Grand Committee
(9 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Consumer Rights Bill
(9 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Taverne
“Product description and advertisement
(1) Subject to subsection (2), where any specification, description or advertisement of goods, services or land or property offered for sale, hire or lease, or any instructions or maintenance manual relating to such goods or services includes one or more units of measurement, those units shall be—
(a) those set out in Schedule 1 to the Units of Measurement Regulations 1986 (as amended); or(b) any multiples or submultiples of those units as set out in Schedule 2 of those Regulations.(2) Subsection (1) shall not apply to products listed in Schedule (Product description and advertisement).
(3) Subject to subsection (4), supplementary indications may be used in addition to the units authorised in subsection (1).
(4) Where supplementary indications are used—
(a) in the case of a conflict between an indication of quantity expressed in an authorised unit and a supplementary indication, the authorised unit shall prevail; and(b) the authorised unit shall appear first, and any characters employed in the marking of quantity in relation to a supplementary indication shall be no larger and no more prominent than those employed in the marking of quantity expressed in the authorised unit.(5) In this section—
(a) an “authorised unit” means a unit of measurement specified in Schedule 1 to the Units of Measurement Regulations 1986 (as amended) or any multiples or submultiples of those units as set out in Schedule 2 to those Regulations,(b) a “supplementary indication” means one or more indications of quantity expressed in a unit of measurement, other than an authorised unit, which is used in conjunction with an indication of quantity expressed in an authorised unit,(c) “unit of measurement” does not include arbitrary sizes such as sizes of shoes or clothing, paper and stationery or eggs,(d) a “year” is not to be treated as a unit of measurement.”
Lord Taverne (LD)
My Lords, I apologise for not having taken part in the discussions on this very welcome Bill but my special concern is with the particular and rather unfashionable subject of metrication. The Bill offers an opportunity to clear up some anomalies in the law as it stands that can only confuse consumers and also to promote some modest steps towards a simpler and more rational system of measurements that has been promised for many centuries.
The first commitment was made in Magna Carta. It required one measure for wine, corn and cloth throughout the realm, and similarly for weights. This was to stop consumers being ripped off. Since then, progress has been rather slow. Four and half centuries later, in 1668, Bishop John Wilkins proposed a universal decimal system of measurement in England. Similar proposals were made from time to time but mostly came to nothing. I will refer to only a few of them. Skipping two centuries, in 1895, the Commons Select Committee recommended that the metric system should become compulsory after two years and be taught in elementary schools. In 1904, the House of Lords voted for a compulsory change to a metric system but the Bill failed in the Commons.
Yet 1971 was a star year when we changed to a decimal currency—a major operation that I remember well because I was Financial Secretary in 1970, when Roy Jenkins was Chancellor. I was involved in preparations for the change, which many prophesised would cause chaos. It went through very smoothly. The following year, a Conservative Government produced a White Paper that recommended a gradual but not compulsory change to metrication. A Metrication Board was set up then, but a few years later it was abolished—perhaps because, more recently, metrication has become associated with Brussels. Most Commonwealth countries have adopted metrication. That is nothing to do with a Brussels agenda but because it is much simpler and more commercially convenient. That is also why British schoolchildren are taught the metric system.
However, we still allow two separate systems to exist side by side in a number of commercial transactions. My amendments seek to dispel the confusion that this can cause. They bring product description and advertising in line with the rules for package labelling and for the sale of loose goods from bulk. At present, package labels must give the metric quantity with the option of a supplementary indication in imperial measurements—for example, “568 millilitres, equal to 1 pint”. Pricing of goods must be by metric quantity—for example, “tomatoes at £2.50 per kilogram”, with the option of a supplementary indication of “£1.14 per pound”.
However, these rules do not apply to product descriptions and advertising, which can prove thoroughly confusing for purchasers. A carpet can be described as measuring “eight feet six inches by 16 feet three inches”, with no indication of metric measurements. We also have the absurd situation that manufacturers and retailers often use incompatible units even for products displayed side by side. For example, a consumer may have to compare a fridge of six cubic feet with a fridge of 200 litres. In property advertisements, some estate agents describe room sizes in feet, inches and square feet, while others use metres and square metres. Therefore, we need a minimum common standard that all manufacturers, traders, advertisers and estate agents must follow. Since the law already requires that goods and services must be priced per metric unit, with the option of an imperial equivalent, it is sensible that the minimum standard for product description and advertisement should also be in metric units.
Subsection (1) of my proposed new clause indicates the scope of the clause to achieve this aim, but allows for certain exemptions. It requires the same units as are already required for the pricing of goods and services—namely those listed in the United Kingdom’s Units of Measurement Regulations 1986. However, in order to help older people who are still uncomfortable with metric units, and to avoid cases of so-called “metric martyrs”, the new clause permits the use of supplementary indications using the exact wording from the Units of Measurement Regulations and the price marking order. Also included are a number of minor exemptions, such as car tyres, where it would not be practical to require them to be relabelled. There may need to be other exemptions, so the new clause gives discretion to the Secretary of State to amend the list.
Subsection (2) exempts the cases listed in the proposed new schedule. I will explain the reasons for the exemptions when I come to the new schedule. Subsections (3) and (4) permit the use of supplementary indications—that is, imperial equivalents—while making it clear that the metric unit is primary and must not be less prominent than the imperial unit. Proposed subsections (5)(a) and (b) define the terms “authorised unit” and “supplementary indication”, using the same wording as in the Units of Measurement Regulations. Subsection (5)(c) makes it clear that clothes and shoe sizes, et cetera, are not to be regarded as units of measurement. In subsection (5)(d), “year” is excluded because, unlike other units of time, it does not appear in the Units of Measurement Regulations; if it were not excluded, it might not be possible for traders to offer, for example, a two-year guarantee.
I now turn to the new schedule. Paragraph 1(1) explains that the reason why tyres need to be exempted is that the labelling conforms to an international standard which, for historical reasons, is expressed partly in imperial inches. Since the labelling is part of the moulding of the tyre, and since tyres are manufactured and traded internationally, it would not be practical to require them to be relabelled in metric units.
The reason for sub-paragraphs 1(2) and (3) is that the Units of Measurement Regulations specifically permit draught beer and cider, and milk in returnable containers, to be dispensed and labelled in imperial measures—that is, pints. It is therefore necessary to exempt the glassware from the requirements to display metric units; otherwise, all pub glasses would have to be dumped. As for paragraph 2, there may be other cases where an exemption is justified. This paragraph gives the Secretary of State the power to amend this schedule, subject to the consent of both Houses.
In summary, the amendments enable consumers to compare products on a like-for-like basis, using the same units as in the Units of Measurement Regulations and the price marking order. They would not prevent anybody from using imperial units in addition if they wished. I suggest that these amendments are eminently sensible: they are sensible improvements for the benefit of consumers, especially the younger ones who have only been taught the metric system at school. I also hope that this Committee will feel that moving a little closer to the requirement of Magna Carta for a common standard of measurement, and doing so after a mere 800 years have passed, is not displaying an excessive sense of urgency. I beg to move.
Lord Harris of Haringey (Lab)
My Lords, the noble Lord, Lord Taverne, raised some interesting issues. However, I am slightly disappointed that he did not attempt to sort out some other problems at the same time, as a number of issues such as product descriptions and advertisements of the size or quantity of goods, particularly food products, could usefully be addressed in this amendment. If he gets the traditional rebuff that Members of the Committee expect from the Minister, he might want to consider including those issues as additional items when he brings the amendment back on Report.
I have noticed a tendency for supermarkets to surreptitiously change the size of products, usually food products but also others, as a means of covertly increasing the price, so things which were previously sold at 140 grams weight are now sold at 120 grams weight. Conveniently, the label moves from the front of the packaging to somewhere at the back, often to a place where it is difficult to read. These are all issues that could usefully be addressed if we are trying to simplify and improve the quality of product descriptions and amendments. It is pertinent that we should look at it.
The noble Lord also highlights in his proposed new schedule the anomaly that exists in the markings on beer glasses. However, for those of us who drink rather more wine than beer, there is even more of an anomaly as places that sell wine by the glass may claim that the glass contains 150 millilitres, or whatever it is, but when you look at it, to the untutored eye, it does not look as though it is anything like that amount. I have on occasion challenged this in restaurants and been told, “Sorry, it’s a big mistake. We have given you the small measure rather than the large”, and a smidgen more appears. However, if one is trying to rationalise this—and the motivation of the noble Lord, Lord Taverne, is entirely helpful in addressing this issue—you might as well try to get a number of other things right. Between now and Report perhaps he and the ministerial team will see what else can be got right and included in the Bill.
Baroness King of Bow (Lab)
My Lords, the noble Lord, Lord Taverne, makes a persuasive argument, to which I listened with great interest. It is interesting to note that we use metres and kilometres for our athletics, miles per gallon for our cars, pints for our milk and beer, miles for our speed limits, feet for our height measurements, and our distances are often measured in yards. As the noble Lord pointed out, we have been hemming and hawing on this issue for 800 years, so I doubt that we will sort it out in the next eight minutes. Suffice it to say that Amendment 81 would safeguard a critical element of British heritage, not to mention a key aspect of British identity—the right to buy beer and milk in pints. For some reason, the self-esteem of the British people depends on it. I thank the noble Lord for bringing this issue before us. As my noble friend Lord Harris said, the motivation behind these amendments is entirely helpful. I hope that we will get a thoughtful response from the Minister and I look forward to returning to this on Report.
