House of Lords
Water: National Grid
(12 years, 9 months ago)
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Lord Gardiner of Kimble
To ask Her Majesty’s Government what plans they have to facilitate the establishment of a national water grid.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Taylor of Holbeach)
My Lords, our water White Paper set out the challenge of ensuring resilient and sustainable water resources in the face of increasing pressure from climate change and population growth. We need to use existing water resources more efficiently, develop new sources and build connectivity across the network. Water companies are already joining up sources of supply to build resilience. We are working closely with Ofwat and the Environment Agency to encourage further connectivity and to promote bulk water trading.
Lord Gardiner of Kimble
My Lords, by 5 April over half the country will be subject to drought orders. I know that the Minister understands the gravity of the situation but perhaps I may press him further. Will he and his departmental colleagues, as a matter of priority, bring forward a national plan—whether it is called a network or a grid, I really do not mind—so that for the future all parts of the country have an adequate water supply?
Lord Taylor of Holbeach
As my noble friend is aware, much has already been done by water companies to improve interconnectivity. My noble friend asked about a plan. We are encouraging water companies to include provision for better interconnectivity in the next price review round, which is due to complete in 2014. This is potentially much more cost-effective than creating a national grid and it will help to address the problem of imbalances in water availability across the country. We need Ofwat to get the incentives right so that water trading is economically attractive for water companies.
Lord Wigley
My Lords, I welcome the statement made by the noble Lord a few hours ago in this Chamber, when he indicated that any proposals to secure additional water supplies from Wales would go ahead only with the agreement of the National Assembly as water is a devolved matter. That being so, will he also confirm that there will be a Barnett consequential for the expenditure undertaken as a result of the Bill passed last night that would be relevant to Wales?
Lord Taylor of Holbeach
The noble Lord made a valuable contribution to last night’s debate. The point I was making concerned the construction of new reservoir capacity, rather than taking water from existing reservoirs, and I think I should make that clear. I am not fully briefed on how the Barnett formula might apply in respect of the Bill which this House passed last night and any arrangements that might be made with Wales, so I cannot help the noble Lord on that point. However, I shall write to him if he will allow me to do so.
Lord Pearson of Rannoch
My Lords, is not one of the more obvious benefits of our EU membership the fact that we have been forced to spend at least £65,000 million, or £65 billion, on three EU water purification directives when there was nothing wrong with our water before? No one was getting tummy ache. Would not that sum now be useful for infrastructure and supply?
Lord Taylor of Holbeach
No, I cannot accept the noble Lord’s premise. The Government owe it to all consumers to make sure that the water is of the highest standards and there can be no derogation from that obligation. The noble Lord is quite right that infrastructure costs money, but the water companies can be incentivised to provide just that.
Baroness Miller of Chilthorne Domer
My Lords, what importance do the Government give to some of the work being undertaken at, for example, the University of Leeds on the development of water-free washing machines and at other institutions on water-free lavatories? Is not the effort on finding ways of using much less water worthy of a great deal of investment?
Lord Taylor of Holbeach
My noble friend makes a very good point, indicating that water efficiency is one of the key strategies which it is in all our interests to pursue, particularly at this time when drought threatens a good deal of the country. That and water capture and storage are strategies which individuals and businesses can undertake for themselves.
Lord Lea of Crondall
Does the Minister recall that the last time the noble Lord, Lord Pearson of Rannoch, invented a statistic regarding the water directive—in this case, £65 billion—he got his arithmetic wrong, as he subsequently acknowledged, by a factor of 1,000? Does the Minister think that the same is likely to apply on this occasion?
Lord Taylor of Holbeach
I cannot possibly comment on the accuracy of the mathematics of the noble Lord, Lord Pearson. He has placed a figure before the House and, of course, is accountable for what he has suggested, but I cannot comment on it.
Baroness O’Cathain
Will the noble Lord tell us whether progress has been made on the things that we can change now rather than the things that will take 20, 30 or 40 years? For example, what progress has been made on stopping the leaks, and what proportion of water is actually lost through leakage every year?
Lord Taylor of Holbeach
My Lords, as part of the Government’s drought summit, water companies are committed to reducing water losses and increasing leakage detection. It is important to say that leakage cannot be eliminated altogether. Even new pipes can leak, but water companies have leakage targets to move them to a sustainable, economic level of leakage. Leakage has fallen by nearly 40 per cent since the mid-1990s and is expected to fall by a further 3 per cent in the next three years.
Lord Campbell-Savours
My Lords, what progress is being made on the proposal to build a new large reservoir in the Abingdon area—I think that it is in Oxfordshire?
Lord Taylor of Holbeach
I know nothing of that proposal so I am not in a position to answer the noble Lord’s question. Reservoir capacity is important, of course, but even more important is the opportunity to connect up existing river resources and water resources so that they are available across water companies. That is the point that I wanted to make in response to my noble friend’s Question.
Earl Cathcart
My Lords, we pipe and store gas and oil around the country, so why not water? The Roman aqueducts did it 2,000 years ago. The Minister previously cited the difficulty in getting water uphill. Quite so, and no doubt the £30 billion or so cost of establishing a grid is also an issue. Why cannot we use wind turbines to push the water uphill? Is not the provision of water a far greater and essential benefit to one and all, rather than getting a few people to Birmingham a few minutes earlier? We should get our priorities right.
Lord Taylor of Holbeach
My Lords, it is possible to achieve both but it is not possible to make water flow uphill as my noble friend rightly points out. I would use the analogy that the amount of money that my noble friend is prepared to spend to put petrol in the tank of his motor car is a great deal more than he would be prepared to pay to fill his bath with water. Some of the difficulty comes from the fact that we as a country do not recognise the importance of water and value it enough.
Japanese Knotweed
(12 years, 9 months ago)
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Baroness Sharples
To ask Her Majesty’s Government what progress they have made in eliminating Japanese knotweed from the United Kingdom.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Taylor of Holbeach)
My Lords, we are working towards sustainable natural control of Japanese knotweed. The controlled release of the highly specialist psyllid, Aphalara itadori, is progressing well and we are nearly two years into the release phase. If successful, the psyllid should restrict the growth of Japanese knotweed, slow its capacity to spread as vigorously and enhance the effectiveness of other management effort. I regret to say that it will not eradicate this invasive plant altogether.
Baroness Sharples
My Lords, perhaps in my perseverance in asking this Question over 25 years, we are actually getting somewhere. The psyllid is quite a success but are there other ways of ridding ourselves of this extremely invasive and destructive weed?
Lord Taylor of Holbeach
I would like to thank my noble friend for her persistence, which I think rivals the Japanese knotweed in its vigour and eradicability. Research is going on into a leaf spot fungus, which also has the capacity specifically—this is the key to biological control—to attack Japanese knotweed. Defra and the devolved Administrations are also supporting catchment scale control work on Japanese knotweed in several areas across the country.
Lord Dubs
My Lords, while waiting for this new panacea to have effect, does the Minister agree that Japanese knotweed is pretty lethal stuff and that there are virtually no powers to deal with it if one sees it in adjoining gardens or houses? Short of having to take civil action, which is pretty cumbersome—especially given the legal aid Bill—should we not have better enforcement powers? People do not know about it, and not all police forces have wildlife officers, so why not give local authorities the power to deal with it?
Lord Taylor of Holbeach
The noble Lord makes a very important point. Japanese knotweed is a pest and it is extremely difficult to eliminate. However, I remind the noble Lord that this House guards jealously the right of entry. I remember many debates on that issue and I am not sure that this House would be particularly happy to have people’s gardens invaded by enforcement officers in the way that he suggests.
Lord Flight
My Lords, when I read this excellent Question of the noble Baroness, Lady Sharples, I wondered whether it was code for the knotweed growth regulation that was debilitating our economy.
Lord Taylor of Holbeach
As my noble friend will know, Defra has been extremely vigorous in responding to the red tape challenge. Indeed, the red tape regulatory reduction targets of this Government are being vigorously enforced. Unfortunately, we do not have a psyllid that we can apply to them.
Lord Davies of Oldham
My Lords, I am very pleased to hear of the progress on the introduction of the psyllid, which passed its scientific trials on my watch when I was a Defra Minister two years ago. I was persuaded, as I am sure the whole House will be, at how threatening the plant is. Network Rail’s permanent way, embankments and the lines themselves are threatened by knotweed and it has to deal with it at immense cost. Householders in Broxbourne, the borough in which I live, lost their £300,000 home the other day because the weed had infested their land. We cannot take this lightly. The noble Lord is right that we place a great deal of hope on the psyllid but we certainly need to make progress on its employment.
Lord Taylor of Holbeach
The noble Lord is absolutely right to remind us of the continuity of government. It was helpful to be able to take up where the noble Lord left off. He was right to point out that this is a serious matter, particularly for those people who find their properties affected. That is why the Government are investing a considerable amount of money in the area. The cost to the economy is £166 million per annum, which is a sizeable sum. That is why we consider it a priority to find effective control.
Baroness Byford
My Lords, is my noble friend confident that other invasive species will not be permitted to come to this country? Clearly this has been a very long-term problem and we need to make sure that we do not allow in such species in the first place.
Lord Taylor of Holbeach
My noble friend is absolutely right. One of the hazards of climate change is that we may find exotic plant and animal pests coming to this country. Defra is constantly on watch; Fera, our science agency, gives us advice; and we monitor plant imports with the express purpose of trying to make sure that we do not allow such an accident to happen again.
Baroness Massey of Darwen
My Lords, on the saga of this weed, is Defra or any other organisation working on a solution to find an insect or animal that can destroy the weed by simply eating it?
Lord Taylor of Holbeach
That is exactly how the psyllid works. It is a mite-sized fly or beetle-type insect that has the capacity to suck the sap out of Japanese knotweed. This has proved to be a very effective treatment. It is a biological control; the psyllid is knotweed-specific and does not destroy other plants. This is why we are particularly pleased with the outcome of the trials that were conducted, and why we see it as the most effective way of controlling the pest.
Universities: Fees
(12 years, 9 months ago)
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Lord Forsyth of Drumlean
To ask Her Majesty’s Government whether they will ensure that students who are resident in England, Wales or Northern Ireland and attend Scottish universities will pay the same fees as those living in other European Union member states.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, as I set out on Report on the Scotland Bill on Monday, higher education is devolved across the United Kingdom. This means that all areas of the UK have made different decisions regarding the funding of higher education. Any change to the devolution settlement would risk a key principle of devolution: that the devolved Administrations have the freedom to set devolved policies as they see fit.
Lord Forsyth of Drumlean
My Lords, I thank my noble and learned friend for that very disappointing reply. Should the Government not get together with the Scottish Government and end the scandalous discrimination against students from England, Wales and Northern Ireland, who have to pay up to £36,000 to go to a Scottish university, where Scottish, Italian and French students can go for free, and where anyone else in the European Union can also go for free? Meanwhile, under the Barnett formula, people from the rest of the United Kingdom are funding a grant for Scotland that works out at about 20 per cent more per head than is spent in England. This is not sustainable; it is unfair to our young people; it is bad for the union; and should the Government not do something about it?
Lord Wallace of Tankerness
My Lords, I recognise the sensitivity of the issue—and the tenacity with which my noble friend pursued it in Committee and on Report. It is totally in character that he should continue to do so. As I indicated, fees are only one part of the question. Different student support arrangements are in place in different parts of the United Kingdom. Support for English students, including English students studying in Scotland, is more generous than for Scottish students studying in Scotland. The universities in Scotland have also made generous bursary arrangements for English students wishing to study at Scottish universities. It was suggested on Monday that there should be pan-UK discussions on the matter. I indicated then that I would relay that to the Department for Business, Innovation and Skills. That proposal has been relayed. However, I do not wish to raise unrealistic expectations. It might be useful for Administrations in all parts of the United Kingdom to come together and discuss the issue.
Lord Morgan
My Lords, why are university vice-chancellors thought to be so passive in this matter? We were told the other evening that they had no alternative, and that the lawyers had explained this to them. We were told that they could not revise their financial calculations. University vice-chancellors are supposed to be chief executive officers capable of responding quickly to sudden changes. Why can they not act to remedy an obvious injustice that stains the good name of their universities?
Lord Wallace of Tankerness
My Lords, it was not the university vice-chancellors but the Scottish Government to whom legal advice was given about the limitations with regard to European Union law. The noble Lord asked about vice-chancellors. I received a letter from Steve Chapman, the principal and vice-chancellor of Heriot-Watt University, urging me to resist my noble friend’s amendments. That shows that universities in Scotland have been responsive. He wrote that universities had put in place arrangements that meant that English students were not disadvantaged if they chose to study in Scotland instead of England, including the availability of bursaries and other forms of financial assistance at a level that was at least as high as that offered by English universities.
Baroness Randerson
My Lords, in the past the same EU anomaly applied to Wales. The Welsh Government have subsidised Welsh students studying in Wales, as well as EU students. Now they plan also to subsidise Welsh students studying in England. Is it the view of the Government that this would place an obligation on the Welsh Government also to subsidise EU students in England?
Lord Wallace of Tankerness
My Lords, I recollect a similar situation arising in Scotland. I cannot indicate that the UK Government have considered the position with regard to Wales. When I visited the University of Glamorgan last summer, I got my ear bent on the university student funding issue. However, as I indicated in my Answer to my noble friend, there would be merit in all the United Kingdom Administrations responsible for higher education getting around a table, teasing out some of the issues and learning from each other.
Baroness Liddell of Coatdyke
My Lords, I have always regarded the noble and learned Lord as a very fair man. He is in the very difficult position of having to justify the manifest unfairness towards English, Welsh and Northern Irish students. I welcome the initiative in seeking to reopen discussions with the Department for Business, Innovation and Skills. Will he also look at anti-discrimination legislation, because this is a clear case of discrimination against students from these three parts of the United Kingdom, and at the end of the day rich students will still be able to come to Scotland while those with humbler means will find it even more difficult?
Lord Wallace of Tankerness
My Lords, I cannot accept the proposition of the noble Baroness. As I indicated, the support arrangements available for students domiciled in England apply whether they are studying in England or at a Scottish university. Scottish universities have put in place generous bursary arrangements to help students coming from England and other parts of the United Kingdom. Students from England, whether they are studying in Scotland or England, will not have to pay off any of their loan until they are earning at least £21,000. That should not deter students from poorer backgrounds from coming to Scotland.
Lord McFall of Alcluith
My Lords, is it not the case that the Scottish Government are forcing the Scottish Funding Council to cut funding by more than £100 million over the next four years, thereby jeopardising the student experience and the teaching quality of the universities? Surely the Scotland Office as well as BIS should engage with this so that we can play fair by students not just in Scotland but in the whole of the United Kingdom?
Lord Wallace of Tankerness
My Lords, the position with which the Scottish Government were faced, once this Parliament had agreed a position on student fees and funding support in England, was that they could not risk Scotland becoming the cheapest option for students from the rest of the United Kingdom. Doing nothing would have created an unparalleled level of competition for places at Scottish universities, and there was a concern that this would squeeze out Scottish students from Scottish universities. As I indicated in debate and in answer to this Question, these are serious issues, and I do not minimise the strength of feeling among noble Lords. However, with European Union law on one side and the principle of devolution on the other, we must try to find a course—but I will not raise expectations of something that may be very difficult indeed.
Education: Languages
(12 years, 9 months ago)
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Baroness Coussins
To ask Her Majesty’s Government what is their response to the Language Trends survey 2011, published on 14 March 2012.
Baroness Coussins
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as chair of the All-Party Group on Modern Languages.
The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)
My Lords, the Government welcome the finding of the language trends survey that in the past year there has been a 15 per cent increase in state schools now teaching languages to the majority of their GCSE pupils. We believe this shows that the English baccalaureate is starting to have a positive impact on take-up. We are considering the expert panel’s recommendations for the national curriculum review and will be announcing our plans shortly. This will be followed by a period of public consultation.
Baroness Coussins
My Lords, I agree that the Government deserve to be congratulated on the boost to modern languages as a result of the EBacc. It is also a welcome finding of the survey that significantly more schools with the highest levels of social deprivation are making these improvements. However, does the Minister agree that it is of serious concern that as many as 46 per cent of state schools still say they have no intention of improving their language provision as a result of the EBacc? Does he agree that this points to the need to accept the recommendation of the expert panel and avoid repeating the mistakes of 2004, by restoring modern languages to the compulsory part of the curriculum at key stage 4?
Lord Hill of Oareford
My Lords, as I have said, we are considering the recommendations of the expert panel, which, as the noble Baroness says, were very clear. We will set out our response to that. The sharp uptake after a number of years of decline is encouraging. Given that it has happened in such a short time, there are grounds to hope that the process will go further. I understand the points that she makes and we will take them into account as we ponder our response to the expert panel.
Lord Harrison
My Lords, given the decline in language provision at independent schools—the reason for which is, I am told, dissatisfaction with the assessment of GCSEs and A-levels—would the Minister research this further in his conversations with that sector, to see why a past rich source of language scholars is in decline?
Lord Hill of Oareford
It is still the case that, for its size, the independent sector provides a disproportionate number of young people who go on to study modern languages. That is something that in broader terms one would want to do something about, to increase the uptake in the maintained sector. That is why these figures are encouraging. I am aware that concerns have been expressed over controlled assessment, grading and rigour at GCSE and A-level. Those are issues that Ofqual is leading on and looking at. I agree with the noble Lord that it is something we very much need to keep an eye on.
Baroness Sharp of Guildford
My Lords, when this House rather reluctantly agreed to the dropping of the modern foreign language commitment from the national curriculum in 2003, it was because the Minister at the time, the noble Baroness, Lady Ashton, agreed that a systematic programme of teaching languages to primary school pupils would be put in place. Will the Minister tell us what happened to this commitment to primary school pupils and how far are they systematically being taught languages?
Lord Hill of Oareford
Part of the answer to that will become clear in our response to the expert panel, which makes recommendations about whether teaching modern foreign languages should be statutory at primary school as well. That will become clear in due course. The last time research was carried out into the teaching of modern foreign languages at primary school, more than 90 per cent of primary schools were doing it. We have a challenge in getting specialist teachers of modern foreign languages into primary schools, and that is something we are seeking to address in looking at teacher training and teacher supply.
Lord Jones of Birmingham
My Lords, I declare an interest as a chairman and adviser to many exporters, who will always benefit from a more competitive, globalised UK economy. Does the Minister agree that if we do not start selling around the world even more than we do today, especially in developing and emerging markets, this country will not generate the wealth, tax and jobs that 21st century Britain will need? One of the best ways of closing a sale is to talk to the would-be purchaser in their language. The way to do that is to put pressure on those in state education not to learn what I presume we all did at school at their age—French and German—but Spanish and Chinese. With English, they are the languages of the 21st century. I hope that the Minister agrees with me that the sooner we get Spanish and Chinese Mandarin into state education, the more competitive this nation will become.
Lord Hill of Oareford
I very much agree with the noble Lord. Spanish is one subject that has been growing. French and German have been most sharply declining in numbers and Spanish has been growing. Chinese is small, but growing. One of the initiatives that my right honourable friend the Secretary of State took when he visited China last year was an agreement with the Chinese Government to have 1,000 Chinese language teachers training over here in our system. I agree with him that it is extremely important from the business point of view, but it is also extremely important from a cultural educational point of view as well.
Baroness Howe of Idlicote
My Lords, could the Minister tell us what the Government are doing to encourage greater use of ICT for language teaching via social networking—
Lord Strathclyde
I apologise for interrupting the noble Baroness, but Questions have now gone beyond 30 minutes.
Online Safety Bill [HL]
Trusts (Capital and Income) Bill [HL]
(12 years, 9 months ago)
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Baroness Royall of Blaisdon
My Lords, I have to admit that this is a trifle contrived, because it relates to a future Bill, rather than the Bill in question. However, noble Lords will be aware that it has been announced that the Joint Committee report on Lords Reform will be published on 23 April. Will the Leader of the House join me in deploring the leaks, of which there have already been two in the past three days? I will be writing to the noble Lord the Leader of the House today to request that a Statement be made on the Joint Committee report on 23 April, and to suggest that we have a debate on the joint report, preferably before Prorogation.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, contrived or not, I know that this is an issue of great interest to the House. The noble Lord, Lord Richard, who is chairman of the Joint Committee of both Houses, is in his place today. Whether or not there have been leaks—inspired or not—I deplore all leaks, by the Government or anyone else. However, it is a matter for the chairman and the committee itself; it is not a matter for me. I do not know whether it is true—I am sure that it is—that, as the noble Baroness said, it will be published on 23 April. The original date for the committee to finish its work was yesterday and I hope it might be able to publish a little sooner than 23 April, but maybe that will be subject to confirmation. I look forward to receiving a letter from the noble Baroness. I must say—I am speaking without any particular brief on this—it is hard to see how we can have a government Statement on the same day as the publication of a great report that has been nine months in gestation and on which 26 Members of Parliament and of this House, including Cross-Benchers and a bishop, sat, but I will see what can be done over the next couple of weeks.
Lord Richard
The original date of publication was to be 16 April. That is what the committee accepted, and that was my view. I took the view very strongly that the report should not be published unless and until this House was sitting. It would be quite wrong to publish the report when the House of Commons was sitting and the House of Lords was not. The Government then chose to change the date from 16 April, so that we have an extra week’s holiday and come back on 23 April. In those circumstances, the committee decided, and I totally agreed with it, that the publication date should be 23 April not 16 April.
Lord Forsyth of Drumlean
My Lords, I appreciate that this is not a matter for the Leader of the House directly, but the report on the BBC this morning of the leak suggesting that 12 bishops will be retained also contained the information that the Government would be content to accept that. That suggests that people in the Government are talking about the report, which would be very damaging because it gives the impression that the Government and the committee are working hand-in-hand when, of course, the committee is completely independent. If my noble friend is saying that we cannot have a Statement because the Government could not respond, surely it is inappropriate for people to be briefing the BBC in these terms.
Lord Cormack
My Lords, nobody could doubt the integrity of the noble Lord, Lord Richard, but it would reassure the House if he were able to indicate that no copies of this report will be distributed to anyone before the embargo date and that no member of the committee will be in possession of the report. As a former chairman of a Select Committee, I know that that is not normal practice, and I hope it will be the case here. I think everybody in this House will applaud the decision made by the noble Lord, Lord Richard, about 23 April and will endorse the Leader of the Opposition’s request that this report be debated as soon as is reasonably possible, ideally before Prorogation.
Lord Richard
My Lords, the question of a debate is nothing to do with me, although I have views about when it should take place. As to the question asked by the noble Lord, Lord Cormack, no copies of the report will be distributed before 23 April.
Lord Grocott
I press a question that I should have thought was the most reasonable and fair question that could ever be put to a Leader who is answerable to the whole House and not just for the Government. The debate must surely take place before the Queen’s Speech. I cannot understand why the Deputy Leader seems to think it is quite out of order. This House of Lords, faced with a Bill and a report on a Bill that is essentially about the abolition of this institution, is unable even to discuss it before it is finalised. The noble Lord, Lord McNally, has stronger views on this than the Leader. Perhaps he can answer for himself rather than simply parroting Mr Clegg’s Bill to the House. I cannot think of any other institution—a university, a factory or a school—where, if it were being closed, the people who work day in, day out in that organisation would be told by the management, “Sorry folks, you can’t discuss it”.
Lord Strathclyde
My Lords, I think that a number of the matters that were raised are not matters for me but for the committee. The noble Lord, Lord Richard, has explained what he is doing and has answered my noble friend Lord Cormack. As for my noble friend Lord Forsyth, I heard the same BBC report, but I assumed that the BBC had read the White Paper and the draft Bill in which it is suggested as one of the options that there should be 12 bishops. They were published last July, so the BBC has taken a bit of time to catch up. As far as I am aware, there is no collusion between the Government, civil servants and the committee, which is why I dare say that I was surprised that the date of publication would not be until 23 April.
Baroness Farrington of Ribbleton
My Lords, the noble Lord the Leader of the House misunderstood what was said on the BBC this morning. It was said that the Joint Committee of both Houses is recommending and that the Government accept the recommendation. Given the huge amount of work that the Joint Committee has done, surely it would be logical for the Leader of the House to agree that there should be time to consider the recommendations before the publication of a Bill, which may be amended because of the recommendations, is announced in the Queen’s Speech. That leads inexorably to a view that the report ought to be debated widely prior to Prorogation.
Lord Campbell-Savours
My Lords, if the report is to be published on 23 April and the Leader of the House tells us that we should have time to read and consider it, can we be assured that the House will meet during the week beginning 30 April for four days, or does the Leader of the House have something else in mind for that week?
Lord Strathclyde
My Lords, I cannot think what that would be. The noble Baroness, Lady Farrington, went back to the BBC report. Let me say this for the record: the Government have not seen the report. No member of the Government has seen it, and no civil servant has seen it. The Government have no view as to the recommendations on the bishops or anybody else, other than those that were listed in the draft Bill or the White Paper. There is no collusion between the Joint Committee of both Houses and the Government in any shape or form. The noble Lord, Lord Richard, can nod in agreement, and I am sure he will. When the report is published, it will be as much of a surprise to me as to my colleagues in government. Apart from anything else, I am very much looking forward to it.
I assure the House that over the next few months there will be plenty of opportunities to debate and discuss the future of this House at considerable length in many different fora. All those matters will be taken seriously. I did not hear my noble friend Lord Forsyth, but I am sure it was a quip that I would not necessarily have been able to respond to very quickly. I can assure noble Lords that there will be a debate before the Bill is published. I will, of course, work with the usual channels on when that will be.
I shall finish with this point. I do not wish to pre-empt the Queen’s Speech, but it has been known for some time that the Government intend to legislate in this area. The Joint Committee may well say, “Under no circumstances should you do this”. It may say, “You should do this, but here are some things you may wish to consider”. I have no idea. The Government will wish to take that into account, and will do so after the publication of the report.
Lord Lea of Crondall
My Lords, is not the question of how many sitting days we have before Prorogation rather relevant to this? Presumably the noble Lord knows on how many days the House will sit in the week beginning 30 April. Am I right that we do not know, or does everybody know?
Lord Strathclyde
My Lords, it really does depend on the progress of business on the date of Prorogation. We will be taking a view on that shortly. On the question of when the House will sit, by not sitting in the week of 16 April we are saving the taxpayer £500,000. That is quite a considerable amount of money. As I have said, there will be plenty of opportunities to debate the committee report and the whole subject of Lords reform on many occasions in the months ahead.
Trusts (Capital and Income) Bill [HL]
(12 years, 9 months ago)
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Lord Strathclyde
That it is expedient that if the Trusts (Capital and Income) Bill [HL]:
(a) has not completed all its stages by the end of this session of Parliament, and
(b) is reintroduced in the next session of Parliament,
the new bill shall, notwithstanding the provisions of Standing Order 46 (No two stages of a Bill to be taken on one day), be taken pro forma through all the stages completed in this session.
Public Bodies (Abolition of Courts Boards) Order 2012
(12 years, 9 months ago)
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Statistics and Registration Service Act 2007 (Disclosure of Social Security and Revenue Information) Regulations 2012
(12 years, 9 months ago)
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Lord Wallace of Saltaire
That the draft regulations laid before the House on 27 February be approved.
Relevant documents: 42nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 20 March
Scotland Bill
(12 years, 9 months ago)
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Lord Forsyth of Drumlean
“Referendum about Scottish independence: further provision
(1) Any referendum held in pursuance of the provisions of section 30 of the Scotland Act 1998 shall not take place until nine months after every Secretary of State has laid before both Houses of Parliament a paper prepared by their department setting out the implications of an independent Scotland—
(a) to that department and its executive agencies,(b) for that department’s policies, and(c) for that department’s planned expenditure.(2) Any referendum held in pursuance of the provisions of section 30 of the Scotland Act 1998 shall be administered by the Electoral Commission with a single question relating to the future position of Scotland in the United Kingdom.”
Baroness Anelay of St Johns
My Lords, I remind colleagues to leave the Chamber peacefully and quietly on this last day of sitting so that my noble friend Lord Forsyth may move his amendment.
Lord Forsyth of Drumlean
My Lords, I am surprised that there is not more interest in this important piece of legislation. This amendment is very straightforward. If my noble and learned friend is not able to accept it, I hope that at least he will be able to give an undertaking that the substance of it will be adopted by the Government.
It is perfectly apparent that the Government do not intend to use the Scotland Bill to provide for the forthcoming referendum on independence. As my noble and learned friend has made clear, the preferred procedure is to use a Section 30 order, but subject to the important conditions that such a referendum taken forward by the Scottish Parliament would be regulated and run by the Electoral Commission, and that there should be a single question.
This amendment is concerned with what happens in the run-up to the referendum. I take it that if my noble and learned friend is not successful in persuading the Scottish Government of the need to move forward on a Section 30 basis, they will bring forward a Bill in the next Session of Parliament to provide for a referendum. No doubt the date of that referendum would be decided at that point.
It is important that we have an informed debate within the United Kingdom as a whole and Scotland in particular. So far the debate has all been about process, about who is going to set the question and what the question should be. This is an important question. It concerns the future of the United Kingdom as a whole, and will have an immense impact on people in ways that many people, including myself, have not even thought of.
This amendment asks the Government for a clear undertaking that every single government department will set out in a Green Paper, in objective—not political—terms, what the consequences of independence would be and what issues would need to be addressed. There are large-scale issues that are obvious, such as what would happen to our nuclear deterrent given that the Scottish Government are opposed to nuclear material being on Scottish soil, and the costs and employment consequences of that. There are also issues about public sector pensions as Scotland, because of its long tradition of public service, has a disproportionately large number of people involved in public service.
In the field of banking and finance, the Treasury should indicate what would happen to organisations like the Royal Bank of Scotland; for example, how could it possibly meet its requirements for raising capital in an independent Scotland? What would happen on the currency? What would happen on the role of the Bank of England? How would we avoid a Greece-like situation?
In the Department of Energy and Climate Change, what would happen in respect of the interconnectors and how would the so-called green policy of being entirely dependent on renewables work in an independent Scotland? It might be cheaper for England to buy its electricity from France, which is generated by nuclear, than from Scotland, where the whole business model for the Scottish Government’s green agenda depends on being able to add to the bills of English, Welsh and Northern Irish consumers.
Those are some examples; I could go on but I have no desire to spin out the debate today because I know people are anxious that we should conclude these proceedings as speedily as possible. But if we leave it to campaigners and politicians to exchange perhaps not entirely well informed arguments, the public will tire and the very serious consequences of the disintegration of the United Kingdom, of the balkanisation of Britain, will be lost sight of.
If I were in my noble and learned friend’s place, I would say, “I am not sure that it is necessary to put this in the Bill”. I accept that, but we should have an undertaking that every government department and its executive agencies will set out the implications for their policies and planned expenditure, so that people go into this with their eyes wide open, and the separatists who advocate breaking up Britain have to explain how they would address these issues. At the moment, people are going round saying that it is up to us to make a positive case for the United Kingdom. I reject that. It is up to those who propose change to explain how they will maintain the benefits that we all enjoy as part of the United Kingdom, wherever we live and whatever our political convictions.
Lord Deben
Does my noble friend agree that this is absolutely crucial for those who are not Scottish as well as for the Scottish? Many in England feel that they need to understand exactly what the consequences are and unfortunately up to now they have had no such opportunity, which is why his amendment is so important.
Lord Forsyth of Drumlean
I am most grateful to my noble friend for that intervention. I look at this from a Scottish perspective and I should have given more emphasis to that. He is absolutely right. This will have huge implications for people in England as well as Scotland. I find it very difficult to see how we could keep our role and influence in the United Nations, for example, if the United Kingdom was broken up. I think our country would be seen to be greatly diminished internationally. I do not quite know how it would work, given that the Scottish nationalists are opposed to our membership of NATO. Most countries are queuing up to try to get in to NATO, but this lot want to leave NATO. What is the position of our armed services, whose dedication fills everyone in the country with admiration?
The Lord Speaker (Baroness D'Souza)
Does the noble Lord wish to move his amendment?
Lord Skelmersdale
My Lords, perhaps I may gently suggest that my noble friend Lord Forsyth finishes his words of wisdom before anyone else interrupts because it interrupts the flow of what he is saying.
Lord Forsyth of Drumlean
I am most grateful that I have a fan here, although the interventions that have been made were very pertinent. I beg to move.
Lord Gordon of Strathblane
I intervene briefly to suggest that the perceived impartiality of such a series of reports might be improved if it was handled by the equivalent of a Calman 2 commission, preferably of economists of sufficient stature that they would put their own reputation for impartiality above any party advantage. Ideally—I hope that I am not being unduly starry-eyed about this—if the membership of such a committee could be agreed with the Scottish Government, there would be no come-back. I agree that that looks pie in the sky, but there are economists, including economists of a nationalist tendency, who would not put their own reputations on the line by being seen patently to lie about the consequences of certain things. I simply suggest that the equivalent of Calman 2 might be a useful prerequisite for any debate on any amendment. I wonder whether the noble Lord agrees with that.
Lord Forsyth of Drumlean
I think that the noble Lord intervened before I sat down. I do agree with that. The next inquiry of the Economic Affairs Committee of this House, of which I am a member, as the noble Lord will be aware, will be into the economic impact of independence on the United Kingdom as a whole. I agree that many economists can contribute to that in an informed and objective way. I think that the committee will produce some very interesting material as a result.
