still be adjusted itself? Obviously there are implications then for Inverness and John Thurso’s seat if Charles Kennedy’s seat is retained. Can you just clarify that for us?

Michael Moore: Apart from Orkney and Shetland and the Western Isles, there will be no seats named as being particularly excluded.

Q71 Chair: I understand that. The second point some of my colleagues raised. I am not quite sure you were absolutely clear on it. The Western Isles and Orkney and Shetland are being, as it were, spared at a much lower level. It is not intended that that would have an impact on the other Scottish seats by having an average, which therefore means that the other seats would be higher?

Michael Moore: No.

Q72 Chair: Moving on to the question of electoral registration, am I right in thinking that it is not your intention to do anything that would try and increase the registration statistics in the run-up to the count that is coming up in October, which will be the count on which the new boundaries will be based? There is no special initiative by government going to be taken on that?

Michael Moore: As far as I am aware at this stage, there are no plans for that but, as I said before, there is an ongoing responsibility on all of us.

Q73 Chair: I wanted to be clear about that. Some of my colleagues touched on the AV referendum. Is it your intention to lead the yes side from the front?

Michael Moore: In my role as Secretary of State, that is not something that I have discussed with the Deputy Prime Minister or others but as a party clearly we will be very much engaged in that.

Q74 Chair: I understand that but I am asking about you.

Michael Moore: Any role in that kind of thing would be a political role, an outcome. That would not be done in the capacity of Secretary of State.

Q75 Chair: Can I put the same point to Mr Mundell? Is it your intention to have a prominent part in the yes campaign on the AV referendum?

David Mundell: It is my intention to vote no in the referendum.

Q76 Chair: That is a no then, is it?

David Mundell: To be fair, it is not yet clear how the yes and no campaigns will emerge. I think we have been very clear in the coalition agreement that members of the Conservative Party generally do not support the introduction of AV and therefore will not be campaigning for it but the nature of the campaigns, as was the case previously in referenda that we have had in this country, has seen cross-party organisations emerging. I would not, as would the Secretary of State ----

Michael Moore: We will agree to disagree on this particular issue.

David Mundell: We will agree to disagree on the issue and we will not be campaigning in ministerial roles.

Michael Moore: In case there is any danger that I have given the impression that I will not be involved in the campaign, I will, but I will not be doing so as Secretary of State for Scotland. I will be doing it in my private, political capacity in the same way that we all fight political campaigns as Members of Parliament.

Q77 Chair: It is not the intention of either of you to sit this out? I just want to be clear at this stage. It is likely that you will both be campaigning but on different sides?

David Mundell: I think we are very clear that we have different views on the referendum, but we both support there being a referendum.

Q78 Chair: As indeed do we. If I can run through the list of issues that have come forward, on the question of Lottery cuts, can I ask you if you could just write to us and provide a little more information about what you believe the impact on the voluntary sector is likely to be and what steps you either are taking or believe can be taken to mitigate that? I think that was left hanging. I appreciate that is a slightly longer exercise, which is why I would not want everything else held up for that one.

Michael Moore: How long are you giving me?

Q79 Chair: 20 minutes. We did not really touch all that much on the question of the defence review. I think it would be helpful if again you maybe wrote to us about what you are doing in your capacity as Scotland Office Minister to be not contributing directly to the defence aspects, because that is clearly somewhere else, but to the defence of Scottish jobs, roles and the like. Not only are there bases in Scotland; there are also carrier contracts and a whole number of other things. There is an anxiety that this should not just simply be dealt with as a defence matter. Rather than quiz you about that just now, I think it would be helpful if you possibly came back to us on it. Similarly, two or three of my colleagues have raised the question of private sector growth which is clearly an important issue for us. I think that we were not entirely clear which particular initiatives you might be taking or intending to take. I think it would be helpful again if we had that, because it is intended that we discuss with CBI Scotland and some other organisations about what they believe ought to be done in these circumstances. I think it would be helpful when we meet them if we are able to raise points that you have already identified as priorities so that we are not going over the same ground twice. If there are two or three things that you are thinking of doing, we would want to discuss with them what they thought of as being the priority. Again, in the spirit of dialogue, it would be helpful if we had that. The final point I had was in relation to the Future Jobs Fund. I think we are still not entirely clear on what evidential base you are taking the view that the Future Jobs Fund has not been working. I think we understand the points that were made about it being always intended to be something temporary, but there is quite a strong feeling amongst a number of civic Scotland organisations that the action that has been taken has been somewhat premature. The response from ministers has been, "No, the evidence shows …" etc. It would be helpful if you dropped us a note on that.