Baroness Jolly (LD)
My Lords, I start by reassuring noble Lords that a statutory framework for the use of units of measurement is already in place. The Weights and Measures Act 1985 requires the use of metric units for any regulated transaction, with the following exceptions—draught beer and cider, bottled milk and precious metals, where we still use the troy ounce. These are required to be sold in imperial units. In addition, the Units of Measurement Regulations 1986 list all the legal units available for any other purpose. The Weights and Measures Act applies to any unit or measurement in use for trade. This is intended to apply not just in the transaction itself but to any use in connection with, or with a view to, trade. That would already cover most advertisements or product descriptions for goods. I hope that noble Lords will be reassured by this. I am certainly very keen to avoid any possible confusion for consumers, businesses or enforcers. I am concerned that businesses might be confused by duplication of existing requirements, particularly if that were to result in reduced levels of compliance as businesses were uncertain about which set of rules they must comply with. Having a single set of requirements on units of measurement, as we currently do, all under the weights and measures framework, makes it easier for businesses to know where to look for the rules and how to comply with them.
Lord Taverne
My Lords, I welcome the suggestion by the noble Lord, Lord Harris, that one might look at broader issues than the ones I have raised. My proposals were very much modest ones. As far as the Minister’s reply is concerned, I will have to look very carefully at what she says. I understand that in the examples I gave, retailers and manufacturers are doing something that is perfectly legal and it is certainly very confusing. I will consider very carefully the suggestions we made. This is an issue to which we can return on Report to see either whether we can examine the issues more widely or whether in fact there is no reason to worry about the examples I gave. I beg leave to withdraw the amendment.
“( ) For the purposes of this Act, consumer notices are considered to be any information or requirements about the contract conveyed to the consumer before or during the commissioning of the contract by the trader which may reasonably be considered designed to influence the behaviour of the consumer.”
Baroness Hayter of Kentish Town (Lab)
My Lords, in moving Amendment 55A, which is in the name of my noble friend Lord Stevenson and myself, I shall also speak to Amendments 56FA and 56FB in this group.
Clause 62(2) states:
“An unfair consumer notice is not binding on the consumer”.
We concur with that, but we are concerned that the consumer notice should clearly include any promotions that are designed specifically to catch the shopper’s eye. We are also clear that in assessing whether something is unfair, the CMA should be able to include some elements of price where those have been hidden from plain sight—that is, if the consumers do not appreciate their significance at the point of purchase.
To some extent this amendment and those in the next group are part of our attempt to ensure that consumers should not fall victim to hidden traps in the traded standard terms and conditions, and that while some core terms and some charges are immune from any fairness assessment, that should not be the case where such terms or charges may influence behaviour or where they are not fully understood at the point of sale. The Unfair Terms in Consumer Contracts Regulations put the terms into two categories: those that a consumer will or can be expected to properly take into account when deciding to enter the contract; and those that he or she will not or cannot. It is the latter that can be assessed for fairness.
The Consumer Rights Bill narrows the scope of the price exemption following the somewhat unwelcome 2010 Supreme Court decision on bank charges, but still assumes that the consumer will behave like a rational economic person and take account of all prominent information. However, behavioural studies tell us that people are often far more influenced by presentation than by the information itself, or put more emphasis on salient rather than actually useful information. As such, even when a price or term is disclosed, consumers do not always factor that into their purchasing decision. They also tend to overvalue a benefit received now and underestimate the impact of deferred costs, which leads to an excessive willingness to pay at the point of purchase while underestimating the future use of the product, which may lead to future costs. Earlier in Committee we talked about a future fee, which a shopper may not consider relevant to them as they do not appreciate the likelihood of it affecting them.
Similarly, we know that consumers are influenced in their buying choices by a wide range of factors, which is what Amendment 55A seeks to cover. Indeed, it is interesting to note that one of the leading university departments specialising in behavioural economics—how consumers actually make decisions—the University of Warwick Business School, wrote to the Minister in the Commons on 7 October, saying that,
“simply providing consumers with information about a charge does not absolve the seller from the responsibility for ensuring the charge is fair and reasonable”.
The business school therefore asked that terms that are effectively “hidden in plain sight” should be assessable for fairness, but its wise words pertain also to other issues that might have been included in information put to shoppers with exactly the aim of tempting them into the purchase.
One example of this, which we know influences behaviour, is the choice of price times; in other words, when you find out about them. Research done in 2010 by the OFT shows that consumers make more mistakes and poorer purchasing decisions under what is known as “drip-pricing”, a form of partitioned pricing, where consumers see only part of the full price upfront and price increments then drip through the buying process. This can cause the most consumer detriment.
We all tell stories in this Committee. I was on the point of buying a walking jacket the other day because it was reduced to only £15. But as you get into it, you choose the colour, the size and whether or not you want a hood, and then you get insurance added on. The jacket was only £15 but the postage and packing was 1p short of £4. That is a very large amount to add on to the price but by that stage you have chosen the size, you have chosen the colour—it is a very clever way of selling. However, drip-pricing has a very negative effect on behaviour because we start our purchasing process before we see the whole price. Other offers, such as “take home today”, “easy to assemble”—I have fallen for that one—and “money-back guarantee”, are the ones that influence the buying process. We are not saying that they should be outlawed but they should be looked at for fairness.
Amendments 56FA and 56FB would amend the terms that cannot be assessed for fairness and replace them with,
“only where the price payable does not relate to future variable fees”.
Normally, price is absolutely not assessable for fairness, because it is assumed to be clear to the purchaser. It is up to them to decide whether to accept it and then it is part of the contract. However, future and unknown prices within a contract need to be assessable for fairness, as the consumer is not in a position to judge them and evaluate their worth at the point of purchase. I beg to move.
Baroness Drake (Lab)
My Lords, I support Amendments 56FA and 56FB. These amendments are not about extending consumer rights, so that more contract terms can be deemed unfair; they are about enabling more matters to be assessed for fairness. The problem arises because of the interplay of two provisions. The court may assess a contract term for unfairness unless it falls into a certain exempt category; and core terms in a contract are exempt from assessment for fairness by the courts if they are prominent and transparent.
Through this Bill the Government are clearly seeking to address the problem thrown up by the 2009 Supreme Court decision in the case of the OFT v Abbey National that held, as my noble friend has said, that charges for unauthorised overdrafts were exempt for assessment for fairness. This gave rise to uncertainty about whether ancillary charges could be assessed for unfairness. To use the Government’s own words, this created a situation whereby:
“Some protection in law is necessary because consumers often cannot, or do not wish to, investigate the detail of every contract term before they sign up to an agreement”.
This Bill provides for the “prominence” test for core terms in a contract to be exempt from assessment for fairness by the courts, but this raises other concerns. Prominence is very important and welcome, but its efficiency in providing a remedy both for unfairness and for a weak and ineffective market depends on how the consumer’s attention is drawn to a term and their understanding of its significance. As the OFT commented:
“Transparency alone cannot turn a substantially unfair term into a fair one”.
As the BIS Select Committee commented, bringing something to the consumer’s attention is not the same as a consumer appreciating its significance.
Prominence should not be operationalised in a way that gives too great a protection to traders in exempting contract terms for assessment for unfairness and too weak a defence to the behavioural bias that consumers demonstrate, so unfairly restricting their access to the courts for assessing the fairness of the term of a contract.
These amendments are clearly seeking to mitigate that risk by limiting the wide range of price terms that are immune from a fairness assessment. Consumer markets and products are becoming more complex, increasing the risk that consumers do not understand the significance of certain information. We have behavioural bias. We have asymmetries of knowledge and understanding between the trader and consumer that can actually create incentives for the trader to frame information in certain ways—a problem which the noble Lord, Lord Taverne, illustrated has not been remedied in 400 years.
The Bill may narrow the scope of the price exemption following the Supreme Court’s decision, but it does so on the assumption that consumers will take into account all information that is provided prominently. However, we know that that is so very often not the case. Consumer behavioural bias is very powerful. If the most important goal is buying a house or a holiday, people will focus less on the detail of the associated insurance policies. The closer that the consumer gets to signing something, the less likely they are to walk away or assimilate the detail. As my noble friend Lady Hayter has spelled out, the behavioural biases that consumers exhibit are very significant. At risk of repetition, I shall restate some of them. People are more influenced by presentation than the information. They overvalue a benefit that is received now. They underestimate the impact of any deferred cost. They underestimate future use. They are prone to optimism bias. Volume information means that they reach saturation point. Excessive or complex product information can freeze their decision-making. That is probably one-fifth of the list that one could enunciate if one was going through a study of the literature.
The one thing that behavioural science shows us is that if consumers are not factoring certain prices into their decision, those prices will not be subject to competitive forces, so the markets cannot work effectively. In effect, the Government will not secure the functioning markets they are quite rightly so keen to secure unless there is some limit on the wide range of price terms which are now immune or could be immune to fairness assessment.
By way of illustration, perhaps I may refer to the letter dated 27 October from the noble Baroness, Lady Neville-Rolfe, to my noble friend Lady Hayter on mortgage contracts. To me, the contents raise more concerns than they settle. On the issue of “mortgage prisoners”, the letter makes a reference to the FCA’s concerns that some firms do not seem to be applying its transitional arrangements in the spirit in which they were intended. That is very politely and gently stated, but it is quite clearly yet another example of the failure of rule compliance and is hardly an expression of confidence that Clause 64 of the Bill will work effectively. In her letter the noble Baroness also refers to a number of things that the FCA is doing to address the concerns raised by my noble friend, but of course these apply to regulated products. They cannot deal with unregulated products, which include the Bank of Ireland example cited by my noble friend. For these unregulated products we must rely on the unfair contract terms, the problems with which my noble friend and I have, I hope, gone through in some detail.
