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Lord Mackay of Ardbrecknish: I am grateful to the noble Baroness. I am intrigued that the Opposition may make changes to the Finance Bill which may change the basic structure of income tax and might even manage to win. That envisages a slightly different House of Commons to the one that we have. However, I see the point.

I do not believe the noble Baroness fully addressed my concerns. What if the Scottish parliament decides that it is not happy with the Revenue's proposals or lack of proposals and feels, for example, that the Revenue is describing as "not significant" a sum of money which, in its view, is significant? Will it simply be a matter of horse trading between the Government in London and the government in Edinburgh to try to resolve it, or is there some way in which an arbitrator--the courts or whoever--can be brought into play in order to decide the issue?

That is the only remaining point which the noble Baroness did not answer to my satisfaction. If she can do that, I shall withdraw my amendment.

Baroness Ramsay of Cartvale: The only point I can make is that, at the end of the day it will be the UK Parliament's prerogative. I hope that that answer is adequate.

Lord Mackay of Ardbrecknish: As a Unionist, that is a perfectly adequate answer. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 286ZB and 286ZC not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 286ZD:


Page 33, line 31, after ("to") insert ("the basic rate of").

The noble Lord said: This is a simple amendment with a simple intention. We are still talking about changes that the Treasury may decide to make because of structural changes to the tax system.

The Bill as it stands must be confined to income tax. I appreciate that. I should like it to be confined to the "basic rate" of income tax. After all, those Members of the Committee who have been here all afternoon will have gathered that it is the basic rate about which we are talking when we discuss the plus or minus 3p. My mind may perhaps be oversuspicious, but I wonder why all of a sudden the basic rate has been dropped when it comes to this specific part of the clause. The amendment suggests the insertion of the words "the basic rate of", which would make it consistent with what we have discussed from Clause 69 onwards; that is, the basic rate.

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If the Government decline to accept my amendment, it will be clear that in the circumstances we are discussing, of the Treasury having to make proposals, they will be able to make proposals affecting other rates of income tax--either the 20p or higher rates. That is clearly the only conclusion that can be drawn from subsection (3)(a) as it stands. Unless we insert the words "the basic rate of", it is not clear that we will be dealing with the basic rate. The Treasury may decide to make the amount 4p, for example, if there was a shortfall. That would be one way out. Equally, it may decide that the only way to get round it is to impose a Scottish variable rate on one of the other bands of tax. We can argue about that, but we ought to be clear about it.

Subsection (3)(a) clearly indicates to me that, in the circumstances we are discussing when Clause 72 is brought into play, the Treasury might propose to add a Scottish tax to either the 20p rate or the 40p rate. If that is not the Government's intention, I suggest that they accept my amendment. I beg to move.

Baroness Ramsay of Cartvale: I understand that, by this amendment, the noble Lord intends to ensure that any replacement tax power affects broadly the same group of Scottish taxpayers as the existing proposed power. We agree entirely with that principle and have already provided for that by Clause 72(5).

The real point is that we cannot know what changes may be made to the income tax structure in the future. It may be radically rewritten and there may no longer be a basic rate band. In that situation this amendment would create chaos. I understand that that is not what the noble Lord intends; I understand his intentions as he explained them. The reason behind leaving out the reference to the basic tax band in this part of the Bill is because there might well be no basic rate tax band at some point. That is why we have let it go on this part of the Bill. With that explanation I hope that the noble Lord will agree to withdraw his amendment.

7 p.m.

Lord Mackay of Ardbrecknish: I am grateful to the noble Baroness. While the circumstances that we are discussing are pretty hypothetical, I can see her point that at some stage in the future the tax system may be changed in a way that there is no longer something which can be called the basic rate of income tax. Consequently, the way in which Clause 72 is drafted would be appropriate. Therefore, I presume that as long as there is a basic rate of income tax the restriction will apply. It is only if there is no basic rate of income tax that it can be widened to other taxes. I shall require more than a nod of assent from the Government Front Bench. I would like the Minister to intervene.

Baroness Ramsay of Cartvale: I can confirm that. I am even prepared to write to the noble Lord if he so wishes.

Lord Mackay of Ardbrecknish: While I would love a letter from the noble Baroness, it is not necessary.

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I have had her assurance from the Dispatch Box, which carries a good deal more weight as regards the future than a letter. I am content to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 286A:


Page 33, line 36, at end insert (", and
(d) shall be contained in a statutory instrument which shall be subject to approval by resolution of the House of Commons").

The noble Lord said: This amendment refers to any proposal to make tax-varying amendments or tax-varying powers by secondary legislation. It follows on from what we were discussing about certain circumstances which may arise under Clause 72. The Treasury has made suggestions for changes and how they are to be dealt with by Parliament. I am disturbed by a power to amend the tax-varying powers by secondary legislation especially as so much time was spent here and in the other place discussing them. Those tax-varying powers were endorsed last September in a referendum, as I am constantly reminded, by the Scottish people.

I considered striking all this out of the Bill to ensure that any changes to the referendum pledges could be made only by primary legislation, but I decided not to go that far, especially as I believe that I have offered the Government an easy way out of this problem. However, I believe that any proposals to amend the parliament's tax-varying powers should be subjected to the strongest possible parliamentary scrutiny short of primary legislation.

My amendment makes clear that any such proposal will need the affirmative order procedure. I accept that this matter ought to be placed in Clause 102, but by putting it where it is now I believe that we shall have the debate in the correct place. If the Minister tells me that she accepts in principle the point that I am making and will make the amendment later on, I shall be content. The whole of Clause 102 has now been re-written by the Government. I have not yet had time to study it. I shall be even more delighted if the Minister tells me that in the re-write I shall find that my wishes have been agreed by the Government.

I am not very happy with the way in which the Government have brought forward at this Committee stage these amendments to the procedures for secondary legislation. From my understanding of the copy letter that I had from the noble Lord, Lord Alexander of Weedon, these matters were to be dealt with at Report stage, which would give us some time to consider them. This very considerable re-write now has to be considered by us--and amended if we want to--today while we are still in Committee on an earlier part of the Bill. In my view it was clear in the letter to my noble friend Lord Alexander of Weedon that these matters were for Report stage. I am puzzled as to why they suddenly appear on the Marshalled List for Committee stage.

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Amendment No. 286BA is very simple. The sum of £420 million which we have discussed a few times is to be inflated by the retail price index. We are talking about Government expenditure. It would be more accurate if the figure was changed by the applied deflator for general government final consumption. I recommend that to the Government as a more accurate way of dealing with the £420 million over the course of the years to come.

Amendment No. 287C removes the possibility that the Treasury may make an order retrospectively if it considers it appropriate. Why do the Government believe that the Treasury may need this discretion and retrospective power? Could it be used by the Treasury to negate a resolution of the Scottish parliament. If the parliament does something, can the Treasury use that power to negate it if it does not like it? If my fears are correct, that could cause a clash between Westminster and Edinburgh, which none of us want to see.

Referring to Amendment No. 287D, I am really puzzled. Surely the Government mean to refer to changing any enactments already on the statute book drafted and passed before by the Scottish parliament was conceived. Any enactment from now on will surely take into consideration the existence of the Scottish parliament and should not need any subsequent changes to take account of the Scottish parliament. I wonder why these words are in the Bill in this rather convoluted way. If the noble Baroness can explain, I shall be very interested to hear it. I beg to move.


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