Michael Moore: Would it be possible for David to go? I am able to stay.

Chair: In that case, is there anything specifically for David?

Q80 Lindsay Roy: It is not so long ago that a Conservative prime minister said there was no such thing as society. We now have a Prime Minister who puts great store in the big society. I believe very strongly in my constituency there is a big society, strong community engagement and participation. What are the dividends for my constituents in the big society?

David Mundell: I hope, as I indicated as a representative from the Scotland Office in relation to taking the big society initiative forward across the United Kingdom, that I will be able to display that to you. I think the point that Ms O’Donnell made earlier, which is one that I fully agree with, is that Scotland is in the forefront of actually demonstrating the benefits of a big society where people do have a wider view of their contribution to their community and the roles that they can play in supporting others.

Q81 Lindsay Roy: That is a future dialogue that we can have?

David Mundell: It is very much a future dialogue and I think developments in relation to the big society and how they affect Scotland are something again that we would want to bring forward to this Committee.

Q82 Julian Smith: We have obviously talked about funding the Olympics but I would be really keen, maybe next time we speak, to hear about the opportunities for young people in Scotland to engage with the preparations for the Olympics and to engage with the huge opportunities that lots of young people in England are gaining from coming to the United Kingdom capital city.

David Mundell: Of course one of the things which is important is that some aspects of the Olympics are taking place in Scotland, not least at Hampden Stadium in relation to the football competition and I think perhaps it would be helpful if it was more coherently set out what Olympic activities are taking place in Scotland. This Committee also provided a very useful inquiry into the impact of the Olympics on Scotland but I think the point that you make is an important one and something that could be looked at in the future.

Q83 Julian Smith: Specifically, it is really I think coming to London and looking at the Olympic Park, making sure that Scottish kids do get that opportunity.

David Mundell: I agree with you but I think the other point is that we have had a number of aspirational Scots delivering on aspirations in terms particularly of Sir Chris Hoy, who is, as a British athlete, a great inspiration to children in Scotland.

Chair: Maybe both of us can look at the report that the Committee produced some four or five years ago and see whether or not there are issues arising from that that we would want to pick up. Thank you, David. We will raise some other questions with Michael.

(David Mundell left the meeting)

Q84 Mr Reid: I asked earlier about Dover House. You said it was not the Scotland Office’s to sell. Clearly, occupying a building costs money. Where is the incentive within the government system for a department to reduce its buildings costs?

Michael Moore: This is a very delicate subject because I am the latest of many Secretaries of State to have the privilege of Dover House as an office. What we always seek to do – our predecessors have done this; I intend to maintain this – is ensure that it is not just somewhere that is a great place to work, particularly for the Secretary of State, with a fabulous office, but also it is open to the Scottish public and Scottish groups to use as a fantastic base in London. I think that is really important. The National Trust for Scotland held a reception there not long ago. Poppyscotland and others do likewise and we have to make the most of that. We are proud of our Scottish connections here in London. The spending review is putting challenges on everybody. We make an appropriate case. I hope I have in terms of the submission I have made. There are big challenges to us when there are particular issues around buildings, staff complements and so on. We have put forward proposals and over the next few weeks we will find out if I have been persuasive with my predecessor.

Q85 Jim McGovern: The first question only really requires a one word answer, yes or no. That has been used quite frequently in the Chamber recently. It is going back to the computer games industry in Dundee. Prior to the budget, the Secretary of State for Scotland at the time, Jim Murphy, visited Dundee. Alistair Darling, who was then the Chancellor, visited Dundee. Numerous other ministers visited Dundee to see for themselves the computer games industry and it was on the basis of that that the budget announced tax breaks. Was there any consultation with the computer games industry prior to withdrawing the tax breaks? A yes or no would do.

Michael Moore: Not that I am aware of.

Q86 Jim McGovern: Your party in its manifesto in the run-up to the general election said that they wanted to make the Scottish Office obsolete. When is that going to happen?