Lord McCluskey
In addition to economic and legal aspects—many different opinions have been expressed publicly by members of the Scottish Government and the United Kingdom Government—I wonder whether the noble Lord has considered legal matters such as the right of Scotland or the ability of Scotland, if independent, to join the European Union or to retain the pound and matters of that kind. Does he think it is advisable that, in addition to a committee of experts such as the noble Lord, Lord Gordon of Strathblane, has mentioned, there should be from this House a committee including lawyers and experts who can offer independent advice on such questions?
Lord Sanderson of Bowden
My Lords, I assume that my noble friend had serious reservations about the terms of Section 30 being agreed with the First Minister. After all, in recent press comments, the First Minister has said, “Will you please leave this all to us in Scotland and we will organise the referendum as we want it?”. I send good wishes to those from the Government who will carry out these vital negotiations but the questions that have to be settled are so important. I support my noble friend in saying that, if we do not get what we want on the question or any of the other important issues, we must have a chance to deal with it at Westminster.
I know that my noble and learned friend when he comes to reply will say, “Oh, but this amendment is not for the face of the Bill”, which I accept. But I believe that he has to give us some sort of undertaking that the very matters which my noble friend Lord Forsyth has raised in this amendment are dealt with and that we will get full and frank discussion of what is involved in this whole exercise.
Baroness Liddell of Coatdyke
My Lords, I should like to expand slightly on what the noble Lord, Lord Sanderson, and my noble friend Lord Gordon have said. I am greatly reassured to hear from the noble Lord, Lord Forsyth, that the Economic Affairs Committee of this House will consider the issues around the economics of independence. I have one suggestion to make for the Green Paper proposed by the noble Lord, Lord Forsyth, and that is to look at the impact on employment of the proposal for an independent Scotland—in other words, that Scotland should secede from the union.
In the 1970s, a very effective campaign was run in Scotland led by the Scottish TUC, the CBI and the Scottish Council for Development and Industry for the dispersal of Civil Service jobs. A few weeks ago I tabled a Question for Written Answer asking how many Civil Service jobs in Scotland relate to reserved departments—in other words, United Kingdom departments as distinct from Scottish departments. There are 31,000 jobs in reserved departments. There is no question that these jobs will disappear. No sovereign state offshores significant Civil Service jobs. We do not have any British Civil Service jobs in the Republic of Ireland, in Jersey or in any of the other realms and areas close to our shores. It is inconceivable that we would have a situation where these Civil Service jobs would remain in Scotland.
If I was a Member of Parliament for places such as the north or the south-west of England and I saw the prospect of these Civil Service jobs becoming available, I would be crying out for them. There are jobs at every level, from limited skill at entry level to real leadership jobs with real salaries. Even on a random guesstimate of the multiplier of these jobs, on a multiplier of three, in the wider economy we are talking about something approaching 100,000 jobs directly consequential on the cessation of Scotland from the United Kingdom.
Some jobs will carry a higher multiplier because they are, for example, in science and technology; in the Ministry of Defence, both uniform and civilian; or they have a long supply chain in Scotland. We need to know what the outcome of that is likely to be for the Scottish economy. Like other noble Lords, I do not expect the noble and learned Lord to accept that this amendment should go in the Bill but I hope that there is already within government at least a Cabinet committee looking at these issues. The economic issue is perhaps the simplest. Once we go on to welfare matters, we are into a degree of complexity that will give us sore heads for a long time.
I urge the noble and learned Lord when he replies to the amendment in the name of the noble Lord, Lord Forsyth, to take into account the crying need for dispassionate information about the true consequences. Let us take a decision based on fact and not on rhetoric.
Lord Maclennan of Rogart
My Lords, I support the objective of my noble friend Lord Forsyth. I believe that the Scottish people need to be presented with much more detailed information about the consequences of separation than are likely to be provided by the popular press or the media. The reality is that the last time we had a referendum on constitutional reform, on AV, the media noticed the issue for no more than two weeks before the vote took place. Although the issue of voting systems is nothing like as significant as that with which we are now faced, which could lead to the break-up of Britain, I do not have any expectation that the depth of analysis that would be available to most people in the popular media would be anything like sufficient to assist the formation of a carefully cast vote. Although it may not be appropriate to put this directly into the Bill, it seems to me that the Government are best placed to analyse the consequences for government departments. Although there is an issue of whether that is the most independent way, the factual description of what would flow can be done. I would go further and say that there is a need for independence not only for a factual explanation of what is feasibly anticipated for Scotland, but the required consideration of alternatives for the whole of the United Kingdom.
That process would require considerable, objective debate, as the noble Lord, Lord Gordon, said. I am not certain that the alternative would best be discussed or presented by the Government at this stage. To have that debate, properly informed, is imperative if we are not going to blunder into a constitutional catastrophe, not just for Scotland but for the whole of the United Kingdom.
The Earl of Caithness
I support what my noble friend Lord Forsyth has said about information. In the United Kingdom we are woefully short on information as to the consequences of this potentially tragic leap that we are encouraged to take. I was disappointed in Committee by the lack of response from my noble and learned friend on these matters. I raised some of them, such as the UK’s membership of Europe and what Scotland’s position would be, and what the position of our seat as a permanent representative on the Security Council of the United Nations would be. What currency will Scotland use? It cannot be allowed to use a single currency with the rest of the United Kingdom because single currencies without a single Government do not work. Will Scotland accede to or be refined as an existing member of the EU? The EU is clear on that: if you are a new member, you have to have the euro. Does that mean that, in Scotland, they will have to have the euro? Without this sort of information, we are not going to be able to have a sensible debate on this.
The noble and learned Lord, Lord McCluskey, raised the legal point. In Committee, I reminded Members of the number of treaties and obligations that had to be renegotiated with the break-up of Czechoslovakia. That ran into tens of thousands. A huge number of commitments will have to be renegotiated or adjusted. We need to know what they are going to be.
I agree with my noble friend Lord Sanderson of Bowden on his scepticism over the Section 30 order. We cannot alter this Bill. It has been agreed behind closed doors and is subject to a legislative consent Motion. My noble and learned friend Lord Wallace of Tankerness was very clear about this when I raised it on the first day of Report, when I asked what happens if we have an amendment at Third Reading. He said, “Well, Holyrood will have something to say about that”. So we will not be able to alter the Bill, and we will not be able to alter a Section 30 notice. Again, it will be agreed behind closed doors and presented as a fait accompli.
In addition to giving support to my noble friend Lord Forsyth, I ask my noble and learned friend Lord Wallace two questions. In the Section 30 notice, does he envisage that the referendum would have to take place by a set date? If the Section 30 notice allows for a referendum but there is no fixed date by which it must be held, we will go into limbo. If it is not held by that fixed date, the United Kingdom Government will have to legislate for a referendum to settle this matter.
Secondly, my noble and learned friend likened the United Kingdom to a club. If a member wants to leave, they should be allowed to leave the club without any of the others having any say in the matter. My amendment on the rest of the UK having a say in what Scotland decided was not acceptable to him. Will he therefore confirm that, in the Section 30 notice, he will allow parts of Scotland also to leave the proposed club of an independent Scotland? It comes back to my point about Orkney and Shetland, but it might be the Western Isles or somewhere else. There cannot be one rule for the United Kingdom and another for those in Scotland.
Lord Steel of Aikwood
My Lords, my noble friend Lord Forsyth has done the House a service in raising this issue this morning, but I am deeply pleased that he is not going to press the amendment, because it is seriously defective. The idea that we should wait until nine months after the last government department has produced a Green Paper on this subject fills me with dread. I am in favour of a referendum as soon as possible. This would have the effect of delaying it indefinitely—indeed, possibly beyond the date that even Mr Salmond hopes to achieve. I know that the noble Lord is not going to press it, so I will not—
Lord Forsyth of Drumlean
The point of the nine months was that I would like this information to be brought forward as soon as possible. Nine months seemed a reasonable period in which people could have an informed campaign. The Green Papers might be published, but you then need that information to be used as part of the campaign and for people to absorb it. It requires some time.
Lord Steel of Aikwood
I do not dispute that. I am querying the length of time that it would take for each UK government department to produce its Green Paper. That is my point.
Lord Steel of Aikwood
The nine months starts after that. I hope that my noble friend is not going to press his amendment.
In the second section, it is of course the case that the single question should relate to the future of Scotland in, or out of, the United Kingdom. You cannot assume that it would be in the United Kingdom.
Leaving that to one side, the kind of information that we would need is what the effect would be, to take one example, on the financial situation in Scotland if it were independent. There seem to be three options: Scotland is in the eurozone, which used to be SNP policy; or it is dependent on the Bank of England, in which case it is not proper independence; or else we have a Scottish currency like the old Irish punt. These options need to be spelt out. That is the kind of information for which my noble friend is pressing, and I hope that when my noble and learned friend comes to reply he will be able to give us some indication of the kind of work that is going on on these issues.
Lord Browne of Ladyton
My Lords, I, too, welcome the general thrust of the amendment of the noble Lord, Lord Forsyth, in so far as it encourages the preparation and dissemination of objective and credible information about the effects of separation on all aspects of public policy and, by implication, the benefits of the union to the people of Scotland. I resist the temptation to add to the growing list of areas of public policy for which this momentous decision will have potentially detrimental implications. The noble Lord, Lord Forsyth, listed a significant and impressive number of them, which were then augmented by the intervention of my noble and learned friend Lord McCluskey and, indeed, by my noble friend Lady Liddell.
My own view is that there is hardly any area of public policy in Scotland that will not be affected in some way by the decision, should the people of Scotland decide to separate from the rest of the United Kingdom, which I am confident—and certainly sincerely hope— they will not. It is inarguable that this is the most important decision that the people of Scotland will ever, collectively, have to make. It cannot be made unless it is informed by facts: not assertions, not massaged statistics, but facts. On the analogy that if you want to leave a club you can leave it but, if you want to stay and change the rules, then everyone who is still a member of the club has a view, the rest of the people of the United Kingdom are also entitled to know what the facts are.
I agree with the general thrust of the debate and the implication of the noble Lord’s opening remarks that the Bill is not the appropriate place for this debate. Whether or not the points that the noble Lord, Lord Steel, made in relation to delay and the wording are correct, I do not think we will try to impose this amendment into the Bill. That is the right thing to do. If there is to be no statutory obligation on Secretaries of State to provide the necessary information to inform this debate then, at the very least, there needs to be a clear undertaking from the Government that they will place an obligation on Secretaries of State to put that information in the public domain. They should draw on the broader debate that is taking place here about what mechanism or mechanisms should be deployed or created in order to disseminate this information and to give it the stamp of credibility and objectivity that will be necessary to inform the debate.
I would be concerned if there were to be a proliferation of initiatives. I accept that it is entirely appropriate and correct that the Select Committee on Economic Affairs, of which the noble Lord, Lord Forsyth, is a member, should address its attention to this important decision. It is at the heart of political life in the United Kingdom at the moment and there would be no better work for the committee to do. I expect that in the other place the Select Committee on Scottish Affairs will carry out similar work and that other organisations, such as academic institutions, will wish to address themselves to this work in the coming period.
In Scotland, a well resourced institution which can bring together this work and give it a genuine stamp of credible objectivity is necessary. Many people in the professions in Scotland—including the legal profession, academics, economists, people who have served in the Armed Forces, people who understand and have made significant contributions to international affairs over the years, many of whom sit in this House—could make a contribution to the debate.
Those of us who are trying to put together the infrastructure that will inform the debate in Scotland ought to apply our minds to the creation of a genuinely credible and independent institution operating out of Scotland—perhaps an academic institution—which could be a receptacle in which all the information could be deposited, verified independently and disseminated. We should clearly invite the nationalists to contribute to that discussion so that what comes out of it has that stamp of credibility and objectivity, and not the taint of a political objective.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, I welcome the debate and the amendment moved by my noble friend. Although he has indicated that the amendment might not be appropriate for the Bill, the way in which he has moved it and the issues he has raised have clearly won widespread support across the House. I certainly recognise the spirit in which he moved it and I endorse the points that he has made. He said that it is time to get on with the informed debate rather than debate the process, and I warm to that because there is a host of important issues that need to be analysed.
It is worth bearing in mind that the Scottish National Party has been pushing for a referendum to be held for many years, and it has repeatedly been asked to set out what it means by an independent Scotland. As my noble friend said, the onus is on it to set out what it means by independence. Individuals, businesses and civic Scotland have been calling for urgent clarification of what independence would mean for their livelihoods, for their workplace and for their families.
In September last year my right honourable friend the Secretary of State for Scotland asked the Scottish Government just six of the many questions that need answering, and these have been echoed in your Lordships’ House today. How would membership of international organisations, including the European Union, be assured? What will Scotland’s defence posture and the configuration of Scotland’s Armed Forces be? How many billions would Scotland inherit in pension liabilities? Who would pay for future pensions? What regulation would be applied to Scottish banks and financial services and who would enforce it? Which currency would Scotland adopt, and how could entry and influence be guaranteed? Lastly, how much would independence cost—what is the bottom line?
Noble Lords also raised other questions. The noble Lord, Lord McCluskey, asked about the legal implications of independence. The noble Baroness, Lady Liddell of Coatdyke, in raising an important point, reminded us of the number of UK civil servants working for UK departments in Scotland—there are considerably more than the number working for the Scottish Government—and asked what their position would be in an independent Scotland. These questions clearly need answering. There is an obligation on the Scottish Government and the Scottish National Party to provide answers.
Although it is accepted that a statutory obligation on, for example, the Department for Education, the Ministry of Justice or an executive agency to come forward with a Green Paper may not be the way forward, I say to my noble friend and the House that I am confident that all departments will be engaged in setting out the positive case for the union and, by implication, what the other side of the coin would be. We are seized of these important issues.
On a previous occasion my noble friend Lord Forsyth raised the issue—as a number of noble Lords did today—of an independent body to examine some of these matters, and in the other place the right honourable Jack Straw has put forward a similar idea. The proposal has its attractions, as the noble Lord, Lord Browne, indicated. I suspect that the proposal would not pass the test if it came from the Government as it might be seen as not being objective. The noble Lord, Lord Gordon of Strathblane, suggested that a Calman Part 2-type body might be appropriate. Although I can see the attraction of that, I would remind your Lordships that the Scottish National Party did not engage with Calman Part 1. As the noble Lord, Lord Browne, said, for us to have the status of providing objectivity we would have to bring in all the parties. It might not be a matter for the Government, but it might be a matter for those of us who wish to see an informed debate outside government to consider how this might be done in an effective way.
My noble friend made the point that the Scottish Government have an obligation to bring forward their proposals for independence. They have had months to answer the questions put by my right honourable friend the Secretary of State, and yet they still delay in telling the Scottish people what their proposals for independence are. It is important that they should be straight about the implications of independence and what it would cost.
If a Section 30 order were used to give the Scottish Parliament the power to legislate for a referendum on independence, my noble friend’s amendment would have the effect of requiring that it should be solely on the question of independence and be administered by the Electoral Commission. As set out in our consultation, and as emphasised during the debate on the subject in Committee, it is our view that any referendum should have a single, straightforward question on independence and should be overseen by the Electoral Commission.
Section 10 of the Political Parties, Elections and Referendums Act 2000 allows the Electoral Commission to give assistance to various bodies, including the Scottish Government and the Scottish Parliament. This means that the Electoral Commission could provide advice and assistance to the Scottish Government now about the independence referendum should they so request. However, the Government do not want to rely on this general duty. It is important that the Electoral Commission should be required to consider and report on any referendum question about independence. It is not necessary to make an amendment to the Bill to achieve that. A Section 30 order devolving the power to the Scottish Parliament to legislate for a referendum could clarify this power by requiring that the referendum was on a single question, held in accordance with the PPERA framework and overseen by the Electoral Commission.
Lord Maclennan of Rogart
My noble and learned friend has indicated his firm view, which I am sure is shared by the House, that the Scottish Government should answer some of the questions that have been raised in this debate. Does he also accept—I presume that he does—that it is for the Government of the United Kingdom to put forward their views about what are the issues at risk? It is not necessary to answer all the questions, but they should at least make that clear. We cannot have any confidence that the Scottish Government will do that.
Lord Wallace of Tankerness
The very fact that my right honourable friend the Secretary of State posed these questions shows that the UK Government are seized of what the key questions are, as raised by your Lordships in debate. I will certainly ensure that colleagues right across the Government are aware of the kind of issues that have been raised in this debate. There is no doubt that the United Kingdom Government want to keep the United Kingdom together. We believe that this is the best option not only for Scotland but for the United Kingdom. It goes without saying that we want to ensure that there is a debate that is as informed as possible and that the case for Scotland continuing to be a part of the United Kingdom is made as forcefully as possible. Points raised by your Lordships today will certainly inform the arguments that are put forward in the referendum debate. I share the view of my noble friend that the sooner we get on with the substance of the debate and move on from process the better it will be.
The Earl of Caithness
My Lords, can my noble and learned friend inform the House whether he has had an invitation from the Scottish Government to give evidence to the committee that they have set up to look at the economic consequences of independence?
Lord McFall of Alcluith
My Lords, further to the point made by the noble Lord, Lord Maclennan, I would say that the debate in Scotland is currently at a high temperature and needs to be lowered so that people can digest the information. If one looks at the Calman report, as I have done, and at the reports of the Scottish Affairs Select Committee in the House of Commons—which has had a plethora of witnesses—one will find many profound issues raised which have not yet reached the public level. It is important, and incumbent on the UK Government, to ensure that that information is put out to the public, for example in the form of a consultation paper. The UK Government need to engage. There cannot be a passive stance to this. I would leave the Minister with those thoughts as he progresses with the Bill.
Lord Wallace of Tankerness
My Lords, I do not think that the United Kingdom Government will be passive on an issue as important and fundamental as this one; I can assure the noble Lord of that. I share his view—I would say this, wouldn’t I?—on the Calman commission, and not only in regard to specific recommendations on devolved and reserved boundaries and financial powers. Both in the interim report published in December 2008 and in the final report, parts of which were referred to by the noble and learned Lord, Lord Boyd, on Second Reading, there are some very good arguments about the importance of our economic, social and political union. I commend these reports to Members of the House. They make a very good case for our union.
Lord Pearson of Rannoch
My Lords, I may have missed it, but I did not hear the noble and learned Lord, in his list of areas that will need dispassionate and honest analysis, mention a share of the national debt, much of which, of course, has been caused by expenditure in Scotland.
Lord Wallace of Tankerness
My Lords, I did not mention that, but it is a pertinent point. Some academic bodies have produced reviews on it.
Lord Forsyth of Drumlean
My Lords, we have had a very interesting debate. I know that my noble friend Lord Shrewsbury has waited patiently to move his amendment and I am sure that he would appreciate it if I did not say very much. So I will not, other than to make one point to my noble and learned friend.
I thank my noble and learned friend for the response, which is very encouraging. However, for once he was a little more aggressive than I am, when he said that he wanted government departments to make the positive case for the union. That is not what this amendment is about—I do not want government departments to make the positive case for the union, I want them to set out, objectively, what issues should be tackled. I do want Secretaries of State and Ministers to make the positive case for the union and hope that my noble and learned friend might ensure that the Prime Minister—who has said that he will fight to defend the United Kingdom to the last breath of his body, I think—is aware of the strength of feeling in this House that government departments should do this. This is not something that can wait until after the Summer Recess. They should be doing it now. One by one, these departments should be setting out what the issues are. It would be completely disastrous, and actually quite wrong, if we were to allow government departments to step into the area where they were involved in advocacy as opposed to providing information. That would undermine the whole nature of the debate. There are plenty of advocates for the union—what we need are the facts. The First Minister is very fond of quoting Burns:
“But Facts are chiels that winna ding”.
I beg to withdraw the amendment.
The Earl of Shrewsbury
“( ) If a system of Visitors Permits is introduced, holders of a firearm certificate or a shot gun certificate issued elsewhere in the UK shall not be required to obtain a Scottish Visitors Permit in respect of air weapons.”
The Earl of Shrewsbury
My Lords, the purpose of this amendment is to highlight some of the complications and probable costs that will arise if the Scottish Government insist on visitors permits for air guns.
Clause 11 seeks to devolve to the Scottish Parliament the power to control low-powered air guns, while leaving control of other classes of firearm—including the more powerful air guns—with the Westminster Parliament. Even at this late stage there is no clear idea on what form of control, if any, the Scottish Government will seek to impose, except that some form of licensing for air guns features in much of the comment. I declare my interest as I have done in numerous debates before.
I have no intention to revisit the areas covered during earlier debates on this clause, but there are matters that your Lordships might consider before approval is given to the clause. The question of cost-effectiveness is one of the more important. There are currently some half a million air gun owners in Scotland, although it seems unlikely that every one of them will apply for a licence. Some will decide that they will no longer follow the various forms of sport that now involve air guns, while some will simply keep the air guns they have, taking advantage of the fact that the authorities have no way of identifying those who currently own them. It seems safe to assume that those who misuse air guns will fall into the latter category.
The Gun Trade Association calculates that about 300,000 people will take up licences in the first instance. It is also conservatively estimated that the simplest form of licence would involve not less than two hours of police time. One learns from the Association of Chief Police Officers in England and Wales that the total cost of a firearms licensing officer, including overheads, is £27.40 per hour, so that the total cost of licensing in the first year will be about £16.4 million, based on the simplest possible system. Any added complexities to the licensing system will increase that large sum of money.
There will also be considerable set-up costs, including the adoption of new computer systems or the modification of existing systems, other back-office necessities, equipment to test the muzzle energy of air guns and more. There will be a need for consultation between Ministers and officials representing several government departments including the Home Office and Ministry of Justice, the two chief police officers’ organisations and police at practical levels to ensure that differing systems can work side by side. The costs will be very considerable.
The fee charged for the licence will reduce the cost to the public purse, but ACPO has calculated that, presently, fees recover only 27 per cent of the cost of running the firearms department. The fees for firearm and shot-gun certificates are under review, but will still fall short of the cost to the licensing authority. Any attempt to treat air gun licences differently in the matter of fees might create an actionable bias by discrimination against air gun users as distinct from users of other firearms. Enforcement costs, though difficult to establish at this time, will be substantial. At least three hours of an inquiry officer’s time will be required to produce the initial report with statements, and the cost of that will be about £82. An expert witness will be required to establish that the air gun has a muzzle energy in excess of 1 joule, about 0.74 foot pounds, but not in excess of 12 foot pounds for an air gun or air rifle or 6 foot pounds for an air pistol, et cetera, which will also cost about £82.
Reference to a senior police officer or a prosecutor may result in offering the defendant some form of warning. If the defendant agrees to accept the warning and surrender his air gun there will still be a cost of disposing of the case and of the air gun. The cost of that process must double the charges already calculated, resulting in a very rough estimate of total costs of about £400 in a case where no prosecution is involved. If the matter is brought to trial, the costs of a court will be very high, probably in the order of £1,000 when all costs, including overheads, are calculated. I assume that defence costs might run to a similar figure.
There is a further cost that cannot be calculated in that any legislation will create additional criminals, in this case mostly young men whose offence is mere possession but who will carry a conviction for a firearms offence for a number of years in most cases, and for the rest of their lives in matters such as obtaining firearm or shot-gun certificates. Costs will also fall elsewhere. Police in England and Wales may well incur substantial costs in making inquiries for a Scottish force that has received an application for a visitor’s air gun licence, for a visitor’s licence scheme must inevitably be provided. Those many shooters from England who visit Scotland each year and contribute much to the economy often take their families with them and may well wish to provide air guns for the younger members to shoot under supervision. When receiving an application for a visitor’s permit, Scottish police may ask English police in the applicant’s home area to undertake some inquiries. There is a cost involved there but, with the information available, this element cannot be costed. There also seems likely to be added costs for dealers outside Scotland who may supply air guns to those in Scotland and could be required to notify transactions. Once again, this element cannot be costed with the information available.
In Scotland, the number of recorded offences involving air guns has fallen significantly, by 42 per cent over the last decade. In England and Wales, over the same period and with the same legislation, air gun offences fell 66 per cent. The vast majority of air gun offences are concerned with criminal damage, usually in public places and primarily involving young people. The Westminster Parliament has been far from idle in this area. Section 19 of the Firearms Act 1968, still the principal Act on firearms, created various restrictions which were easily evaded by the ill disposed and were often very difficult for the police to enforce. Following more recent changes to the legislation, the law now provides a simple and easily understood offence. Air gun owners can understand the law and the police find it easy to enforce. The police have a power of arrest and may seize the air gun. All the evidence suggests that the massive reduction in air gun offences is attributable in large measure to this simple, enforceable legislation.
Further measures were imposed by the Violent Crime Reduction Act 2006, under which sales or transfers of air guns by way of trade or business were restricted to persons registered as firearm dealers, who must now keep records of transactions. It also provided that sales must be face to face and not by direct mail. The age at which air guns or air gun ammunition may be purchased or acquired has been raised to 18 years so that a single age is applied to all firearms following an EU directive on firearms using combustible propellants.
Finally, the Crime and Security Act 2010 amended the 1968 Act to make it an offence to keep an air gun in a manner that will allow a person under 18 to have access to it. Home Office advice about the levels of security required to meet this duty has been proportionate and reasonable.
I list these measures so that your Lordships can be sure that the UK Government keep the problem of air gun misuse under constant review and seek to improve on the already quite remarkable reduction of air gun misuse throughout Great Britain. In doing so the UK Government have tried to impose restrictions that are effective but proportionate and which take account of the legitimate activities of at least 4 million legitimate air gun users in Great Britain—I believe that the figure is closer to 6 million. It is the view of interested parties, researchers and the Gun Trade Association that these measures have not unduly impinged on legitimate air gun users but have made a very significant impact on rates of air gun misuse. There is no evidence to suggest that a costly licensing system will have a significant effect on air gun misuse, but it seems clear that vigorous enforcement of much simplified laws can have a marked effect.
Lord Gardiner of Kimble
My Lords, I support my noble friend in his amendment and in doing so declare my interest as executive director of the Countryside Alliance. My noble friend has highlighted the complexities and consequent costs if the Scottish Government insisted on visitor permits for air guns from those from other parts of the United Kingdom. This reasonable amendment seeks to protect legitimate users across the country from potentially undue and disproportionate bureaucracy. Should we really be asking the police in England, Wales and Northern Ireland to spend resources and time in dealing with visitor permits for Scotland? I ask my noble and learned friend to reflect on these matters and I hope that sense will prevail.
Lord Forsyth of Drumlean
I support my noble friend in his amendment, which is very reasonable and quite restrained. I suspect that my noble and learned friend will say that the provision simply provides a power for the Scottish Parliament and that it is a matter for the Scottish Parliament, but that is a less than responsible position to take. We all remember the genesis of this proposal and its inclusion in the Scotland Bill; it arose because of some very tragic events in Scotland. But as is often the case, the conclusion is that something must be done—and this is something being done without the consequences being thought through, which can add enormously to the bureaucracy and difficulties.
My noble friend Lord Shrewsbury has given us a glimpse of the enormous difficulties that could be created for the police in taking them away from their vital duties in pursuit of serious crime. Air guns are not subject to numbering in the way that shotguns and other firearms are, apart from those that are very powerful. One Member of this House, who had an association with the special services, briefed me that they could actually be extremely powerful weapons. But for the vast majority of people using air guns as part of their leisure activity, they are not numbered, and there are very real difficulties with that. It seems a little perverse to argue—if my noble and learned friend is to make this argument—that we are just giving the Scottish Parliament a power and do not need to worry too much about how it is implemented, because that is for the Scottish Parliament, when that will have enormous implications for people in the rest of the United Kingdom and, indeed, the rest of the European Union. I very much hope that my noble and learned friend will at least take this away and think about the very important arguments that have been made, with a view to perhaps coming forward with some practical proposals at a later stage.
The Earl of Caithness
My Lords, if I might follow my noble friend Lord Forsyth, he said that the reply that our noble and learned friend was going to give was that all of this would just provide a power for the Scottish Parliament. That is true, but it has cost implications for the police forces in England, Wales and Northern Ireland. If my noble and learned friend cannot accept this amendment, would it not therefore be in order for the other police forces that are put to extra cost by the Scottish police, in seeking information about firearms, to charge for the cost of their time?
Lord Pearson of Rannoch
My Lords, perhaps this would be an opportunity for me to refer to the anomaly—some would call it the absurdity—of the present requirement for a sound moderator, or silencer, to be treated as a separate weapon and be separately registered on a firearms certificate. After all, the silencer is only a tin can which is screwed on the end of the rifle. When the Government are looking into this area in collaboration with the Scottish Government, I suggest that this would be an opportunity to remove that requirement.
Lord Browne of Ladyton
First, my Lords, I thank the noble Earl for his great courtesy in writing to me extensively on this issue to introduce the arguments that he intended to make in support of his amendment. I was in the privileged position of having almost all of the points that he made in advance of his addressing your Lordships’ House, so I thank him for that. Unfortunately, despite his great courtesy to me, I cannot find myself being in a position of supporting his amendment. I am sure that he will appreciate why since, in Committee, I argued for even greater devolution of responsibility over air weapons to the Scottish Parliament. It would be entirely perverse and inconsistent for me now to support the restriction on the exercise of the limited devolved powers that the Scottish Parliament is going to receive, having made that consistent and coherent point before.
I do not accept the dismissal by the noble Lord, Lord Forsyth, of this argument as not being sufficient justification, because to restrict the power that one devolves in this fashion undermines devolution. I do this for two reasons. First, if we agree to devolve this power to the Scottish Parliament, we should trust that Parliament with this power. Secondly, I see no reason to believe that the Scottish Parliament would not be persuaded by the arguments that the noble Earl has made about the potentially unintended consequences of an onerous regulatory process. I am sure that, in consultation, it will be capable of regulating in a way that deals with the issue at the heart of the noble Earl’s amendment, although not at the heart of his broader argument about implications.
I do not propose to repeat all the reasons why the people of Scotland are so exercised about the misuse of air weapons, and why there is a public demand for some form of regulation. I and the noble Lord, Lord Forsyth, have spoken about those before. I congratulate the noble Earl on giving us, in the official record of our debate, a repository of the success of restrictions imposed on air weapons and the obvious effect that sensible regulation has had on their misuse. It would be utterly ungracious of me to point out that I do not remember the Gun Trade Association arguing for these restrictions, and I remember being persuaded on some occasions by lobbying from that area that these restrictions would not work, and would merely cost a lot of money unnecessarily. However, that does not alter the fact that at some stage these arguments may prove to be true, even if they did not in relation to those restrictions.
I congratulate the noble Earl on at least being honest and willing enough to say, from the perspective and interest that he has, that regulation of this nature can be positive and can have a beneficial effect and that if it perhaps has a cost, and if that cost is saving lives or injuries, then it is a cost that society may be prepared to bear.
For the reasons I have given, I am unable to support the noble Earl’s amendment but I congratulate him on his contribution to the debate today, and on providing a quarry of argument which I am sure will inform the Scottish Parliament’s exercise of the powers that I hope it will be given.
Lord Wallace of Tankerness
My Lords, I thank my noble friend Lord Shrewsbury for again giving the House the opportunity to discuss these matters. His amendment seeks to ensure that if, following devolution of the regulation of air weapons anticipated by this clause, the Scottish Government were to introduce a system of visitor permits for air weapons, holders of firearms or shot-gun certificates issued in other parts of the United Kingdom would not be required to obtain such a permit in order to use air weapons in Scotland. As has been said, in devolving the regulation of air weapons, the Government are acting on a recommendation of the Calman commission, and we believe that the regulation of air weapons is best controlled locally. My noble friend Lord Shrewsbury has made a very well reasoned case and, as has been noted, he indicated that where sensible and proportionate restriction or regulation of air weapons has been used, it has been done so to some effect. Nevertheless, it is our view, as indicated earlier and in the Bill, that this issue is better decided by the Scottish Parliament.
I do not think that this is a small point. I say to my noble friend Lord Forsyth that the nature of devolution is that a power is devolved, and it is then up to the devolved body to determine how it wishes to exercise that power, obviously within the constraints of the law—and, taking into account some of the very pertinent points made by my noble friends Lord Shrewsbury and Lord Gardiner of Kimble, when that body comes to make policy conclusions. Not the least of these is the cost effectiveness. My noble friend has focused on the cost implications of establishing and enforcing a licensing regime, and I recognise the points that he has made so clearly. These will be matters for the Scottish Parliament and Scottish Government to take into account. We hear them regularly talking about the restrictions and restraints on their funding, but the block grant will have to fund any measures that they take. This will obviously be one of the considerations that they have, obliged as they will be to put forward with any accompanying Bill a memorandum on its cost implications.
As I know my noble friend is aware, the Scottish Government have set up a Scottish firearms consultative panel, and I understand that the director of the Gun Trade Association, an organisation of which my noble friend is the honorary president, sits on that panel. The panel is currently considering, if there is to be devolution of this power, how best to implement any proposals for regulating air weapons. The panel will consider cross-border issues. Indeed, I understand that there was a meeting on Monday at which cross-border were on the agenda. If this amendment were included in the Bill, it would fetter the Scottish Government’s and Scottish Parliament’s discretion as to how they might go about the task of regulating air weapons following devolution and would second guess the ongoing work of the Scottish firearms consultative panel. However, as I have indicated, the arguments put forward by my noble friend are very persuasively articulated. I am sure that the Scottish Government will be open to representations made to them when they are shaping any legislative proposals.