Other non-financial sectors will exhibit similar problems with unregulated products, especially where switching is difficult because of the length of the contract wrapped around the product. Examples of these would be products bought in the ICT and telecoms sectors or longer term courses in higher education. When one takes into account the extent of the behavioural bias which consumers bring to the market and how that creates incentives for traders to frame information, the fact is that if consumers are not factoring these prices into their decisions, it means that competition and functioning markets cannot be operating. There really is a compelling case for amendments that would constrain terms that are not assessable for unfairness.
Baroness Jolly
My Lords, this is the first amendment to Part 2 of the Bill covering unfair terms, so allow me to set the scene. Part 2 responds to the Law Commission’s recommendations to the Government on how to improve the rules around contracts between a business and a consumer. The aim of this part is to provide clarity for business and consumers, resolve uncertainties and avoid lengthy court disputes in the future. The basic framework remains the same: terms in a consumer contract must be fair and they must be plain and intelligible. A court can decide whether a term is fair or not, but the “core bargain”, what you pay for and how much it costs, is exempt from that assessment in certain circumstances. The legislation also lists certain terms as examples which the court may look at, known as the “grey list”.
What are we changing in this Bill? I would draw the attention of noble Lords to two particular changes. First, we are making the “small print bigger”: price and subject-matter terms must be transparent and prominent to avoid a court being able to consider whether they are fair. That requirement for prominence to avoid assessment is new. Secondly, we are adding three new types of term to the grey list. These are the types of term which are always assessable for fairness. We are adding terms which permit the trader to claim disproportionately high sums in compensation or for services which have not been supplied where the consumer has attempted to cancel the contract. These are also known as early-termination clauses. We are adding terms which give the trader discretion to decide the subject matter or price after the consumer has become bound by the contract. These additions were recommended by the Law Commission and based on evidence of consumer detriment and case law.
I turn to the amendments specifically and, first, Amendment 55A. As I am sure the Committee is aware, one of the other ways in which this part of the Bill increases consumer protection is by bringing consumer notices into the scope of the fairness test and transparency requirement which currently apply only to consumer contracts. We based our explanation of what constitutes a “notice” on the current regime, specifically the Unfair Contract Terms Act 1977. We make clear in Clause 61(8) that a consumer notice,
“includes an announcement, whether or not in writing, and any other communication or purported communication”.
I can therefore reassure the Committee that “notice” has this broad definition, meaning more protection for consumers.
We have been asked whether the provisions in Part 2 include general statements such as adverts which are not made to a particular consumer but to all consumers. Such notices are covered by the unfair terms part of this Bill where they relate,
“to rights or obligations as between a trader and a consumer, or … purports to exclude or restrict a trader’s liability to a consumer”—
as stated in Clause 61(4).
I also remind the Committee that Part 2 complements other protections. First, this Bill makes clear that certain information the trader gives the consumer forms part of a contract for the supply of goods, service or digital content. For example, in relation to a contract for a service, Clause 50 provides that where a trader gives a consumer information about a service they are offering, and the consumer relies on that information in deciding to enter the contract, the trader must comply with that information. Secondly, the Consumer Protection from Unfair Trading Regulations 2008 are already in place to protect consumers from being misled by a trader. I can therefore reassure noble Lords that the definition of “notice” has a very broad scope and that a wide range of notices are covered by Part 2 of the Bill. Both Part 2 and the other provisions and regulations will protect consumers from being misled.
On Amendment 56FA, concerns have been raised today that our drafting of the exemption will allow traders to surprise a consumer with additional charges after a contract has been agreed, without those charges being assessable for fairness. I do not like these surprises any more than noble Lords do. I would rather know about them upfront so I can shop around to avoid them. That is what the new requirement for “prominence” will allow. Traders should make such charges prominent when they enter into a contract. There should be no surprises. If there are, the consumer or a regulator can challenge them in court. Through that new requirement, consumers will for the first time have significant protection from unfair terms in the small print.
The noble Baroness, Lady Hayter, mentioned drip-pricing. The Bill will help protect consumers from drip-pricing, alongside the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which say that these extra charges must be clear and comprehensible before the consumer buys. In contrast, were we to allow only the main price to be exempt from assessment for fairness, traders might just bundle all their charges under the headline price. That is not beneficial for consumers or creating a competitive marketplace. The Law Commission recommended to us in 2013 what you see in the Bill now. It considered this a careful balance between protecting consumers and allowing the market to operate. The Government agree with that view; we need an unfair terms regime that works in practice.
On Amendment 56FB, which would change the requirement for prominence under Clause 64, concerns have been raised that our current definition allows terms to be “hidden in plain sight”, where a consumer could see and read a term because of its prominence but still not appreciate its significance. We recognise that consumers rarely read terms and conditions and that those who do may not fully appreciate how they will impact them. After thorough consultation we agreed with the Law Commission’s recommendations that the way to tackle this was through transparency, prominence and the maintenance of the grey list—that is, the list of terms which are always assessable for fairness. In answer to the concern of the noble Baroness, Lady Hayter, about customers being irrational, I understand that the Minister has responded by letter to the University of Warwick academics on this particular point. I am not sure whether the noble Baroness has seen a copy of that letter.
The grey list is key to protecting consumers from terms which they may not fully appreciate when agreeing to a contract because it covers such a very wide range of such terms. We are therefore making clear in the Bill that terms on this list are always assessable for fairness. We are also adding three terms to the list, again on the recommendation of the Law Commission, thereby protecting consumers from three additional types of term that they may not fully appreciate when they agree to a contract. Finally, we are taking a power in the Bill to allow us, after parliamentary scrutiny, to update the grey list. That means that were consumer or trader behaviour to change, we could add terms to the grey list to accommodate that.
I agree with noble Lords that consumers might not appreciate all the terms when agreeing a contract, but I think that we have already addressed this in the Bill as drafted. I hope that I have explained our reasoning for accepting the Law Commission’s recommendations for the construction of Clause 64 and I therefore ask that this amendment be withdrawn.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for that response. As she says, this is the first time that we have discussed this provision. I also thank my noble friend Lady Drake for her professional and expert intervention; this is her area. Among the details which she so rightly raised, she used the phrase “transparency alone is not enough”. I think that that is the problem that we still have—that transparency and prominence are highly welcome but, by themselves, are not enough.
I very much welcome the expansion of the grey list. I think that there was a half-offer there that we could see the letter that was sent in reply to the Warwick University Business School, so I thank the Minister. I particularly welcome something that I am not sure I had noticed—it is confession time—which is the ability to update the grey list. We might return to this on Report after we have read those words carefully to see whether we would still like to tweak it at that stage, although it may be that we will want to do it later. I think that some points are still not sufficiently well covered. For the moment, I beg leave to withdraw the amendment.
“ A term (including those within the scope of paragraph 22 of this Schedule) which has the object or effect of permitting a trader to increase the price of, or alter unilaterally any characteristics of, goods, digital content or services during any minimum contract period or before the end of a contract of a specified duration without a valid reason or where it is reasonably foreseeable that the consumer would not be free to dissolve the contract without being disadvantaged.”
Baroness Hayter of Kentish Town
My Lords, Amendment 56ZA, which stands in my name and that of my noble friend Lord Stevenson, deals with a similar area. It would add a type of contractual term to the list of what may be regarded as unfair. The purpose is to ensure that consumers do not have terms imposed on them which could leave them disadvantaged, specifically in a minimum or fixed-term contract where a price was increased and where they would then be disadvantaged if they were to switch products or providers. I refer to the discussion that we had on “mortgage prisoners” earlier in Committee.
Which? has pointed out that the Unfair Terms in Consumer Contracts Regulations 1999 recognise that such variation in contracts can lead to consumer detriment. However, the grey list, as currently drafted, would appear to absolve the person varying the terms of the contract from responsibility should the consumer be unable to end the contract. We discussed examples of where consumers could not leave contracts, for whatever reason. There are clear examples of where ending the contract would lead to significant consumer detriment—for example, if another mortgage is not available or one’s circumstances no longer qualify one for a mortgage. Merely being able in theory to terminate a contract does not alleviate the difficulty of a change being made to the contract for no good reason because the person concerned still needs to find another mortgage but cannot do so at that stage.
A mortgage is not the only kind of contract where growing older during its term could make it disadvantageous suddenly to have to find a new one. Life insurance is another such example, or home insurance where a neighbour might have experienced flooding or subsidence since the consumer first bought their own coverage. In the case of a university degree, where suddenly a subject is withdrawn, merely being able to move to another university does not mean that the student is not disadvantaged, especially if they have worked hard for two years at the first university.
This amendment is limited to fixed-term contracts and minimum-term contracts, where the expectation of the deal advertised is at its clearest. The fairness test allows consumers to challenge a term of a contract to make it non-enforceable. Any compensation would have to be decided separately, whether by the financial ombudsman or elsewhere. The Minister will be aware that the approach we are taking here was supported by the BIS Select Committee and the CMA, so I hope that the Government will find themselves in a position to support it, too.
Amendment 56D returns us to the issue of “mortgage prisoners”, although it takes a slightly different approach. It would add to the grey list a term in a contract which would give a mortgage provider the ability to increase the price of a mortgage in cases where the consumer cannot get a new contract for the reasons we have been through. It would have the effect of giving a consumer recourse to argue that the change in the terms of the contract is not legal and should not take place. This consumer detriment, where people cannot get another contract, will be familiar to the Committee.