Michael Moore: It is a double edged sword where I am the one who makes it obsolete by my actions. It still remains our party’s long term position that, as we move through the stage of devolution, it will not be necessary to have a uniquely Scottish Secretary of State but a Secretary of State who represents the different nations and regions of the United Kingdom. Right now, there is a huge economic and budgetary challenge facing the country. We have an ambitious programme to do with Calman. I think in that context, pragmatically, now would not be the time for abolishing that but you would expect me as the incumbent to say that, would you not?

Q87 Fiona Bruce: The previous government agreed to set up a network of devolution champions in each Whitehall department, senior members of staff. I am interested to explore how effectively this is working out. For example, this must be an add-on role to an existing role. I note that they have actually just met once and they are going to meet again several months from the initial meeting. I do wonder whether this is effective and also whether it is in fact value for money.

Michael Moore: The silent but ever informative Mr McIntosh slips me a note that says that the meeting of devolution champions is actually taking place right now, as we speak. I confess I would not have known myself but, being serious about it, I hope that is symbolic of the seriousness with which it is being taken across Whitehall. There is always a challenge. It is quite understandable that different departments are primarily focused on the policy areas of their responsibility and delivering it for the bits of the UK that they have primary responsibility for, but there are consequences across the UK. I lead the efforts from a Scottish perspective, but my counterparts, my colleagues in the Welsh Office and the Northern Ireland Office, likewise feel very strongly about this and collectively will make sure that everything is as sensitive as possible for devolution.

Q88 Fiona Bruce: Would you be willing to write to us about how each of these devolution champions is functioning within their individual departments and what contribution they are making towards the work that we all want to see for the benefit of Scotland?

Michael Moore: If I may add this to my increasingly long list of notes to send to you, I am happy to. What I would like to do however is consult my colleagues in Cabinet to ensure that we can give you a consistent picture from across Scotland, Wales and Northern Ireland.

Chair: Can I mention the report that we have produced to which you have just recently replied. We have agreed we will write to you in six months to ask how things have progressed since because there were a number of issues. It would be too soon to ask you right away how things have moved but hopefully within six months there will be progress on a number of these, so that perhaps will take that forward also.

Q89 Julian Smith: On the role of the Business Department in London, I do not want to add to this letter that you are writing to us, but there are some really exciting programmes that they are introducing and obviously some of their responsibilities remain for London and some are devolved. Given that the economy is such an important issue at the moment, would it be possible to get some clarification on the role of the Business Department in Scotland and exactly the focus of their activities over the coming months and years ahead, at such a crucial time for the economy?

Michael Moore: I am very happy to do so. My colleague and friend, Vince Cable, who obviously leads the department, was in Scotland very soon after his appointment, so I think that is very clearly a department that recognises its UK-wide responsibilities.

Q90 Dr Whiteford: I have a very brief follow-up on the transmission charges this year. I appreciate that it is difficult for you to be specific around time frames for action on this, but would you be able to give some indication of when we might expect a more firm timetable on when action might be taken?

Michael Moore: I fear I am about to disappoint you on that. Not right now, but just to repeat slightly what I said to you before, every discussion I have had with senior representatives of the energy sector – you made the point rightly about this being broader than just them. This is an issue that needs tackling. It is under active discussion and it is a very helpful point that you have made, just to reinforce that urgency.

Q91 Cathy Jamieson: I have a couple of points in relation to the proposed review of the boundaries and the numbers. It would be normal practice, as I understand it, for the Boundary Commission, who obviously will make the recommendations, nonetheless to be given guidance on the basis on which they would proceed. Would it be your intention to give similar guidance to that which has been given in the past in that local authority ward boundaries would form part of the building blocks and indeed that the Scottish Parliament constituencies would also be included in that, given that we have just been through a fairly major boundary review? Also, my hearing of what has been said is that it seemed to be being suggested that the process would not allow for public inquiries or appeals in the same way as has been done in the past, which seemed to me to take away a layer of democracy from local people. I wonder if you could comment on that.

Michael Moore: I think there is a legitimate debate about whether the public inquiry bit of it has, in the round, been an efficient and effective way of actually reflecting democratic views and getting the right outcomes. Likewise, there is a huge range of people who have had different experiences. Who am I to say whether that is right or wrong? I am happy to make sure we clarify the specifics but I know the plan is to make sure this is a streamlined, more efficient system because there is a very ambitious timetable for ensuring that the legislation is not just delivered but that the Commission reviews following it take place very quickly. I apologise. Dealing with that, I have forgotten the first bit.