My noble friend Lord Caithness raised the possible costs that would feed through into other parts of the United Kingdom. Those will of course depend on the actual nature of the policy that is put in place. I see the noble Lord, Lord Empey, in his place. He will no doubt correct me if I get this wrong, but perhaps it is worth bearing in mind that, as I understand it, air weapons are controlled in Northern Ireland and any person wishing to go there from Great Britain with an air weapon must apply for a certificate of approval. There is a special form available on the website, which needs to be submitted via a sponsor about six weeks in advance of any visit, but there is no fee. However, a visitor to Northern Ireland from outwith Great Britain requires a visitor’s permit, the point being that air weapons are already devolved to Northern Ireland. I have always believed that one of the strengths of devolution ought to be a willingness to look at experience in other parts of the United Kingdom where policies have been taken forward. Indeed, there is a policy already in place regarding the regulation of air weapons. I hope that what happens in Northern Ireland will be looked at by the consultative panel.
The Earl of Shrewsbury
My Lords, I am most grateful to all those who have taken part in this short debate and especially to my noble and learned friend Lord Wallace. I listened carefully to what he said, I know exactly where he is coming from and I could have written his speech for him last night. All I know is that the whole issue of devolving legislative power on air weapons to the Scottish Parliament is fraught with problems, as I have explained. The problems are both of an operational aspect and with regard to the potential substantial costs involved. Those issues will take a lot of answering. The whole thing is unworkable, it will take an awful lot of working out and it will probably not be. I reserve the right to stand here in a few years’ time and do a wonderful and famous “I told you so”. I shall have to be extremely careful next time I go across the border to go fishing in Scotland because I think I am a marked man. In the light of my noble and learned friend’s comments, I beg leave to withdraw the amendment.
Lady Saltoun of Abernethy
Lady Saltoun of Abernethy
My Lords, I shall speak also to Amendment 10, which is almost identical. Noble Lords will no doubt remember that in Committee we had considerable discussion about the phrase “Scottish Crown Commissioner”. There was a little problem. If he were called the Scottish Crown Commissioner, he would not have been able to take part in anything concerning England, Wales or Northern Ireland. This was not thought desirable. We discussed the matter for a bit and then I had an idea—I suggested the phrase “Commissioner with special responsibility for Scotland”. To my amazement, this appeared to find favour with the noble and learned Lord, so I put it down as an amendment for Report stage. I beg to move.
Lord Forsyth of Drumlean
My Lords, we have been singularly unsuccessful in getting my noble and learned friend to accept any amendments so far in the long consideration of the Bill, but here is one that he cannot possibly refuse to accept. He is surely not going to argue on the basis of syntax that he could not accept the noble Lady’s very sensible common-sense amendment, which I have great pleasure in supporting.
Lord Cameron of Lochbroom
My Lords, it is not merely a matter of syntax—it is what the Crown Estate Commissioners represent. They represent a single body with jurisdiction over the Crown Estate in each of the four constituents of the United Kingdom. It is clear that the amendment would cure the problem and recognise that responsibility. I therefore have no hesitation in supporting it.
Lord Browne of Ladyton
My Lords, noble Lords will remember that in Committee I spoke to an amendment in my name and in the names of my noble and learned friends proposing the amendment of the title in the Bill to the simple title of “Crown Estate Commissioner for Scotland”. That did not find favour with the Government—particularly, as I recollect, with the Advocate-General for Scotland—but in the course of the debate it became clear that the Committee was of one view: the least attractive title for the Crown Estate Commissioner was the one that was in the Bill.
The noble Lady, as she has told the House, spontaneously came up with this proposal in the course of the debate, and it appeared to find favour with the government Benches—at least, they were more inclined to respond positively to it than they were to the proposal that had emanated from the opposition Benches. My own view is that there is a distinction between the proposal that I put forward and the one that the noble Lady put forward, but it is in the category of a distinction with little difference. But I understand why the Government may be more inclined to respond positively to something that comes from the Cross Benches. In those circumstances, as Members of the House will see, my noble and learned friends and I have appended our names to the noble Lady’s amendment. I support it for all the reasons that she articulated then and which have been debated at some length. Therefore, I do not think that we need to go into them again.
I was not convinced by the noble and learned Lord’s defence of the title “Scottish Crown Estate Commissioner” but I was convinced by his defence of the process of selection that I had also sought to amend. I have repeated that amendment by laying Amendment 11, but for the purposes of forward planning I advise that when it comes to the appropriate time I will not be moving it.
Lord Wallace of Tankerness
My Lords, Amendments 9 and 10, tabled by the noble Lady, Lady Saltoun of Abernathy, and supported by the noble Lord, Lord Browne, and his colleagues, would change the name of the Scottish Crown Estate Commissioner to the Crown Estate Commissioner with special responsibility for Scotland. As the noble Lady indicated in moving her amendments, she made that suggestion in the Committee stage debate. I indicated at the time that I found the suggestion helpful and committed to reflecting further on the proposal.
I confirm that the Government’s original name included in the Bill was taken from the commission’s own proposals and discussed with the Crown Estate. However, the Government are happy to accept the proposal from the noble Lady. As indicated by the noble and learned Lord, Lord Cameron of Lochbroom, we believe that the revised name—it is not a question of whether it came from the Cross Benches rather than the Opposition—will properly reflect the role that that commissioner will play. That role will not be exclusively for Scotland; indeed, contributions to our debate in Committee from people with experience, such as the noble Lord, Lord Curry, indicated the value of having commissioners who would have responsibilities across the United Kingdom. We are therefore wiling to accept Amendments 9 and 10. As the noble Lord, Lord Browne, has indicated that he does not intend to move Amendment 11, the mode of appointment would seem to be acknowledged and accepted.
Lady Saltoun of Abernethy
My Lords, I have been in this House for 32 years and this is only the second time that I have had an amendment accepted. I am delighted.
Lady Saltoun of Abernethy
Lord Forsyth of Drumlean
Lord Forsyth of Drumlean
I beg to move Amendment 12 standing in my name. I do not intend to move or speak to Amendment 13. This is a very straightforward amendment. I hope that I have caught the Minister on a roll and that he might feel able to accept my amendment. I am tempted to get my noble friend Lady Saltoun to move all my amendments. She speaks very briefly and the Minister says yes. Perhaps there is much to be learnt from that.
We discussed this issue in Committee and I will not go over all the arguments but essentially the Bill devolves control of speed limits to the Scottish Parliament, so we will have different speed limits north and south of the border, or the prospect of that happening. I think that is absolutely ridiculous, but given that that has been agreed by the Calman commission, and is stated in the report and in the Bill, and given that it was a manifesto commitment to implement the Calman proposals, I will not argue against the principle of the Scottish Parliament having the power to set speed limits. However, if you are going to do something like that, you need to do it properly. The Bill gives the Scottish Parliament the power to decide speed limits for motor cars but not for caravans or HGVs. It is a nonsense to have the Department for Transport responsible for some speed limits in respect of some categories of vehicle while the Scottish Parliament is limited to others. My amendment may not be perfectly drafted but the sense is clear, which is that if we are to have the Scottish Parliament taking responsibility for speed limits, it should do so for every class of vehicle and not for particular classes of vehicle.
I know that my noble and learned friend Lord Wallace and my right honourable friend the Secretary of State have been in discussions with the Department for Transport. I know that it is not always easy to get agreement on these matters but I very much hope that my noble and learned friend’s well known skills in advocacy will enable him to accept this amendment if for no other reason than that it makes for good legislation and for clarity on the statute book, which is very much required. It is rather ironic that I should put forward an amendment which seeks to give more power to the Scottish Parliament. I beg to move.
The Duke of Montrose
I am very interested in this issue, on which I spoke in Committee. However, I am still rather puzzled as to what the Scottish Parliament will gain from this aspect of devolution because, as far as I can see, it already has powers to introduce any speed limit that it wishes on any road. As I drive along roads in Glasgow and out in the country, I come across speed limits that are set at 40 miles an hour and 50 miles an hour. Therefore, I hope that the Minister will indicate why this aspect of devolution is required.
Lord Browne of Ladyton
My Lords, I support the noble Lord’s amendment. My reading of the Calman commission report is that it made no distinction between the types of vehicles that should be included in this aspect of devolution. I believe that this amendment supports the Calman recommendation and that the power should be devolved in full, as was recommended by that commission. I agree with the noble Lord, Lord Forsyth, that the omission of HGVs would create confusion on Scottish roads, should there be an unnecessary change of speed limits.
When this issue was raised in Committee, I think the Minister said that the distinction arose as a consequence of the development of signage, which was deeply convincing. However, he also wisely indicated that it would be proper for him to take the issue away and reflect on it. Therefore, the signposts are clear. The House’s position is well signposted for the noble and learned Lord. I hope that he has followed the direction of those signposts and has persuaded his colleagues in the Department for Transport that this is a common-sense proposal. I will resist the temptation to speak to Amendment 13, which I would have supported had the noble Lord spoken to it. As he did not, it is not appropriate for me to speak to it.
Lord Wallace of Tankerness
My Lords, my noble friend tabled amendments on this matter in Committee and I recall some very interesting debates on them. The Government have included powers in the Bill to allow Scottish Ministers to determine the national speed limit on roads in Scotland. I say to my noble friend the Duke of Montrose that the amendment seeks to ensure that the measure applies to motorways and dual carriageways, which have national speed limits at the moment. There is a power to make regulations to specify traffic signs to indicate that limit. The powers currently set out in the Bill are limited to cars, motor cycles and vans under 3.5 tonnes. The Government drafted the provision in this way as there is already a single clear sign that denotes the national speed limit for cars, motor cycles and vans under 3.5 tonnes. The Bill will allow Scottish Ministers to create a new sign and educate people on its meaning for any change to the national speed limit in Scotland.
As I highlighted in Committee, for different vehicles, including HGVs and caravans, either separate signage would be required, or the speed limit for these classes of vehicles would remain unsigned as now, but people would need to be aware that different speed limits could exist across Great Britain for these types of vehicles.
However, we have listened carefully to the arguments presented by my noble friend and by other noble Lords, including the noble Lord, Lord Browne, on the Benches opposite. I commend my noble friend and others for pursuing this issue. I think it is fair to say that those of us who served on the Calman commission were not made aware of the distinctions or of the importance of signage. We may consider that my noble friend’s amendment would give fuller substance to what was originally proposed. Together with the case made by the Scottish Parliament and the Scottish Government for the Bill to provide for devolution of the regulation-making powers for setting the national speed limit for all classes of vehicles, we have decided to accept Amendment 12 tabled by my noble friend, so clearly he has managed to get me while I am on a roll. However, in accepting the spirit and the principle of the amendment, I must make it clear that it will require redrafting to ensure that the measure applies to all roads and not just special roads. Therefore, we will bring forward an amendment at Third Reading which addresses the technical issues and gives full substance to the amendment which my noble friend has tabled. I thank him for his persistence in this matter. I hope he welcomes the fact that it has had a positive outcome. I note that he does not intend to move Amendment 13. Therefore, I shall not speak to it.
Lord Forsyth of Drumlean
I thank my noble and learned friend for accepting the amendment. I also thank the Secretary of State for Scotland for doing battle with the Department for Transport and delivering this outcome. I think that The House Magazine has counted the number of words that I have spoken during the passage of this Bill. It is a supreme irony that the only change I have achieved so far is to increase the powers of the Scottish Parliament and to deliver more of what is in the Calman report, but such is the nature of politics. As I say, I am most grateful to my noble and learned friend. I am sure that what is proposed makes sense. I am also grateful to the noble Lord, Lord Browne, and his colleagues for their support on this matter. I beg leave to withdraw the amendment.
Arrangement of Business
(12 years, 9 months ago)
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Earl Attlee
My Lords, it may be for the convenience of the House to know that the Report stage of the Scotland Bill will resume immediately after the conclusion of the two orders in the name of my noble friend Lord De Mauley.
Employment Tribunals Act 1996 (Tribunal Composition) Order 2012
(12 years, 9 months ago)
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Lord De Mauley
That the draft order laid before the House on 6 February be approved.
Relevant document: 41st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 19 March.
Lord De Mauley
My Lords, this first order permits but does not oblige judges to sit alone rather than, as at present, with two lay members on unfair dismissal cases. It is part of the wider package of reforms. It is not a silver bullet, standing on its own, but neither is it a risk to the just handling and disposal of cases.
As I said in Grand Committee, when we debated these orders on Monday last week, the order seeks to replace prescription with flexibility, and helps to secure value for money. It will allow employment judges to sit alone in unfair dismissal cases before an employment tribunal. It will provide discretion for judges to decide whether to sit with lay members, where appropriate. The criteria against which such decisions must be made are set out in primary legislation. It has been tried and tested for years in relation to other types of case to which it already applies.
Many of your Lordships here today were also present in Grand Committee last week. Noble Lords who then opposed the measure did not argue against flexibility for its own sake. Indeed, it is difficult to see how flexibility per se could be easily argued against in this context. Instead, some noble Lords, and some who debated the matter in the other place, seemed to distrust the motives underlying this reform. The perception seemed to be that this is the thin end of the wedge. Fairness, independence and justice must not be compromised. However, proportionality is key to all those concepts, and the Government have a duty to ensure that value is secured.
The safeguard of judicial discretion is real. As noble Lords themselves cited in Grand Committee, academic research demonstrates that employment judges value the input of lay members. Judges tell us that too. We have good evidence therefore—something noble Lords were rightly keen on drawing out in Grand Committee—to explain why we think panels will continue to sit where they are appropriate, and where they will add value. That is as it should be. There is also evidence of support for the proposal. Some, such as the British Chambers of Commerce, say that we should go further and abolish lay members altogether. Some say that we should row back and drop even this order. Some think we have got the balance right. We have considered the numbers, considered the substance of the arguments put, and made sure that we have listened carefully to all parties with an interest. Our conclusion is clear, and I am confident that it is right.
The Government value the role of employment judges, just as the Government value the role of lay members. Each group brings significant expertise and experience to the system. Judges are well placed to make decisions about how best to manage a case to hearing, including about how and where the respective expertise and experience is best deployed, and with what value. Employment judges are trained in active case-management techniques and to deal with cases in the unique fora of employment tribunals. The safeguards are real. The objective of securing value for money is important.
The purpose of the second order, the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012, is to extend the qualifying period for unfair dismissal from one to two years for individuals beginning work on after 6 April this year. It also extends in the same way the minimum period an employee must have been with the employer before being entitled to request a written statement of reasons for dismissing. The purpose of the statement of reasons is essentially one of evidence when making a claim for unfair dismissal. It is therefore closely linked to the right to claim unfair dismissal and it is logical that the qualifying period for both is kept consistent.
The Government are committed to reviewing all aspects of employment law over the course of the current Parliament. We are doing this because we are serious about rebalancing the economy, supporting job creation and achieving strong, sustainable growth. We want new and growing businesses to thrive and feel confident about taking on more staff.
The legal framework of employment law today is quite different from that which obtained when unfair dismissal rights were first introduced in 1971—by a Conservative Government. In 2012, employees additionally have a wide range of day-one rights: the right not to be discriminated against; the right not to be dismissed for asserting a statutory right, such as asking to be paid the minimum wage; and the right not to be dismissed for making a protected disclosure, otherwise known as blowing the whistle.
The change we seek to make will not affect any of those day-one rights, but it will reduce the fears that many employers have—until a few years ago, I was one of them—that a minor procedural slip-up might land them with a tribunal claim. As the British Chambers of Commerce has noted, a single claim can wipe out a whole year’s profits for a small business. That is a burden that many small businesses are simply unable to bear. The British Chambers of Commerce also reported—this is particularly shocking—that 48 per cent of larger firms have been threatened with an employment tribunal claim in the past three years.
This change will have a relatively small impact on employment tribunal claims and individuals who might seek to bring a claim. We have made a conservative estimate that the increase in the qualifying period will bring about only a 4 per cent reduction in unfair dismissal claims. Furthermore, we have not taken account of the fact that employers will not be under such pressure to let employees go, as my noble friend Lord Razzall pointed out in our debate in Grand Committee on Monday of last week. They will have the extra time to give them a chance, to coach them and to train them. Also, as set out in the impact assessment, we estimate that more than half of unfair dismissal claims currently made by those with one to two years’ service are part of multiple claims, so we would expect them still to go ahead under one or more other jurisdictions.
The Government are taking other measures that will help employers and employees to resolve disputes outside the tribunal system. I am sure that many noble Lords will agree that this is most often preferable for all parties. We are increasing the role of ACAS in conciliating disputes before a claim is made. We are piloting a scheme to boost access to mediation among small businesses in Cambridge and Greater Manchester, and we will be considering how we can deal more quickly with straightforward employment tribunal claims.
Looking back over the history of unfair dismissal rights, a two-year qualifying period has existed for most of the past 30 years, so it is hardly an unprecedented measure, but it is one that we, and large numbers of businesses, believe will make a positive difference to employer confidence.
As I said, our top priority is to achieve strong, sustainable and balanced growth. We are tackling youth unemployment by ensuring that more and higher-quality apprenticeships are available. We are taking steps on issues such as tax, planning rules and access to finance to boost enterprise. Critically, we have a credible plan to reduce the deficit and tackle the UK’s debts, as set out in the Budget.
The extension of the qualifying period must be seen in the following contexts: the greater employment rights that individuals now enjoy; the Government’s measures to encourage early dispute resolution; and our focus on growth and business confidence.
The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of the businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce—
Lord De Mauley
My Lords, perhaps the noble Lord will allow me to make my case. There will be plenty of opportunity for him to speak later.
The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of those businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce, the Institute of Directors and the CBI. During the consultation, the CBI expressed the view that,
“the extension of the qualifying period will have a positive impact on marginal hiring decisions, particularly in smaller firms”.
That accords with my own experience as an employer in an IT company, which I ran for six years. I cannot emphasise enough how much time is needed for training and assessing people. I can categorically say that a year is not enough in every case, and it is a view that the Government share. There is a credible body of opinion that employers will have greater confidence to recruit as a result of this measure. I assure noble Lords that the Government will do everything practicable to monitor and assess the impact of increasing the qualifying period.
As set out in the impact assessment, we are committed to a post-implementation review of the Resolving Workplace Disputes policy package, including this measure, in 2016. The amendment laid by the noble Lord, Lord Young, calls for a review after 18 months. With respect, this will be too soon to be able to make an assessment of the policy’s effect, not least because the qualifying period will be two years and will apply only to those starting a new job from 6 April. No employee will therefore have reached the end of their qualifying period in 18 months’ time.
While respecting and preserving the important employment rights that have been established over the years, we must give proper weight to those currently outside the labour market: the school leaver looking for the first job, the long-term unemployed striving to get back into work, and the person who was let go during the first year of employment because the employer was unsure whether they would come up to scratch. These are the real beneficiaries of this order, and I commend the orders to your Lordships.
Amendment to the Motion
Lord Young of Norwood Green
As an amendment to the above Motion, at the end to insert “but that this House regrets that the order will risk the reduction of justice and fairness at employment tribunals, is opposed by both trades unions and employers’ organisations, and risks increasing costs through a greater number of appeals; believes that having an employer and employee representative on employment tribunals remains the right way to ensure a fair and just decision and process for claimants; and calls on the Government to place a report into the effect of the changes before Parliament 18 months after the approval of the order”.
Lord Young of Norwood Green
My Lords, I thank the Minister for his contribution, although that does not mean that I agree with it. I also thank him for the speed with which he responded in writing to the questions that had been raised but, again, I do not necessarily thank him for the content. I do not feel that he helped to clarify or justify the Government’s proposals, and that is why we have put down these amendments to the two orders.
The noble Lord, Lord De Mauley, said that people felt the introduction of lay members was motivated by further proposals. I do not think that you can really blame people for that, given that the Government have indicated that there are likely to be further movements in employment law. Even if you were not of a suspicious nature, the Beecroft report being delivered to No. 10 might at least have caused your antennae to wave about a bit in anxiety. Therefore, my question to the Minister is: can we expect more in this vein, with the view being taken that if only we lift these restrictions, somehow that will open the floodgates to employment and that the restrictions are the barriers that are really holding back SMEs or even large firms? We believe that that is a false analysis predicated on entirely the wrong views.
On the question of lay members, why do we believe that they ought to be a key part of the process? I do not intend to go through all the reasons as we had a full and frank debate in Grand Committee. When industrial—now employment—tribunals were first formed, the whole idea was that there would be a different approach and a different style. Along with that came lay members. What do they bring? They bring real knowledge and understanding of industrial situations. That is not to say that judges do not, but they do not have the same perspective. Will the proposal alter fundamentally the nature of unfair dismissal claims? We believe that it will. We believe that lay members play a fundamental and important role in the proceedings.
The noble Lord, Lord De Mauley, told me that the safeguards are there and are real. I listened carefully and the only safeguard that I could see was that it would be a judicial decision. That does not strike me as a real safeguard. I will not use the word “whim” but it depends on a view that lay members are not necessary in a significant number of cases. It must be significant or we would not be going down that road. If we are talking about preserving the nature of employment tribunals in which the views of people who have real experience in a wide range of industries and occupations, lay members play a vital role in ensuring that those views are taken into account and that the perspective of cases receives the widest possible analysis. Will it cost a bit more? Inevitably, it will, but we believe that it is justified in the circumstances.
On the second Motion, on the question of the length of unfair dismissal, it is true that there has been a history of different periods. We have gone from two years, to one year, to six months. Is the Government’s proposal justified? We do not believe that it is. Although it has fluctuated over a significant period, there is no evidence to show that it has had a direct effect on employment levels. That is why I said at the outset that it is predicated on the wrong analysis. Since the qualifying period was reduced from two years to one in 1999, more than 1.75 million jobs have been created in the UK, so it does not seem to be a barrier or impediment. The Minister quoted the chamber of commerce. Similarly, I could say that, interestingly, the SME Business Barometer survey asked 500 SMEs about the main obstacle to success. Top of the poll as the biggest obstacle was the state of the economy, with obtaining finance next. Just 6 per cent of respondents listed regulation as the main obstacle to growth.
In the correspondence that I received from the Minister, even he struggled to demonstrate that the unfair dismissal claims were the root cause of the problem. First, they cannot be disentangled. We cannot disentangle employment tribunal claims from the multiple claims; the Minister admitted that in the correspondence. We do not believe that the proposals are evidence-based.
I will quote again from the Chartered Institute of Personnel and Development. Surely it has some credibility when it states:
“Making it easier to dismiss staff without due cause is far more likely to harm the prospects of UK plc by fostering crude and out-dated attitudes to employment relationships that will put employees off from ‘going the extra mile’. Unproductive and disengaged workers will cost firms far more than the threat of tribunals”.
I believe that the institute is right about that.
If we want to give employers helpful advice, some things that the Minister suggested were right, such as more use of ACAS and mediation. However, the key for employers is how they treat their employees. We never suggested that training would be finished in a year; we are talking about continual learning in today’s workplaces. We are saying that the first year of employment is a long enough period to assess a new employee if the employer is making sure that they are being mentored and are responding to their training programmes. Are we really saying that at the end of that period an employer cannot assess whether an individual is going in the right direction and will make a worthwhile contribution to the organisation? My experience tells me that a year is a significant period of time.
This would signal the wrong route to employers. If we extend the unfair dismissal period, we will be trying to convince ourselves—without any evidence—that this will make employers take on more people. Of course we want employment to increase, but the way to encourage this is to ensure that we create the right economic conditions. I cannot resist saying to the noble Lord, Lord De Mauley, that while the focus is definitely on reducing the deficit—and I welcome the increase in apprenticeships—we still have not seen the growth that was predicted, the forecasts for which have been significantly reduced.
My final reason for moving the Motion was that I read the letter in reply to the noble and learned Lord, Lord Scott of Foscote, who made the reasonable request that an employee should be entitled to be given a reason for dismissal before they were dismissed. Unless the noble and learned Lord is more easily pleased than I am, he will be disappointed with the final paragraph, in which the noble Lord, Lord De Mauley, stated that the Government consider that requiring employers to give a written reason before giving notice would be an additional administrative complexity for them and would increase their costs. Does that send the right signal to employers about how to treat employees? Surely it is totally the wrong advice to give them. If they are handling their employees in a proper, structured way, and if they have the right HR procedures, they should have nothing to fear from an employment tribunal. On these grounds, I beg to move.
Baroness Turner of Camden
My Lords, I support my noble friend’s Motions. We had a wide-ranging debate on both these orders in Grand Committee. I opposed both, and I still do. Both orders undermine the employment rights that many people have fought for over the years. The first deals with the qualifying period and the right of workers to receive a reason for dismissal. The second provides for the removal of lay members from industrial tribunals that deal with cases of unfair dismissal. As noble Lords indicated in our previous debate, this has been opposed not only by the TUC and the CBI but by the Engineering Employers Federation and Citizens Advice.
Those who supported the Government in our previous debate did so, as I understand it, because they believed that if employers did not have to comply with employment laws, they would be able to employ more people. I doubt that. I oppose the orders for a different reason: I believe that, in a civilised community, the worker has rights which must be observed. An overriding one must be the right to continued employment unless there are very good reasons for this not to be maintained. Is it right that employees should simply be regarded as disposable? The loss of employment is often a disaster; not only for the employee but for his or her family. Many may face a decline in living standards and perhaps years spent on benefits. The trauma is even worse when the decision is felt to be unfair and if there is little alternative work available.
I agree that conciliation or mediation should be tried rather than immediate reference to a tribunal, but this is attempted nowadays and may not always work out. The opportunity to go to a tribunal should exist if such procedures do not provide an acceptable solution. The presence of lay representatives from both sides of industry or commerce, in addition to a judge who presides, produces an informal—and informed —atmosphere, conducive to a fair hearing by litigants. Most organisations familiar with our present arrangements, including many judges themselves, are supportive of the involvement of lay representatives.
The Government want to change the arrangements for hearing unfair dismissals so that the litigant will appear before a judge sitting alone. In other words, there will be a more legal set-up but no access to legal aid, since this is being removed by legislation recently before our House. There is no doubt that the Government believe there have been too many tribunal cases and that there will be fewer under their new proposals—and no doubt fewer successful cases. This is grossly unfair. There is no more important area of life than the work that most people do. Without it, life changes dramatically, not only for the individual concerned, but the family which he or she has to support. The loss, if unfair, should be compensated. The least the Government can do is examine how these changes impact upon people, which is what is proposed by my noble friend’s Motions. I hope the Government will accept them. If they are interested in fairness and justice, they can really do no other.
Lord Borrie
My Lords, I would also like to support the amendment proposed by my noble friend on the Front Bench. The two SIs before us today are shabby. They are retrograde and in opposition to models of procedure and rights that have been with us for many years. I do not think that the Minister who argued the case for the statutory instruments today made a better case than he did in Grand Committee. An odd thing that he said today in support of the statutory instrument dealing with unfair dismissal was that, because workers now have certain rights that they did not have 30 years ago, such as those in relation to discrimination, it is reasonable that the qualifying period for claiming unfair dismissal should be extended to two years.
He indicated that there are rights of discrimination—sex and racial discrimination—that did not exist 20 or 30 years ago. That is true. How on earth can that justify greater rights for the employer to dismiss without due cause or indicating what the reasons are? Someone not fitting in or being surplus to requirements would not be an adequate reason if the unfair dismissal qualifying period was available.
The noble Lord on the Labour Front Bench and my noble friend Lady Turner have indicated reasons why we doubt the desirability of changing the composition of the tribunals, so that the judge or chairman—the legally qualified person—can, at his discretion alone, determine that the composition should do without lay members in future.
Lord Risby
My Lords, the question we have to ask ourselves is whether in any way the one-year qualifying period is a barrier to hiring. That is an essential part of what is before us today. We can all agree that small businesses face significant challenges, a weak economic environment and difficulties in accessing credit. At the heart of this discussion is youth unemployment, which is a huge difficulty right across Europe. Almost all European countries are suffering from very high levels. Small businesses—acorn businesses—being able to hire people, young people in particular, must be an ambition for all us who want to see the economy do well.
We have all had representations from a range of organisations. The thing is to encourage employers to make that leap and take on additional staff. Among those representations there was something from the British Chambers of Commerce that I thought was particularly interesting and instructive. It was about issues facing sole traders—those who have not yet taken on additional employees. It says:
“In the UK, over 3.6 million individuals are classed as ‘enterprises with no employees’. Not all of these people want or have the potential to expand their business and become an employer, but some do. The key questions are how many of these companies are interested in employing people, how we can identify them and how we can encourage them to take the huge leap needed to become an employer.
The first action must be to reduce the size of the leap required. Throughout our survey work, individuals said they would prefer to use freelancers to assist them rather than take on employees. So, in many cases, it is not a question of whether there is enough demand out there for the business to sustain another worker. The issue is whether the individual wishes to take on the obligations and risks inherent in employing their first staff member”.
All of us who have been involved in small businesses or tried to build up businesses know that that is a very pertinent question.
If we look at the main concerns of businesses in the current environment, pension requirements, dismissal rules and sickness absence feature very strongly. The British Chambers of Commerce says:
“The second biggest barrier is the dismissal process, and it is interesting that it is seen as a significant or total barrier by more than double the respondents that feel that way about the recruitment process. 27% of businesspeople believe that dismissal is a significant or total barrier to recruiting a first employee”.
This is an important point. We must make sure that in a civilised society there is just and fair redress against bad employers. However, I believe that the extension to two years would be welcome to the business community as part of restoring business confidence—something we all aspire to.
I will touch on the issue of tribunals. We already have a precedent for the arrangements that have been set out by the Minister. Judicial discretion prevails; there is no automatic mandate for the exclusion of lay panel members and there is no clear evidence that suggests a judge cannot satisfactorily deal with unfair dismissal claims. This would send out a small but significant message to businesses that have been calling for the change that is before us today.
Coming back to the original point, our major challenge is not only to keep people in employment where possible but to encourage employers or even those sole traders to add to their workforce. Having hired and trained many people in my professional career, I know that one year is often an insufficient time in which to come to that final judgment. I therefore support the proposals put forward by my noble friend today.
Lord Scott of Foscote
My Lords, perhaps I might say a word or two about the second Motion moved by the noble Lord, in particular the statement of reasons.
I was astonished to learn from the noble Lord, Lord De Mauley, who took the time to come and explain the position to me, that the statement of reasons was only an adjunct to the introduction of a right to claim for unfair dismissal. It was thought desirable to have a statement of reasons so that the employee subject to the dismissal would know what the reasons were and could have some record on which he could base his opinion as to whether he should bring a claim for unfair dismissal.
I had supposed, maybe naively, that it would be regarded as good management practice for employers to give reasons for dismissal, particularly to young employees, for whom this had perhaps been a first job, and those who had previously been long-term unemployed. With those reasons, they could modify their behaviour if they were lucky enough to obtain alternative employment, or they could go into some other occupation if they thought that there was some insuperable barrier to their success in the job from which they had been dismissed.
The noble Lord explained to me that the introduction of a one-year period before the right to reasons for dismissal arose was tied to the one-year period that was the condition for being able to bring a claim for unfair dismissal. The two ran together. He explained that if the condition for bringing a claim for unfair dismissal was to be raised from one year to two years, so too the right to have reasons for dismissal should be raised from one year to two years.
I find myself in some difficulty in accepting that the right to reasons for dismissal should be tied in that way to a claim for unfair dismissal. I should have supposed that it would be good management practice and, moreover, a matter of common courtesy for an employer to inform an employee why they were being dismissed. The notion is that a young person could be taken on as an employee, perhaps in his or her first job, and after six months—that is the position now but 18 months would be the position if these statutory instruments come into effect—be dismissed without being given any reason whatever for the dismissal. It is astonishing that that could be regarded as acceptable management practice.
Acceptable management practice would be to provide reasons to an employee who was being dismissed, particularly if it were a young person or a person who had been long-term unemployed and was working his or her way back into employment habits. I respectfully disagree with the part of the Motion that attacks the proposition that the time period for getting a statement of reasons for dismissal should be raised to two years. I would want greater justification than has yet been offered for requiring a two-year period before a statement of reasons for dismissal can be obtained. It should, as I repeat—I am afraid that I have repeated it more than once—be regarded as good management practice for an employer to tell an employee being dismissed why he or she is suffering that fate. For those reasons, I support the second amendment.
Lord Beecham
My Lords, I support my noble friend’s amendments, if only because the Government’s policy seems to be based on a myth; namely, that in this country our labour market is more regulated than those of our successful competitors. It is a myth comparable with that of the compensation culture, which has been used to justify some of the changes under the Legal Aid, Sentencing and Punishment of Offenders Bill, which limped through the House last night at the end of its Third Reading.
I want to comment briefly on two aspects of the Motions. First, on the composition of tribunals, the Explanatory Memorandum to the statutory instrument records:
“The Government accepted that some unfair dismissal cases can be ‘fact heavy’ and that the input of lay members can be beneficial. But evidence and consultation responses (including from some judges and some lawyers/law firms, and in particular from business) suggested that for those cases which revolve essentially around questions of fact rather than any complex legal point, Employment Judges are competent to deal with an assessment of the evidence against established legal tests and criteria without the need for lay members”.
The inference to be drawn from that note is that there are cases in which there are complex legal points. In those circumstances, how do the Minister and the Government justify taking out of the scope of legal aid and advice, employment law tout court, which is essentially the position except in relation to discrimination cases? It is clear that there are a proportion of cases in which legal points arise; hence, the justification for the change that the Government propose. However, they do not balance that by allowing legal aid and advice to those appearing as complainants in those cases.