The Minister’s letter, received on 27 October, to which my noble friend referred, relates to Amendment 56ZA and contracts that vary in their supposedly fixed lifetime, such as a mortgage. However, it applies only to what the FCA is doing on mortgages. But the bottom line is that there is little concrete provision in the rules to stop a lender changing the terms of a mortgage deal that they have come to regret offering in the first place—perhaps when hidden terms and conditions allow them to do so—leaving consumers high and dry where there is no alternative product. Does the Minister agree that if the banks cannot honour the terms and spirit of a fixed mortgage deal, they should never have offered it in the first place? After all, consumers cannot exit the contract without penalty if this happens the other way round, when there may well be exit fees. Therefore, it is hard to see why the provider should be able to do so.
Furthermore, while the Bank of England example allowed BIS to deflect the issue back to the FCA, this issue can occur in other markets that are regulated by different regulators, such as Ofcom with telecoms fixed contracts and Ofgem with fixed energy contracts. Even more importantly, what happens where there is no regulator at all? Who would take action then? Would it be trading standards or the CMA? Again, it is worth noting that the CMA supports our approach to this.
I turn now to the other issue in the example of the Bank of Ireland. The Government said that it would be for the court to decide if the Bank of Ireland case was unfair, although the FCA has already said that it does not think it was. Furthermore, while the Minister says that consumers can go to the Financial Ombudsman Service, in fact that service adjudicated against the complainant because the unfair contract term regulations are not adequate in this case. The financial ombudsman actually cannot help unless the grey list is complete; that is, if it allows these terms to be open to assessment for fairness. Our amendment would add terms that vary by unknown amounts within a fixed lifetime to the grey list and would thus be able to be assessed for fairness. That is what we are trying to achieve.
I would add once again that although the Government have tried to use the particular case of mortgages to show what the FCA considers to be acceptable, we are worried about wider markets where it does not operate. The amendment would provide a clear route for someone to take their complaint in such a situation, and I hope that the Minister will either be able to accept it or will lay out plans to provide an equivalent level of protection within this legislation. I beg to move.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, these amendments also relate to Schedule 2 covering the grey list, containing terms which are always assessable for fairness under Clause 62. These are terms that are likely to trip up even an astute consumer or that someone would not fully appreciate when agreeing a contract. As the noble Baroness, Lady Drake, set out, consumers do not always appreciate the terms they have agreed, and I agree with the sense of the debate that this is not the easiest area in the Bill in terms of understanding exactly what is happening. I note the points she made not only about regulated areas but other areas as well, and I am grateful to her for making them.
I shall try to address the generalities and then perhaps I may move on to financial services, which are the subject of Amendment 56D. Let me reassure the Committee that there are protections in place to protect consumers from unfair variation clauses. Where traders include a term to allow them unilaterally to change the characteristics of the goods, service, or digital content being provided without a valid reason, that is included on the grey list as set out in paragraph 13 of Schedule 2. Those terms can be challenged in court even if they allow the consumer to exit the contract. For example, if a painter decorating your bathroom includes a term stating, “All materials may vary in style, colour and finish”, that term can rightly be challenged for fairness.
Where traders include a term to allow them unilaterally to change the price of the goods, service, or digital content being provided, that is also included on the grey list as set out in paragraph 15 of Schedule 2. In that case, a term can be challenged for fairness if the increase is too high and it does not allow the consumer to exit a contract. I should remind the Committee that just because an item is not on the grey list, it does not mean that it is fair or exempt from the fairness test. In order for a price term to be exempt, it must be prominent and transparent, and I believe that the requirement for prominence that we are introducing in this Bill marks a significant increase in consumer protection. I hope that the noble Baroness, Lady Hayter, will bear that in mind in her further consideration of this issue.
The noble Baroness, Lady Drake, mentioned that I had written round—thank you for that. It may be worth reiterating a couple of the points that I made in that letter. The Government are determined that lenders should treat mortgage borrowers fairly. That is why, during the course of this Parliament, we have strengthened protections in a number of ways. Most significantly, in April of this year, the new independent consumer regulator, the Financial Conduct Authority, introduced a revised set of rules as part of its mortgage market review. These provide stronger protections than ever before for borrowers taking out a mortgage to buy a home and, indeed, have changed the marketplace a bit. Among the key changes were improvements to sales standards and to affordability assessments. The FCA’s rules are designed to protect consumers who find it difficult to switch once market or regulatory conditions change. Therefore there is a general requirement on firms to treat customers fairly, but there is a specific provision within the FCA rules that forbids lenders from taking advantage of a borrower who is stuck with their current mortgage—a circumstance that the noble Baroness, Lady Hayter, referred to. FCA rules say that lenders should not treat these customers less favourably than other, similar customers. In addition to that specific provision, the FCA has provided for transitional arrangements that allow lenders to waive the new affordability requirements for existing borrowers seeking to remortgage as long as they are not increasing the size of the loan. Finally, and most importantly, the FCA is also undertaking a review of its new mortgage rules which will consider how the rules are working in practice and whether any adjustment or clarifications are required. If need be there is scope for action and the FCA has the powers.
We believe that this amendment would significantly reduce valuable flexibility that lenders currently have in making commercial pricing decisions across the market. If we make it much more difficult for lenders to increase rates in response to changing market conditions, then lenders’ ability and readiness to offer the most competitive deals will be constrained. Ultimately, it will be mortgage borrowers who lose out.
In conclusion, we believe that introducing new legislative requirements would undermine the robust but flexible system of regulation that has been put in place in recent years. It would constitute a backward step in terms of delivering the Government’s aim to deliver a regulatory environment that offers consumers protection as well as choice and good value. I therefore ask that this amendment be withdrawn.
Baroness Hayter of Kentish Town
I am not certain about the flexibility point, because both amendments use the words “without a valid reason”. That is the point—there are valid reasons for things having to change. We are very focused on changes that are made without a valid reason and which therefore of course cannot be within the expectation of the purchaser. Valid changes in interest rates they know; we are worried about changes made without a valid reason. I want to look carefully at the words used in this amendment and the one before, which to some extent try to address the same problem, to see how we might come back to this. I beg leave to withdraw the amendment.
Baroness Thornton
“20A (1) A term which has the object or effect of permitting a trader engaged in the provision of fixed broadband internet access or mobile internet services to block, restrict or otherwise hinder the access of a consumer to any lawful electronic communications network or electronic communications service on the basis of an unreasonable or unusual definition of “internet access”, “data”, “webaccess” or similar word or phrase.
(2) Nothing in this prohibition shall affect filters for the purpose of child protection.
(3) “Electronic communications network” or “electronic communications service” shall have the same meaning as in the Communications Act 2003.”
Baroness Thornton (Lab)
My Lords, this is an amendment to Part 1 of Schedule 2 which seeks to add three sub-paragraphs. They concern net neutrality and seek to clarify the issue. As the Minister will know, they are made necessary, in some ways, because of the flurry of confusion that was caused by unfortunate wording in a measure debated recently in the European Parliament. It would be absurd, would it not, if in the name of net neutrality—or anything else, for that matter—ISPs or we found that we were unable to take reasonable steps to protect children from age-inappropriate materials on the internet.
No right-thinking person can ever have intended that, so I hope that the Government will take this opportunity to put the matter beyond any doubt. Noble Lords will know that net neutrality is the principle that internet service providers and Governments should treat all data on the internet equally. They should not discriminate or charge by user, content, site, platform or application. In layman’s terms that means that whether we are looking at iPlayer, Sky Go or Netflix, there will be equal access to services and there should be no speed differentiation in accessing them. The amendment seeks to address that issue.
I know that noble Lords have comments to make so I will limit myself to putting some questions to the Minister. What consideration has she made of any possible changes to the principle of net neutrality? Will she rule out any changes to data priority for UK consumers of online content? Has she had meetings with ministerial colleagues to discuss what response the Government might make if the authorities in America, for example, make changes to their rules on net neutrality? Does she feel that existing protocols are strong enough to protect the interests of consumers and avoid competition issues among content providers? What assessment has she made of any competition implications of the possible creation of a two-tier internet? I do not expect the Minister to answer those questions in detail right now but it might be necessary for the discussion to take place between now and the next stage of the Bill. I beg to move.
Lord Deben (Con)
My Lords, I hope that the Minister will listen to this very carefully. I will repeat for her interest an experience I had as a Minister when I sought to insist that the providers of telephonic communications should be able to withdraw the service to telephone numbers used by people advertising illegally in telephone boxes. This had become an increasing problem and it seemed not unreasonable that we should say that if you advertise a telephone number illegally in those circumstances, the telephone company might withdraw it.
One of the telephone companies took me to Ofcom, or the equivalent then, to say that this was contrary to competition and would create a cartel. With very great regret, the regulator said that it thought that the law did mean that. So this very simple way of removing very objectionable content in telephone boxes in the centre of London, which were very often used by young people, was stymied. I use the example so that my noble friend will recognise that this is an area in which very great care must be taken not to allow the very necessary protection for competition to interfere with the very necessary protection for other reasons.
The noble Baroness who introduced the amendment did so in a very broad-minded and sensible way, saying, “We just want to do this in order that the Minister will take it very seriously”. I just want the Minister to understand that this is much trickier than sometimes Ministers are advised. Having been through this, it is a very dangerous area to be in and the Committee will probably agree that we want both—protection of competition and protection of people so that they can make the choices that they want to make. There are many unscrupulous people around who will use the one to play against the other.
Therefore, will the Minister take it from me that it is much more difficult than is sometimes suggested, and that she needs to be on her guard in a particular way? I hope she will be able to answer the very pertinent questions that were raised by the noble Baroness.
Lord Best (CB)
My Lords, I have added my name to Amendment 56B. I was approached by the Internet Telephony Services Providers’ Association—ITSPA—because I chair your Lordships’ Select Committee on Communications. However, my committee has not had a chance to consider this particular issue so, having discussed it at length with ITSPA, which represents some 80 providers of telephony services via the internet, I speak in a personal capacity.