Q92 Cathy Jamieson: The first bit was about the building blocks and coterminosity issues for the Scottish Parliament.

Michael Moore: I certainly think the building blocks need to continue to be local council ward areas. That is, as I understand it, the plan. The coterminosity thing began to break down in 2005 and it is not specifically part of the plan to try and bring that back.

Q93 Chair: To be fair, on the question of efficiency of the system, obviously things are much more efficient if people are driving them forward, but they are usually the people who are making the decisions. Those for whom the decisions are being made are not necessarily in favour of something that is efficient in the sense of being expedient but in favour of something that is fair. How is this going to be balanced?

Michael Moore: A fair question and something that will I am sure be at the heart of the debate on the Bill when that is presented to Parliament. I hope I have not created the impression that there will be no public input to the process. The rules of engagement will be specified in the legislation and consulting on the proposals will be a key, important part of that process. People will not be squeezed out of it, but I think it is entirely legitimate to ensure that, in reviewing the legislation, getting the procedures in place, we do not end up with an open ended prospect of very long ----

Q94 Chair: That is absolutely fair. If these things are going to happen, I do not think anybody wants them to be interminable. I am presuming that there is going to be a right of appeal.

Michael Moore: The precise form of consultation and response to the plans is not yet finalised. It will be public when the Bill is published.

Q95 Chair: There might not be a right of appeal?

Michael Moore: I am getting into difficult territory here. I am not responsible for the development of the Bill. I will talk to my colleagues to discuss that further.

Q96 Chair: This comes back to the question of what is the point of the Scotland Office and what is the point of you. Is there a Scottish input into these matters? We have discussed the big society, the voluntary sector and a whole number of things. If all of this is just simply being laid down from on high and there is no right to appeal, then clearly that is going to cut the feet away from a whole amount of verbiage about dialogue, involvement and the like.

Michael Moore: You are making two different points that I need to separate out. Specifically about the Scotland Office role in that, of course we are being consulted and involved in that process. I am very happy to take on board the points that you and others have made this afternoon about that. What I am saying is I cannot this afternoon tell you what the appeal process will be in the context of these new proposals.

Q97 Chair: Are you, as Scotland’s representative in the Cabinet, arguing for an appeal mechanism to be there?

Michael Moore: I have not specifically engaged on that point at the moment but I hear clearly what you have said and I understand. What we are trying to avoid is a costly public inquiry system that means there is no end. I will clarify the situation for you.

Q98 Chair: I think this is important. We do need to clarify some of these things reasonably quickly because otherwise we may very well feel that the Committee wants to have some form of hearings in Scotland to identify what is acceptable and what is not acceptable about any mechanism that is being proposed in order that we can have a discussion about this. If we can get this resolved more easily striking a balance between efficiency on the one hand and fairness on the other, then that is a much better position for us to be in.

Michael Moore: That is an entirely fair, legitimate and reasonable point. The proposals are being worked on at present in terms of the legislative proposals and I will take away the exact concerns and views that you raise.

Q99 Cathy Jamieson: In relation to Calman, given that the Calman Report was predicated on a particular set of financial assumptions, I wonder what plans there are to have a look at those again in light of current government policies, particularly in relation to taxation.

Michael Moore: Calman itself set out, as you will be aware, a scenario saying that, based on the current situation, it proposed a variation in terms of income tax. What it also said however is that the base tax position – be it tax rates, personal allowances and so on – is bound to change over time and there will be a mechanism built in to ensure we can allow for that. That is very much part of the work that we are doing at the moment with the Treasury and HMRC to ensure that we have that flexibility built in.

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.

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.

Q105 Mark Menzies: Secretary of State, we have spent much of today talking about rebalancing the Scottish economy away from the public sector to the private sector but at the same time there is some focus being given to moving bodies out of London and the south east into other regions of the UK. Particularly from a Scottish point of view, are you having any conversations with departmental colleagues about moving bodies up to Scotland? I am thinking of something like IPSA for example. I am sure those 72 jobs would be welcomed in Stornaway, Mauchline and many other communities. I just wonder what your thoughts are on that.