Secondly, I wish to touch on the point made by my noble friend Lord Borrie and the noble and learned Lord, Lord Scott, about the statement of reasons. I sympathise very much with the noble and learned Lord and feel that a statement of reasons for dismissal should be given at whatever point an employee is dismissed but for an additional reason, apart from those advanced by him. If you are dismissed and have to seek another job, it would be helpful to be able to demonstrate that your dismissal was not related to any inadequacy or misconduct on your part, if such were the case, but, for example, arose because there was insufficient demand for continued employment in the firm in question or for some reason not related to the person being dismissed.
The Government’s proposals mean that, for the first two years of employment, no one will have the benefit of such clearance to demonstrate to another employer that he is in other respects perfectly fit to be employed, subject to the employer’s own requirements. Particularly in the conditions of the present labour market, that is something to be deplored. For those reasons, in addition, I strongly support the amendments in the name of my noble friend.
Lord Whitty
My Lords, I support both amendments, but I will concentrate my remarks on the second. In one sense, I apologise to the Minister for repeating some points that I made in the Moses Room. However, I find that his response—in the Moses Room, here today and in correspondence—does not address the issue that I raised. He claims that he is not basing the assertion that the raising of the threshold will increase the propensity to employ on anecdotal evidence. Yet he does not adduce any statistical evidence. The crude evidence is that the last time the threshold was lower, there was an increase in the propensity of employers to employ. That can be dismissed on the basis that it was part of the business cycle, but I am sure that the noble Lord’s department has statisticians who could take out that effect. We have, as the Minister proudly claimed, had some provision on unfair dismissal for 41 years, introduced in the 1971 Act to which those of us who were in trade unions at the time were, in general, opposed. However, the Government of the day thought that some balance was needed in terms of the attack on trade unions that that represented and individual employee rights. Therefore, they rightly inserted the right to claim against unfair dismissal.
Since 1971, either the threshold or the scope of that right has changed five or six times. There are therefore clear points where a change in the legislation could be related to the change in employment patterns. The Minister and his colleagues have failed completely to adduce any of that evidence and present it here today. Instead, they continue to rely on anecdotal evidence. When we were in the Moses Room, I put this down to listening too much to the saloon bars of the Home Counties; we may since have learnt that it may have been raised in the private dining room of No. 10. Either way, it is not statistical evidence. It is anecdotal and it is not proven that that is how employers actually behave. Until the Government prove that, they have not got to base 1 for justifying the macroeconomic effects of these changes.
For Joe Public sitting on the Clapham Omnibus, it is a pretty counterfactual argument to say that the best way of creating jobs is to allow employers to sack people more easily. Some economics is counterfactual, I agree, but without statistical evidence, it is difficult to argue in favour of these changes. That evidence has never been there. In the mid-1990s, there was the famous case of Seymour-Smith and Perez, which went all the way up to the European Court, about indirect discrimination in terms of the higher threshold. I am not arguing that case now, but I am saying that in the course of it, every court at every level, from the High Court right up to the European Court of Justice, accepted that the Government had not proven that, whether or not this was indirect discrimination, there was a bigger good in that more employment had resulted from an upward movement of the threshold. The Court of Appeal said that,
“nothing in the evidence, either factual or opinion … obliges … us to draw the inference that the increase in the threshold period has led to an increase in employment opportunities”.
That was the case 17 years ago. In the intervening 17 years nobody has proven to my satisfaction that the connection is there. The evidence was not there then and it is not there now.
There is a wider context to this, too, as my noble friend Lord Borrie has indicated. This may be the first of many changes in employment law that the Government are bringing forward, and their intention is probably to do so under statutory instruments. I appreciate that it is the convention of the House that we do not vote against statutory instruments, and we are not doing so today. I have a slightly different view, because in the list of government defeats under the previous Government, the first two were against me, so I do not have quite the same compunction as other colleagues. However, if a central tenet of primary legislation is undermined by a series of statutory instruments as the beginning of this series suggests it will be—3 million people taken out of the protection that primary legislation allows—and that continues, we have to look at the way in which the Government are using statutory instruments. I say no more on that.
The other, wider, point, as my noble friend Lord Beecham said, is that we are talking about a vulnerable subset of the population—people who have been employed for a relatively short time, most of whom, regrettably, do not have the protection of trade unions—which is excluded from the basic right not to be unfairly dismissed. This is part and parcel of other legislation which the Ministry of Justice rather than BIS is bringing forward. We have excluded from access to legal aid not only issues of employment but of housing, social security, industrial injuries, for the most part, and industrial diseases—all of which disproportionately affect the most vulnerable elements of our society.
In his opening the remarks, the Minister said that it is vital that the justice system is fair, independent and must not be compromised. I agree—but if you cannot get before a court or a tribunal in the first place, however good and balanced the court and tribunal systems may be, you are being discriminated against. The combination of taking away employee rights in this legislation and taking away access to legal aid in the Bill we regrettably passed last night is a severe restriction of the access to justice.
I fear that those of us who hoped for a relatively liberal Secretary of State at the Ministry of Justice, and a very liberal Minister in this House from that department, will be disappointed. The Ministers’ epitaphs will be that they excluded significant sections of the most discriminated against population from access to justice. That is a bad epitaph for both the parties opposite. I hope that this legislation will not be an additional contribution to that negative effect.
Lord Monks
The difficulty with making changes through statutory instruments is that they convey the impression that the changes being made are minor and of a technical nature. However, these changes are not technical and they are certainly not minor. As the noble Lord, Lord Whitty, said, 3 million people will be taken out of the scope of unfair dismissal legislation and protection. That is a major change which will have a major impact on the British labour market.
Why is this happening? The justification from the Government is that it will aid job creation. Have any employers said, “If you make that change, we will take on more people”? Have they given any undertakings or promises? Of course they have not. This is all in the impressionistic world and it is a matter of conjecture whether anything will change. I do not believe that it will have anything other than the most marginal effect on employers—and I know a lot of employers—but it will have more than a marginal effect on those 3 million workers, or at least some of them. In most jobs—there may be exceptional ones—you do not need more than a year to check whether or not a person is suitable. Probation periods are rarely longer than one year.
Nor is an employer likely to be found guilty of unfair dismissal if a worker does not first achieve and then maintain the required standards of competence or behaviour. Provided that a warning is given, the employer will not make the minor procedural mistakes that the Minister warned about in his moving remarks. I do not mean “moving” in an emotional sense—I wish to make that clear—but in moving the Motion. Bad employers are being given carte blanche for an extra year and the effect will be a rise in insecurity and grave injustice.
Cutting the role of lay members is not a minor issue—this is a step towards a tribunal becoming a full court, with a judge on his own. That will be a daunting prospect for many applicants, which is softened at the moment by the fact there are lay people with some understanding of their world of work. That is not a criticism of judges, for whom I have a lot of time generally, but we will miss a tremendous amount of experience in tribunal hearings because of this change.
As others have said, these may be the first two steps in implementing some of the ideas that are circling around the Beecroft report. We have not seen the report yet, but this venture capitalist has been let loose like a bull in a china shop in the delicate field of employment law. I ask the Minister for an assurance that if any changes are to be made in the future in employment law, they will not be smuggled in through the statutory instrument route but will be a matter for primary legislation so they can have a proper debate and proper exposure in this House.
Baroness Donaghy
I was a lay member of industrial tribunals, as they were then called, in the 1970s and 1980s and was also chair of ACAS for seven years until 2007. I have said before that I am not sentimental about employment tribunals, as they represent a breakdown in employment relations. The vast majority of applications to employment tribunals are withdrawn or settled through ACAS. The test of these statutory instruments should be whether they are objectively justified, and whether they will create jobs and encourage good employment relations.
On the objective justification, the Minister was kind enough to send a copy of one of the letters that he has sent around, in which he wrote that although the recent increasing trend in single claims being accepted does appear to have halted, it is difficult to establish a clear trend over the most recent quarters. Indeed—so why make policy on the hoof?
When I arrived at ACAS, I found 15,000 applications for equal pay in a room. They had been sitting there for a year and could not be conciliated as they were test cases that had to be handled differently. The Minister has said in a letter that multiple claims are processed and judicially managed together—so the claims that there has been a huge increase in applications is very misleading, as I think the Minister himself accepted in correspondence.
It is important to remember that employment tribunals are not judicial courts involving an applicant versus the state. They are there to hear disputes between employee and employer. Of course they take account of facts and take due process into consideration, but they also take account of the employment relationship. This is why the role of the lay member is so important. I was unhappy when the regulations were changed to allow employment judges to sit alone in cases involving notice periods, holiday pay and other slightly technical issues. I thought it was the thin end of the wedge then, but at least there was some intellectual cohesion to the proposal, as applicants used to find themselves caught between two different processes and facing long delays before they received their lawful payments.
The issue of claims for unfair dismissal is not slightly technical. I was struck by the number of times that the paperwork I would receive for a case made the decision seem cut and dried but at the actual hearing a very different picture would emerge. It will be a very detrimental step indeed for the role of lay members to be further diminished. Increasing the eligibility period for putting claims to an employment tribunal from one to two years will do nothing to improve employment relations or the morale of employees. I speak as a fellow of the Chartered Institute of Personnel and Development; good management and good training are the answers here.
I appreciate that this is regarded as a small business problem. When I was chair of ACAS, the organisation spent a large proportion of its time on improving advice and guidance to small businesses to help to keep them out of trouble. It is perfectly possible to have adequate employment procedures on one side of A4 paper. Dare I say that too many with a financial interest insist on gold-plating employment procedures? We should concentrate on the world of work as an engine for growth, with well trained and motivated staff and good management. These measures are unworthy of any Government in the 21st century, and it makes me sad that this is being debated in the same week as the funeral of Lord Wedderburn.
Lord Jones of Birmingham
My Lords, I declare an interest, as I chair and advise many businesses that will benefit in one way or another from the outcome of the implementation, or not, of this statutory instrument.
Listening this afternoon I am left with the impression that, if ever the other place or the general public want to know about the value of this place, it can be found in the marvellous depth of expertise and experience that I sit here and look at today. I do not agree with many noble Lords, but I acknowledge their experience and that they have done it. I hope that as we go home for Easter we could take that thought with us—that there are very few legislatures in the world that could debate a subject such as this one with the experience that I see all around me today.
Of course, there are many reasons why this nation can be attractive to inward investment. There are the factors of economic stability, growth, access to skilled labour, a competitive tax regime—and, I beg of this Government, better and more value and not price-based government procurement. But at the end of the day it is true to say that a flexible labour market, by perception as well as reality, is one reason why we are attractive. I think that the noble Lord, Lord Beecham, was saying that it is a myth that we do not have a flexible labour market, although I may have misunderstood him. We have one of the most flexible labour markets, if not the most flexible, in the European Union. That is why Tata continues to create jobs here before it creates them anywhere else and one reason why GlaxoSmithKline announced that fabulous news just the other day.
I say to the noble Lord, Lord Whitty, that I do not think that I could be identified with the saloon bars of the Home Counties, a place where a crèche is something that two Range Rovers have. I come from the home of the real Range Rover—Birmingham. One reason why Tata is investing in another 1,000 to 1,500 jobs in my hometown, building that product, is because that company knows that it is in the home of a flexible labour market. That company runs, as do so many other sophisticated and large inward investors, by skilling and investing in its people, and it will hardly benefit at all from extending from one year to two years. But the very fact that we have that rule will be one of the bricks in the perception that we are attractive. There is no running away from it—when I go around the world, that is one of the reasons cited. But it is not on that scale that we will target job growth in this nation, if we are to get out of the economic mess. That will happen through small business, getting micro-businesses to take the plunge and employ one person for the first time, and getting a firm that employs five to employ six or one that employs 20 to employ 21. They are the route out of this—the private sector creating jobs—and we have to do everything that we can to ensure that they get all the encouragement they can to do so. Why on earth we have a national insurance contribution from employers for small businesses when they are not making money is beyond me. At the same time, we have to, first, make it factually easier for them to do it and, secondly, ensure that they do not feel that they will be subjected to all the debilitating problems—as they see it—with an employment tribunal if they take someone on.
The noble Lord, Lord Young of Norwood Green, said at the end of his remarks that no business has anything to fear if it complies with regulation. I remind him that they have a lot to fear; it is called the spurious claim, where somebody leaves employ and has a crack at an employment tribunal to get damages for unfair dismissal. It happens a lot, and it never actually comes anywhere because these people are bought off. It is no use people saying, “At the end of the day, that is a small price to pay”. In economic boom times, it may be because, yes, people then take labour on more readily. Yet when we are really under the cosh in this country it is a real inhibitor. People say, “I’m not going to take somebody on, because in the next year or 18 months they’re just going to leave and then do me for constructive dismissal. I’m not going there; I won’t do it”. It happens all the time, and I hear it all the time.
Many of the noble Baronesses and noble Lords who have spoken come from a noble cause of championing labour. I ask them, just for a few moments, to leave their ideology at the door and think more not of those who are in work but of those who are out of work. In the European Union we have a history of regulating and championing those in work, but we are looking at serious, long-term sustained unemployment, especially of the young, throughout the whole European Union because no one is bothering about getting those who are out of work into work. If we really care about that, we have to go to town on ensuring that small businesses take the chance.
I notice that so many unions fight so often on the subject of pensions. When an employer closes a pension scheme to new entrants, they fight while their members are fine, but say that they are doing it for people who are currently not in that scheme. If you care that much for those who are out of work in that situation, why not do the same now? The noble Lord, Lord Monks, said that no one has written an undertaking saying, “You do this and I’ll take on more work”. Let us throw the glove down to small businesses. Let us champion it and say, “Come on, we’ve done our bit—you do yours”.
The amendment speaks of “justice and fairness”. In supporting this statutory instrument, I absolutely agree with the noble and learned Lord, Lord Scott of Foscote; it is despicable if anybody is ever dismissed and does not get a letter from the employer saying why. The other side of that should be concern if they do not want it, because often an employer can write, “Actually, I fired you because you’re rubbish”. There is nothing wrong with that. Perhaps if they knew they were going to get that letter, employees might behave and go to work a little differently along the line. As the amendment speaks of “justice and fairness”, I end by asking: fairness to whom? Yes, it is fairness to a business because it is not going to have so much time, resource, effort and lawyers’ fees going towards fighting so many claims, which occasion after year one at the moment. Yes, it is fairness to the wealth creation of the nation but, at the end of the day, that generates tax which pays for a lot of schools and hospitals. More than anything else, it is fair to the unemployed because it is just one more chance of getting them into the world of work. I support the Motion.
Lord Cope of Berkeley
My Lords, I will not repeat what I said last week in Committee but I want to emphasise one point, although I shall not do so as eloquently as the noble Lord, Lord Jones, has just done. Jobs do not exist automatically. In the small and medium-sized businesses with which I have been concerned they need to be created and people need to take risks in order to create them, borrowing money and so on and putting their own money on the line. Obviously they hope that that will be successful—sometimes it is, sometimes not—but they need to be creative. As I say, jobs do not exist automatically and a tribunal cannot decide who does them in every case. This measure will make it just that bit easier for employers to create the sort of new jobs in small and medium-sized businesses that the noble Lord, Lord Jones, was talking about, and will make it more likely that they will do so. We need these jobs and less bureaucracy.
On the question of reasons, which the noble and learned Lord, Lord Scott, mentioned, I entirely accept what he said about good management practice but this is not just a question of good management practice; it is a legal requirement to produce a legal document that could form the basis of legal proceedings in the tribunal and so on. It is different from good management practice, with which I would concur, to say that there must be a legal duty to produce a legal document. That is the difference, and that is why this measure goes along with the extension of the amount of time in the statutory instrument. For those reasons, I support the statutory instruments as they stand and would not accept the amendments.
Baroness Drake
My Lords, my involvement with employment tribunals is recorded in the register of interests. Issues of fair or unfair dismissal are at the heart of workplace relationships. The first-tier employment tribunal is in effect an industrial court where evidence is assessed and decisions made on what is fair and reasonable conduct. It was intended that those decisions would be rooted in the industrial context and business realities.
That is why lay members were introduced and why they should be retained in the hearing of unfair dismissal cases. The presence of lay members brings to the employment tribunal system both legitimacy from the view of the claimant, and a significant component of knowledge of social relationships at the workplace acquired through observation and participation. Employment tribunal decisions that are made jointly by a panel of people who pool legal and other knowledge and experience are better for that range of skills. This is particularly important when, as has been said, one considers that unfair dismissal claims are often questions of fact rather than complex legal points.
The Government argue that allowing judges to sit alone on unfair dismissal cases will bring cost reductions and efficiencies. Removing lay members’ automatic presence from unfair dismissal cases will save around £140,000, together with perhaps a further £500,000 as a result of needing to recruit fewer lay members—a most modest saving when one considers the challenge being posed to the industrial jury concept when dealing with unfair dismissals. As for inefficiency, the timetabling of cases is as much driven by the availability of judges as it is by lay members.
The Government argue that employment tribunal judges are highly competent, which I fully endorse—of course they are, but that is not the issue. What is important is that the legitimacy and benefit of a tripartite industrial court system in unfair dismissal cases remain. That is important for a series of reasons. In unfair dismissal cases people often feel very hurt and upset and the dismissal may be a life-changing experience, whatever the merits of their case. The employment tribunal must decide the reason for the dismissal and whether the employer acted reasonably in treating that reason as sufficient for dismissal. Where a tripartite tribunal finds against a claimant, that is a powerful message: the lay and the legal are of a common view. However, they have had their day at the tribunal, and that tripartite tribunal has expressed a view. Where that decision is taken by a judge sitting alone, the claimant may well feel more minded to pursue an appeal. I believe that legitimacy in the industrial context will be perceived to be less valid without that tripartite system.
Lord Razzall
My Lords, we have had an extremely interesting discussion, which was virtually a repetition of our debate in Grand Committee. I remain with the fear I expressed during that debate that this issue has become far too polarised. On the one hand, the proponents of the statutory instrument suggest that it will lead to a significant increase in employment, particularly in the SME sector. On the other hand, after listening to a lot of the remarks on the Labour side, one would think that one was returning to the days of the Tolpuddle martyrs. I worry about this polarisation because this is a relatively modest instrument.
As the noble Lord, Lord Whitty, indicated, I know that a lot of the evidence here is anecdotal. I now see that the noble Lord has extended his saloon-bar anecdotes beyond just Hertfordshire to the whole of the Home Counties. The evidence is not only anecdotal but based on the experience of many noble Lords who sit on boards of directors and are involved with SMEs. The evidence is therefore not entirely anecdotal, but I take the point.
This is a very modest alteration if you look at the number of people who, when the restriction was one year, actually made a claim for unfair dismissal when they were dismissed between year one and year two. There does not seem to be any significant indication that such people will lose their rights as a result of this legislation.
The point I really want to make, which I made in Grand Committee—and I am glad that one or two noble Lords on the Labour side have taken this up—is that we are in the middle of a significant internal argument around the suggestions in certain quarters that virtually all employment protection should be scrapped. This is a very serious matter. Conversely, a number of people, certainly on the coalition side, have been arguing that we need improvements in employment protection, particularly in what are described as family-friendly rights on maternity, paternity and other such issues. I hope that this will appeal to the Labour side of your Lordships’ House. If we are going to get the improvements we want in those family-friendly rights, and if we are to beat off the damaging proposals that seem to be coming from Mr Beecroft and ensure that they are not implemented, passing this modest instrument seems to be a small price to pay.
Earl Attlee
My Lords, this is not a time-limited debate, but I suggest that we hear from the noble Lord, Lord Lea of Crondall, and then the Minister.
Lord Lea of Crondall
My Lords, I have three points. First, perhaps I may pick up on the points made by the noble Lord, Lord Razzall, if I have his attention. He made what I would call a Sudetenland remark—the one made by Neville Chamberlain about “peace in our time”. If only that were so. Does he want a guarantee, a white piece of paper in his pocket that he can wave, promising that there will be no more legislation if this order is passed? Well, we shall see.
I also congratulate the noble Lord, Lord Jones of Birmingham. His joke about crèches is the worst joke I have heard in the House in the 12 years that I have been here.
My first substantive remark is about the evidence base. In Committee, I pointed out that the evidence paper presented to us as part of the background material did not give evidence as you would normally understand that term—that it was clear what would happen if you moved from one year to two years; instead, it was evidence about perception. It is probably worth repeating that the Minister said that perception is as powerful, if not more powerful, than evidence.
Today, having been given the challenge that if you have a problem of perception, your job should be to counter perception by evidence—to change the perception by talking to people—the noble Lord said, “Exactly. That is what we are trying to do”, which caused an intake of breath on these Benches. The Minister has reinforced that today by saying, “I want to meet the challenge that there is evidence of perception”. I am sure he has evidence of perception—that becomes a circular argument—but there is still no evidence.
My second remark is that noble Lords repeated three or four times the Americanism about how many people we should let go. I do not think I am alone in finding that American usage distasteful. I deplore the idea that these people want to be let go. Do they come up and say, “Please let me go”, to which the answer is, “All right, I will let you go”? They are being sacked, they are being dismissed, they are being thrown out, they are being put on the scrapheap. That is the language. I have never heard in a pub in Burton upon Trent anyone saying, “I think they’ll let me go”, when they mean that they are going to be dismissed. Does the Minister appreciate that that is not the industrial language in this country?
Finally, I echo the remarks of my noble friend Lord Whitty, supported and reinforced by my noble friend Lord Monks. If legislation through statutory instrument as deep-cutting as this goes on and on, one is cutting the legs off primary legislation. We have a growing problem in the role of the House of Lords—second only, perhaps, to the Money Bill question. We are seeing more and more statutory instruments which are not playing around with minor detail of the primary legislation but, bit by bit, salami-wise, cutting the legs off primary legislation. Does the Minister think that we can go on taking 3 million, another 3 million and another 3 million out of the scope of primary legislation without making nonsense of the conventions about the use of secondary legislation?
Lord De Mauley
My Lords, perhaps I may start by agreeing with the noble Lord, Lord Jones of Birmingham, most strongly about the quality and value of debate in your Lordships’ House. Today is no exception. We have had a good debate today, as indeed we had a good and full debate in Grand Committee on Monday last week, in which nine noble Lords from the opposition Benches participated, as did two from the Cross Benches and four from the coalition, as well as me.
Many of the questions and issues raised today were debated when we discussed the orders on that occasion, and my answers have not changed much since then. I am also well aware that noble Lords on all sides want to get on with the next business, so I hope that they will forgive me if I focus on the key issues.
The words flexibility and discussion have been deployed liberally throughout our debates, particularly by noble Lords on my side of your Lordships’ House, and my noble friend Lord Risby used those words today. Those concepts are at the heart of what the first order, the tribunal composition order, is about. The amendment of the noble Lord, Lord Young, suggests that the order will reduce the justice and fairness of employment tribunals and risk increasing costs through a greater number of appeals. These concerns are unfounded. I explained in this debate and in Grand Committee last week why they are unfounded but perhaps I may repeat what I said.
Lord Young of Norwood Green
My Lords, I thank the Minister for his extensive reply. I will keep my remarks very brief. I see that I am getting support for that intent. It is not because I think that the issues are unimportant, but because my noble friends did ample justice to the reasons for both amendments to the Motions.
I will pick up a couple of points. The noble Lord, Lord Jones, invited us to leave ideology at the door. I like to think that we did in this debate, and that there were sincerely held views on both sides. All of us in the Chamber care passionately about youth unemployment. That is why the previous Government spent so much time rebuilding the apprenticeship programme, which was practically at death’s door.
Because we hold a different view on these issues, that does not mean that we do not care—we do care, passionately. However, the noble Lord is being over-optimistic if he believes that this measure, described by the noble Lord, Lord Razzall, as “modest”—again I must part company with him there—will somehow ensure that we do not have, in his view, any spurious claims. I still firmly believe that if you really want employers to protect themselves, the way is to have proper personnel procedures and not imagine that somehow they can deal with this at the 11th hour.
Because of the time, I am going to telescope my remarks to a large extent. I welcome one point by the noble Lord, Lord De Mauley. I do not know whether he called it a “review” or a “report” in a two-year period approximately, but I welcome it, even though we are totally opposed to these changes. As for the composition of the tribunals, we believe that this is a profound change in their nature. I am not going to test the opinion of the House on the first amendment to the Motion, not because we see this issue as less important, but mainly in the interest of time; it is for that reason alone. We are still fundamentally concerned about it; we are still not reassured by any means when the noble Lord tells us that there will be more to come. We believe that this will again diminish rights. However, for the reasons I gave, I beg leave to withdraw the amendment.
Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012
15:19 - Division on Lord Young's amendment to the Motion - Ayes: 125 / Noes: 193 - Lord Young's amendment to the Motion disagreed.
Lord De Mauley
That the draft order laid before the House on 6 February be approved.
Relevant document: 41st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 19 March.
Amendment to the Motion
Lord Young of Norwood Green
As an amendment to the above motion, at the end to insert “but that this House regrets that the Order will unnecessarily diminish the employment rights of employees, will have little or no effect on employers’ likelihood of taking on new staff, encourages the use of dismissals in place of good management practice, and is opposed by trades unions; believes that employees should always get a written reason for their dismissal; and calls on the Government to place a report into the effect of the changes before Parliament, 18 months after the approval of the Order”.
Lord Young of Norwood Green
My Lords, I will again be brief because we have explored the arguments in great detail and I have partially covered them in my previous contribution. I will refer to one aspect, in relation to the contributions of the noble and learned Lord, Lord Scott, on reasons for unfair dismissal. I listened carefully to what the Minister said, and I must admit that, again, this is totally the wrong signal to give employers—that this will somehow be used as a legal document. It is but a small and necessary example of good management practice and something that ought to be an employee right. They should understand why they have been dismissed. If that means that employers have to think long and hard about how they treated an employee, I would hope that that process takes place before, rather than when they produce this letter. That would improve both management and employee rights.
Given the importance of what we believe to be a fundamental change—which, as some of my noble friends have said, would be more proper in primary legislation than a statutory instrument—I wish, for those reasons as well those previously expressed, to test the opinion of the House.
Scotland Bill
(12 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Advocate-General for Scotland (Lord Wallace of Tankerness)
I beg to move that this Bill be now further considered on Report. In moving this Motion, I am conscious that at earlier stages in the passage of the Bill, Members of your Lordships’ House have been anxious about the progress towards a legislative consent Motion. On Monday, I indicated that the Scotland Bill Committee would meet this week—I thought that it would be today but I understand that it was yesterday—to discuss the legislative consent Motion and the agreement reached between the Governments on the Scotland Bill.
I can advise the House that the committee met yesterday. It debated and agreed a short report, which was published earlier today, on the draft legislative consent Motion, which had been put forward by the Scottish Government. That report concludes with the following words:
“All of the Committee notes the contents of the Legislative Consent Memorandum and a majority recommends that the Parliament gives its consent to the legislative consent motion”.
Only the Green Party member of the committee has chosen not to make a recommendation.
It is now clear that we have agreement between the Governments on this Bill and a clear recommendation to the Scottish Parliament to vote in support of the Bill from both the Scottish Government and the committee established by the Scottish Parliament to review the Bill. That report having been published earlier today, I thought it was important to bring it to the attention of the House.
Lord McCluskey
I hope that the House will forgive me if I take 90 seconds to say something about my personal attendance, or non-attendance, for Part 4 of the Bill today. Each time I have come to the House, the proceedings of the Scotland Bill have been delayed—today, by more than three hours; on Monday by longer than that; and, at Second Reading, by even more. Unfortunately, that means that I, for personal and domestic reasons, am unable to remain until Part 4 is reached. It will be at a time when I have to go for personal reasons.
However, perhaps I may say that I am deeply indebted to the Advocate-General for the way in which he has responded to the amendments proposed in relation to the Supreme Court. The end result is something with which even I could agree to the extent of about 98 per cent. In due course, I shall write to him with a couple of technical points that are perhaps worthy of consideration. I hope that we can proceed on the basis that the Advocate-General is now advocating in Part 4. I am indebted to him and his staff for all the courtesy shown to me in the course of these proceedings. I thank your Lordships for allowing me this indulgence.
The Deputy Speaker (Baroness Pitkeathley)
I should tell your Lordships that if Amendment 15 is agreed to I cannot call Amendment 16 for reasons of pre-emption.
Amendment 15
Lord Forsyth of Drumlean
Lord Forsyth of Drumlean
My Lords, the noble Lord, Lord Browne, can probably rest easy as far as Amendment 16 is concerned. We have been around this course a number of times. I find it very difficult to understand, especially given the announcement just made by my noble and learned friend. He has just told us that there is a recommendation for legislative consent. We have heard repeatedly during the course of the deliberations on this Bill that it implements the recommendations of the Calman commission. Nowhere does the Calman report suggest that there should be an open-ended power to create new taxes of any kind, to be introduced by order in both Houses.
I have two objections to that. First, the taxes which are intended to be given to the Scottish Parliament, like the aggregates tax—we have a later amendment on that, which I do not propose to move because I know that the Government will say, “We are not ready to do that”—are not in the Bill. We have this open-ended power. My objection to this open-ended power is constitutional. It cannot be right that we have an order-making power for the imposition of taxes through the House of Commons and the House of Lords. I know that the Minister will say, “Oh, but this will be discussed in the Scottish Parliament”. This is the sovereign Parliament and the House of Commons is the sovereign body. Its history is one of voting means of supply. To create a procedure that enables taxes to be imposed without going through the requisite finance Bill and Committee stages in the House of Commons is a huge step which is in no way justified by the manifesto commitment or by anything that the Calman commission said.
I urge my noble friend to think again about this. It is an enormous change to our constitutional processes. I cannot think of any example where it has been possible to impose a tax by Order in Council. The very early history, with the arguments over ship money and everything else—I do want to repeat arguments that I used in Committee—was about this very principle. It is a dangerous precedent to create. One of the things that worries me about this Government and the previous Government is that there does not seem to be an understanding that we have no written constitution in our country. Our constitution, in so far as it exists, exists in the procedures and conventions of the House of Commons and of this place. To ride roughshod over them in this way for the sake of convenience is a very retrograde step, which has certainly not sprung from any commitments or recommendations that have been made externally. I can see how it is for the convenience of Ministers and the Executive, but it is utterly wrong in principle. Even at this stage, I ask my noble friend to think again and find some other method of achieving his objectives which does not ride across the very nature and existence of our parliamentary procedures. I beg to move.
Lord Lang of Monkton
My Lords, I support the amendment of my noble friend Lord Forsyth. Like him, I am concerned about the constitutional aspect of it. Here is part of a structure to set out a tax-levying power within the Scotland Bill which represents an abrogation by the United Kingdom Government of their obligation to promote financial stability, efficiency and good government across the whole of the United Kingdom.
Of course, it is one thing to devolve a tax-raising power to a specific area, as is contained in the Bill; I have my own views about that, which I will say a little about in this context. However, it is also the duty of the United Kingdom Government to ensure that the policies which they espouse and the priorities that they hold for the good financial and economic government of the kingdom should be as capable of implementation in Scotland as in the rest of the United Kingdom. The capacity of any Government of any complexion to fulfil other, broader financial and economic obligations against the background of the impact of the tax provisions specifically contained in the Bill is seriously jeopardised.
I see the whole Bill as a Trojan horse. I think that the commission and those who prepared the Bill and brought it forward were, perhaps, not fully aware of the potential damaging impact on the Scottish economy. It will create major challenges. I raised a couple earlier in the passage of the Bill, at Second Reading and again in Committee. The first is the situation affecting the tax base. The Scottish tax base will be smaller and weaker than the tax base on which provision for Scottish expenditure is currently based. Scotland’s economy has a higher proportion of company failures and a lower proportion of company formation. It has a smaller and weaker entrepreneurial class. It has a higher proportion of public sector employment. All these points have been made already, but they have to be made again because they feed into this problem of lower growth and expansion and a weakening private sector. However, it is on that weakening and small private sector, relative to the rest of the United Kingdom, that the impost of the 10 per cent tax rises will fall.
The study to which I referred earlier showed that the United Kingdom public expenditure base had expanded by 94 per cent in the previous 10 years, while the Scottish tax base, which will form the basis of this 10 per cent tax, had expanded by only 48 per cent. That may not be continued at the present time when the Government’s public expenditure programme is much more disciplined, but what will happen in a future Parliament, in future circumstances, when the economy nationally—by which I mean across the United Kingdom and, indeed, in the world at large—is expanding and once more on an efficient growth track? That is when the divergence will reappear. At that stage, of course, if Scotland were separate from the United Kingdom, the added burdens of dependency on a volatile oil price and reducing oil production, which are now generally agreed to be likely for the next few years, would come to bear.
The 10 per cent tax rate would have to take a massive degree of strain. This is where the gearing feature comes into it, just as we have seen with local government taxation where the bulk of funding comes from the United Kingdom Exchequer and only a small proportion is raised locally by local councils. So, if a local council wants to make a 2 per cent increase in spending, it would have to increase taxation by a multiple of that, perhaps a large multiple.
I remember the referendum that took place in Quebec about 10 years ago. When I was in Toronto last year, it was pointed out to me that, although the referendum to separate Quebec from the rest of Canada failed, the economy of Quebec went into a grey, dismal period from which it has not yet emerged. I was even told that the Bank of Montreal had moved its headquarters to Toronto in Ontario. That is an example of the kind of problem that we may face.
