Income tax and English votes for English laws Standing Orders
The Scottish Parliament now has the power to set the main rates of income tax. A motion to be debated on 7 March 2017 would amend Standing Orders on English votes for English laws to take into account that in future there may be legislation relating to income tax rates that are exclusive to England, Wales and Northern Ireland.
The motion below is scheduled to be debated on 7 March 2017.
STANDING ORDERS (PUBLIC BUSINESS)
Mr David Lidington
That:
(1) In Standing Order No. 83S(3)(c), after the paragraph (4A) treated as inserted in Standing Order No. 83J, insert-
"(4B) In addition, a clause or schedule-
(a) relates exclusively to England, Wales and Northern Ireland, and
(b) is within devolved legislative competence,
if it does nothing other than set one or more of the main rates of income tax for a tax year."";
(2) In Standing Order No. 83S(3)(d), at the end insert "and";
(3) In Standing Order No. 83S(3), omit sub-paragraph (f), and the "and" preceding it;
(4) In Standing Order No. 83T(2)(c), for ", (7) and (12)" substitute "and (7)"; and
(5) In Standing Order No. 83U(8), for "(4A), (7) and (12)" substitute "(4B) and (7)".
Standing Orders Nos 83J-83X were agreed by the House on 22 October 2015. They are the Standing Orders that set out the English votes for English laws (EVEL) procedures.
The EVEL Standing Orders, as agreed on 22 October 2015, generally required the Speaker to certify clauses, schedules or entire bills that related exclusively to England, or to England and Wales, and were within devolved legislative competence. Members representing seats in England, or England and Wales, have to give (or withhold) their consent to provisions that are certified by the Speaker, as a bill passes through the House. They do this in legislative grand committees, after Report Stage; and, if necessary, when the House considers Lords amendments.
For Finance Bills, the criteria for certification were different (see below) because the Scottish Parliament has a number of powers in relation to taxes that the other devolved legislatures do not. Under the Scotland Act 2012 the Scottish Parliament was given the power to set a Scottish rate of income tax. The same Act also created the Scottish tax on land transactions and the Scottish tax on disposals to landfill. The Scotland Act 2016 widened the Scottish Parliament’s powers in relation to income tax. “For the first time the Scottish Parliament has the power to set all income tax rates and bands (except the personal allowance, which remains reserved) that will apply to Scottish taxpayers’ non-savings, non-dividend (NSND) income for tax year 2017/18”.[1] It also devolved air passenger duty and the aggregates tax.
Standing Order No 83S sets out how the EVEL procedures apply to Finance Bills, or to a bill, which before second reading contained provisions which would be within the scope of a Finance Bill. Currently:
A clause or schedule which relates exclusively to England, Wales and Northern Ireland is within devolved legislative competence if it would be within the legislative competence of the Scottish Parliament to make any corresponding provision for Scotland in an Act of that Parliament.
Reflecting the wider powers for the Scottish Parliament under the Scotland Act 2016 to set all income tax rates, the motion amends the Standing Orders to provide that any clause or schedule that makes changes to main rates of income tax (that is the starting rate, the basic rate and the higher rate[2]) for a tax year “relates exclusively to England, Wales and Northern Ireland, and is within devolved legislative competence”. In other words, such a provision would have to be certified by the Speaker. Such a provision would then require consent in a Legislative Grand Committee (England, Wales and Northern Ireland).
The change to Standing Order No 83U provided for in paragraph (5) of the motion would have the effect of applying the changed provision to the founding motions for the Finance Bill (i.e., the Budget resolutions). A budget resolution relating to income tax would be subject to a double division (under Standing Order No. 83V) and would require a majority both of all Members and of all Members representing constituencies in England, Wales and Northern Ireland.
If the Standing Orders are amended, they would apply to Budget Resolutions considered at the end of the debate on the Budget which the Chancellor of the Exchequer will present on Wednesday 9 March 2017.
At Business Questions on 2 March 2017, the Leader of the House, David Lidington, said that the Government would publish an explanatory memorandum on the proposed Standing Order change (see Supporting Documents, below). He also outlined the reasons for the proposed change:
The proposed change to the Standing Orders is to recognise the fact that the Scotland Act 2016 has devolved to the Scottish Parliament the right to set the main rates of income tax. Our own Standing Orders on English votes for English laws therefore need to be adjusted to take account of the fact that we may well in future have resolutions or pieces of legislation relating to main income tax rates that are specific to England, or to England, Wales and Northern Ireland, but not to Scotland, because those matters have been devolved. That is the purpose of the technical change to the Standing Orders.[3]
An Order of 1 March 2017 allows debate on the Standing Order change to continue for up to one hour.[4]
The Library briefing papers on EVEL and on the devolution of financial powers to the Scottish Parliament provide some further background:
- Devolution of financial powers to the Scottish Parliament: recent developments (SN07077, March 2016)
- English votes for English laws (CBP 7339, December 2015)
[1] Scottish Government, Scottish income tax 2017/18 [last viewed 2 March 2017]
[2] Income Tax Act 2007, section 6