I am sure lawyers will not be out of business any time soon on this matter The hon. Gentleman is absolutely right. In our recommendations on extra borrowing powers as part of a devolution package—including the housing revenue account and using tax increment financing more actively as local authorities have complete control over business rates—we make it clear that all the borrowing has to be done within the prudential borrowing rules. That is absolutely clear.
There is one other major issue: the control total for total managed expenditure that central Government use. The Government have already had to accept that if the Scottish Parliament decides to raise more money and spend it, that has to come outside the total. If Scotland can vary it, there cannot be a total managed expenditure that is absolutely fixed, because it cannot be cut elsewhere to compensate for Scotland’s increase. The principle has been accepted, and the Treasury has to relax more about allowing local authorities to raise money for investment purposes at local level outside the controlled total.
Finally, let us return to what the Prime Minister said about devolution in Wales:
“That means those who spend taxpayers’ money must be more responsible for raising it.”
That is a fundamental point. It is why fiscal devolution, as well as spending devolution, is essential. As the Select Committee said:
“The point has been reached for the Government (and policy makers in other political parties) to make it clear whether they are committed in principle to large-scale and more comprehensive fiscal devolution in England.”
We as a Select Committee are, and we believe that all those on the Front Benches should be, too.
4.42 pm