We talk about the importance of inward investment but, against this kind of background, in the future we will have to talk about the loss of existing companies from Scotland—outward investment. Where will the major Scottish companies choose to locate against the background of the economic troubles that will develop within Scotland? Where will the Royal Bank of Scotland choose to locate? Where will Standard Life go? These companies have 95 per cent or 98 per cent of their business outside Scotland, and they will be thinking very carefully about their future taxation residence.
Corporation tax, which the Scottish Administration at present claim they want to reduce, is already coming down very sharply. It is 24 per cent now and there is a plan to reduce it further. If the Scottish economy in a separate Scotland were to try not only to keep up with but to exceed that, it would find that the Laffer curve does not work as efficiently as might be hoped in an economy that is otherwise deeply strained, and that it faced a race to the bottom. It would be extremely difficult and very serious.
The danger there is that, against the background of this Bill and these tax provisions within it, people in Scotland would demand further taxation concessions, and so one more step down what we used to call the slippery slope but is now called the continuing process of devolution would take place. It is not devolution that is a continuing process—it is separation. The salami slicing of Scotland’s place as an equal partner in the United Kingdom is taking place.
The Government should give an answer as to why, against that background, they have put these tax provisions in the Bill without contemplating the effect they will have in reality. I have not had an answer to the questions I raised earlier; my noble friend Lord Forsyth also raised them. I see that we are privileged to have my noble friend Lord Sassoon from the Treasury in his place. I hope that he may be able to enlighten us or, if nothing else, admit that there is a problem and say, “We accept it and we regret it but we have abrogated our position as Her Majesty’s Treasury for the United Kingdom”. I support the amendment.
Lord Kerr of Kinlochard
My Lords, I do not want to repeat what I said in Committee on this. Although I am sure there is much force in some of the points made by the noble Lord, Lord Lang, they are no doubt points that the Scottish Parliament would have in mind, were it minded to exercise the power that this clause would confer upon it. I do not agree with the noble Lord, Lord Forsyth of Drumlean, that there is some constitutional impropriety. I do not understand his constitutional argument.
The constitutional principle in regard to taxation is that those paying the tax—those on whom it will be levied—should have voted for it. I see no constitutional objection to the Scottish Parliament having the power to levy another tax, given that only Scots or people resident in Scotland will be paying it. As I said before, I see no difficulty about them having the power to vary an existing tax, for example the rate of VAT. I do not see a constitutional principle there. I referred in Committee to the example of differential sales taxes across the United States of America. There are many taxes that are different between states.
I conclude my remarks by saying that I see a lot of sense in the amendment we will come to in a moment, which suggests a procedure and safeguards that could be built into the system, which I could support. I also understand the economic arguments that the noble Lord, Lord Lang, advanced and it is very important that they should be in the minds of the Scottish Parliament when it chooses whether to exercise the power conferred on it here, but I cannot see the constitutional principle. I do not follow the ship money argument.
Lord Forsyth of Drumlean
It is very straightforward. We are talking about devolution here, not about establishing a federal system. As someone said, although I cannot remember who, power devolved is power retained. The ability to create a completely new tax—a window tax, or whatever—has to reside with the other place down the Corridor. Within our constitution, in order to create a new tax, you have to have a finance Bill. It used to have to be on the Floor of the House of Commons when it came to Committee, and there is a set of procedures that needs to be followed. It is completely different from devolving the power to set a rate of tax, which this Bill purports to do and is the commitment made in the manifesto.
My constitutional problem is that that ability of the House of Commons to discuss, through a long-standing procedure, the imposition of taxation is being undermined because all that it requires now is an Order in Council, which by convention cannot be voted on in this House and cannot be amended. That is no basis upon which to create new taxes on the people. It is the nature of the procedure that is the constitutional outrage as far as I am concerned, not the nature of giving the Scottish Parliament the ability to raise a particular tax.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I will just try to clarify the position here, which might be helpful to this ongoing debate. This is a very important point. We should be clear that we are talking about a power to devolve taxes, which is a constitutional provision that it is perfectly proper for Parliament, including this House, to have a role in. That is quite separate from the creation of the new tax, which will be the responsibility—if it is given it under the provisions of this Bill—of the Scottish Parliament. I suggest to my noble friend that it is misleading to say that somehow we are driving through the creation of new taxes via some improper provision of this Bill. The clauses we are talking about seek to devolve a tax, a power that is retained by this Parliament and around which there will be all sorts of safeguards, as we will come on to. There will be a joint assessment by the Government here and in Scotland before such proposals come forward. But the creation of the new tax will be for the Scottish Parliament and will go through a proper, full parliamentary process of that Parliament.
Lord Pearson of Rannoch
Forgive me, but that does not appear to be exactly what the Bill says. It may be helpful for those who follow our proceedings, but do not go into the detail of the Bill and the Explanatory Notes and all the rest of it, if I read out briefly what the Bill says and then put some questions to the Minister.
The part of the Bill that the noble Lord, Lord Forsyth, is attempting to remove is new Section 80B of the 1998 Act on the power to add new devolved taxes. It states:
“Her Majesty”,
who of course acts under the advice of Ministers, so it is not her fault,
“may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description … or … make any other modifications of the provisions relating to devolved taxes which She considers necessary or expedient”.
I repeat a question put to the Minister by the noble Lord, Lord Forsyth. Can he think of anywhere else where a new tax or taxes can be imposed on our people by Order in Council without their informed consent? Have they given that consent and, if not, how will they do so? Are the Government really suggesting that this process will take place without going through your Lordships’ House or the House of Commons? Are we not even to have the affirmative or negative procedure? We need to clarify this matter because, from what I know of it so far, this is going too far for our democracy.
Lord Sassoon
I do not want to keep popping up and down like a jack-in-the-box, but I shall try again.
Lord Tordoff
With all due respect to the Minister, he should not keep popping up and down. We are at the Report stage of the Bill and people should speak only once. I understand the pressure on him to intervene after what the noble Lord has just said, but this feels more like a Committee stage than a Report stage to me.
Lord Sassoon
My clear understanding is that as the Minister I have the privilege of being able to speak multiple times at the Report stage, unlike other noble Lords. I simply thought that it might be useful to intervene again now to answer this question before it is raised yet again and to help to shorten the debate.
A tax cannot be applied simply by Order in Council, as the noble Lord seeks to suggest and as I think my noble friend suggested. First, in answer to the specific point made by the noble Lord, Lord Pearson of Rannoch, it is an Order in Council subject to an affirmative procedure. That Order in Council simply devolves the responsibility and gives space to the Scottish Government and Parliament to decide how to fill that space with a new tax of their construction. It will be up to the Scottish Parliament. The Bill allows the Scottish Parliament to pass legislation in a Bill for a new tax in Scotland. Of course, the Scottish Government will have to give full consideration to the impact of the new tax, as they propose it, just as there will need to be an assessment—we will discuss it later—before the power under the clause is devolved.
Lord Browne of Ladyton
My Lords, I have immense respect for the noble Lord, Lord Forsyth of Drumlean. I listen carefully to what he says, and I have heard this argument from him on a number of occasions and respect it entirely. I have listened carefully, too, to the arguments put forward by the noble Lord, Lord Lang of Monkton. I thought that his contribution ranged much wider than the actual provision that we are considering, but he made some very important points, which are worthy of being recorded. The noble Lord, Lord Kerr of Kinlochard, rose to debate some of them and made a helpful contribution. The noble Lord, Lord Pearson of Rannoch, read in short—and with respect to him, slightly misleadingly—a part of the Bill to make another point. I hope noble Lords will forgive me, but we have debated these provisions in some detail in different ways. I had my say both at Second Reading and in Committee, and that is all recorded. If people want to know what my views are for supporting this provision and its maintenance in the Bill, they can read them at length.
However, in response to the point made by the noble Lord, Lord Pearson of Rannoch, it can sometimes be deeply misleading to read in short a piece of legislation. I am not intending to read it at length, but the operational way of this Bill is to amend other legislation. I think that the answer to his point—the Minister will be able to correct me when he comes again to the Dispatch Box if I am wrong—lies in the fact that the active verb in the piece that he read to us is to “specify” a tax, not to impose a tax. The answer lies in the words that the noble Lord, Lord Pearson, chose. That, put another way, is the point that the Minister was making to him.
In any event, whether or not this provision generates deep and interesting constitutional issues, we know that where this constitutional imperative resides—in the other place—they have already approved this devolution. The Bill has come to us with their approval. It may be that we can say, with some merit, that they did not pay a lot of regard to this clause. It was a differently numbered clause at the time. However, they will certainly pay a lot of regard to it when it goes back to them, and it will not become law if they do not approve it. The responsibilities that they hold in terms of our constitution, they hold. If they choose to devolve them and encourage us within this Parliament to support that, I do not think it is our privilege to prevent them doing so.
For clarification, we also need to look at the genesis of this provision. It is not entirely true to say that Calman was silent on this point. The Calman commission recommended:
“The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland”.
The noble Lord, Lord Forsyth of Drumlean, who is comprehensively knowledgeable about Calman and this Bill, and has proven that time and again, will see that this provision goes significantly further than the Calman recommendation. However, it is not true that there is no reference in Calman to the devolution of taxation or the creation of a power of this nature to assist future devolution. There is consideration of it in some detail in the report. The arguments for and against are there, and there was a clear recommendation, but I accept that it has been taken further.
As I said in Committee when this issue was debated at great length, the deletion of this provision would leave the Bill significantly reduced, not only in its constitutional significance but in its significance for the people of Scotland. I am not interested in achieving that objective. Our position is that we support the inclusion of this provision, provided that certain checks are in place. That is why rather than seeking to support the deletion of this provision we have tabled Amendment 16, to which I will speak at greater length in the next group, and which we believe would allay much of the concern over the breadth of this provision, were it to be accepted in some form. This of course all depends on the House’s position in relation to this amendment. I accept that the debate on my amendments is dependent on the decision that the House makes in relation to this amendment. However, I was given a certain assurance by the noble Lord, Lord Forsyth, in his introductory remarks that I need not worry about that, so I will now sit down and prepare to argue the next amendment.
Lord Pearson of Rannoch
Before the noble Lord sits down, and with the leave of the House, neither he nor the Minister has answered my main question on this matter: have the people of Scotland given their informed consent to this provision? If they have not done so, will they be invited to do so, perhaps with the provision being specifically flagged up in any eventual referendum?
Lord Browne of Ladyton
I might just respond on this point and leave the Minister to deal with the matter if he thinks I have not dealt with it adequately. My response to the noble Lord, Lord Pearson, is that I think I answered his question by pointing out where he was misreading the provision that he himself chose. He now asks another question and I am happy to answer it.
Scotland is a representative democracy, just as the rest of the United Kingdom is. It has two levels of parliamentary democracy: the Scottish Parliament and the UK Parliament. The Scottish Parliament, which speaks for the people of Scotland, and all parties overwhelmingly approve of the provision. I have no doubt that we will see that in the second legislative consent Motion, which I am confident will be passed unanimously by the Scottish Parliament.
Lord Browne of Ladyton
Perhaps the noble Lord will allow me to finish answering one question before he poses another one. I am asked where the democratic support for this comes from. It comes in the unanimously expressed will of the Scottish Parliament. The noble Lord, Lord Pearson, may not think that sufficient, but I can tell that the people of Scotland think it is.
Lord Forsyth of Drumlean
I do not mean this in a cheeky way, but my recollection is that when we discussed this at an earlier stage the noble Lord indicated that he had not appreciated that these powers were quite so wide-ranging. If he, with all his brilliance and his close study of the Bill, did not realise that, surely the noble Lord, Lord Pearson, is right in suspecting that the people of Scotland might not know that these powers were being provided, or indeed the people of England, Wales or Northern Ireland who could be affected by them?
Lord Browne of Ladyton
The combination of cheek and flattery is so appealing that I can barely resist it. The noble Lord’s recollection of what I said when we discussed these provisions before is not my recollection, but the Official Report will have recorded it. I think that I said it was not fully appreciated how significant these provisions were—not by me; I thought that I had helped those who had not fully appreciated that, but maybe this was a process of education in which I was a pupil, not the educator.
In any event, I am not suggesting that the significance of this important provision of the Bill is widely known and appreciated by the people of Scotland, whatever that phrase means, but I was asked a different question by the noble Lord, Lord Pearson—where the constitutional democratic support lay for this from the people of Scotland. The noble Lord, Lord Forsyth, will recall that I referred to a representative democracy; I did not suggest that all the people of Scotland understood this.
Lord Pearson of Rannoch
I merely say that the record will confirm that the noble Lord has not answered the question that I asked him.
Baroness Rawlings
My Lords, I remind noble Lords that on Report a Member may speak only once except for a short question of elucidation to the Minister.
Lord Sassoon
My Lords, I shall try to address some of the further points that have come up, although I have addressed one of the key points so I will not repeat myself. Although my noble friend Lord Lang of Monkton went rather wider—I thought we were going back to Second Reading—he provided some important context for the clause. We do not want to leave ourselves with the impression of a weak Scottish economy that my noble friend paints. It is right to remember that with 8.4 per cent of the UK’s population, the gross added value contributed by Scotland was 8.3 per cent, which is almost in line with the percentage of the population. I could cite many figures, including some which show that Scotland’s economy outperforms that of the UK as a whole. We should not think that we are making Scotland too reliant on the 10 per cent of tax base. I think my noble friend suggested that we were relying excessively on that 10 per cent. To be clear, under the Bill about 60 per cent of Scotland’s budget will still come from the block grant, so that context is important.
I wish to address one or two of the issues specific to this clause and the amendment. It is important to realise that the power we are talking about allows for the Scottish Parliament to be given full control over a specified tax. It does not allow for the Scottish Parliament to be given control over particular aspects of taxes such as the rate. It is a power to devolve complete control of a specific area. As I have explained, it will then be for the Scottish Parliament to go through a process to create a new tax to fill the space.
Lord Forsyth of Drumlean
On a point of information, is my noble Friend saying that the Scottish Parliament cannot think up a completely new tax, such as a window tax, for example?
Lord Sassoon
First, this Parliament needs to devolve the power to create the space and then the Scottish Parliament can move into it.
There are two reasons why we need this power. One is to enable those taxes and duties which are already in contemplation to be devolved. Then there is the question of future specified taxes, which relates to Calman. We may or may not come back to the question of an air passenger duty and an aggregates levy, which we discussed at length in Committee. However, this power is needed under the construct which the Government propose whereby we have APD and an aggregates levy to be devolved in due course. We are not in a position to do so at the moment and the power is required to enable that to happen. However, I completely accept that that is a separate matter from the identification of future taxes and how that relates to the Calman recommendation. It is clear that there are different interpretations of what Calman recommended, as we have heard this afternoon. I could read out large chunks but I suspect that would not lead to our agreeing on the precise construction of the words. I repeat that I believe that Calman envisages the devolution of future specified taxes rather than just taxes that have been specified up to this point. I agree that the words are not easy but I will quote a chunk from Calman:
“We see no reason why the Scottish Parliament should not be able to legislate to create new taxes that affect the whole of Scotland uniformly and not just via local taxation, if it does so with the agreement of the whole UK Parliament”.
I believe that that is the context in which this central power should be seen.
I will not repeat our previous discussion but I remind noble Lords that, whether they have noticed it or not, a very similar power is embedded in Section 30 of the Scotland Act. Therefore, like it or not, it is simply a fact that that power has existed for a number of years and there is a record. That relates to one of the points made by my noble friend Lord Lang of Monkton about abrogation or abnegation—whichever or both—of responsibility by HM Treasury. It is already clear from the operation of Section 30 and requests made under it to devolve tax and non-tax powers that the Government have a record of looking carefully at the evidence and rejecting any proposals that do not meet the tests that, in the context of the Bill, we will come on to talk about a little later.
I say to my noble friend that there will be no shirking of responsibility by the Treasury or any other part of government. The tax, and evidence base for any proposal to devolve responsibility for a particular tax, will be agreed between the UK and Scottish Governments before the Government bring any order before the House under the affirmative order procedure. We will come on to this, but the impacts will have to be assessed in line with the guidelines set out in the Command Paper. We will discuss what the standing of those guidelines should be, but that is how any proposal will be assessed.
The power is necessary and appropriate as regards the two taxes that have been identified but which we are not in a position to devolve at this time. The power is consistent with the construction of Calman, which I believe is appropriate, and consistent with the spirit of Section 30 of the Scotland Act. The evidential base will be properly assessed against the criteria set out in the Command Paper that we will discuss in more detail shortly. After this useful discussion, I ask my noble friend Lord Forsyth of Drumlean to withdraw the amendment.
Lord Forsyth of Drumlean
My Lords, I am most grateful to my noble friend for that very unsatisfactory response. He has not answered any of the points that have been made, particularly as to whether he could give an example of where taxes have been imposed by secondary legislation, subject to a vote in this House. His comparison with the Section 30 procedure in the Scotland Act to justify this is ridiculous. On that basis, Ministers could impose taxes on England using the secondary legislative procedure because there is a precedent of secondary provision in other legislation.
My noble friend did not read out the bits of the Calman report to which he referred because I suspect that they are crystal clear. It talks about specified taxes, and when I have repeatedly asked the Minister to specify the taxes that could be imposed using this power, we have been told that the aggregates levy and other taxes could be written into the Bill, with a commencement provision by order. I would not have a problem with that.
My noble friend says that he does not understand what the constitutional difficulty is, because the Scottish Parliament will follow its procedure in deciding on the tax. However, the ability to raise taxes on the people of this country should reside with the House of Commons. The House of Commons, having gone through the proper procedures may delegate decisions to the devolved institutions, but what my noble friend is doing is turning that principle on its head. I do not wish to embark on the debate on the next set of amendments and the sensible amendment of the noble Lord, Lord Browne, but one has only to look at the first subsection of his amendment, which states that the use of the section,
“shall be assessed against the following criteria … the potential for the new tax to create or incentivise economic distortions and arbitrage within the UK … the potential the new tax might create for tax avoidance across the UK”.
These are matters of interest to people not just in Scotland but in the rest of the United Kingdom, and should be debated properly in the normal way that applies to tax policy—on the Floor of the House of Commons, not in this place by order. We have no business in relation to the imposition of tax, and have not had any since 1911.
Lord Sassoon
I understand that my noble friend feels very strongly about these matters, but does he agree that the Scottish Government, in the process leading up to the Bill, asked, among other things, for the assignment of excise duty revenues and the devolution of corporation tax, but have not got them? With all due respect to him, the idea that the Government will somehow roll over to every request from the Scottish Government is simply wrong, as evidenced by the perfectly proper negotiations leading up to the Bill, where the Scottish Government have not remotely had all their asks granted.
Lord Forsyth of Drumlean
I am most grateful to my noble friend for the stand that he has taken on corporation tax. That is an example of an existing tax. We are not talking about existing taxes. My noble friend has confused the issue—I am sure not deliberately. We are talking about the creation of completely new taxes that would apply only in Scotland but which might have an impact on the rest of the United Kingdom.
I am simply saying that the procedure included in the Bill, which requires that to be dealt with by order, is inadequate. It should be dealt with by primary legislation. My noble friend is, in effect, enabling Ministers, by Order in Council—without having to go through the whole difficulty of introducing primary legislation—to give consent to new taxes that might be proposed by the Scottish Parliament. In doing so, he is driving a coach and horses through the way in which we levy taxation in this country. That is a huge step and that is why I feel strongly about it.
What is particularly irritating is that it is unnecessary to do that to achieve my noble friend’s objectives. In his reply, he said, “Of course, we have these agreed criteria”. Everything he said has been about how the Executive will ensure that there is protection. The whole point of our parliamentary democracy is that Parliament should provide protection for the people, because it is accountable to people in a way that the Executive are not. The Executive are accountable to Parliament. This procedure suggests that we should have an order. In this House, not only is it unamendable but, by convention, we do not vote against it.
That is a big step for no apparent reason other than administrative convenience—unless, of course, it is in the Government’s mind that they want to give more powers to raise taxes or create new taxes without the bother of having to go through the procedure of having another Scotland Bill. I can well understand, given the time that I have devoted to my noble friend, why he might wish not to have another Scotland Bill and prefer the convenience of this procedure, but that is not right. Therefore, I am not satisfied with his response. I can see that I am not going to change his mind, and I am certainly not going to win a vote on this, so I beg leave to withdraw the amendment.
Lord Browne of Ladyton
“(7) The use of an Order in Council under subsection (1) of this section shall be assessed against the following criteria—
(a) the potential for the new tax to create or incentivise economic distortions and arbitrage within the UK;(b) the potential the new tax might create for tax avoidance across the UK;(c) the impact of the proposed tax on compliance burdens across the UK; and(d) the compatibility of the new tax with EU Legislation and Rules, such as those covering State Aid and the Single Market, and the Human Rights Act.(8) In proposing an additional devolved tax under subsection (1) of this section, the Scottish Parliament shall provide evidence in support of the criteria specified under subsection (7), including in particular—
(a) the rationale for the devolution of such a tax;(b) the intended tax base, taxable activity and expected revenue;(c) an assessment of the expected distributional impact, including the impact on business and individuals and the wider economic impact;(d) an assessment of compatibility with the Human Rights Act, EU State Aid rules and other directives;(e) plans for the collection and administration of the tax, including means of ensuring compliance; and(f) an assessment of any interaction of the proposed new Scottish tax with UK-wide taxes, including plans to protect policy and geographical borders.”
Lord Browne of Ladyton
My Lords, I beg to move Amendment 16 standing in my name and that of my noble and learned friends. It provides an opportunity for the Minister to make his own contribution to the new-found relationship between the House and the ministerial Front Bench and show that the Government are not only listening but responding positively to positive and helpful amendments that are being tabled to this legislation. We have had two very positive responses on Report today. I think that this is the time for a third positive response, and the Minister has the opportunity to make his own distinct contribution to that.
As I said in a previous debate and as has been apparent in the discussion about Clause 27 thus far, the provisions of the clause are of great significance, constitutionally or otherwise. However, the tenor of the debate in this House, both in Committee and today on Report, demonstrates that it is precisely because of the significance of this provision that there are legitimate concerns over democratic accountability in the exercise of the provision as presently drafted.
In creating the mechanism for the devolution of future taxes to the Scottish Parliament, the Government are providing a stable framework for the continued development of the devolution settlement and, in many ways, for the natural progression of the Calman commission project. It is significant that the commission did not at any point suggest that any new taxation powers should be devolved using the Section 30 order mechanism, which I agree with the Minister could be used for the devolution of taxation. Any of the taxes provided for in the Bill, or indeed any future taxes, could be devolved through a Section 30 order. However, I am not proposing to open a debate about that because, from the way they have chosen to proceed, the Government have clearly come to the view that that is not desirable and that in fact another mechanism should be framed in primary legislation for the devolution of any new or specified taxes. I imagine that the Minister will be able to confirm that that was a deliberate decision as they thought that it would be inappropriate constitutionally to make these significant changes or to allow them using the existing mechanism, and that there needed to be a separate and well understood distinct mechanism for doing so.
For that reason, we on these Benches believe it is important that the conditions which we have debated at some length—I shall not go into the detail of them—and which will be applied to any proposed devolved tax should be clearly understood and set out. Not only do they need to be transparent but the Executive—in the exercise, through Order in Council, of the specification of taxation in the future—needs to be accountable to Parliament. At the very least, there needs to be some mechanism to make the Executive accountable in their future dealings with the Scottish Government against the criteria that the Government themselves set out in the Command Paper, informing how they will exercise this power. Therefore, we support the mechanism but we believe that Parliament should have the right to debate and, if necessary, to amend the criteria to be applied in assessing the convincingness of the case to be made for the devolution of taxation in the future.
In their Command Paper on the Scotland Bill, the Government provided a helpful sketch of the criteria to be applied when considering any future new devolved taxes. However, unless these criteria are placed in the Bill, Members of this House and the other place will have no ability to comment on or amend that list; they will just have to accept it. It is on that consideration that I tabled Amendment 16, which would place in the Bill the list of criteria to be considered for the use of an order to add a new devolved tax, so that Parliament can vote for Clause 27 in the full knowledge of how it will be applied in practice. I imagine that the Minister will not wish to argue with any of the specific criteria listed in the amendment as it transposes verbatim the list in his own Command Paper, so we cannot have a dispute about the criteria. I must assume that if he does disagree, which I hope he does not, his disagreement will lie in an attempt to increase the democratic accountability of the clause.
I am coming to the end of this argument because it is comparatively simple, without going into the detail of it. The Government have given us the makings of a full and properly accountable Clause 27 but they have not brought them together. I recognise that there may be a deficiency in the drafting and that there is an opportunity to take it away and correct it, but all I seek is to bring the two parts of the Government’s thinking together and to put them into a legal framework in such a way that in future—well, actually we can debate now whether these are appropriate criteria or whether they should be augmented or further explained, and if not, we can settle them—we will know transparently that the test has been properly applied.
I am doing this for one other reason, which is very important, too. The Bill will not become active unless there is a legislative consent Motion in the Scottish Parliament. If these criteria are in the Bill, the Scottish Parliament will have to approve them. When the Scottish Parliament has approved them by a legislative consent Motion, which I am confident it will, we will have agreement. We will then have a framework against which to test any future decision we make on whether it complies with the agreement and the Scottish Parliament will know whether the criteria are met. It cannot say in future, “This is a set of criteria that those people in London thought up and imposed on us. They didn’t even have the good grace to put the criteria in the Bill, so they don’t apply to us. We don’t feel ourselves bound by them because they are in your Command Paper and not in ours; whereas, if the criteria are in our agreed legislative framework, we may have a dispute on whether they are met but at least we will know what they are and we will be able to make the argument that you have failed to meet the criteria that you voted for yourselves”.
Lord Forsyth of Drumlean
My Lords, I support the amendment. It is not even half a loaf. I hate the procedure but I agree that it is a great improvement for the reasons that the noble Lord put forward—the last one, in particular: that it would make it clear where the boundaries were in the use of this extraordinary open-ended power.
I have not seen my noble friend’s brief, but I am prepared to stick my neck out and make a prediction, which is that he will not accept the amendment. Writing it in the Bill will create the opportunity for judicial challenge, and the Treasury loves being able to decide the rules and not be subject to challenge. I do not think that my noble friend will like the amendment because it will constrain what he seeks, which is for the Treasury to decide what will and will not happen. He underestimates the extent to which there will be a political challenge from north of the border. I accept that this is an advance so I support the noble Lord’s amendment.
Lord Kerr of Kinlochard
I support the amendment in the name of the noble Lord, Lord Browne of Ladyton, for the first and last reasons he gave. Like the noble Lord, Lord Forsyth, I very much agree with the last reason, but also the first. I hope that the prediction of the noble Lord, Lord Forsyth, is not true. It is unsatisfactory to have these criteria only in a Command Paper. They should be in the Bill, so I very much hope that the prediction is wrong.
Lord Lyell
My Lords, perhaps my noble friend can assist me. I wonder whether the proposals in the amendment owe something to Monty Python. Proposed new subsection (7)(b) refers to,
“the potential the new tax might create for tax avoidance across the UK”.
My jaw dropped when I read that. I will be fascinated to hear what my noble friend says when he directs his attention to it.
Lord Pearson of Rannoch
My Lords, I, too, take the amendment as a small step in the right direction. I merely ask the noble Lord, Lord Browne of Ladyton, whether he agrees that if the Government do not accept the amendment, it will give great force to the previous amendment of the noble Lord, Lord Forsyth. Of course, if the Government do accept the amendment, it will be a small step in the right direction. However, it does not abrogate the point that I and—much more huffily—the noble Lord, Lord Forsyth, attempted to make when we debated the previous amendment, which remains the best one. I do not know whether the noble Lord, Lord Browne, is in a position to answer that before the Minister replies.
Lord Sassoon
Then it was a no for a very good reason.
My Lords, I thank the noble Lord, Lord Browne of Ladyton, and the noble and learned Lords, Lord Davidson of Glen Clova and Lord Boyd of Duncansby, for the amendment, which exposes an important issue that it is quite right that we should debate. As was well anticipated, I say at the outset that it does not find favour. However, in the spirit in which the noble Lord, Lord Browne of Ladyton, led me on, I will be positive in my response, because there is further reassurance to be given here about what I hope your Lordships will think is a pragmatic and proportionate way forward.
I am not sure whether we are talking about Amendment 17 at this point. My noble friend did not speak to Amendment 17, which is a fundamental one about removing the ability of the Scottish Government to legislate on any taxes that are devolved. Perhaps I will not need to say very much about that; it links to our previous discussion.
Lord Sassoon
I thank the noble Lord for that clarification.
Amendment 16 inserts the conditions and procedures required prior to the devolution of further taxes. It would put the considerations required for the devolution of a new tax outlined in the Command Paper on a statutory basis. Of course I confirm at the outset that the Government still fully agree that the criteria in our Command Paper are the right ones. In that sense, the words were picked up correctly and I am afraid that I have to hold up my hand to my noble friend Lord Lyell and remind him that the criteria came from the Government, so there is no way for me to avoid the accusation of Monty Python-speak—I cannot pass on the responsibility to the noble and noble and learned Lords who tabled the amendment.
I hope that my noble friend recognises the serious point that in devolving responsibility for taxes, we do not want knowingly to set up a massive opportunity for tax avoidance because of a mismatch in the tax systems between two parts of the United Kingdom. That is rightly what the criteria are intended to prevent. There is no question about the criteria; we endorse their aims. I think that even my noble friend, Lord Forsyth of Drumlean, would accept that if there are to be criteria, he has not suggested any better ones. So that is a good starting point. The question then becomes about the statutory basis or otherwise. First, I suggest that because we all agree about the nature of these criteria without debate, perhaps they are self-evidently the criteria which any Government would use. They are common-sense criteria which any Administration or Parliament would address in looking at these matters. They are self-evidently reasonable and have not been challenged. That questions why we need to state the obvious in statute. However, I appreciate the concerns and let me come to the positive of how we can reassure noble Lords on this point.
This links to Amendment 29, which we will come to later: the proposal to place a statutory requirement in the Bill for both Governments to provide updates to their respective Parliaments on the implementation of the Bill. That is the mechanism under which the Government propose these criteria should be properly considered. The criteria themselves can be debated and discussed before any proposals come forward to this House and another place, and to the Scottish Parliament.
This provision recognises that the implementation of these measures will be very important. Under the proposal that we will come to in Amendment 29, there is a requirement that both Parliament and the Scottish Parliament be well informed after the Bill completes its passage through your Lordships’ House but before further and future proposals come forward for taxes that might be devolved. I can specifically commit that the first report under this new power, which we will propose later, will be published within 12 months of Royal Assent and will include the criteria set out in the Command Paper. So the criteria will come in the first report that will be presented. They will be included in the detail of the report, which will allow consideration and possibly debate in this House if your Lordships consider it appropriate. In that way, I believe we will go as far as reasonable or necessary to have a specific debate, to make it absolutely sure for the avoidance of doubt in a paper which comes forward to both Parliaments that the criteria are indeed the criteria following passage of the Bill.
Lord Forsyth of Drumlean
Before the Minister draws this red herring across our path, it will be interesting to discuss these proposals when we come to that point in the Bill. As we all agree that this is a model set of criteria that in some way circumvent the use of this power, what is his objection to putting them in the Bill? Nothing he has said explains why he should not accept the noble Lord’s amendment and put it in the Bill. It is written by his Treasury staff, they are his own words, everyone agrees that they are sensible criteria and it will offer reassurance to us, so why is he not prepared to accept this amendment? Is it because he is worried about judicial challenge?
Lord Sassoon
No, I am not specifically worried about judicial challenge. I just think that it is reminiscent of debates I am becoming increasingly used to in your Lordships’ House. I am sure many noble Lords are much more familiar than I am with these arguments that regularly come up: if it is so obvious, we do not need to put it in because everybody understands it; or, if it is so clear and everybody accepts it, let us put it in. I have suggested to your Lordships that the criteria, based on the limited discussion that we have had here, are widely accepted. They should be debated if your Lordships want to debate them properly.
We do not have the opportunity here, and have not had it in Committee, to debate the criteria in detail because we have a “take it or leave it” provision to put them in. I believe that the proportionate, appropriate and sensible way forward is to set them out in the first report that we will require, if the House agrees, under Amendment 29. At that point, if your Lordships want it, there could be a specific debate on the criteria.
Lord Kerr of Kinlochard
The trouble with that is that it is retrospective. It is about things that have happened and the use that has been made of powers. That is what reports are about. The safeguards in the amendment tabled by the noble Lord, Lord Browne, and in the Command Paper are about affecting the procedure prospectively when the Parliament in Scotland wishes to introduce a new tax and the Government in London are considering an Order in Council. I see a huge difference there, and it would be very good to have these in the Bill. I have not heard a convincing argument against that from the Minister.
Lord Sassoon
I believe that the noble Lord, Lord Kerr of Kinlochard, has not quite got the construction right. The report proposed under Amendment 29 will be on the implementation of the Bill. The first report will come forward 12 months after the Bill is passed and will be about implementation matters. One of those implementation matters, which I am making a commitment to include in that report, is around the Command Paper criteria. It will be a report on implementation and will include things that have been done in the period since Royal Assent, which will include confirmation of the criteria. They will then be debated. It will have prospective effect in the sense that it is most unlikely that in that time any new proposals will have come forward for the devolution of further tax powers. Therefore, the debate on the criteria will happen before they take effect when any further proposals for devolved taxes come forward. The noble Lord shakes his head, but in that sense it is looking forward and is entirely consistent with the nature of the report that we envisage. I hope that reassures him on that point.