The amendment addresses a consumer rights issue relating to the penalties facing unwary customers of some of the companies that supply our mobile phone and internet connections. Unbeknown to those who sign up to get the internet from their iPhones and other mobile phones—unless they have studied all the small print and those terms and conditions that we all accept but have never read—some of the big players have built-in penalties for using the internet to make telephone calls—for example, through Skype. While providers such as BT, O2 and Sky, for example, have not adopted such practices and do not penalise their customers in this way, Vodaphone and EE have done so in recent years.
Presumably, the restrictive practices of these companies are a consequence of them providing mobile telephone services, which could be less popular and profitable if people use the internet to make telephone calls at a much lower cost. However, this practice is bad not just for the innocent consumer who can have their calls blocked or degraded, and/or could find some hefty charges on their mobile phone bills, it is also bad for this industry that finds it harder to attract investment to extend a really useful communication tool which, increasingly, could benefit more and more of us but has this cloud hanging over it. The practice is detrimental to consumer interests as well as anti-competitive and will gradually affect other services as we increasingly access the internet via mobile connections.
I note that amendments to this effect were tabled in the other place by both Conservative and Labour Members. We learnt there that the Government and Ofcom are keen to see an end to the current bad practice. We hear that in recent days Vodafone and EE have bowed to pressure from all sides and agreed to sign up to the industry’s code of practice which outlaws the technical blocking or restricting of telephone services through the internet. This is a step in the right direction. Nevertheless, as ITSPA points out, there are ways of interpreting this code of practice that could circumvent its intentions, for example simply by avoiding the term “internet access” and using a synonym such as “mobile data” or “mobile broadband”. There are also no sanctions for breaking the code, and those who voluntarily sign it one day can withdraw from it another. Only through legislation is the matter fully resolved.
As I know from the work of the Communications Committee, ensuring the law keeps pace with technological change—particularly in respect of the internet—is an important challenge for today’s legislators. This Bill takes steps in that direction and this amendment is very much a case in point. It seems that in the somewhat arcane world of telephony services, the consumer needs the protection of the law, not just of a voluntary code, to ensure fair play.
Finally, I gather that there is a school of thought that suggests we should await an EU directive on so-called internet neutrality—to which the noble Baroness, Lady Thornton, referred. That would cover this point, among other measures. However, I fear that we could wait a very long time for agreement on the content of this Europe-wide measure. Surely it is much better for UK citizens if the Government act now with a small, well-focused amendment to the Bill already before us. I am delighted to support this amendment.
Lord Stoneham of Droxford (LD)
Briefly, I lend my support to this amendment. Most of the points have already been made but wherever uncompetitive activity is trying to distort a market and deprive market entry to competitors it should be exposed and eliminated. Internet access should be open and consumers buying that service expect it to be so. Can the Government really achieve their objective of an open market without considering this amendment? Selective blocking is abhorrent to innovation and generally has uncompetitive motives. Consumers are not fully aware of the practices when ISPs and mobile providers undertake inhibiting their services. Ofcom has already indicated that it would welcome more clout against the blocking of or economic deterrents for internet services. It recognises that these practices should be unacceptable. The voluntary code of practice should be given statutory support.
Baroness Jolly
The noble Lord, Lord Deben, says that this is a tricky issue and he is clearly right. One of the tricky bits of this amendment is that many aspects of internet behaviour can be fitted under these amendments. The ones in my comments relate to those of the noble Lord, Lord Best, in which people using voice over internet protocol have been wrongly charged for it. Nobody wants to see that situation but I question whether there is a need to change the law to tackle such behaviour as we have good and robust protections in place for consumers.
I also understand that companies which block services such as Skype no longer offer packages that do so, except on legacy tariffs, so these terms and conditions should not apply. I also understand that the regulator Ofcom has been in dialogue with the providers, and that there is a commitment to review the wording in their terms and conditions to ensure that these are not misinterpreted in this way.
The noble Baroness, Lady Thornton, asked about the assessment of the two-tier internet. The Government’s intention is to ensure an open, secure and safe internet. Where some services are blocked, we want to see transparency. However, our experience is that competition is working. The proposals in the US are informed by the US market. The UK’s market is very different, so we watch with interest to see what the FCC will do.
More broadly, the Government and industry through the Broadband Stakeholder Group have done a great deal of work together to ensure that there is greater transparency. For example, two industry codes of practice have now been developed. This, coupled with the UK’s highly competitive telecoms market, has been very successful in ensuring that there is no consumer detriment caused by traffic management problems.
I hope that this gives some reassurance to noble Lords proposing the amendments. However, given their wide applicability, it makes an awful lot of sense to convene a meeting on this issue with interested parties before Report. Therefore, I ask the noble Baroness to withdraw the amendment.
Baroness Thornton
I thank the Minister and the noble Lords, Lord Deben and Lord Best, for their remarks.
I was getting quite cross until I heard the Minister read out her last paragraph, as I thought that her remarks showed a level of complacency which I do not think is justified. As the noble Lord, Lord Deben, said, this is a complex area. I would certainly like to take the Minister up on her offer of discussions before the next stage of the Bill. I beg leave to withdraw the amendment.
“ A term which either—
(a) requires or encourages a consumer to contract third party services without informing them of their right to seek independent advice; or(b) seeks to limit a consumer’s access to independent advice regarding third party contracts where there is a potential conflict of interest for the third party involved.”
Baroness Hayter of Kentish Town
My Lords, in moving Amendment 56C, I shall speak also to Amendment 56FD, both of which also stand in the name of my noble friend Lord Stevenson.
These amendments are about protecting consumers who take out legal protection through their insurance policies against being allocated a lawyer who has some tie with the insurance company. Instead, they should clearly be offered independent advice and have greater certainty that any lawyer arranged through such a deal will act independently of the interests of the insurance company. This is about ensuring that, following an accident, the lawyer, who has after all been paid for by their premiums, is working for the driver and not in any way for the insurance company. Unfortunately, experience shows that it is necessary to look at this. At the moment, if you look at your car or house insurance, you may well find a paragraph about legal protection.
The problem is that, should you need to call on this, you would probably have to use the law firm that the insurers appoint, not a lawyer of your own choice. And one has to ask, in order to stay on the panel recommended by the insurance company, what incentive would there be for a law firm to do extensive and therefore expensive work, which would be paid for by the insurance company, rather than a quick job which perhaps looks very satisfactory to the driver, if it results in a very fast settlement? Would such a law firm on the panel which relies for its work on referrals from the insurance company, really fight the driver’s corner with any vigour in a personal injury claim, or would there be a temptation to settle for the first offer from the other side? These legal expenses clauses are often difficult to remove from an insurance policy, which does not sound like a healthy market for consumer choice.
Baroness Jolly
Perhaps I may reassure noble Lords that where conflict of interest is an issue in particular sectors, the Government have taken action. As I am sure noble Lords are aware, in November 2008 the then Master of the Rolls, Sir Anthony Clarke, appointed Lord Justice Jackson to lead a fundamental review of the rules and principles governing the costs of civil litigation and to make recommendations in order to promote access to justice at proportionate cost. Lord Justice Jackson published his final report in January 2010 and the recommendations are being taken forward in a variety of ways. A number of measures required primary legislation, and some of the major reforms are in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Other reforms will be implemented through rule or policy changes.
Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act implements recommendations made in Lord Justice Jackson’s review. No-win no-fee conditional fee arrangements have been reformed, but remain available. They provide a means of funding legal cases for those who could not otherwise afford them. That part also provides that for personal injury cases, referral fees are prohibited. This ban covers both the payment and receipt of such fees, which means that a firm cannot benefit through referring a customer to a particular third party. In effect, this removes the incentive on the trader to refer a consumer to a particular third party, just as this amendment would do. The ban captures all of the main businesses involved: solicitors, claims management companies and insurers. Any breaches of the ban will be subject to appropriate regulatory action by the relevant regulators, which are the Solicitors Regulation Authority, the FCA and the Claims Management Regulator. This regime has been in force since April last year.
Provision is also made in the Act for a power to extend the prohibition to other types of claim and legal services beyond personal injury claims. However, the Government do not intend to use this. There is no evidence that such a ban is needed in other sectors. I hope that that reassures the noble Baroness and I would ask her to withdraw the amendment.
Baroness Hayter of Kentish Town
I thank the Minister for her reply. I have worked on referral fees a lot and of course this is not quite the same. It is not about the payment of referral fees, but about a law firm which is dependent for the volume of its work on being referred by an insurance company. I made no allegation whatever that a referral fee was being paid. The problem is that if the insurer is putting all its cases to one or more lawyers on its panel, that sets up a potential conflict of interest for the law firm which wants to remain on the panel.
I know that the Minister will not be able to answer my next point now, but she has talked about claims management companies. She will not be aware, because she was not the Minister at the time, that another amendment I did get through was that complaints against claims management firms should be able to be made to the Legal Services Ombudsman. I think that that happened around 18 months ago, but the SI has still not come before your Lordships’ House. Despite this House having taken the decision—a very wise decision, I have to say—that complaints against claims management firms can be made to the Legal Ombudsman, the MoJ has been so tardy that we still do not have the SI. I am sorry to get that in as a dig, but we are still waiting for it. It is really important in these sorts of issues.
As I say, it is not referral fees that we were touching on in this. It is about being absolutely certain that when you pay for insurance to cover legal representation if anything happens, that legal representation should be absolutely non-conflicted and should act for the driver concerned. For the moment, I beg leave to withdraw the amendment, but if the Minister could talk to her colleagues in other departments, and if they could move on the complaints against claims management firms going to the Legal Services Ombudsman, many people would be very grateful.