Michael Moore: There have been a number of suggestions made about where to locate IPSA and I do not wish to go there, so to speak. In terms of relocation, that is something that is actively considered by government departments all the time. In the face of the budget situation we find ourselves in and some of the huge decisions departments are having to make at the moment, clearly measures that would reduce the costs of administration are central to those considerations, but each department will come forward with its own thoughts on that.

Q106 Mark Menzies: On the jobs front, it is sometimes easy to talk about job numbers as opposed to quality of jobs. The one thing I would just like to leave you with is about making sure that we give a lot of focus, not necessarily on job numbers, but on high skill, high tech, linking with universities, apprenticeships and so on. In the constituency I represent, we have very high skilled, very high tech jobs and you see the benefit that has for the local economy compared to other people. The percentage levels of employment look the same but the quality of jobs is very different. I would just like you to give some thought as to what you are going to do about that.

Michael Moore: I think every government at every stage in history has always wanted to ensure it gets the right mix of jobs, taking account of the skills that are available and making sure that, for everybody in society, there is a worthwhile occupation and contribution they can make through their jobs. Yes, of course we want to ensure that there are lots of well paid jobs in Scotland. I do not want to make a quality judgment about that. There are lots and lots of jobs which would not count as well paid but I would absolutely call them high quality and we have to ensure that we sustain them.

Q107 Fiona O'Donnell: Turning to the question of electoral registration, as the Chair points out, local authorities have until October. Are you going to be directing local authorities or monitoring their performance in terms of getting people onto the electoral register between now and then?

Michael Moore: The responsibility is theirs. I do not foresee that they will be sluggish in the responsibilities that they undertake all year round now. People can register all the time innovations that have been introduced in the last ten years. I am happy to pay tribute to the fact that they have been introduced. As I understand it, there are not going to be additional resources targeted to local authorities or anybody else to make any extra special efforts, but I think in the context of the debate we will be having about the boundary reviews, about the AV referendum and everything else, I hope that awareness will be higher. Certainly from colleagues in your own party and many others, there will be increased efforts, I am sure, to ensure that as many people who are as yet not on the register get themselves on the register. Hopefully, we can encourage more people to exercise their right to vote.

Q108 Fiona O'Donnell: My concern is that there is no monitoring. There are no targets for local authorities and I think it is the constituencies with the highest levels of deprivation that are more likely to suffer. People who come through your door with case work often are not on the electoral register, which does not mean you do not offer them a service. I would like you maybe to consider that for the future and possibly use the census as a means to get more people onto the electoral register.

Michael Moore: I absolutely agree with you that every citizen in this country should be enfranchised and that we should do all we can to ensure that they are registered to vote. I never once in 30 years in this place have asked somebody who comes through the door, "Are you on the voters’ roll or not?" We serve all the people who live in our constituencies, whether they are registered or not. Perhaps we need to be more precise. We need to say to people, if we do find out from our case work systems that they are not on the voters’ roll, "By the way, have you considered this?"

Q109 Chair: I think it is worth saying that there is at least one of our colleagues who was saying recently that 40 per cent of her case work is not on the electoral roll. That is telling you something about the population she is serving. Could I draw matters to a close? Could I thank you for spending so much time with us? You are clearly not as bad as people expected. We would want to have the dialogue continuing with you and that is why we are really wanting notes back, because it might very well be that we want to discuss with you having some informal discussions about how to proceed with some of these things. Could I say to Mr McIntosh not only has he continued to play a blinder; we very much appreciated the seminar that we had yesterday with staff from the Scotland Office. I think that was felt to be very helpful. There was a whole number of areas cleared up and some areas where people were left more confused than they were before, but it is a learning process I think for us. So much of this is new. The process, as I understand it, about notes is that, where we identify those things that we think we have asked you for notes on, we will be circulating to Members just to confirm and then dropping you a letter about the things we want something back on. They will flow back as and when and we will have this iterative process. Is there anything else you want to add before you escape?

Michael Moore: I would just like to thank you and your colleagues for the opportunity to come here this afternoon to talk about some of these issues. I think you have given us a very fair hearing. There are areas – I am clear now – where you want to do more work and I hope we will be able to help you in doing that. I look forward to a good, constructive and productive relationship with you over the course of this Parliament.

Chair: Thank you very much.