It is an honour to follow the right hon. Member for Orkney and Shetland (Mr Carmichael) who, apart from being a thoroughly nice bloke who is held in great regard in this House, was a most distinguished Scottish Secretary.
I want to make the Conservative case for as much fiscal autonomy, and therefore responsibility, as is possible. This is a big subject. It needs big positive gestures. We are talking about the future of the nation. We should frame our response to the general election not in the pettifogging detail of the civil service brief, but in the tradition of the great national declarations of the past. I call for nothing less than full home rule for Scotland—or self-rule as I prefer to call it.
The Smith commission really is a dog’s breakfast. No one understands it, and it addles the brain of anyone who tries to read it, as I have done. We have to get out of this love affair with commissions of the great and the good. We are politicians. We must have the vision in this House, as politicians—and, dare I say it, as statesmen—to look at the overall picture.
The election changes everything. We have to come to terms with the sad fact that the SNP has just won all but three of the seats in Scotland. We cannot go on as if we have just had the referendum. We won the referendum, but it was nine months ago. We have had a general election since then and we have to respond to that. The Smith commission was in response to an earlier panicky scare, which led to the vow, and I think the vow has, in a sense, produced an inadequate response.
If we do nothing now—if we do not move forward—we will fall into the same trap as the disastrous response to Irish nationalism. We are about where Ireland was in the 1880s. We now know our response to Ireland was too little, too late. We were wrong to abolish the Irish Parliament in 1801. We were wrong to delay granting Catholic emancipation. We were wrong not to listen to Gladstone in the 1880s. We were wrong not to implement home rule in 1914.
If we are to keep Scotland in the United Kingdom, which is my primary aim as a Unionist, I believe we should move towards full fiscal autonomy for Scotland so that, in broad terms, the Scottish Parliament spends what it raises, with only foreign affairs, defence and pension liability—and the ultimate liability for financial shocks like in 2008—remaining at the UK level.
I do not argue for fiscal autonomy as some kind of cheap trap: “Ha ha, get rid of the Barnett formula, the oil is slowly running out, make them poorer and they’ll behave.” Aside from the obvious immorality of such a position, nationalism cannot be defeated by imposing poverty—quite the opposite.
The Union is asymmetrical. The English have 85% of the population, and we must be generous. We are never going to get some perfect federal solution. We are better off with the Union. It makes for a larger spirited nation, and it is in our interests as English Members of Parliament to be generous. That means, certainly, English votes for English laws in the very few cases where we are passing laws that only affect England, but Scottish MPs must be part of the discussion. It is a sensible compromise that grants them a role in that discussion but with an ultimate double-veto.
There are several arguments against full fiscal autonomy. First, there is the argument that we must keep something in reserve. That is a Machiavellian argument, but it does not work. If we must keep something so that we have a bargaining tool, what happens when we have just one chip left? If it cannot be given away, it has lost its effectiveness as a bargaining tool, and if it can be given away, the argument fails completely. So I do not accept it.
Secondly, there is the matter of tax competition. We are warned that Scotland will lower its corporation tax or other taxes—we have heard about airport passenger duty—but so what? We should have the confidence to accept competition in tax policy.