The second commitment around this issue, which it is important to get on the record, is that the Government are happy to commit to publishing an assessment on any occasion that the power is used. That report will confirm how any order brought forward under the new tax provision meets the criteria. Again, this information will not just be used by the Government in their assessment of the criteria coming forward, but will be wholly transparent to your Lordships’ House and be part of what your Lordships will have available to them to satisfy themselves that the Government are properly considering the criteria when they come to exercise this power and put an order forward.
The information will clearly need to cover all the relevant criteria included in the Command Paper. It will do so in a proportionate level of detail. I repeat for the avoidance of any doubt, by my noble friend in particular, that the Government have already been clear—I have said it this afternoon—that a number of tax proposals from the Scottish Government have already been made without the provision of sufficient evidence and requests have been declined a result.
On Amendment 16, I hope that I have responded to the specific request of the noble Lord, Lord Browne of Ladyton, to come forward with a new and positive proposal, which I hope addresses the substance of his amendment. I respectfully ask him to withdraw it.
The Earl of Caithness
My noble friend said that what the noble Lord, Lord Browne of Ladyton, had proposed in his amendment was self-evident. For many of us who live north of the border, what we consider to be self-evident is not what the Scottish Executive would consider to be self-evident. This causes huge concern, of which I am not certain that my noble friend is aware. We are very sceptical of what is happening north of the border. What to us might be self-evident, and what might be in a report produced by a UK Government under Amendment 29, still does not bind the Scottish Executive.
I ask my noble friend to reconsider the last point made by the noble Lord, Lord Browne of Ladyton. This will be subject to a legislative consent Motion, and if we can tie the Scottish Executive in under that, we will be happier.
Lord Sassoon
My Lords, I hope I can reassure my noble friend that that is exactly what will happen under Amendment 29, because that will require both Governments to provide updates to their respective Parliaments on the implementation of the Bill. If we are not able to give a report that confirms that the criteria envisaged under the Command Paper are accepted by both Governments, that will become clear when we see the first report after the passing of this Bill.
Lord Cameron of Lochbroom
Before the Minister sits down, perhaps he could help me. In his answer, he made reference to a tax being an “empty space”. In the Bill, new Section 80B includes,
“a tax of any description”.
Let us assume that this tax is not presently a United Kingdom tax or one that the Scottish Parliament has adopted, but a new tax that could have implications for the United Kingdom. On the point about space, I would have expected that the proposer of the new “tax of any description” would have a clear idea of what he wanted Parliament to provide for it—the shape and mechanics of it, and the rest—all of which would have to meet the Command Paper requirements.
Nowhere in legislation are these criteria set out, yet proposed new subsection (8) of Amendment 16 —which logically should come before proposed new subsection (7)—requires the “additional devolved tax”, this empty space, to comply with the criteria. You can argue that the criteria should be stated first and thereafter the proposal should be shown to be thought through in the context of statutory criteria, rather than leaving it on the basis that the proposals will come forward in the Order in Council and Parliament will not have any indication of why the Scottish Parliament considers it a space that is conclusive of the criteria. I see nothing in Amendment 29 which requires that kind of material to be reported to Parliament in advance of Parliament considering the Order in Council. Perhaps the Minister will explain. His metaphor of the empty space was very apt as the Bill stands.
Lord Sanderson of Bowden
Perhaps I may come back to what the noble Lord, Lord Browne, said at the end of his speech. Having his amendment in the Bill would bind the Scottish Parliament to its vote for the whole of this exercise. That is the most important part of this whole business. I cannot for the life of me see why the Government cannot accept it.
Lord Pearson of Rannoch
Before the Minister replies, to qualify what the noble and learned Lord, Lord Cameron of Lochbroom, asked, will the Minister be specific and say whether the empty space could include a tax on Sassenachs who own cottages, a window tax or a land tax?
Baroness Rawlings
My Lords, perhaps I may remind the House that:
“Only the mover of an amendment or the Lord in charge of the bill speaks after the minister on report except for short questions of elucidation”—
as I mentioned before—
“to the minister or where the minister speaks early to assist the House in debate”.
Lord Pearson of Rannoch
The Minister was still speaking and I asked a very short question, to which I look forward to the reply.
Lord Sassoon
My Lords, let me give a brief response to the noble and learned Lord’s question. If we take the example, say, of stamp duty land tax, we have not set out the new tax framework for land tax in Scotland, which will be for the Scottish Parliament to do. We have devolved the policy space. It will be for the Scottish Government to design a new system that suits the requirements of Scotland, which will go through the tax-making procedures of the Scottish Government and the Scottish Parliament. That is exactly the approach which will apply to any new tax devolution proposal. It is as simple as that.
Lord Forsyth of Drumlean
It is not as simple as that. The SDLT tax is in the Bill. Here, we are talking about taxes which are not in the Bill and could be completely new taxes. That is why the criteria are so important.
Lord Sassoon
We are going back to another question. I am answering the question about the empty space that is created. It is easiest to do that by reference to a specific example of where we are creating the space within which the Scottish Parliament will have the ability to create a new tax framework to fill that space. That example is specifically envisaged. By analogy, that is how I anticipate it will work for possible other taxes in the future if they meet a number of thresholds and requirements, legislative and otherwise, including meeting the requirements that we have been discussing in the Command Paper.
Lord Browne of Ladyton
My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. I am particularly grateful to the noble Lords, Lord Forsyth of Drumlean and Lord Kerr of Kinlochard, for their comprehensive support, stated commendably briefly, for my amendment. I very much thank the noble Lord, Lord Sanderson of Bowden, and the noble Earl, Lord Caithness, for their specific support for the last argument I made, which is the key perhaps to the future of this amendment.
I am also extremely grateful to the noble and learned Lord, Lord Cameron of Lochbroom, who has made a suggestion that will improve the amendment. I agree with him that the order of the amendment would be more fortuitous the other way around but we may have an opportunity to come back to that. I have to say that I will come back to the noble Lord, Lord Lyell, but I thank him for his intervention about “Monty Python”. He has given me an idea for a peroration, which I think he will appreciate—but he will need to wait for it.
In the way in which the Minister has responded to the debate he has entered into the spirit of the day, but that is where it ends. He has only entered into the spirit of the day; we now need to get the content. The Government are listening and responding to the House’s position on this provision. I think that the Minister gets it and understands the point. Although I was a Treasury Minister for a period, I am not entirely sure where the blockage lies but I am sure that it can be moved.
The Minister says that he has made the arguments and hopes that they are convincing. I have to say that I do not think that he made any arguments on either my first or second points, the first being that it would be better if this extensive provision was ring-fenced by the Government’s own criteria in the Bill for the purposes of accountability, at least for the future. With respect to the Minister, a report—I will have to look carefully at the words he used about how it will work—which is an augmentation of one that is part of the agreement with the Scottish Government for the legislative consent Motion will not do. It will not do for all the reasons that the noble Lord, Lord Kerr, and others identified. Although it may have a degree of prospectiveness about it, the problem is that it would be more likely to be retrospective. However, even if it is prospective, it does not have the element of accountability about it that your Lordships’ House is looking for and the Opposition are looking for.
I could have been convinced by some offer that was more solid than the one that was put to me, but I am not persuaded by that offer. I am wary of the devolved taxation equivalent of an impact assessment report, which I think is what he also offered me. A statement by a Minister saying that these criteria are met will not be enough for this purpose. I am afraid that it will probably come to some Minister, whose bona fides I am not questioning in advance, saying, “The criteria that we set are met by this”, or “I assure the House”, or whatever. That will not quite be enough for this.
Even if I have not, and we cannot, find in this Bill a mechanism that gives the accountability that I—and, I sense, your Lordships’ House—would like to see, the Minister did not address at all the point about how we get the Scottish Parliament and Scottish Government to buy into and own these criteria. Experience tells us that that is essential. Even when they do buy into and own criteria or legislation by legislative consent Motions, they deny it later on, or they say that it was not enough, or they ask for more. That I can live with. We can debate that. That is politics. But we surely need to get the Scottish Government and Scottish Parliament to own the whole of this process. We cannot allow them the deniability of saying, “That was your Command Paper. It’s not got our imprimatur on it. We did not agree to it. What we agreed to is in the Act, so we are not having these London-based criteria imposed on us”. We all know this script. They need to own them. If they want these powers—and they do—then they need to own the whole package. I do not know whether the Minister or any of his colleagues have applied their minds to how to get the Scottish Parliament and Scottish Government to own this package, but there is a very simple way: get them to pass a legislative consent Motion for an Act of Parliament that includes them.
How, therefore, given that I am not convinced by the Minister’s arguments, do I propose that we deal this issue? Members of the House will be relieved to know that I do not intend to divide the House in the afternoon of the day before Recess. I do not intend to do so for this reason: that the Bill has another stage to go and I wish to continue talking to Ministers about this issue. I sense a growing coalition across the House for a revision and amendment of the Bill which could attract wide support and I have not had the opportunity to build that coalition. I am being open. I want an opportunity to try to build a coalition for an amendment that will find favour with your Lordships’ House and have some possibility of being passed.
I make one more offer to the Minister—I do not expect him to respond now—to engage to see whether we can find a way of amending the Bill or of obtaining from the Government a bankable undertaking that is owned by the Government and the Scottish Government. I cannot see what that can possibly be other than this amendment. I shall not be leaving the country during the Recess and I will make myself available for any discussions—if I can, I will bring members of our own Treasury team with me—to see whether we can find a way around this issue and, if we can, I shall be happy to commend it to the House.
Lord Maclennan of Rogart
If the noble Lord does not get the response that he is seeking and he is right in divining that others are seeking, then he should not rely on his intuition about coalition around his point. I think he can have the assurance that a number of noble Lords on these Benches are of the same mind as he is.
Lord Browne of Ladyton
I am extremely grateful to the noble Lord for his contribution. I know where the key to success in a vote in this House lies: it is on those Benches. I am fortified in my resolve to try to improve this legislation.
The noble and learned Lord, Lord Wallace of Tankerness, will confirm that at all stages of this process I have endeavoured to be constructive and helpful. This provision has to be improved, although not necessarily directly in the way I have proposed. I am happy to be flexible but my suggestion passes my only test: it improves the ability of the Bill to contribute to the betterment of the Scottish people while, at the same time, strengthening the union. It gives us an argument that is owned across the union which we can deploy in the future.
I say to the noble Lord, Lord Lyell, that, as far as the amendment is concerned, this parrot is very much alive; this parrot is not no more and it is not deceased. It may not fly today, but it is very much alive.
I gave the Minister advice about Scottish football on a previous occasion. He scorned it, and he got himself into an argument in the House about Scottish football which he could have avoided. I give him this advice now: do not tempt the noble Lord, Lord Forsyth, to go away and come up with better criteria. I am almost certain that we will return to this issue at Third Reading. I beg leave to withdraw the amendment.
Lord Forsyth of Drumlean
“Changes to United Kingdom income tax which are detrimental to the income of the Scottish Government
(1) In this section, a “change to the United Kingdom income tax system” refers to any change to the operation of personal income taxation in the United Kingdom, including but not limited to personal allowances and tax rates, introduced by an Act passed by Parliament.
(2) The Office for Budget Responsibility shall assess the impact of each change to the United Kingdom income tax system and publish its assessment of whether the change decreases the total income tax take.
(3) In preparing a report under subsection (2), the Office for Budget Responsibility shall choose the number of years in which it wishes to assess the impact of each change to the United Kingdom income tax system.
(4) If any assessment conducted under subsection (2) indicates that the United Kingdom Government’s income tax take in any tax year will decrease, then—
(a) there shall be no related increase in grant funding provided to the Scottish Government;(b) a Scottish rate resolution under section 80C of the Scotland Act 1998 may not be passed or replaced solely to reflect any consequent decrease in income accruing to the Scottish Government;(c) the Scottish Parliament may by resolution (a “Scottish allowance resolution”) adjust the personal allowances set out in sections 35 to 37 of the Income Tax Act 2007 to increase the income of the Scottish Government up to the level it would have been prior to the change assessed in the report made under subsection (2).(5) A Scottish allowance resolution made under subsection (4)(c)—
(a) applies for only one tax year, and for the whole of that year,(b) must specify the tax year for which it applies,(c) must be made before the start of that tax year,(d) should set personal allowances for each of sections 35, 36 and 37 of the Income Tax Act 2007, and set no other allowances, and(e) may only apply to a tax year which has been the subject of a published assessment by the Office for Budget Responsibility in a report prepared under subsection (2).(6) If a Scottish allowance resolution is cancelled before the start of the tax year for which it is to apply—
(a) the Income Tax Acts have effect for that year as if the resolution had never been passed, and(b) the resolution may be replaced by another Scottish allowance resolution.(7) Standing orders must provide that only a member of the Scottish Government may move a motion for a Scottish allowance resolution.
(8) The provisions of subsection (4)(a) and (b) shall apply to any tax year that has been the subject of an assessment conducted under subsection (2).
(9) The Income Tax Act 2007 is adjusted as follows.
(10) In section 35 (personal allowance for those aged under 65), at the end insert—
“(5) If the individual is a Scottish taxpayer under Chapter 2 of Part 4A of the Scotland Act 1998 then the personal allowance in subsection (1) may be adjusted to any amount set out by the Scottish Parliament in a Scottish allowance resolution.
(6) Section (Changes to United Kingdom income tax which are detrimental to the income of the Scottish Government) of the Scotland Act 2012 makes provision about the setting of the personal allowance for Scottish taxpayers.”
(11) In section 36 (personal allowance for those aged 65 to 74), at the end insert—
“(4) If the individual is a Scottish taxpayer under Chapter 2 of Part 4A of the Scotland Act 1998 then the personal allowance in subsection (1) may be adjusted to any amount set out by the Scottish Parliament in a Scottish allowance resolution.
(5) Section (Changes to United Kingdom income tax which are detrimental to the income of the Scottish Government) of the Scotland Act 2012 makes provision about the setting of the personal allowance for Scottish taxpayers.”
(12) In section 37 (personal allowance for those aged 75 and over), at the end insert—
“(4) If the individual is a Scottish taxpayer under Chapter 2 of Part 4A of the Scotland Act 1998 then the personal allowance in subsection (1) may be adjusted to any amount set out by the Scottish Parliament in a Scottish allowance resolution.
(5) Section (Changes to United Kingdom income tax which are detrimental to the income of the Scottish Government) of the Scotland Act 2012 makes provision about the setting of the personal allowance for Scottish taxpayers.””
Lord Forsyth of Drumlean
My Lords, the amendment seeks to outlaw the practice, which my noble friend laid bare before us at an earlier stage of the Bill, whereby the Scottish Parliament is able to raise 10p in income tax but, if the tax base is narrowed, the Treasury sends it a cheque.
The current Budget, quite rightly, raised the threshold at which people pay income tax, which will be very beneficial to people in Scotland. If this system were in operation today, not only would everyone enjoy a lower tax on their income in Scotland but the Treasury would send a cheque for the equivalent amount in the reduction in the tax base to add to the block grant—which drives a coach and horses through the whole idea behind this Bill, of bringing accountability to the spending practices of the Scottish Parliament. It should not be compensated for a reduction in the tax base that arises from a reduction in income tax in the rest of the United Kingdom. It is an absurd proposal.
I am very nervous that my noble friend may accept this amendment, because it extends the powers of the Scottish Parliament very considerably, in a constructive way. I know my noble friend, at an earlier stage in the Bill, said that the Scottish Parliament cannot change the allowances, and therefore the reduction in revenue would be as a result of something that was done in the United Kingdom. The amendment provides for the Scottish Parliament to be able to change the allowances and gives it more power. I listened to the noble Lord, Lord Kerr, and can see the logic of that.
My noble friend may not like that at all, because it adds to the complexity of the devolution of income tax. I noticed he said earlier that the block grant would be about 60 per cent of the expenditure. We keep hearing that the Parliament will be raising 35 per cent of its own expenditure through tax—but that is a dishonest figure. The amount that will be raised by the 10p on income tax is about £4.5 billion. We are looking forward to discussing this later today, but it just so happens that when the Barnett committee, which was established as a result of the efforts of the noble Lord, Lord Barnett, looked at this, the estimates of the additional grant that Scotland had over and above what would be based on needs was about £4.5 billion. That is what 10p on income tax, broadly speaking, will raise. It is about 15 per cent of the block grant and it has all the problems that we have with local government finance, where a small increase in expenditure needs a large increase in income, because of the gearing effect. Therefore, it may be sensible to broaden the tax base, which is another reason for having additional sources of revenue other than income tax, such as the aggregates tax and so on and so forth. I can see myself being sucked into this process of additional tax-raising powers. It is the slippery slope that my noble friend Lord Lang referred to.
The purpose of this amendment is to deliver what all those advocates of this Bill, whom I have spent most of my life opposing, say that the Bill is about and to remove this extraordinary idea that Scotland should benefit both ways—and no self-respecting Scot would want this—by getting both the reduction in the tax and the additional grant. It is very straightforward and because the hour is late, I will not elaborate on it any further. I beg to move.
Lord Eatwell
My Lords, in the enforced absence of my noble and learned friend Lord Davidson, I rise with considerable trepidation to speak on these clauses. Having spent some time reading myself into the debates that your Lordships have had on this Bill, I cannot feel that they have been entirely enlightening.
With respect to the amendment proposed by the noble Lord, Lord Forsyth, I am afraid that he shot his own fox in his remarks, when he pointed out that by varying the tax base as well as tax rates he will increase enormously the complexity of any tax changes that might affect Scotland. On top of that, when you increase complexity you reduce transparency and accountability. To have proper accountability we need to have clarity. By changing both the tax base and tax rates or putting both into play, within a very short period of time we could have enormous complexity in the Scottish tax system relative to that in the reset of the United Kingdom. The notion of accountability would be lost.
Lord Forsyth of Drumlean
I am grateful to the noble Lord and I sympathise with him if he has had to read all our proceedings, but this is not my fox. I am opposed to having these tax powers for the very reason that, to make it work, it would be excessively complicated. It is the fox of his noble friend Lord Browne, not mine.
Lord Eatwell
By introducing tax allowances, the noble Lord seems to be adding to the creature to be chased.
I pose a couple of questions about this issue, which comes under the general heading of “no detriment”. As I understand it, the whole concept of no detriment is to require all government departments—and, in this case, the UK Government with respect to the devolved powers in Scotland—to take account in their decisions of any detriment that they might impose on the Scottish Parliament and its revenues.
As I understand it, any proposal of this sort would be intra-budget in the sense that it is within a budgetary year. In a letter from the noble Lord, Lord Sassoon, to the noble Lord, Lord Forsyth, dated 19 March, he stated that,
“it is highly unlikely that a UK Budget would announce a change in income tax policy to be implemented within the same fiscal year”.
I understand that he is referring to something within a budgetary period—in other words, not from one budget to the next, when the negotiated taxes, allowances and block grant are made clear—but to some amendment that takes place within a budgetary period. Perhaps he could clarify exactly what he meant by that part of his letter.
On another element of clarification, I turn to the Written Statement made by the noble and learned Lord, Lord Wallace, on the Scotland Bill, on 21 March, when he referred to the application of the model recommended to the Welsh Assembly in the Holtham report on the tax and budgetary arrangements between the UK and the Scottish Government. I would be grateful if he could clarify exactly what is meant by the Statement that it,
“will help protect the Scottish Government’s budget from wider macroeconomic shocks”.—[Official Report, 21/3/12; col. 62WS.]
Given that in the face of a macroeconomic shock any change is unlikely to be reflected in the tax base, because that takes so long to implement, what does this actually mean? Could he give us an example of how a macroeconomic shock would in some way lead to a change in the tax base affecting Scotland within a fiscal year? I am completely puzzled by that; it does not seem to make any sense at all.
There is one other area of puzzlement that I have with respect to this question, in the reference to the OBR, which appears in the amendment from the noble Lord, Lord Forsyth, and in government statements about the assessment of the impact of a change in taxation. In the report published on 21 March, the OBR said:
“We are therefore not able to produce a Scottish macroeconomic forecast to drive the Scottish tax forecast. Instead the methodologies we intend to use … are generally based on Scotland’s historic share of the relevant UK tax stream. We then generally assume that this share will be maintained at the recent average level in the future”.
However, if there is a change in allowances that assumption is invalidated, and therefore the OBR is not competent because it does not have the information it needs to perform the task which both the noble Lord, Lord Forsyth, and the Government wish it to perform.
In those circumstances the OBR says that, in due course and with a long lag, it can assess this. If the block grant is changed in the way that the Government have suggested, in response to a change in tax base—I agree with the Minister that that is how it should be done and not with the noble Lord, Lord Forsyth—and if the OBR finds that its preliminary assessment was misguided, will that be adjusted in future years or will we proceed with a methodology which the OBR admits is imperfect?
Lord Sassoon
My Lords, let me first thank the noble Lord, Lord Eatwell, for confirming what I and the Government strongly believe but clearly have not communicated to my noble friend Lord Forsyth—that the no-detriment principle simply does not have the sort of double-benefit effect to Scotland that he seeks to portray that it has.
Lord Sassoon
It is not a matter of “of course it does”. I regret that not all noble Lords seem to have been able to come to the briefing for all Peers that we had earlier this week to go through the Holtham-style block grant adjustment, because it is complex. Regrettably, under the conventions of the House, I cannot hold up charts and explain the money flows. However, that was precisely why we had an all-Peers meeting earlier this week, when we were able to go through the mathematics of this in detail.
Lord Forsyth of Drumlean
I am grateful to my noble friend. However, he organised that meeting in the middle of lunchtime on Monday. We were given a few hours’ notice of the meeting, and some Peers did not even know that it was happening. Some Peers were travelling down from Scotland. This Bill has been around for 18 months, so if the suggestion is that we have not been considering the arguments or been open to briefing, it is not correct.
Lord Sassoon
I am sorry—I have been very patient with my noble friend—but we had a very short window. We were asked to set up a meeting and we did so as quickly as we could. I appreciate that not all noble Lords could come but we did respond to the request for a meeting. If any other noble Lords had wanted a one-on-one explanation of the detail of how the adjustment works, my officials or I would have responded. I am not aware that any request was made because the meeting time was inconvenient. We have tried to be—
Lord Forsyth of Drumlean
My noble friend has made an accusation; perhaps he will let me respond.
Lord Sassoon
I am sorry. I was merely trying to suggest that we have been as accommodating as possible in the very short time that we had available. I am not aware that there were any further requests for a detailed explanation of the complicated series of adjustments that would need to be made to make sure that the no-detriment principle works in a symmetric way, and is not a double hit to either the Scottish or the UK taxpayer.
Lord Forsyth of Drumlean
If my noble friend will allow me, the meeting was organised at 1.30 pm on a Monday when I was hosting a lunch. I replied to his officials saying that I might be able to do something at three o'clock. He will recall that the Scotland Bill came on later that day and that I had tabled a number of amendments to it. I was not able to attend, and other Peers were not able to attend because they were travelling. This is, by the way, not an argument about the technicalities. However, it is really quite unacceptable to suggest that we do not understand the arguments because we disagree with my noble friend, or to criticise us for not coming to meetings that were organised at short notice.
Lord Sassoon
My Lords, I do not want to prolong this but I resent the suggestion that we have not tried to be accommodating on this issue. We have all been considerably inconvenienced by the difficulties of the parliamentary timetable. I merely want to make the point that that timetable has been difficult and we have all sat around waiting for things to happen. I am sorry that we have not had an opportunity to take some of that time to discuss the details of this very technical series of adjustments under these arrangements. I say at the start of my response to this discussion that it is simply not possible to go through the adjustment line by line, but I shall make some points on it.
For those who have looked through the adjustment carefully—the noble Lord, Lord Eatwell, clearly has, as he does at such things—I believe that the way that the adjustment works means that the block grant is protected in the way that it should be. Scotland is exposed to the effect of decisions that are taken by any variation in the 10p rate, and that is all it should be exposed to in this case. That is entirely as it should be.
I turn to some of the questions about how the adjustment will operate. The first point related to when announcements are made and in-year adjustments or adjustments within the fiscal period. It is consistent with the Government’s approach to tax policy-making that we would seek normally to make any relevant tax adjustments and announcements well in advance. For example, the adjustments to the personal allowances that were announced in the Budget this year come into effect in just over a year’s time, giving time for any adjustments of a sort that will be needed to be worked up in future. So there is nothing more behind this than simply confirming that we are conscious that an adjustment will need to be made and it will be better if it can be made in advance. That is consistent with the normal approach that we now have to tax-making.
On the question about the OBR’s description of where it is at, the important point is that the OBR will use the period between this year, 2012, and the time when the new tax powers are transferred to refine its approach, including moving from historic to actual data, so that the impact from UK policy decisions will be refined and the methodology will evolve in the periods between 2012 and 2016. I am sure that, as it has done to date, the OBR assessments will set out transparently in successive reports how its methodology is changing. In the spirit of that—although I think this anticipates a situation that we are not remotely in—notwithstanding that there are four years to refine the methodology, if we get to a position where the OBR data are used to make some block grant adjustment and it subsequently discovers that it was misguided, something has changed and it refines that adjustment, I am sure that that will be taken into account. The more important question for the moment is the time period that it has to refine its methodology over the next few years before any question of block grant adjustments comes in.
On the question of macroeconomic shocks—
Lord Eatwell
I do not understand what that has to do with income tax and tax allowances. When you have a shock, you do not deal with it through the allowances or tax rates, because they take too long to have an effect; you deal with it through VAT or some other measure which has immediate effect in responding to a shock.
Lord Sassoon
I certainly agree with the noble Lord’s analysis. However, if there were a significant reduction in the tax base as a result of a macroeconomic shock, the Holtham method of adjustment would take less out of Scotland’s budget. So there would be a dampening effect, entirely properly, to reflect the reduction in tax receipts from a shrunken tax base.
I have answered the questions about intra-Budget period adjustments. I come back to some of the overall numbers to see whether I can help my noble friend on the key consideration here. Under the proposals, from 2016 the income tax base in the UK will be shared between Scotland and the rest of the UK. As my noble friend says, the 10p taken out of all the rate bands in Scotland is expected to yield between the £4.3 billion and £4.5 billion that he mentions, up to £5.6 billion over the OBR forecast period, and the Scottish Government will receive around 3 per cent of total UK income tax receipts. The Scottish Government will then be responsible for setting their rate of income tax and the UK will be responsible for everything else. In such a system the UK must be accountable for the decisions that it takes on the structure of the tax. Conversely, the Scottish Government must be accountable for the decisions that they take in respect of the rate. At the moment, when the Government make decisions about personal allowances that will have a significant impact on many thousands of taxpayers in Scotland, taking them out of tax, it does not in any way affect the current settlement under the Barnett formula. In the same way, we want to make sure that in future, once the 10p rate is devolved, there is no adjustment to the block grant to the detriment of Scotland, just as there would not be now.
If we follow through my noble friend’s argument and apply it to the current situation, the logic would seem to suggest that if the people of Scotland benefit from a measure—as they will from the very considerable increase next year in the personal allowance and the starting rate of tax—the block grant should be reduced. If my noble friend is suggesting that then I would agree that the principles that we are applying under the proposed legislation are not appropriate. However, I do not think that my noble friend is suggesting that if the people of Scotland benefit from a reduction in their income tax, the block grant should be adjusted. We are simply saying that, going forward, there should be no such adjustment flowing out of decisions on changes to the personal allowance, and that the position should be neutral, just as it is now. On the other hand, if the Scottish Government want to make changes to the 10p rate or to the 3 per cent of total UK income tax revenue which will effectively be ceded to the Scottish Parliament or replaced by what it chooses to raise, they will be fully at risk. Perhaps the detailed discussion around the numbers that we were regrettably unable to have because of the pressure on everyone’s time—it was no one’s fault—may not have been necessary after all, if my noble friend is able to accept my attempt to bring the discussion back to the key simplicities.
Lord Forsyth of Drumlean
My Lords, perhaps I may begin by commenting on the shortage of time and the pressure that has been put not just on Ministers but on Members of this House. That is nothing whatever to do with people who are not members of the Government. It is the Government who introduced the Bill more than 18 months ago; it is the Government who chose to wait so long between its introduction in this House and its Second Reading and Committee stages; it is the Government who decided to produce a consultation paper in the middle of the Committee stage, which meant that we had to delay consideration of part of the Bill; and it is the Government who landed us in a position where we were in Committee on Wednesday last week and had only one day in which to table amendments for Report.
The noble Lord, Lord Browne, raised the question about the formula that none of us, apparently, understands, and we received from the Bill team an invitation to come to a briefing at 1.30 pm on Monday. I travelled down from Scotland on a plane that arrived at London City Airport at 10.30 am. I did an interview with the BBC. I had a lunch to host. I got here at 3 pm and responded to the invitation to come to the briefing, saying that I could not come because I was hosting a lunch. I received a response asking whether I would like an individual briefing. I pointed out that the Report stage was happening at 3.30 pm but that I could do something at 3 pm. I received no response because, I would guess, the Bill team were preparing for proceedings on the Bill just as I was. Frankly, for the Minister to criticise us for not attending those briefings is, perhaps I may say, unfair. As it happens, his briefing is completely irrelevant to the argument. He seems to be satisfied with the technicalities. My argument is one of principle. The principle is clear. He asks: do I really expect the Scottish block to be reduced as a result of changes in taxation here? Yes, I do. That happens at present.
My noble friend shakes his head. I have been doing this for the best part of 20 years. When I was Secretary of State, I negotiated with the Treasury. I understand how Barnett and the block works, along with my noble friend Lord Lang. I also know how you can get round that and how you can pull the wool over the eyes of the Treasury. We spent some six or seven years of our lives doing that. I understand how it works.
My noble friend shakes his head to say that reductions in taxation do not actually result in a change to the block. Of course they do. How does my right honourable friend the Chancellor achieve reductions in taxation? He has to do it by reducing expenditure. If expenditure is reduced, the formula consequences are translated to Scotland. For example, when it was decided to privatise water, which helped the then Government to continue with their tax reduction programme, the Scottish block lost the block consequences of the money made available for the provision of water by public services. Of course there is a relationship between the size of the block and the spending decisions taken down here.
My noble friend is muttering. I am happy to give way to him if I am saying something that is incorrect.
Lord Sassoon
I completely agree with my noble friend about his last statement: there is a clear link through the Barnett formula to spending decisions here. There is not the same hardwired link between tax decisions on, for example, income tax and personal allowances and the block grant. I completely agree with him about the link between UK spending decisions and the block grant. That is clear, but it is very different from linkage between decisions about income tax matters and what is already agreed in the settlement for the block grant in a spending review period.
Lord Forsyth of Drumlean
Indeed, but I described the present situation. My noble friend proposes in the Bill to change it and to take part of the block grant, which is the equivalent of 10p on income tax, which, we agree, is £4.5 billion out of £28 billion, set it aside and say that that is the product of 10p on income tax. He suggests that that bit of the block grant is completely insulated from the effects of tax changes made at a UK level from which people will benefit. He says that I should have come to the briefing so that I understood it. I understand it. He is creating the illusion that the tax-raising decisions of the Scottish Parliament—whether it decides on 10p, 9p, 11p or whatever—will be directly related to its spending decisions if, at the same time, as a consequence of reductions in taxation down here, the block is automatically topped up to compensate the Scottish Parliament as a result of changes in allowances.
For example, if the threshold at which people pay tax was raised to £25,000, so everyone in Scotland who earned the average wage would not pay any income tax, that would have an enormous cost. As I understand it, under my noble friend’s equalisation proposals, the Government would say, “Your 10p on the basic rate no longer raises any money at all. That is a result of a decision that we have made here in the UK. Therefore, you have to be compensated for that and we will send you a cheque”. Do I misunderstand this? I will give way to my noble friend if he tells me that I am talking nonsense, but am I not correct in that understanding of the situation?
Lord Sassoon
My noble friend is positing a completely unrealistic situation. I do not see that that is ever going to happen.
Lord Forsyth of Drumlean
I agree. Of course it is not going to happen because our public expenditure commitments are so immense. I posit that in order not to get bogged down in complexity, formulae and detail because the principle here is quite clear. The idea that this is about Scotland raising its own revenue and being accountable for it is an illusion. My noble friend is simply recreating the block and saying that Scotland will in any event get the equivalent of the Barnett formula consequences because it will be compensated as a result of any changes in the allowances. That is what he is saying. Therefore, it is not what we are being sold; we are being sold—
The Deputy Speaker (Lord Brougham and Vaux)
I remind the House that we are on Report, not in Committee, so I ask noble Lords to stick to the rules of the Companion.
Lord Forsyth of Drumlean
I think that my noble friend was going to give me some helpful information. This is an important point. I sense from his irritation that he is getting tired of my making this argument, but I do so because it is absolutely central to the issue. I do not believe in giving the Scottish Parliament tax-raising powers. I do not think that you can have two tax-raising bodies in a unitary state, as it will result in disaster, but that is the Government’s policy and it is being justified on the basis that it will increase accountability. However, this principle of equalisation does not provide that accountability.