Baroness King of Bow
Baroness King of Bow
My Lords, Amendments 56FC and 56G are in my name and those of my noble friends Lady Hayter and Lord Stevenson.
Amendment 56FC aligns the definition of “average consumer” with case law from the European Court of Justice. This basically means using a phrase already well established in EU law to identify an average consumer. The phrase in question is,
“taking into account social, cultural and linguistic factors”,
when identifying what is average. The essential point of Amendment 56FC is to give courts flexibility when determining what constitutes average. The amendment supports the view of the Financial Services Consumer Panel, which has judged the Bill to be inadequately flexible.
I realise that the Minister is likely to respond to Amendment 56FC by saying that it is too subjective. It would seem, for example, to protect consumers who might currently be unprotected—those who are not average. An example might be consumers with learning difficulties, mental health problems or medical conditions. The European Court of Justice has not found this approach too difficult and has used the phrase in a succession of cases. Although the ECJ expects traders to consider an average consumer as reasonably well informed and reasonably observant, at the same time it expects traders to take social, cultural and linguistic factors into account. This does not seem to have caused it undue problems.
Amendment 56G requires the Competition and Markets Authority to,
“publish an annual assessment of the extent of consumer detriment caused by the use of unfair terms”.
Throughout this debate, we have heard that consumer protection is meaningful only if consumers understand what their rights actually are and those rights are enforced. Amendment 56G would provide insight into those two critical factors. Many stakeholders involved with this legislation are concerned about the enforcement landscape, which is looking very patchy, to say the least. One of the obvious reasons for that is that funding for trading standards has in some places been cut off at the knees. The majority of trading standards enforcement comes via local authorities and we all know what has happened to local authority funding. The amendment requires the CMA to publish an annual assessment of the extent of consumer detriment in relation to what we have just been discussing around unfair terms.
It is helpful to have an idea of what we are talking about in terms of scale. The most recent comprehensive research on this that I am aware of was conducted by the National Audit Office in June 2011, although I would welcome any more recent figures that the Minister no doubt has to hand and can bring to the debate. In June 2011 the NAO estimated that the total cost of detriment to the consumer was £6.6 billion. Of that sum, £4.8 billion could not be tackled locally. Therefore, £4.8 billion of consumer detriment requires a national response and a national enforcement strategy. That national response is funded to the tune of £34 million—or at least that was what was forecast for this year.
Those figures set out a national problem that costs the consumer almost £5 billion, depending which of those figures you are using, and yet our response at a national level amounts to £34 million. That is an example of asymmetry that is clearly detrimental to consumer interests. Of course, you are never going to spend as much on trying to tackle the problem as the scale of the problem itself because clearly that would not make sense but I am sure we can all understand that there is a very big gap there when you look at the scale of the problem.
I am sure that, none the less, the Minister will resist the amendment by saying that the NAO is reviewing the landscape. She may well also point to research commissioned by the University of Birmingham which the Government are supporting and which will look at the structure of trading standards and the extent to which funding cuts may have impacted the service, among other issues. However, the key point here is that the CMA has overall responsibility for unfair terms legislation and therefore the CMA should determine detriment in this area. After all, it holds the knowledge about what is happening in the market. Yes, the NAO has looked at the landscape and said that it is a dog’s breakfast because it is just so complicated. The feeling out there is that the Government have replaced one complicated landscape with another one.
We know that the scale of the problem is huge and that the resources allocated to tackle it are few and far between. It is for precisely that reason that we need all the insight and information we can get from the right source. The debate that we recently had on unfair terms sets out why we need to assess and then tackle the vast scale of consumer detriment caused by unfair terms. I beg to move.
Baroness Jolly
My Lords, let me take each of these amendments in turn. First, on Amendment 56FC, the Government of course agree wholeheartedly that vulnerable consumers should be protected. The existing consumer protection regulations protect vulnerable consumers from misleading and aggressive practices. They take into account whether a practice is directed at a particular group and whether that group is particularly vulnerable when considering whether a practice is misleading. On 1 October this year the Government amended those regulations to make it much easier for consumers who have been the victim of such practices to get redress. The Government have also ensured that there is support available for those who need help understanding their finances or their financial options, for example through the Money Advice Service and citizens advice bureaux.
However, one of our aims in Part 2 of the Bill is to create a regime that protects consumers but which traders can work in practice. I am not sure whether the noble Lady would agree, but I do not think that a trader can be expected to know the social, cultural and linguistic characteristics of their customer; and, in many cases, the customer would not want to share the detail. Many contracts are now agreed remotely online or over the telephone, a practice that greatly benefits the consumer through speed, ease and efficiency. However, in such cases the trader cannot know the specific details of who it is contracting with, and I am not sure that we should be encouraging it to ask that information of the consumer either. Even in a face-to-face transaction, a business might need to spend considerable time assessing the social, cultural and linguistic status of a consumer, and even after that there will be uncertainties about how accurate that assessment was. This is a process that consumers themselves may not appreciate, as the Association of British Insurers pointed out in its evidence to the Bill Committee in the other place. Some consumers already begrudge the time spent purchasing insurance and the length of the documentation they receive.
I am aware that the language proposed is used in other legislation, such as the Consumer Protection from Unfair Trading Regulations. However, it would not be practical to use the same definition of “average customer” here. That is because those regulations are for unfair trading practices. A trader who, for example, uses advertisements to mislead consumers will know at whom it is targeting those advertisements. Indeed, it can choose who to target and what type of consumer to engage with. The Law Commission examined that issue in its 2013 report and recommended the definition we see in the Bill. Like noble Lords, it strongly supported a definition that works in practice.
I am pleased that Amendment 56G gives me an opportunity to talk about Schedule 3 to the Bill. This schedule is vital to ensure that the consumer protection regime is enforced effectively. As the noble Baroness said, rights need to be not only understood but enforced. It provides for a tailored, specific enforcement regime for the law on unfair terms. We have taken the current enforcement regime under the Unfair Terms in Consumer Contract Regulations 1999 and worked with the Law Commission and our stakeholders to improve and update it. For example, we are making it clear for the first time that enforcement action can be taken against consumer notices, such as those seen in retailers’ car parks, that seek to deny all responsibility for theft from or damage to cars parked in them. We have also taken a national approach to unfair terms enforcement in Schedule 3. This Bill will reduce consumer detriment by £2 billion a year.
Schedule 3 includes a key role for the Competition and Markets Authority, as the noble Baroness mentioned. It sits at the heart of enforcement work on unfair terms across the regulatory landscape and has the power to issue guidance on what traders need to do to comply with the law in this part of the Bill.
I can reassure noble Lords that the CMA will publish on its website details of specific enforcement action taken. It is also required by the Enterprise and Regulatory Reform Act 2013 to publish and lay before Parliament an annual report that covers among other things its enforcement activity in the previous financial year. Traders, consumers and other enforcers can also ask the CMA for this information during the year. Of course, for noble Lords, and for Members in the other place, the benefit of having the annual report laid in front of Parliament means that noble Lords can challenge the CMA on its work.
The department also regularly monitors consumer detriment in order to inform policy. I am pleased to say that a report on consumer detriment, drawing on survey responses from real consumers across a whole range of sectors, was published earlier this year and is available on the GOV.UK website. I have given noble Lords several examples of the CMA’s work that we think would not call for either of the two amendments that the noble Lords are suggesting, and I therefore ask that the amendment be withdrawn.
Baroness King of Bow
The Minister points out as a concern with Amendment 56FC that it might cause the trader problems in relation to knowing the background of the consumer. I trust that she understands that the point behind the amendment is, as I set out, not to increase any undue burden on the trader; rather, it is to increase flexibility in the courts when determining what constitutes the average. As I hope I have pointed out, this seems to have been done in a way which will not lead to the problems that the Minister raised.
On Amendment 56G, I am delighted that the Government estimate that the Bill will reduce consumer detriment by £2 billion. However, the point remains that the agency that would appear to be best suited to being able to measure this is not the one tasked with that, as far as I am aware. The concerns still remain, but naturally at this point I will withdraw the amendment.
Baroness Neville-Rolfe
“(7) No order may be made under sub-paragraph (2) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.”
Baroness Neville-Rolfe
My Lords, this amendment was recommended by the Delegated Powers and Regulatory Reform Committee in its report on the Bill. On the committee’s recommendation, we propose to change the parliamentary procedure used to update and amend the list of enforcers of the unfair terms regime by moving from the negative to the affirmative procedure. We agree with the committee that now that the list of enforcers is in primary rather than secondary legislation, this is a significant power because it can be used to add to or amend the list of enforcers who can take action against unfair terms, as set out in Part 2. As such, the higher level of parliamentary scrutiny and the opportunity for debate that the affirmative procedure provides is more appropriate. I beg to move.
Lord Stoneham of Droxford
“Copyright
In cases where there is a consumer contract under Part 1 or 2 of this Act, paragraph 1(c) of Schedule 1 to the Unfair Contract Terms Act 1977 (scope of sections 2 to 4 and 7) applies with the omissions of “copyright,”.”
Lord Stoneham of Droxford
My Lords, I speak on behalf of my noble friend Lord Clement-Jones, who has commitments in China this week. I reassure the Committee that this is not an option that has been proposed in order to make speedier progress on the Bill.
The purpose of Amendment 57A is to amend the Unfair Contract Terms Act 1977 so that it would apply to intellectual property rights contracts. Although this has been sought by the Society of Authors, we would argue that there is a wider significance that needs to be examined in the context of the Bill. There is no justifiable reason why creators should be denied the legal protections afforded to other businesses, and we would therefore press for the amendment to be accepted.