I agree with my noble friend and with the noble Lord, Lord Eatwell, that it would not be sensible to adopt my amendment and give the Parliament the ability to fall to the thresholds because of the complexity, costs, uncertainty and difficulties that that would create. I simply seek to illustrate that the core basis or philosophy on which this whole thing is based does not stand up. The Government are creating an opportunity for a substitution for the block grant which has one very unfortunate side-effect—here, I declare an interest as someone who lives, and will always live, and pay tax in Scotland—and that is that we will end up being the highest tax-paying part of the United Kingdom in order to carry out a political con trick. I beg leave to withdraw the amendment.
Lord Sassoon
“Reports on the implementation and operation of this Part
(1) The Secretary of State must—
(a) make reports on the implementation and operation of this Part (see subsection (5)),(b) lay a copy of each report before both Houses of Parliament, and(c) send a copy of each report to the Scottish Ministers, who must lay a copy of it before the Scottish Parliament.(2) The Scottish Ministers must—
(a) make reports on the implementation and operation of this Part (see subsection (5)),(b) lay a copy of each report before the Scottish Parliament, and(c) send a copy of each report to the Secretary of State, who must lay a copy of it before both Houses of Parliament.(3) A report must be made under each of subsections (1) and (2)—
(a) before the end of the period of one year beginning with the day on which this Act is passed, and(b) thereafter, before the end of each subsequent period of one year until the final reports are made under subsection (4).(4) Final reports must be made on or as soon as practicable after—
(a) 1 April 2020, or(b) if later, the first anniversary of the day on which the last of the provisions of this Part comes into force.(5) A report on the implementation and operation of this Part must include—
(a) a statement of the steps which have been taken, whether by the maker of the report or by others, since the making of the previous report (or, in the case of the first report, since the passing of this Act) towards the commencement of the provisions of this Part,(b) a statement of the steps which the maker of the report proposes should be taken, whether by the maker of the report or by others, towards the commencement of the provisions of this Part, (c) an assessment of the operation of the provisions of this Part which have been commenced,(d) an assessment of the operation of any other powers to devolve taxes to the Scottish Parliament or to change the powers of the Scottish Ministers to borrow money, and of any other changes affecting the provisions inserted or amended by this Part,(e) the effect of this Part on the amount of any payments made by the Secretary of State under section 64(2) of the 1998 Act (payments into the Scottish Consolidated Fund), and(f) any other matters concerning the sources of revenue for the Scottish Administration (within the meaning of section 126(6) of the 1998 Act) which the maker of the report considers should be brought to the attention of the Parliament of the United Kingdom or the Scottish Parliament.”
Lord Sassoon
My Lords, I was momentarily thrown by the unaccustomed speed at which we seemed to be going but I am grateful to my noble friend for enabling us to make a bit of progress. It is much appreciated.
The purpose of Amendment 29 is to provide information to both Houses of Parliament on the implementation and operation of the financial powers in the Bill. The clause requires the Secretary of State for Scotland to publish an annual report to be laid before Parliament within one year of the Scotland Bill becoming an Act until a year after the tax and borrowing powers are fully transferred to the Scottish Parliament. The last report is therefore expected to be published in 2020. The Secretary of State will send a copy of his report to Scottish Ministers, who will lay a copy of it before the Scottish Parliament. The clause also requires Scottish Ministers to lay a report of the same title before the Scottish Parliament on an annual basis and to provide a copy to lay before both Houses of Parliament. Scottish Ministers have been fully involved in the drafting of this proposed new clause and support its intention.
This duty will ensure that there is a transparent mechanism of reporting to both Parliaments on implementation. Both Parliaments will have direct access to an assessment of progress on implementation from the Secretary of State for Scotland, as well as from the Scottish Government. The Government intend these reports to be comprehensive and accessible to all. They must cover all aspects of implementing the Scotland Bill package—legislative and non-legislative.
The proposed new clause sets out the areas that each report must include but I will not take up the time of the House by reading through them. As set out previously, the first report under this new power will be published within 12 months of Royal Assent. It will formally set out the criteria against which new tax proposals from the Scottish Government will be judged and Parliament will be able to consider and debate these criteria as necessary. I believe that the amendment will help to ensure that the most significant transfer of powers to the Scottish Parliament is achieved in a transparent and open manner. I beg to move.
The Earl of Caithness
My Lords, I return to the problem that we discussed earlier when we were on Amendment 16. I have read and reread Amendment 29 and wonder whether my noble friend can help me. Where does it tie in the Scottish Executive in the way in which the noble Lord, Lord Browne of Ladyton, mentioned in his amendment, which was supported by my noble friend Lord Sanderson of Bowden and the point that I raised? I listened to my noble friend with great care when he replied on Amendment 16 but I still cannot find the bit in Amendment 29 that will satisfy me.
Lord Browne of Ladyton
My Lords, I welcome the amendment. It is entirely consistent with a request that I have made repeatedly for reports on current progress in relation to the transfer of these powers. I hope that in anticipation of Third Reading, Ministers will take some time over the Recess to prepare at least an outline of a report on progress for the transfer of these powers to the Scottish Parliament. I say that for the reasons that I have articulated. I have a belief, based on information that I have received, that the Scottish Government and their Civil Service are ill prepared for the transfer of these powers. I should like to be reassured that we are transferring powers to people who are building the competence to use them appropriately.
In response to the point made and repeated by the noble Earl, Lord Caithness, about the buy-in of Scottish Ministers, there is a reference in subsection (2) of the proposed new clause to an obligation on Scottish Ministers to report in a similar way to the Secretary of State. However, it is deficient in the sense that it does not satisfy the desire on these Benches, which is apparently shared across the House, that the Scottish Government and the Scottish Parliament should buy in more fully to the whole package of transferring taxation powers for the reason that I gave before. I repeat that some time in the future they may be tested against that package and they should own it. That can be done only if they agree. If they do not agree, it will be interesting to hear their explanation, but I suspect that if it is put to them they will find it so impossible to agree that they will agree.
The reports, which we understand from the Government will be used to answer some of the points that I made earlier, do not in their present form answer those points, although I accept entirely what the Minister said about the Government’s intention to augment the reports in the way he suggested. I do not doubt that for a moment, so he should be clear that I accept entirely that that undertaking can be guaranteed to be delivered. I sense that it will not be enough but I do not want to go back to Amendment 16. I welcome the proposed new clause as it stands and as far as it goes, but it does not go far enough.
Lord McFall of Alcluith
Under the proposed new clause as far as it goes, I was taken with the Minister’s comment about taxation being an instrument of redistribution, as Calman noted. If that is the case, we need a deeper appreciation of the transfer of these powers. It is not just about money but how that money is spent. There is no association between tax levels and growth. As a Scottish citizen, I want to ensure that money from income tax in Scotland is spent properly and that I will benefit as a result.
As far as concerns subsection (5)(d) of the proposed new clause, it is important that the issue is looked at. As was suggested, Scottish public services are inefficient even by miserable UK standards. The Scottish health service, for example, spends 19 per cent more per person, and we have 30 per cent more doctors, yet in many cases—such as cancer survival levels for women—there are worse outcomes. This is a very important issue. If we are going to look at income tax levels, we should have reports from the Scottish and UK Parliaments to ensure that we spend our money in the proper way—as an instrument of redistribution, as Calman suggested.
Lord Sassoon
My Lords, I will respond briefly to the points raised. The noble Lord, Lord McFall of Alcluith, articulated what goes to the heart of the Bill. It was a bit away from the limited but important role of the new reports that we are suggesting, which will deal with implementation and cover important things such as the criteria in the Command Paper that we discussed. I completely agree with him about the need for broader accountability. That will be precisely what the Bill takes to the Scottish people and to the Scottish Parliament.
In answer to my noble friend Lord Caithness, I say that the noble Lord, Lord Browne of Ladyton, has already drawn attention to the obligation, in subsection (2) of the proposed new clause, on Scottish Ministers to submit a report. My noble friend shakes his head. Perhaps he would like to see one report agreed between the two Parliaments. I am not sure what further step he would like to see, but it was felt appropriate, since there are two Governments representing separately the people and interests of Scotland and the UK, to have two reports with slightly different perspectives.
The Scottish Parliament will have access to both reports. In the working up to the reports, the Joint Exchequer Committee and the other fora for joint working will be engaged in all the work. Any difference in the reports on the progress that is being made on implementation will be wholly transparent, but I do not anticipate that there will be any such difference. There will be a report by Scottish Ministers, it will be clear to everybody how the reports link to each other, and I fully expect them to present a consistent picture of the progress that is being made.
I appreciate what the noble Lord, Lord Browne of Ladyton, said in welcoming the reports. I fully understand, in the context of our earlier discussion, that the proposal does not go as far as he would like, but it is appreciated that he understands that this is a step forward which will help with reassurance on implementation.
The final point that the noble Lord made, which we discussed in Committee, was on the question of how well prepared or otherwise the Scottish Government are to take on the challenge. There are three further years to go. I appreciate that it is a big challenge. The UK Government are sharing all relevant expertise. Ministers from both the UK and Scottish Governments are overseeing progress. Now that the substance of the Bill has been agreed, we hope that the emphasis and focus will move to implementation, which I accept is an important challenge.
Lord Barnett
“Allocation of public funds to Scotland
(1) The allocation of public funds to Scotland shall be based on a needs assessment, rather than the population basis of the Barnett formula.
(2) The Chancellor of the Exchequer shall, by order, establish a commission—
(a) to agree a methodology for assessing Scotland’s needs; and(b) periodically to review the allocation of public funds to Scotland in the light of its needs.(3) The first review by the commission must be completed no later than 1 April 2015.
(4) The new Barnett formula should be implemented no later than 1 April 2016.”
Lord Barnett
My Lords, I should apologise as an English Member intervening to this extent in a Scottish debate. I must also apologise that I was unable to be present when my amendment was debated in Committee. I thank the noble Lord, Lord Forsyth, for so ably speaking to it on my behalf. It was much appreciated, as were the other speeches in the debate, although not all of them were ones with which I would agree, as I will point out in a few moments.
I want to make clear that this amendment is based entirely on the report by this House’s select committee on the Barnett Formula. That Select Committee is probably the best thing I ever did in this House. Not only was its membership cross-party and cross-non-party but it was chaired by my noble friend Lord Richard, a former Labour Leader of your Lordships’ House. It had distinguished members such as the noble Lord, Lord Lawson of Blaby, who was a Chancellor of the Exchequer; two former Secretaries of State, Lord Lang and Lord Forsyth; many noble friends and former Ministers; and senior Lib Dems and Cross-Benchers. After a year’s discussion and evidence-taking, they came up with a powerful report, which made strong recommendations which are entirely the basis for my amendment.
The issue is about the fairness of allocating expenditure between England, Northern Ireland, Wales and Scotland. I am moving the amendment on a Bill about Scotland but if it is accepted, as I hope, it would affect the money going to the other parts of the United Kingdom as well. It is bound to do. I am glad to see my noble friend Lord Richard come in. I have just referred to his chairmanship of the committee which formed the basis for this amendment, and am glad to see him in his place. The amendment is based on the Select Committee’s report and requires need to be taken care of. In other words, instead of the block grant changing each year based on population, it would be based on need. I hope that nobody could oppose need when talking about this matter, although I gather, sadly from some notes that I have received, that my own Front Bench is going to oppose the needs basis rather than the population basis. I hope that it is not the case and that it has been badly drafted, but if it is not it would be disgraceful.
I know that there have been reports that the Barnett formula was once referred to by Alex Salmond, the present leader in Scotland, as the Barnett squeeze. He reckons it is all perfectly reasonable and fair to Scotland. Following a report by some research body recently, I saw a headline that said, “Scots rejoice as subsidy junkie myth laid to rest”. That report was based on the annual changes but, as the Select Committee pointed out in its report, it is not just the annual changes that are wrong; it is the baseline. Those former Secretaries of State who have told me in the past that the formula would eventually make things right really meant that it would bring things back to the baseline. However, the baseline is wrong. The Select Committee pointed out clearly that it was the major cause of the difference between the two and the difference is enormous.
Lord Steel of Aikwood
My Lords, the noble Lord, Lord Barnett, is held in great affection and respect in this House and he has given us a very good history of his formula, for which he deserves great credit. The reason I am opposed to this amendment is not financial; it is simply the politics of the situation that we are in today. With great respect to the noble Lord, he is now out of date. Subsection (4) of his amendment says:
“The new Barnett formula should be implemented no later than 1 April 2016”—
so we have new Labour, new Barnett; it goes on.
My argument is that by 2016, if politics develops as I expect it will in Scotland, the Barnett formula will not need to be amended; it will be abolished. We decided in 1997-98 to devolve financial powers to the Scottish Parliament—powers over expenditure but no powers over raising the money to meet that expenditure. I have said right from the beginning that that process could not exist for ever. This Bill moves us slightly in the direction of allowing the Scottish Parliament more financial responsibility for raising the money that it spends.
The three political parties in Scotland have recently appointed groups to do more work on implementing what the Prime Minister himself has referred to as future steps of devolution. At their recent conferences, all the parties set up groups to do more work. It would be ideal if they were co-operating, but at least a lot of work is going on to put flesh on the words of the Prime Minister. By the time of the referendum—which should it be as late as 2014 I would regret, but at least it would be no later than 2014—we will have, I hope, a decision against independence. We will then have to turn our attention to how we put flesh on the words of the Prime Minister and transfer financial responsibility for raising the money in Scotland to the Scottish Parliament for the subjects on which it spends. If we succeed in doing that, in the years to come, the Barnett formula sadly will disappear but the noble Lord will always have his name attached to that useful instrument.
Lord Richard
My Lords, I apologise to my noble friend Lord Barnett for not being here at the beginning of this debate. I am afraid that I missed it on the Annunciator and I realised only after my noble friend had started speaking. I listened to what the noble Lord, Lord Steel, said. As I understand it, the object of my noble friend’s amendment is to get this House to declare quite firmly that the Barnett formula’s days are done. We went into it in great detail in the Select Committee. I do not want to refer to that in detail except to say that it was a unanimous report and that the membership of that committee included a former Chancellor of the Exchequer, two former Secretaries of State for Scotland, and two other Ministers, I think, who had served in Scottish departments. We went into it in considerable detail and all came to the conclusion that the so-called formula had been instituted by my noble friend Lord Barnett casually—I hesitate to use that word—or at least without any thought that it would subsist for generation after generation or would become enshrined with the term “formula”.
My noble friend is right. What is wrong with the so-called Barnett formula is the baseline, which is now about 40 years out of date. In those circumstances, how can one justify its continuation? We asked ourselves very firmly the question: could you have a formula which is based on needs? We came to the conclusion that you could. Indeed, we set out in some detail in the report the way in which you could arrive at a needs-based formula and the result of applying it. In those circumstances, how can the Government project an amendment which says that something that has been in existence for 40 years—it is clearly out of date and way past its sell-by date—and is designed only to preserve a situation, which, as I say, is 40 years gone? It is being done on spurious grounds when in reality we know exactly what is going on; namely, that the Government do not want to stir the pot in Scotland because they think that it may prove to be politically disadvantageous. I am sorry to say it but the pot should be stirred. After 40 or 50 years, it is time for this to be resolved.
I totally support my noble friend in what he is trying to do, which is to get this House to put a marker down that the days of the Barnett formula have gone and that we should look at a needs-based formula rather than the existing one. If my noble friend chooses to divide the House on this matter, I, for once—very rarely for me—would support him.
Lord Lang of Monkton
My Lords, I support the noble Lord, Lord Barnett, in his attempt to abolish the formula in his own name. Most of us would give our eye teeth to have a formula named after us. The noble Lord carries a great burden and I sympathise with him because it is a burden based on a complete misunderstanding, to which the noble Lord, Lord Richard, has just alluded. Although, over the years, Secretaries of State have taken advantage of it in the territorial departments to varying degrees, it is not something that we have done with particular pleasure because we have become increasingly conscious of the anomalies inherent in it, as those anomalies have expanded.
It has distorted the debate with colleagues, created resentment in the country and spilled over into antipathy towards Scotland, which could colour the debate and the future referendum on Scottish independence. Because it is indefensible it really should be got rid of and we need a clear statement from this House that that should happen. I disagree with the noble Lord, Lord Steel of Aikwood, whose formula for keeping it and allowing it to wither on the vine was peppered with “ifs” and “assuming thats”. I think that we need a clear statement on it.
The reason why I think that the noble Lord, Lord Barnett, has been unfairly treated in having the formula named after him is that it—the twist to the arrangements, as he called it—was not a formula at all. It was a change in the way in which the additions were made to the baseline. They used to be expressed as percentages and be applied evenly across the whole United Kingdom. As the Scottish baseline rose, those percentages delivered larger cash sums. So the ingenious scheme which the noble Lord hatched with Mr Bruce Millan, the Secretary of State for Scotland at the time, was that instead of Scotland getting a percentage transfer, it would get a cash transfer. They would get the same cash increase to baselines per year, which would represent a smaller percentage when applied to their own baseline.
Lord Forsyth of Drumlean
My Lords, I do not want to speak at length as I spoke about this in Committee, but I will make a couple of points. I agree with everything that my noble friend Lord Lang has said about this apart from one thing. I am not sure that I would have pressed for a needs-based system to replace Barnett. Indeed, the briefing I got from the Treasury officials was, “Whatever you do, do not agree to a needs-based assessment”. In those days, they said that it would cost us £2.5 billion off the block. Given the evidence we had in the Barnett committee—which, incidentally, was unanimous—we were lucky to have on the committee the noble Baroness, Lady Hollis, who understands the needs-basis system that is applied in local government in other parts of the public service.
If my noble friend Lord Steel is right, the Barnett formula will be replaced by a new one which will be called the cold Steel formula. That is because, if my noble friend has his way, there would have to be huge reductions in the Scottish budget. The idea that by 2016 Scotland can be responsible for raising all the income it spends would mean catastrophic reductions in expenditure or huge increases in tax. This is not alarmist: the figures are all there in the report; the work has been done by people such as Professor Bell at Stirling University.
For historical reasons, Scotland is probably funded to the extent of about £4.5 billion more than it would be on a needs basis. It is not sustainable to argue against the needs-based system for funding the Scottish Parliament when the Scottish Executive distribute the bulk of the money they receive to local government and the health boards using a needs-basis system of funding. The idea that this is somehow alien to Scotland is wrong.
We have a huge political problem in that the overfunding is probably of the order of £4.5 billion. My noble friend Lord Sassoon said earlier that the product of putting 10p on income tax in Scotland would raise about £4.5 billion. So we are talking about the equivalent of half the income from the basic rate and 10p of the income from the higher rates being the additional grant that Scotland enjoys over and above that which would be provided on a needs basis. This is why the amendment of the noble Lord, Lord Barnett, is so important and why, I regret to say, the report produced by this House under the excellent chairmanship of the noble Lord, Lord Richard, has not been implemented and why it needs to be implemented.
If we are going to make this change, it will need to be phased in over a long period. That was the key recommendation of the committee. We need consensus and agreement on this. It is no good this Government or another Government saying, “This is what needs to be done” because everyone will say that they have done it for political reasons. We need an independent and objective group of people to look at the issue and make recommendations, which we then need to implement over time.
It is particularly—I keep saying this—irresponsible to introduce a system of funding which relies on putting up tax while not dealing with the underlying problem. We are heading for a train crash. We will reach a position where the Scottish Parliament will say, “Well, you can raise income tax if you want to spend more”, while they find not only their baseline for income tax but the whole of the element of the block grant which relates to Barnett disappearing as the pressure for moving to a needs-based system of funding becomes impossible.
There is one element of the Calman commission which all the enthusiasts for its recommendations conveniently forget to notice; that is, the recommendation —my noble and learned friend Lord Wallace will remember it well—which acknowledges that this issue of funding will have to be addressed and that we will have to move, in time, to a formula based on needs. That is one of the points made in the Calman commission report. The noble Lord, Lord Barnett, is saying, “Look, accept this amendment and set up the commission. It will take two or three years to work out the methodology and to get agreement on it. Get consensus and then, if the noble Lord, Lord Steel, wants to get to a position where the Scottish Parliament raises all its own revenue, recognise that it will take 20 years if it is not to result in a huge gradient between Scotland and England and huge damage to our public services”.
Who is going to make capital out of that situation and who is going to get the blame? It will be meat and drink, even if Alex Salmond loses his referendum. If you have just won the referendum for the union but then whip away the money and introduce a tax-raising power that makes Scots pay more tax than others, do we really believe that will settle this constitutional question once and for all?
The noble Lord, Lord Barnett, took a large part of a year of my life when I sat on what was a very interesting and fascinating committee. In pressing this matter now, we should listen to this sage advice and not run away from it. The argument put forward by the Government that we cannot deal with Barnett because we are concentrating on budget deficit reduction is a non sequitur if ever there was one. What has dealing with the deficit got to do with putting in place arrangements for funding, not only for Scotland but Wales and Northern Ireland, that are fair to all?
That is the other aspect of this—Wales is suffering quite considerably as a result of the inequity of this formula. If we are to maintain the United Kingdom, which appears to be under great pressure and will be under even more severe pressure because of the economic circumstances in which we find ourselves, it is important that we have a baseline that is seen to be fair and cannot be challenged. There are arguments about marginal seats and all the rest but, broadly speaking, when we distribute money to local government, health and so on, we use a well trodden path of formulas based on need. The Barnett formula, if I may say so, was a fix that followed great anxiety about the SNP winning elections in Scotland. We have been going down this track of appeasing the nationalists in a haphazard and piecemeal way.
It is important, as the Government embark on the huge constitutional change that is contained in this Bill, that we understand the importance of the finance. When my noble friend Lord Steel says, “We will do this”, he is saying what many people in Scotland and endless editorials say—that we must have more powers for the Scottish Parliament. However, I do not think they have looked at the numbers. If you do an opinion poll and ask people whether they would like more powers for the Scottish Parliament, of course the overwhelming majority say yes. However, if you ask them whether they would like to see public services having less money, higher taxes in Scotland or a financial crisis in public services in Scotland, you get a very different answer. The noble Lord, Lord Barnett, in proposing this amendment, is giving us a pathway that, over the next 20 years, will avoid that kind of dysfunction and dislocation within the United Kingdom.
Lord Maclennan of Rogart
My Lords, I add my words in support of the general view expressed in this short debate that the time has come for the Government to make clear their attitude to Barnett. However, I do not agree with the proposed amendments, since they are insufficiently explicit about the process that would need to be established to implement the Richard report effectively and fairly. Amendments 30 and 31, which are grouped together, speak of assessing Scotland’s needs. However, if you are to implement the Richard report then you have to assess the needs of the whole of the United Kingdom. Setting up a commission to look solely at Scotland will not necessarily produce a proper outcome.
I would strongly recommend therefore that the Government come forward with their proposals and do not postpone until the Greek kalends grasping the important issue of fairness, which is exacerbating the bad feeling between the different nations of this country; and recognise that it will take some time to establish the fair basis for making these calculations. Consequently, I cannot support the amendments in the form in which they have been drafted, but none the less believe that, as a backdrop to the constitutional developments we are seeing, we need to know that the Government firmly intend to recognise the validity of the principles enunciated by the Richard report.
Lord Sanderson of Bowden
I have no doubt that my noble friend on the Front Bench will have a note that says “resist”. However, the whole principle of the Barnett formula has to be dealt with. There is no time like the present to make a start, so the Government have to set up a consultation. I hear what my noble friend Lord Steel says—that it will be difficult to implement quickly—but it is not going to be implemented quickly if I know the workings of commissions. It will take time.
As a former Minister in the Scottish Office who benefited undoubtedly from the terms of the Barnett formula, I know only too well that it is a very difficult thing to defend when you are talking to Welsh Ministers and others in England. The noble Lord, Lord Barnett, is quite right to bring forward this amendment at this time. I have no doubt that it is something that the Government may not wish to include in the terms of this Bill, but that is no excuse for not giving us a clear assurance that they will start work on this whole business, which has been so detrimental to the situation for so long.
Lord Deben
My Lords, the noble Lord, Lord Barnett, said that he had to apologise for speaking in this debate as he was not a Scot. One sadness of this whole Bill has been that it has been a private discussion among Scots when it has a huge effect on the whole of the United Kingdom. I have intervened on occasion for that reason, as a self-appointed supporter of the rest of the United Kingdom, not just of England but of Wales, where I have close connections. This is why I want to intervene on this particular issue.
The Government have to be extremely careful about this issue, not just because of what is happening in Scotland but because of the deep abiding anger in England about how the formula operates. Noble Lords have before them a Member of Parliament who for 35 years had to explain to the people of Suffolk that we had a formula that operated in a way that meant that every year they did proportionately less fairly because of the use of this mechanism. In England and Scotland, the word fair is very important. This was not an anti-Scottish view; it was a view about fairness and about how the United Kingdom should operate.
It is particularly difficult for those defending the position in Wales. In the Principality, this formula acts so unfairly that it distorts the ability of any Government, coalition or Labour or whoever, to explain their policies. Their policies affect Wales differently not because they mean them to but because the provision is different. So we need to look at this from a United Kingdom point of view, which is why I have huge sympathy for my noble friend who proposed the view that the amendment is too limited in its demand that we should look at the situation as it affects Scotland. This is a united kingdom. The real trouble with the party-political structure in Britain is that those who call themselves unionists have never been unionists; they have always sought a kind of half-arrangement or side deal, which never faces up to the reality of the union, which should be to benefit every part of the union because people belonged to it. That is why we are increasingly divorced—because increasingly we do not know what happens in other parts of the union, as anyone knows if they listen to the “Today” programme in Scotland and compare it to what they might have heard in England. The fact is that we do not know what goes on in Scotland, because we do not have that information, nor do the people in Scotland have much of the information that would be extremely helpful to make a proper balance.
I intervene today because this is a serious matter for this United Kingdom. Unless we learn to talk unionism as a whole, we might win a referendum and then lose the peace, if I may put it like that, because we will then continue the same old stuff: dividing off the countries of the United Kingdom and letting them get on with it, as far as we can manage it, because it is too troublesome to make unionism work.
For that reason, I believe that we need to have an absolutely clear promise from the Government that there will be a proper, independent investigation—not a half or quarter investigation, and not just a Scottish, Welsh, English or Northern Irish view—to come up with a mechanism, based on need, which will enable us to have a system. I agree with my noble friend Lord Forsyth that it may be over 20 years. However, I want a system which can be defended in Wickham Market and in Dorchester as well as in Llanelli and in the north of Scotland instead of the present formula, which cannot, could not and will never be able to be defended anywhere, except to those people who know that it delivers to them something out of all proportion to what it delivers to other people.
A formula which can only be defended in front of those who benefit from it is no formula at all. That is why this is a much more serious debate than the Government have so far been prepared to face up to, and I hope that the Minister will have no moderate, calming or comfortable words. I want a real promise that this will be done, and be done forthwith.
Lord Robertson of Port Ellen
My Lords, I was never a Secretary of State for Scotland but I was the shadow Secretary of State for Scotland. I was to be relieved of the great burden of being Secretary of State by being moved to deal with wars, conflicts and troubles between states in the world. I found that an immense relief after nearly four years of looking after the Opposition in Scotland, against the noble Lords, Lord Lang and Lord Forsyth. This is the first time I have dipped my toe into the piranha-filled rivers of Scotland, but I do so because this is a particularly important issue. I hope that my noble friend Lord Barnett, with whom I have had some exchanges over the years on this subject, withdraws the amendment tonight. This is not the time and not the place for looking at this subject.
I was one of those who did not think that we should be having these debates at all, and that the Calman commission should have stayed on a shelf until the great debate that is now taking place in Scotland was completed. This is an ingredient of that debate which, sadly, has not really been debated widely in Scotland at all. My noble friend Lord Elder, who was a member of the Calman commission, perhaps disagrees with me but I do not remember anybody mentioning the Calman report during the last election in Scotland. Ludicrously, when we were all fighting the SNP, nobody mentioned the fact that there was this report which was to give the Scottish Parliament extra powers. Devo-plus was on offer but, strangely enough, nobody mentioned it.
Given that the SNP won the election, against the odds—and against the expectations of the noble and learned Lord, Lord Wallace, and myself, who drew up the electoral scheme in the first place—and got the majority in the Parliament, we needed to reassess at that point what the alternative was to be to the separatism of the SNP. However, we are here. We are where we are, but this is not the right way to go about it. If we are to have a needs-based assessment—and I have been through the same briefings that were involved in this—it has to be one for the whole of the United Kingdom.
I am interested that the noble Lord, Lord Deben—or whatever he is calling himself at the moment; I can see why he wanted to disguise himself in this new iteration, but I just do not remember the name itself—goes on about this great redistribution within the union. It is strange to hear this pure form of redistribution coming from a Conservative ex-Minister.
The issue needs wider debate and that should take place, but not at the moment in the context purely and simply of the Barnett formula and only in relation to Scotland. That is unhelpful at present. In Scotland today we have a bigger debate going on that will determine what sort of country we and future generations are going to live in. We therefore need to be very careful with the language that we use, the facts that we use and how those facts are deployed. Sometimes we fall into the same trap as those on the other side of the argument, the separatists, who manipulate the figures and move them around.
In the last analysis, the discussion will not be about identifiable public expenditure on its own—because if it is then that, unfortunately, is an argument that the nationalists will take to us. Expenditure is only one part of the balance sheet; income is another, and they can make their argument about that. Number-crunching, as I know only too well from many other contexts, can produce the numbers that the statistician wants to produce at the time. Let us have the broader and wider debate within which we will have to consider how the UK’s finances will be managed, but I do not see why, this evening, on the eve of an Easter Recess in an ill attended House, we should start using arguments that may well be used against us.
Lord Kerr of Kinlochard
My Lords, I disagree with the noble Lord, “Lord Barnett of Formula”. I have never disagreed with him before. I used to write briefs for him and he never paid the slightest attention to them. He was a brilliant Chief Secretary who did not bother about the arguments but simply explained that there was no money, which was a much better argument than any of the ones that I produced.
I disagree with putting this new clause in the Bill for the reasons that have just been given. I disagree with looking at it in a Scottish-only context. I confess that I had forgotten the report of the committee of the noble Lord, Lord Richard, but I disagree with the kind of criteria that the noble Lord, Lord Lang, was reminding us of. That on its own is not enough. Periphery and distance matter. I do not know of any state that I have lived in—France, America—where distance is not a factor. The purity of the position taken by the noble Lord, Lord Deben, does not really work. If you have an extremely sparse population on highlands and islands, the cost of communications and that sort of thing is much higher. That sort of need may well be built in to the formula that the noble Lord, Lord Richard, is talking about, but it is not just criteria such as poverty: it is the problem of dealing with poverty, which is more difficult if people are on a distant island. I do not know who to give way to first.
Lord Deben
As my purity has been called into question, I would like to say that it is a purity that demands that we do something that recognises sparsity and the difficulty of reaching people. The trouble is that this new clause recognises it in Scotland but not in Wales; that is what is wrong with it.
Baroness Rawlings
My Lords, I remind your Lordships that on Report a Member may speak only once, excepting for a short question of elucidation to the Minister, as I have said.
Lord Kerr of Kinlochard
I understand the noble Lord’s point. My principal argument would be about timing. I do not think that the politics of this in Scotland would play well. Personally, I go with the prediction made by the noble Lord, Lord Steel, about what is likely to happen—perhaps rather more slowly than he suggested, but that is the direction of travel. That direction is not objectionable, but my worry about it is that it does not make sense to wait until after 2014, as he was implicitly accepting, to define what this further devolution of tax-raising power is. I think that one ought to do this in advance. That was my twofold worry about the Prime Minister’s speech in Edinburgh. It is unwise to offer the measure; it is certainly unwise to offer it undefined and suggest that it can be defined only in the light of a referendum result. To me that is the greatest worry about this matter.
Lord Lyell
My Lords, having waited for seven hours, I am delighted that I am allowed to speak. I thank my noble and learned friend the Minister for the kind letter that he wrote to me about the Scottish taxpayer. I was very relieved to read what he wrote. I had intended to speak on an earlier amendment that was not moved. I thank him for what he wrote about the Scottish taxpayer. I hope that I may write to him about the military because he referred to their residence and what they might be doing. I thank him for that. I am delighted to see that my noble friend Lord Bates is present. He will remember what I had to say at an earlier stage about the mouse that roared; after the Titans who have been speaking, this is the one who spoke.
Lord Eatwell
My Lords, when I spoke on an earlier amendment, I said that I was participating in this debate with considerable trepidation. Having listened to this discussion, my trepidation has turned into a state of serious anxiety. However, I will attempt to proceed. My anxiety is raised particularly by the respect in which I hold my noble friend Lord Barnett and the power of the arguments that he put forward. However, as I listened to the debate, any support which I might have had for these amendments slowly drained away for three major reasons. The first is that there is a debate which centres round the need to devise a scheme to abolish the existing Barnett formula. However, that is not an argument in favour of the amendment; it simply identifies a public policy problem which needs to be dealt with, but which I suggest is not necessarily dealt with by this amendment. As those arguments multiplied, my support for my noble friend’s position started to fade away, as I said.