The Consumer Rights Bill should be extended to protect creators and others in an unfair negotiating environment where they often have little choice but to sign the contracts that are put in front of them. For example, writers always have to sign clauses indemnifying publishers against any claims brought by other parties even when they arise through no fault of the author, and even though the publisher is covered by insurance. Nor can writers easily enforce performance which turns out to be substantially different from what they could have reasonably expected under the contract.
The proposed new clause would impose a basic obligation of fairness. It is unclear why contracts involving intellectual property are currently excluded from the Unfair Contract Terms Act, but it is probably because they were not so significant in 1977. It will protect consumers and businesses from being bound by contractual terms that they may not have read as they would have simply clicked their agreement to them, as we all do, on the assumption that they contain nothing astonishing or that the law will offer protection. For intellectual property rights, which could include something as basic as buying an e-book, there is currently no legal protection against unfair terms. This is remarkable, given the growth of contracts involving intellectual property rights.
The Government may argue that this new clause would represent a major change that requires consultation, but we do not agree. It is not being suggested because creators have little bargaining power—although that is true—but because if as a society we agree that people should be protected from hidden and patently unfair terms in contracts, the protection should be apply to everyone. It is completely illogical to exclude contracts that relate to intellectual property. Without a government response, this unfairness will grow with the increase in contracts involving intellectual property, and it will deter innovation. I urge the Minister to accept the amendment, or at the very least tell the Committee how the Government intend to deal with this growing inequity.
I now turn to Amendment 63A, which is somewhat unrelated. I have spent my life in the publishing business, where passing off brands was a problem. Although we invested heavily in brands over a long period, it required us to be ever vigilant to protect them. Parasitic copying—the practice of packaging consumer products to mimic familiar brands—misleads consumers and distorts competition. Indeed, this has been recognised by the Government, who launched a consultation in February on enforcing consumer protection regulations in relation to misleading, similar packaging. It is therefore a legitimate subject to be covered by the Bill. Copying the packaging of branded goods hijacks the reputation of a brand built up over many years of consumer experience. The current legislation appears inadequate to deal with the problem.
Lord Stevenson of Balmacara (Lab)
My Lords, I was aware that the noble Lord, Lord Clement-Jones, was abroad because I have been in correspondence with him on other issues in relation to this Bill, but I had not realised that he had set up such a brilliant “counterfeit parasitic package” in his place. The noble Lord, Lord Stoneham, has done a wonderful job of presenting the case and I congratulate him sincerely on that.
I do that because I have been exposed to the original version on a number of occasions. Those of us who have sat through the various pieces of legislation emerging from BIS this year have been astonished by the persistence that the noble Lord has displayed in finding ways to introduce both these items out of a hat. Even in respect of the most unlikely of clauses, he has been able to persuade those who should know better that they were not only in their scope but were central to the whole understanding of consumer law in this area. There are a lot of prizes around Parliament, such as those for the best newcomer or the best law. We ought to have one for persistence, and the noble Lord, Lord Clement-Jones, would win that hands-down.
Having listened to the noble Lord, Lord Clement-Jones, over the years, I am aware of the arguments he uses in these matters; indeed, my speech was prepared in response to what I thought he would say. It is rather irritating, but also very gratifying, that the noble Lord, Lord Stoneham, was able to find new words for these issues. It shows that this is not just a one-man band, which is an unhelpful way of describing it, but there is a broader sense of engagement with this issue, something that the Minister should reflect on when she comes to respond.
The case on the question of copyright is a strong one. It is perplexing that until recently the Government have maintained the view that it was okay for copyrights to be excluded from any negotiations, particularly where negotiations were between a relatively unresourced creative person and a large corporation. Individual creators can be at a disadvantage when negotiating such contracts, and it is time to look seriously at the Unfair Contract Terms Act and amend it if necessary in order to ensure that the terms of engagement are more equal. I know there have been discussions on this issue, and the last time this came up the then Minister confirmed that he would meet with representatives from the various creative industries. I would be grateful if the Minister would confirm whether that meeting has taken place and, if so, tell us what the outcome was and whether there were any proposals discussed that might have ameliorated the issue. It is an interesting one, which has been bubbling away quietly, but it has now reached a point where we need to make some movement on it—doing whatever is possible through this or other measures.
On the relationship to parasitic packaging—which is a new name since we went though this last time—the case was certainly well made by both the noble Lord, Lord Clement-Jones, and the noble Lord, Lord Jenkin, who is not in his place today but has followed this subject with interest. I think it is correct to say that lookalikes are already unlawful in the United Kingdom because they are contrary to a variety of measures introduced by previous Governments, particularly the Consumer Protection from Unfair Trading Regulations 2008. The point made by the noble Lord, Lord Stoneham, was right: these regulations would have little effect if the responsible authorities—in this case it must be the trading standards people—do not have the resources to take action against those who might breach the regulations. His point, which I support, is that we need more detail from the Minister on whether trading standards are sufficiently resourced to be able to deliver on this point. For instance, will the Minister identify precisely what resources are currently being deployed in this area? Where is the responsibility for these issues physically located? There is an understanding among the trading standards authorities to locate particular responsibilities in particular areas; I would be grateful if we knew a bit more about how that will have been done in this case.
The most interesting issue is one that was touched on—but perhaps not explored as much—in the speech today: the line between confusing packaging on the one hand and the use of generic cues to signal to customers on the other. The point is that if similar packaging prompts mistaken purchases and creates false assumptions in the minds of consumers, there must be an effect on sales. If there is an effect on sales, then it is surely right for the Government either to strengthen existing powers so that they are effective or to introduce new legislation. I would be grateful if the Minister could respond to that point.
Baroness Jolly
I am grateful to my noble friend Lord Clement-Jones for tabling these amendments and to my other noble friend for speaking to them on his behalf.
I realise that these amendments are closely related but I will take each in turn, starting with Amendment 57A. Noble Lords asked why we are not changing the scope of the Unfair Contract Terms Act in the Bill to apply to business-to-business intellectual property contracts. This is because this Bill is about consumers. We want to have a one-stop shop where consumers can go to find their rights. Adding business-to-business contracts would dilute this for consumers, making the law more complex and reducing its accessibility. Having rights for businesses in the Unfair Terms part of the Consumer Rights Bill may also be confusing for businesses.
We sympathise with the situation in which some small businesses find themselves. However, we have not yet seen evidence that amending the Unfair Contract Terms Act in this way would address the issue. We would need substantial, quantitative evidence of a problem to make this change. We would also need to be sure that amending the Unfair Contract Terms Act in this way would solve the problem my noble friend raises without unintended negative consequences.
My noble friend Lord Stoneham raised the issue of consultation, effectively saying that we do not need consultation, we need action. We need to be sure that we get this right, so we need to consider all interests. The creative industries are too important to rush this. They are really critical to the UK economy. The department is aware that this is a live issue, but the Bill is not the place to solve it.
Lord Stoneham of Droxford
Is my noble friend saying that in recognising the issue, the department is prepared to initiate some form of consultation to put this inequity right?
Baroness Jolly
Yes, there was a meeting and the outcome was agreement from the creative industries to provide evidence of the problem and to propose a solution. My noble friend has just said that she is seeing the British Brands Group tomorrow at an IP round table to discuss these issues.
Lord Stoneham of Droxford
I am sorry, that is a separate issue. That is on parasitic brands. I am sorry to confuse my noble friend. Perhaps she could write to me.
Baroness Jolly
I will drop my noble friend a line. I am sorry, that has thrown me. I was given this and told exactly where to slot it in.
Lord Stevenson of Balmacara
Just to pick that up and endorse it, in my researches for today I just happened to check back in Hansard and I felt it was important to reflect on this point. When this was discussed previously, the noble Viscount, Lord Younger of Leckie, said that the noble Lord, Lord Clement-Jones, had sent him a paper,
“on how the issue of unfair contracts could be addressed. I confirm at the beginning that I have received this paper and that we will consider his suggestions very carefully. It is a little early to talk about this as a formal review, but I reassure him that we will certainly discuss this and take it forward”.—[Official Report, 11/3/2013; col. 55.]
I am very heartened to hear from the noble Baroness that there has been a meeting. That is a good thing. If evidence was required from the creative industries, I am sure that it would have been supplied, so what is the hold-up?
Baroness Jolly
We can clarify this. The noble Viscount, Lord Younger, had a meeting to discuss this and we have asked for more detail. I hope to be able to come back with more detail on this for noble Lords, certainly before Report.
Moving to Amendment 63A, I would like to add my compliments to those of the noble Lord, Lord Stevenson, to my noble friend for speaking to this well-crafted amendment so clearly and for raising the important issue of copycat packaging. This was debated at the Committee stage of the Intellectual Property Bill in June last year and the noble Viscount, Lord Younger of Leckie, said that the Government would undertake a review into this issue.
Lord Stoneham of Droxford
I thank my noble friend for her comments. I apologise for interrupting, but I am grateful for the assurance that she will come back to us on Amendment 57A and its implications. Although I am disappointed that the review on parasitic products is not going to be published until early 2015 and I have certain doubts as to how this Government could deal with the European Act, we have had some assurances that the Government are on a path towards progress on this matter. I will have to leave it to my noble friend Lord Clement-Jones to decide how he pursues this matter. I beg leave to withdraw the amendment.
Baroness Jolly
“section (Enforcement of the duty)(1) of this Act.”