I put down a warning marker for those who have talked about a needs basis for the funding allocations to different parts of the UK. The noble Lord, Lord Lang, is absolutely right that the calculation of need can be done on a clear and objective basis. It could indeed be done by a commission looking at matters such as the number of people under a certain age and the number of people living in poverty according to a certain definition. However, when you start to attach monetary valuations to those needs, you create a policy because you are then weighting them in monetary terms. By weighting them in monetary terms, you are defining a particular policy which you wish to apply uniformly throughout the UK. If you wish to follow the purely unionist line enunciated by the noble Lord, Lord Deben, that may be a reasonable position. However, if you wish to devolve some elements of social policy to the constituent nations of the United Kingdom, you impose policy on them through the needs-based weighting of the funding associated with the underlying formula—and not only that, this amendment would impose the policy through an independent commission. Therefore, an independent commission would vary the policy. Therefore, for example, if one decided that one did not very much care about, say, care for children between the ages of five and 10, but cared very much about children from birth to the age of five, and changed the financial weighting in those two areas, you would be changing the policy because you would be changing the funding available. Handing out this sort of important policy choice to an independent commission would deny what policy-making is all about.
That is just a warning and is not the basis of my slowly ebbing support for my noble friend Lord Barnett’s position. What really settled it for me was the argument of my noble friend Lord Robertson, who made clear that this was an entirely inappropriate way to deal with an incredibly important question. I should therefore like to invoke the great academic principle of unripe time and suggest that we are facing an amendment that is distinctly unripe. We need a much more ripened argument to deal with this very complex matter.
Lord Sassoon
My Lords, this has been an interesting debate as we draw towards the end of consideration of the Bill. I am grateful to the noble Lord, Lord Eatwell, whose analysis I very much agree with. It has been a fascinating debate that has taken almost an hour. Sadly, as it has continued, more and more voices have been raised making all sorts of correct arguments that this is not the time and place for it. Many voices in this House accept the starting point of the noble Lord, Lord Barnett, which is that although his eponymous formula has stood the test of time, its time may nevertheless be coming. However, we are not at the point of having a ripe solution, and having a one-country answer within the vehicle of the Bill is not the way to address these proper concerns. I often find that noble Lords from all sides of the House are against me, but it is rare to find myself in substantial agreement with them.
Let me start by reminding noble Lords of one or two things that we should be clear about. First, one of the things that the Bill will do is devolve some of the financial management of income tax to the Scottish Government. However, it will not fix the Barnett formula in stone for the future, and we need to be clear about that, for the avoidance of doubt. It is also worth dwelling on Calman for a moment. My noble friend Lord Forsyth of Drumlean referred to the Calman report, but it is perhaps worth quoting at some length. Recommendation 3.4 states:
“The block grant, as the means of financing most associated with equity, should continue to make up the remainder of the Scottish Parliament’s Budget but it should be justified by need. Until such times as a proper assessment of relative spending need across the UK is carried out, the Barnett formula should continue to be used as the basis for calculating the proportionately reduced block grant”.
The Bill certainly does not therefore lock in the funding formula but, as a number of noble Lords, starting with my noble friend Lord Maclennan of Rogart, have pointed out, this is very much an issue for the whole United Kingdom and should be dealt with at the appropriate time.
Just before I come back to one or two more points on the broader issues, I should for completeness comment on the technical drafting of the amendments.
Lord Sassoon
My noble friend says no. Well, I will do so anyway—very briefly. I want to do full justice to the amendments of my noble friend and the noble Lord, Lord Barnett, even if they are so modest as to not want to go through the pain of my analysis.
Very briefly, I suggest that April 2016 is not the ideal timing—coming, as one would expect it to do, part way through a spending review. Timing is an issue. The noble Lord, Lord Barnett, himself pointed out that the current formula is an administrative procedure. It does not appear in legislation. The formula is not specific to Scotland. That goes beyond the purely technical question of the drafting into a wider debate, as I have mentioned. I suggest that it is not right to legislate for a United Kingdom formula that is not at the moment in legislation in a specific Bill related to Scotland that is about tax-raising powers rather than spending.
Lord Forsyth of Drumlean
I am most grateful to my noble friend for giving way as we reach the end of these proceedings. I entirely accept, as I am sure that the noble Lord, Lord Barnett, does, that this may not be the ideal vehicle. I think that the House would be very happy to hear a commitment from the Minister that he will address the issue at some near date in future.
Lord Sassoon
This will not meet the stringent test that either my noble friend or the noble Lord, Lord Barnett, will set, but let me go as far as I can.
The Government understand the concerns expressed in this House and in another place about the devolved funding arrangements. The Government’s position is clear. As the noble Lord, Lord Barnett, recognised, there must be other priorities at this time. It is clear that the Bill does not rule out or in reform of the formula in future. The Government hear, loud and clear, concerns about the formula.
As is clear from our discussion, as well as to those who have followed the debate more broadly, most would concede that there is no consensus across the UK on how to measure the needs of the four countries. Therefore, it is not possible to say what the impact of replacing the Barnett formula might be. Within the devolved formula as it works now, the devolved Administrations determine their assessments of needs and priorities in the devolved areas. That is a strength of the Barnett formula—a point made by the previous Government in responding to the Select Committee’s recommendations then. It is a complex area. Successive Governments have acknowledged the difficulty both with the existing formula and of putting something else in place. The Government certainly do not dismiss that.
I will disappoint my noble friend and, I fear, the noble Lord, Lord Barnett, but I think that it is extremely useful—although not directly linked to the substance of the Bill—that we have had this discussion, because the linkages are clear. My noble friend Lord Steel of Aikwood points out one scenario in which it may all go away. Others have challenged that scenario but have nevertheless agreed that now is not the time to do it.
The issue will not go away. I am sure we will come back to it, if only because the noble Lord, Lord Barnett, will regularly ask me questions on it, and there may be other opportunities for more substantive debate. However, for the reasons that noble Lords from all sides of the House have given, important topic although it is, this is not the time nor the vehicle to address it. I therefore ask the noble Lord to withdraw his amendment.
Lord Barnett
My Lords, I thank all noble Lords who have spoken in the debate. I am sorry that I cannot reply to them but, given the time, I am sure that they would not expect an overly long speech from me.
To say that I am disappointed with my own Front Bench is to put it mildly. My noble friends could not even go as far as the Government in saying that they recognise the concerns about needs. I imagine that my English noble friend who replied on behalf of the Opposition had been got at by the Scots, who did not want him to support the amendment. I do not know whether that is the case but, whatever they did, I find it incredible that he, as an academic, should have come up with the idea that this is an “unripe time”. He obviously had not read the excellent Richard report.
Lord Barnett
If he had, he would not have come up with the kind of speech that he made today. As I said, to say that I am disappointed is to put it mildly. I think that it has been appalling.
The noble Lord, Lord Sassoon, did at least repeat his concern, and it is one that the Government recognise. As many noble Lords said—even those who disagreed with the amendments—the technical drafting is not an argument. If the noble Lord wants them redrafted, I will redraft them, or I will let him redraft them—I do not mind. However, the case for doing something, whether in this Bill or elsewhere, is clearly made, as basically every speaker has said. I understand that the noble Lord, Lord Sassoon, cannot go further, because he also has a brief and he is not able to go further than he has done.
We will inevitably return to this matter because this huge disparity in the allocation of money between the different parts of the country cannot go on. As has been said in this debate, this issue concerns the whole of the UK, not just Scotland, and it cannot be set aside by talking about technical amendments or by saying that they should not appear in this Bill, or that they are being brought forward in the wrong place or at the wrong time. Of course all those things can be said but they do not alter the fact that something needs to be done here about the whole of the UK. I have listened very carefully to what has been said and, for the moment, I beg leave to withdraw the amendment.
(a)”
Lord Wallace of Tankerness
My Lords, as we come to the final group of amendments, we move from finance to law.
In the debate that we had in Committee on the roles of the Lord Advocate and the Supreme Court in criminal proceedings, I recognised that we had come a long way from some of the exchanges that took place last summer. Today, we are not considering whether the Supreme Court should have a role in relation to certain constitutional issues arising in Scottish criminal appeals, as it is agreed that this is, and ought to remain, within the current constitutional framework. The issues that remain to be discussed concern the nature and extent of the appeal rights to the Supreme Court in Scottish criminal proceedings and how those rights can operate effectively.
The amendments that I tabled in Committee took account of the views expressed by a number of bodies and people on these issues, including the expert group that I set up under the chairmanship of Sir David Edward, the review group led by the noble and learned Lord, Lord McCluskey, and indeed the representations made by the Lord Justice General and Lord President of the Court of Session, Lord Hamilton.
In Committee I agreed to consider a number of issues and said that, if persuaded, I would be willing to table amendments on Report. The amendments that I have tabled reflect some of the points made in this House in Committee and the agreement reached between the Government and the Scottish Government to ensure that a legislative consent Motion in support of the Bill is tabled in the Scottish Parliament.
There has been much discussion about the questions that should constitute a compatibility issue and those that should remain devolution issues. We have been seeking to ensure that the new appeal right is workable and that it does not result in argument about when the appeal right should and should not apply. Account also has to be taken of the important constitutional issues that can arise when considering the legislative competence of the Scottish Parliament and the acts of Scottish Ministers.
Amendment 35 amends the definition of a compatibility issue to include questions raised in criminal proceedings as the compatibility of Acts of the Scottish Parliament with the Convention on Human Rights or European Union law. Other questions as to whether an Act of the Scottish Parliament is outwith the competence of the Scottish Parliament—for example, whether it is a reserved as opposed to a devolved matter—will remain devolution issues, even if they are raised in criminal proceedings. The effect of that will be that there will be a single route of appeal for all convention and EU law issues raised in criminal proceedings, regardless of whether the issue relates to an act of a public authority or the compatibility of an Act of the Scottish Parliament.
Amendment 39 would remove from the definition of a devolution issue any question raised in criminal proceedings relating to compatibility with the convention or EU law. As I said, this will ensure that questions about the compatibility of ASPs with the convention and EU law that are raised in criminal proceedings can be raised only as compatibility issues. Questions as to the compatibility of acts of the Scottish Ministers raised in criminal proceedings will be raised as compatibility issues, not devolution issues, by framing these as questions of whether the Scottish Ministers have acted, or propose to act in a way which is unlawful under Section 6(1) of the Human Rights Act 1998.
Amendment 33 amends the definition of “compatibility issue” to make clear that such an issue can arise only in criminal proceedings—in other words, if there is an issue about an Act of the Scottish Parliament and its relationship to EU law that is not in the context of criminal proceedings, the normal devolution issues will apply.
Amendment 37 provides a procedure for the reference of compatibility issues. It allows the lower courts to refer a compatibility issue to the High Court before trial proceedings are concluded. The decision of the High Court on the compatibility issue can then be appealed to the Supreme Court. The amendment also allows the Advocate-General or the Lord Advocate to require the lower court to refer a compatibility issue to the High Court, acting as an appeal court, before trial proceedings are concluded. Where this power is exercised, the High Court can refer the issue to the Supreme Court or determine the issue itself. If the High Court determines the compatibility issue itself, this again can be appealed to the Supreme Court.
Where a compatibility issue arises in the High Court sitting as an appeal court, the amendment allows the High Court itself to refer the issue to the Supreme Court rather than determining the issue. However, if the compatibility issue is being considered by the High Court on a reference from the lower court of its own volition, the High Court must determine the issue and cannot refer it to the Supreme Court. The powers of the Supreme Court in determining a compatibility issue arising out of a reference will be the same as on an appeal of a compatibility issue, so the Supreme Court will determine the compatibility issue and remit proceedings to the High Court. We do not expect these reference powers to be used frequently but consider that there may be cases when these powers are beneficial and enable important issues to be dealt with quickly. It will still be possible for both the lower court and the High Court to hear cases expeditiously and there may be cases where this is more appropriate than the making of a reference.
I turn to the amendments tabled by the noble and learned Lord, Lord McCluskey, and we acknowledge what he said earlier in our proceedings. I am grateful to him for the way in which he has engaged with officials on this issue. The amendments raise the question of whether the Lord Advocate and Advocate-General should be able to refer to a compatibility issue to the Supreme Court without the permission of the High Court. It is an issue that I will consider further. In particular, I wish to consider what the role of the High Court should be in a reference of a compatibility issue by the Law Officers to the Supreme Court. It is one that I want to discuss with the Lord Advocate. It may, therefore, be necessary to table further amendments at Third Reading to provide for such a further power of reference for the Lord Advocate and Advocate-General.
Perhaps the most controversial issue in this matter is the issue of certification. I have not been persuaded that it is necessary to provide a compatibility issue that can be appealed to the Supreme Court only if the High Court has certified that it raises a point of law of general public importance. However, as I said in Committee, I consider that the arguments in respect of this are finely balanced and I have considered very carefully the views expressed by the Lord Justice General and the review group of the noble and learned Lord, Lord McCluskey.
The amendments that I have tabled do not seek to introduce a certification requirement. However Amendment 52 makes provision for there to be a review arranged by the Secretary of State of the new compatibility issue procedure and of the introduction of time limits for devolution issue appeals to the Supreme Court in Scottish criminal proceedings. The review is to be carried out as soon as practicable after the provisions have been in force for three years. I consider three years to be an appropriate time to enable us to asses how the new procedure is working. Before the review takes place, there must be time for the new compatibility procedure to bed in, and having the review before a three-year period may not allow this to happen. Even allowing for the limited number of cases where permission to appeal a devolution or compatibility issue is likely to be sought, there should be sufficient evidence available after the provisions have been in force for three years for a review to take place. The review can be carried out earlier if the Secretary of State considers this appropriate—for example, if circumstances arise that suggest the need for an earlier review.
The review will be wide-ranging. It will look at all aspects of the provisions and consider whether changes should be made. In particular, it will consider whether compatibility issues should be appealable to the Supreme Court only if the High Court certifies that the issue raises a point of law of general public importance. The review will not be limited to considering whether certification, in the form used in England and Wales, should be introduced: it will be able to consider alternative forms of certification.
The United Kingdom and Scottish Governments have agreed that the review will be chaired by the Lord Justice General. It will seek a wide range of views, including those of the Lord Advocate, Scottish Ministers, the Scottish courts, the Supreme Court and representative bodies with an interest in the criminal justice system. The Lord Justice General is the appropriate person to chair the review as he—or she; a new Lord Justice General will be in post by then—will have the appropriate overview of criminal procedure. It is not necessary for the Bill to provide that the review should be chaired by the Lord Justice General. I hope that my statement to the House to that effect should be sufficient.
I will address two further issues. There was discussion about the role of the Supreme Court in relation to compatibility issues. This was considered by the review group of the noble and learned Lord, Lord McCluskey, and by the Scotland Bill Committee. In Committee in this House I tabled amendments to provide that when the Supreme Court considers a compatibility issue, its role is only to determine that issue and then remit the case back to the High Court for disposal.
The Supreme Court has the power under Section 40 of the Constitutional Reform Act 2005 to consider any question that must be determined for the purpose of doing justice in an appeal to it, and can make rules governing its practice and procedure. New Section 288AA of the Criminal Procedure (Scotland) Act 1995, inserted by Clause 38, makes it clear that the powers of the Supreme Court in relation to compatibility issues are exercisable only for the purpose of determining such issues.
The general powers of the Supreme Court, as set out in provisions such as Sections 40 and 45 of the Constitutional Reform Act 2005, will be read subject to the specific provisions in new Section 288AA that limit the court’s powers in relation to compatibility issues. For the purpose of determining compatibility issues, the Supreme Court will have the power to make any change in the formulation of the compatibility issue that it considers necessary in the interests of justice. New Section 288AA also expressly provides that when the court has determined the compatibility issue, it must remit the proceedings to the High Court.
Rule 29 of the Supreme Court Rules 2009 makes provision on Supreme Court powers in relation to appeals. This was discussed with the chief executive of the UK Supreme Court. She confirmed that Rule 29 would be read in the light of any relevant changes to the primary legislation agreed as part of the Bill.
There are currently no time limits for appealing devolution issues in criminal proceedings to the Supreme Court. It is important that there is finality and certainty, not least for victims, in relation to criminal proceedings. Amendment 51 provides for time limits for appeals to the Supreme Court in relation to devolution issues that arise in criminal proceedings. The limits are the same as those that will apply in relation to compatibility issue appeals to the court. An application will have to be made to the High Court for permission to appeal within 28 days of determination of the appeal, or such longer period as the court considers equitable. If the High Court refuses permission, an application to the Supreme Court must be made within 28 days of the High Court’s refusal of permission. Again, the time limit can be extended if the court considers this equitable. This will strike an appropriate balance and reflect the need for finality in criminal proceedings, while taking account of circumstances when it might be appropriate for the time limit for appeals to be extended.
Finally, Amendment 38 amends Section 102 of the 1998 Act. It provides that if the Supreme Court, in considering a compatibility issue, decides that a provision of legislation is outwith legislative competence, it will be the High Court rather than the Supreme Court that will decide what retrospective or other orders might be made under Section 102 of the Scotland Act 1998. If the Supreme Court, in determining a compatibility issue, decides that an Act of the Scottish Parliament is outwith competence, the ASP will still not be law. Amendment 38 is about dealing with the consequences of the ASP not being law, and reflects the respective roles of the Supreme Court and the High Court.
Amendments 41 and 44 are technical drafting amendments. Amendments 53 and 54 are consequential amendments as a result of the provisions on the role of the Supreme Court in Scottish criminal proceedings being moved from Part 2 of the Bill to Part 4.
It is an important issue and I appreciate these amendments are technical. They raise a number of important issues, too. After much dialogue and discussion I believe that we have struck the right balance and I beg to move.
Lord Browne of Ladyton
My Lords, I rise to support the amendments to which the noble Lord has spoken, and to speak to the amendments standing in my name and that of my noble and learned friend Lord Boyd of Duncansby. On his behalf, I should first tender his apologies for not being here to speak. Unfortunately, he has commitments that he could not avoid. He would have wanted to be here. He has put a lot of time and investment into this part of the Bill and this issue. He has given me an exhaustive seminar on it and I shall try to do my best to support the amendments which he would otherwise have spoken to.
Could we also offer our congratulations to the noble and learned Lord the Advocate-General for Scotland on achieving this level of agreement and the solution to what was a highly charged political problem in Scotland for a period of time? When it blew up, it was not obvious that it could have been resolved in this way. The extent to which the Minister has found agreement and a resolution to this problem lies in the words of the noble and learned Lord, Lord McCluskey, before he left. He said that he was 98 per cent satisfied.
In all the years I have known him, I cannot imagine the noble and learned Lord being 98 per cent satisfied in relation to almost any argument ever put before him. If he is satisfied to that extent, it is a measure of the achievement of the Minister and his officials. From observing this closely, I know that my noble and learned colleague has put a significant amount of his time and effort into trying to resolve this. I do not intend to speak to any of the amendments that the Minister has spoken to, with the exception of Amendment 52, because the two amendments proposed by the Opposition are attached to their Amendment 52. If noble Lords bear with me, even at this late hour I will try to cover this in a few minutes.
Amendment 52 is a wholly new provision which comes out of the agreement with the Scottish Government, paving the way for the legislative consent Motion. It establishes a review of the new procedures to take place,
“as soon as practicable after the end of three years”.
In principle, we see no difficulty with the concept of a review. It has much to commend it and the Minister set out some of those reasons. However, it is clear from the Written Statement from the Secretary of State, dated 21 March, that the agreement for this review stems from the dispute about whether there should be a requirement for certification of an issue by the High Court as one that raises a point of law of general public importance. Can I say how pleased we are that the Government have resisted the request from the Scottish Government to include certification as part of the package of agreement for the LCM? My noble and learned friend Lord Boyd set out the reasons for our approach in Committee and I do not intend to repeat them here.
More importantly, the clear tenor of the debate in Committee was against certification as a prerequisite for an appeal to the Supreme Court. Those who were present at that debate will recall the cogent and persuasive reasons advanced by the noble and learned Lords, Lord Cullen of Whitekirk and Lord Cameron of Lochbroom, who is in his place today. These were about why such an innovation should not now be made, restricting the right in cases involving the determination of issues of fundamental human rights. Had certification now been included in the agreement it would have been against the wishes of this House.
We appreciate, however, that Scottish Ministers wish to have a commitment to a review of the operation of the new procedures, with the issue of certification being directly addressed in that process. The noble and learned Lord has already alluded to this. If a review is to be meaningful, it must have sufficient evidence to inform it, and it must take into account all sides of the debate. This is where our concerns come in and why we have put down two amendments to Amendment 52.
First, we suggest that the review should be conducted after five years, rather than the three years specified in the amendment. We do not think that three years is long enough for a meaningful review. The Supreme Court took over the jurisdiction of the Judicial Committee of the Privy Council on devolution issues in October 2009. In the approximately two and a half years since then there have been around 12 cases from Scotland. However, seven of those were what have become known as “sons of Cadder”, arising from the case of Cadder on access to a solicitor before a police interview. These seven cases came before the court in two batches as they raised substantially the same issues, so the reality is that of 12 cases, eight arose out of the same issue; namely, access to a lawyer. Our concern is that in conducting a review after only three years there will be insufficient material and an insufficient spread of cases for a proper judgment to be made on the efficacy of the new arrangements. This is a serious issue as the person conducting the review may feel obliged to make findings and recommendations where it would be more prudent to await further information.
Secondly, although this is not in the Bill, the Written Statement made by the Secretary of State states that the review will be chaired by the Lord Justice General, whoever she or he may be at the time. The present Lord Justice General has been making the case for certification on behalf of the Scottish judiciary. We do not, of course, know the identity of the new Lord Justice General, nor do we know what view he or she may form on the evidence. Whoever it is, it seems inevitable that he or she will have been part of the debate on certification among the Scottish judiciary. It is improbable that the new Lord Justice General will not emerge from the existing Scottish judges. Moreover, he or she will have presided over a court whose judgments will have been subject to review by the Supreme Court. His or her opinions may have been overturned and he or she may have been criticised by the Supreme Court in the course of those judgments. This person is then being asked to stand back and conduct an impartial review of the mechanism by which such cases get from his or her court to the Supreme Court. Fundamentally, we do not think this is right. With the best will in the world, even the best jurist will find such a task very difficult and, indeed, may not even welcome such an imposition.
The issue of certification for the Scottish judiciary has arisen out of concerns raised by it about the effect of the Supreme Court on the criminal law in Scotland, and we believe that the new procedures in this Bill go a long way to addressing such concerns. Scottish judges have also seen this as a matter of respect. They point to the fact that in appeals to the Supreme Court from ordinary criminal proceedings from courts in England and Wales and Northern Ireland certification is required from the courts below. They consider that not to require such a certification procedure in appeals from the High Court of Justiciary raises the issue of consistency of approach. However, as the Minister pointed out in Committee, the introduction of certification in the other jurisdictions was, if I remember correctly, to stop what might turn out to be a flood of criminal cases coming from the courts below to the House of Lords. The purpose was wholly different from the issues of respect and consistency that were raised by Scottish judges.
Our amendment addresses these issues. Of course it is right that there should be a senator of the College of Justice intimately involved in the review, but that surely has to be balanced by a view from the Supreme Court itself. That is why we wish to see a commitment that a justice of the Supreme Court will be a member of the review panel to bring the other perspective. I hope that the noble and learned Lord, Lord McCluskey, will forgive me for reporting a private conversation I had with him in the precincts of your Lordships’ Chamber before he left. He suggested, and I agree with him, that it would probably be better if that justice of the Supreme Court was not one of the Scottish justices appointed to the Supreme Court. We on these Benches would very much prefer to see a chairman of the review who had no present involvement with either court, but we know the agreement that has already been reached and, although we think it is wrong, we are prepared to respect it.
I have one question for the Minister, but I hope he will respond to the points that I have raised. I know that he was aware of them in advance because I know there was communication between him and my noble and learned friend. Will the Minister give a commitment that the new Lord Justice General, whoever that might be, will be consulted on whether he or she thinks it is right for him or her to chair this review? If the new Lord Justice General considers that it might be difficult to do that task because of the points that I raised, will the Minister give an assurance that that view will be respected? Will he then work with Scottish Ministers to find a mutually acceptable alternative?
Lord Cameron of Lochbroom
My Lords, I pay tribute to the Minister for having listened so obviously to what has been said in all quarters—not least in your Lordships’ House—about these matters. The proposals in these amendments seem entirely reasonable and appropriate, particularly in the light of certain remarks that my noble and learned friend Lord Cullen and I made about the place of the Supreme Court in our judicial system.
Having listened to the noble Lord, Lord Browne of Ladyton, I have sympathy with the view that he has expressed, and indeed the amendment proposed, that the review should be carried out after a longer period than that proposed in Amendment 52. It seems that this is an important review, although apparently not one that will be repeated; therefore, the importance of its conclusions must be based upon a sufficient period to give those conclusions some justifiable basis.
Although the matter of the chairmanship and membership of the review does not appear in the amendment, there is substance in what the noble Lord, Lord Browne, has said about both the chairmanship and the inclusion of one of the Justices of the Supreme Court. I therefore support what he has said in that regard. Otherwise, I pay tribute to the noble and learned Lord for what he has achieved in bringing these amendments forward.
Lord Wallace of Tankerness
My Lords, I am very grateful to the noble Lord, Lord Browne of Ladyton, and the noble and learned Lord, Lord Cameron of Lochbroom, for their general welcome for the position that we have reached with regard to these amendments and the role of the Supreme Court and issues of compatibility in criminal proceedings with European convention rights or European Union law.
I also pay tribute to the noble and learned Lord, Lord Boyd of Duncansby, who not only has made a very constructive contribution to this and other debates on this Bill but was a member of the expert group I set up under the chairmanship of Sir David Edwards; he has been contributing to this debate from a very early stage. I also welcome the 98 per cent satisfaction rate that I seem to have achieved from the noble and learned Lord, Lord McCluskey. I think that is a recognition of the amount of work that has been done by so many people in trying to bring this matter to a satisfactory outcome.
The noble Lord, Lord Browne of Ladyton, is right to recognise that this is part of the agreement that we reached with the Scottish Government. He and the noble and learned Lord, Lord Cameron, asked whether three years was sufficient. The noble Lord, Lord Browne, explained why we had resisted the idea of certification. The comparison with England and Wales was that certification was brought in under the Administration of Justice Act 1960 to stem a flood. If after three years, there have only been five or six cases, that would be a relevant factor to be taken into account; the flood has not happened. Without in any way prejudging any inquiry, the fact that there has not actually been a huge number of cases would have to weigh in to the consideration, if that is how it indeed turns out.
I do not believe that that the composition of the committee and its chairmanship is inappropriate. Many commissions are headed up by a judicial figure. I do not think that to head up a commission with the most senior judicial figure in Scotland is inappropriate, given that one can be assured that a figure of such stature will undoubtedly deploy the judicial qualities which have put him or her into that position. In moving the amendment, I indicated that there will be a number of views. We would expect bodies such as the Lord Advocate, Scottish Ministers, the Scottish courts and the Supreme Court and a number of representative bodies—and the bodies such as have responded to the consultations which I held, including, for example, the Scottish Human Rights Commission, Justice, the Law Society of Scotland and the Faculty of Advocates—to contribute.
We did not seek to put into statute that it should be the Lord Justice General, not least because—in answer to the point made by the noble Lord, Lord Browne—of what would happen if a future Lord Justice General does not want to be involved. When the time comes for the review to be held, should the Lord Justice General at that time not consider that it would be appropriate for him or her to undertake the review, of course the United Kingdom and Scottish Governments would work together to agree an alternative chair for the review.
By the same token, I do not think that we would wish to be constrained by specifying, as the amendment proposes, a Justice of the Supreme Court. For example, a recently retired Justice of the Supreme Court might be an appropriate person—either one from Scotland or one from another part of the United Kingdom. I hear the fair point that someone having had that experience might well be an appropriate person to be a member of the review body but I do not think that it would be appropriate to put that into statute. As I have said, it might not be a currently serving Justice of the Supreme Court but one who nevertheless everyone agrees is an appropriate person to serve.
When the time comes for the review to be set up, I am sure that soundings will be taken as to who would be appropriate to serve on that commission. With these words, I hope that I can reassure the House that the review will properly look at all the issues, not just those of certification but at how time limits have worked. I have no doubt that the issues of certification will be properly aired before that commission as they have been before your Lordships’ House and in the wider legal and public debate.
As this is the last group of amendments, I thank all noble Lords who have taken part in the debates on Report. I believe that in these two days of Report, and in Committee, this House has done what it is intended to do; namely, to give proper scrutiny to the measures brought forward in this Bill. I am very grateful to noble Lords, and to my noble friend Lord Sassoon for helping me in responding. I hope that colleagues in all parts of the House will enjoy and refresh themselves over the Easter Recess before returning to Third Reading.
Lord Forsyth of Drumlean
Perhaps I may say how much we have appreciated the way in which the noble and learned Lord and the noble Lord, Lord Sassoon, have handled this Bill. I do not think that, from all sides of the House, this has been a particularly easy time for them but we have certainly done our job and very much appreciate the way in which the Government have dealt with this.
(b) whether an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament is incompatible with any of the Convention rights or with EU law.”
“References of compatibility issues to the High Court or Supreme Court
In the Criminal Procedure (Scotland) Act 1995, after section 288ZA (inserted by section 37) insert—“288ZB References of compatibility issues to the High Court or Supreme Court
(1) Where a compatibility issue has arisen in criminal proceedings before a court, other than a court consisting of two or more judges of the High Court, the court may, instead of determining it, refer the issue to the High Court.
(2) The Lord Advocate or the Advocate General for Scotland, if a party to criminal proceedings before a court, other than a court consisting of two or more judges of the High Court, may require the court to refer to the High Court any compatibility issue which has arisen in the proceedings.
(3) The High Court may, instead of determining a compatibility issue referred to it under subsection (2), refer it to the Supreme Court.
(4) Where a compatibility issue has arisen in criminal proceedings before a court consisting of two or more judges of the High Court, otherwise than on a reference, the court may, instead of determining it, refer it to the Supreme Court.
(5) On a reference to the Supreme Court under this section—
(a) the powers of the Supreme Court are exercisable only for the purpose of determining the compatibility issue;(b) for that purpose the Court may make any change in the formulation of that issue that it thinks necessary in the interests of justice.(6) When it has determined a compatibility issue on a reference under this section, the Supreme Court must remit the proceedings to the High Court.
(7) An issue referred to the High Court or the Supreme Court under this section is referred to it for determination.
(8) In this section “compatibility issue” has the meaning given by section 288ZA.””
“( ) In section 102 (powers of courts or tribunals to vary retrospective decisions)—
(a) in subsection (4)(b) at the end insert “or to a compatibility issue,”;(b) after subsection (5) insert—“(5A) Where the decision mentioned in subsection (1) is a decision of the Supreme Court on a compatibility issue, the power to make an order under this section is exercisable by the High Court of Justiciary instead of the Supreme Court.”;
(c) in subsection (7) before the definition of “intimation” insert—““compatibility issue” has the meaning given by section 288ZA of the Criminal Procedure (Scotland) Act 1995.””
“But a question arising in criminal proceedings in Scotland that would, apart from this paragraph, be a devolution issue is not a devolution issue if (however formulated) it relates to the compatibility with any of the Convention rights or with EU law of—(a) an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament,(b) a function,(c) the purported or proposed exercise of a function,(d) a failure to act.”
“( ) after “purposes of” insert “a reference under section 288ZB or”;”
“Time limits for appeals on devolution issues in criminal proceedings
In Schedule 6 to the 1998 Act (devolution issues) after paragraph 13 insert—“13A In criminal proceedings, an application to the High Court for permission under paragraph 13 must be made—
(a) within 28 days of the date of the determination against which the appeal lies, or(b) within such longer period as the High Court considers equitable having regard to all the circumstances.13B In criminal proceedings, an application to the Supreme Court for permission under paragraph 13 must be made—
(a) within 28 days of the date on which the High Court refused permission under that paragraph, or(b) within such longer period as the Supreme Court considers equitable having regard to all the circumstances.””
“Review and power to amend sections 37 to (Time limits for appeals on devolution issues in criminal proceedings)
(1) The Secretary of State must arrange—
(a) for a review of the provision made by sections 37 to (Time limits for appeals on devolution issues in criminal proceedings),(b) for a report of the conclusions of the review to be made to the Secretary of State, and(c) for a copy of the report to be given to the Scottish Ministers.(2) The review must be carried out as soon as practicable after the end of 3 years beginning with the day on which section 38(5) comes into force, or earlier if the Secretary of State considers it appropriate.
(3) The review must—
(a) consider whether changes should be made to the provision made by sections 37 to (Time limits for appeals on devolution issues in criminal proceedings);(b) consider whether further provision should be made in relation to any matter dealt with by those sections; (c) consider (in particular) whether an appeal to the Supreme Court on a compatibility issue should lie only if the High Court of Justiciary certifies that the issue raises a point of law of general public importance.”(4) The Secretary of State may by order—
(a) amend the provision made by sections 37 to (Time limits for appeals on devolution issues in criminal proceedings);(b) make further provision in relation to any matter dealt with by those sections.(5) Provision made by order under subsection (4) may—
(a) amend, repeal or revoke an enactment passed or made before the order is made;(b) confer power on the Secretary of State or the Scottish Ministers to make an order or regulations;(c) include consequential, transitional or saving provision.(6) In this section “enactment” includes an enactment contained in subordinate legislation (within the meaning of the Interpretation Act 1978) and an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament.
(7) In making the first order under subsection (4) the Secretary of State must take into account the report made in accordance with subsection (1)(b).
(8) No order under subsection (4) may be made unless the Secretary of State has consulted the Scottish Ministers.
(9) A statutory instrument containing an order under subsection (4) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”