Baroness Jolly
My Lords, I want the requirement for letting agents to publicise their fees to come into effect in both England and Wales as soon as possible to ensure that tenants have some certainty over the payments they have to make. This is why I have laid an amendment putting the enforcement details into the Bill rather than subsequently using secondary legislation. This amendment simply uses the process described in the existing clause but makes it clear that the duty in England and Wales will be enforced by county councils, county borough councils, unitary authorities and London boroughs.
These authorities will be able to fine agents who fail to publicise their fees up to £5,000 for each office and website. Agents will be able to appeal to a tribunal. I recognise that enforcing the requirements for agents to publicise their fees will entail a new burden for English local authorities, so we will make additional funding available for this. Furthermore, authorities will be able to retain the fine, potentially enabling the proceeds from agents who are opaque on their fees to be used to tackle rogue agents where they exist, thus continually driving up standards in the industry. I beg to move.
Baroness Hayter of Kentish Town
I rise to say “well done”. I should warn the Minister that we will have other amendments on letting agents next week. However, we are very pleased that this will be in the legislation and that it will happen early, by the extra resources, and by the incentive for local authorities to take action, given that they will be able to retain any fines levied. I realise that that is the end of her political career, having had praise from me, but so be it.
Baroness Neville-Rolfe
Before the noble Lady sits down, perhaps I can say thank you to her.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I will speak to Amendments 60, 61, 62, 63 and 63ZA. As noble Lords know, my noble friend Lord Clement-Jones is elsewhere so I am standing in for him.
The first group of amendments deals with powers of entry for enforcement officers. While there is some logic to giving advance notice of inspections by trading standards officers, I do not believe that will work in favour of consumers and businesses in all cases. There are a number of situations in which the exemptions for giving notice cannot be sustained and are likely to cause confusion and uncertainty about whether an officer has to serve notice before an inspection of a business they believe is in breach of legislation.
The horsemeat scandal has caused the European Commission and the consumer to voice support for more unannounced inspections. Reviews of food safety powers have left powers of entry for trading standards officers untouched after concluding that the use of unannounced inspections is proportionate to the risks involved. The assumption is that consumer protection against unsafe products, including dangerous electrical goods, involves less risk. I question that assumption.
Evidence from members of the consumer association Which? suggests that many authorities are already following an intelligence-only approach. They use powers of entry only where there is good evidence to suggest that a breach has occurred. Many businesses suggested that they value unannounced inspections, both for their own businesses and their competitors. The need to give notice is questionable if it will do little to change existing practices and add little to the system. Although Which? welcomes the new provisions to give consumers redress, help them make better choices or prevent businesses from creating further harm, it has concern about how many authorities will actually take up such provisions, due to the complex nature of the processes, costs and risk to the enforcer.
In the criminal courts, enforcers can be liable for the defendant’s costs only in limited circumstances; for example, in the event of the enforcer acting improperly, negligently or unreasonably. We all know that in the civil courts the loser generally pays the winner’s costs. That could act as a disincentive to enforcers who are acting in the public interest. Perhaps now is the time to have the same protections for enforcers in the civil courts as in the criminal courts. If the legislation puts the onus on the enforcer to prove that the cost of redress does not exceed the cost of the harm, it will add to an area of possible challenge and could encourage enforcers to use the criminal route instead. A more balanced approach is needed whereby the business proposes a package of measures to the enforcer or the court and that is negotiated as necessary.
Amendment 63ZA is a probing amendment. I was contacted by environmental health officers who are concerned that the need to give advance notice would not help protect the consumer when grading food preparation and catering premises for food hygiene certificates. During the summer, I spent a day out with an environmental health officer. We visited a care home for the elderly which was anxious to increase its score from four to five, which is the highest rating. The visit was unannounced, but the home had requested a rescore. The reason for the score of four was mainly to do with the preparation of paperwork and flow charts, not the cleanliness of the kitchen or the temperature at which the food was stored. I am sure that noble Lords will agree that food hygiene in a care home for the frail elderly is extremely important. I was able to see the food being prepared, stored and served to the residents. All of them had a choice of food and the menus ran for a month before being repeated. It was very reassuring that despite having to be in an institution, the residents were consulted about what they would like to eat and their special diets were catered for. Our unannounced visit was successful and the home was told when we left that it would now get its treasured five rating.
We then went on to visit premises where the officer had provided advice and support to two new small businesses starting out in the food industry. One comprised a man in his 20s entering the specialist beer brewing market and the other was made up of two ladies starting a lunch and sandwich business close to a railway station and an industrial site where previously there had been no catering outlet. Once the businesses were up and running, they would get unannounced inspections in order to be given a food hygiene grade. Both were aware of this and both welcomed it.
We also visited a public house which the council, together with the police, had prosecuted, having previously served several improvement notices without success. The photographs of this establishment were truly horrific and proved that what the consumer sees in the bar or dining room of a restaurant is not what goes on behind the scenes in the kitchen. Mercifully, such instances are rare.
A catering establishment which has been awarded a grade four or five will have the certificate displayed on the door as you enter. Those which have received a three or below will not have it displayed anywhere since there is no requirement for them to do so. The officer who took me out also had on his patch Yeo Valley yoghurts and a massive Dairy Crest processing plant on a farm. He said that of course he gave notice when he went to visit them because he wanted to meet the managers and those who could give him the answers he required. He accepted that they were very busy people and did not wish to waste either his or their time. However, if when he went on his planned visit he found something that he felt was unsatisfactory, he would then make an unannounced inspection at a later date. Noble Lords will be pleased to know that this did not happen in either of the two cases I have mentioned.
I am seeking an assurance from my noble friend the Minister that the businesses I have described are not included in the requirement to give advance notice of inspection. To do so would mean that the unscrupulous would have a clean-up prior to the inspection but a week later would revert to their normal practices. I do not believe that this would be in the best interests of or protect the consumer. I beg to move.
Baroness Crawley (Lab)
My Lords, I thank the noble Baroness for her interesting description of going out with local authority officers. I would recommend that experience, as I am sure she would, to all Members of the Committee. Environmental health officers do an extraordinary job, given the scale of the work they are involved in and the scarcity of the resources they have to work with.
The amendments in the names of the noble Lords, Lord Clement-Jones and Lord Stoneham, and the noble Baroness, Lady Bakewell of Hardington Mandeville, are to be welcomed—I think. I am sure they are a sincere attempt to bridge the gap between the Government’s stance on enforcement and the rather more clear-cut and preferable amendment of the noble Lord, Lord Best, which we will discuss in a few moments. However, I am not yet persuaded that these amendments best the amendment of the noble Lord, Lord Best, on the same subject of trading standards officers conducting inspections on business premises. I am sure it was not at all the intention but these amendments might unfortunately bring about increased barriers to enforcement for officers conducting inspections. For me, the jury is still out on these amendments.
Baroness Hayter of Kentish Town
I am slightly confused by this. If I am completely honest, among friends and just within these four walls, I think our Lib Dem colleagues would very much like to support the amendment of the noble Lord, Lord Best, but are not allowed to. They do not want to confront the Government, so they are trying to find a weasel way of not quite confronting them while almost writing down exactly the same words but making it very complicated. They are not going the whole way but saying, “Well, in certain circumstances other than those already allowed for in the Bill, the 48 hours would not have to be given; that is, when a trading standards officer shows his or her credentials and they are going to see whether an offence has taken place”.
I am sure that the noble Baroness, Lady Bakewell, knows that trading standards do not go around in policemen’s big boots unless they think some offence is being committed. They do not have the time or inclination—why on earth would they? They always show their bona fides anyway. This basically seems to be saying, “We don’t like what the Government are suggesting but can we find a way of saying that round the back?”. I could be quite wrong—and look forward to being corrected—but I have my suspicions.
Of course, the problem with these amendments is that they have all the disadvantages of the Government’s own clause; that is, the uncertainty. The same people do food as do electricity safety, counterfeit booze or whatever else one is looking for. The amendments would still introduce two systems for when somebody could go in to do an inspection. It leaves all that complication and uncertainty of having to checklist things first but with no added advantage. That seems a convoluted way of saying that they do not like the present clause.
There seem to be two things going on here. First, in moving the amendment, the noble Baroness, Lady Bakewell, said very strongly that she supports unannounced inspections—which is exactly what is said in the amendment of the noble Lord, Lord Best. Secondly, she raised the interesting point about costs in civil courts, which we will come on to. I look forward to her support for that amendment when we get there. My concern about these amendments is not that they would not move a little way towards making life easier but that they are actually a rather weak way of telling the Government, “We don’t like your clause”.
Baroness Neville-Rolfe
My Lords, I thank my noble friend Lady Bakewell for her very interesting comments and good examples. They help us to understand so much more clearly the issues that we are debating.
In this part of the Bill we are consolidating and updating our investigatory powers in order to make enforcement more efficient and effective. A further objective is to reduce burdens on business without compromising consumer protection. We are doing this, for example, by making it easier for enforcers and businesses to know what enforcers’ powers are by consolidating them across 60 pieces of legislation and setting them out in one place. I think that the Committee will welcome this. We are also modernising them—clarifying that where there is a good reason enforcers can access information held or stored on computers. This brings us into the 21st century. We will return to the notice requirement again under the amendment of the noble Lord, Lord Best, and I expect that we will have a fuller debate.
I want to say a few words about why we have introduced the requirement for enforcers to give two days’ written notice, subject to some important exemptions. The Government are committed under the Protection of Freedoms Act 2012 to protect civil liberties and to reduce burdensome and intrusive powers of entry. Our aim is to strike a balance between the powers and safeguards that are needed for protecting businesses while ensuring that enforcers can tackle illegal activities. I am sure that we will come back to the detail.
I will answer a couple of points that my noble friend raised. She asked about notices and litigation, and court cases being lost on a technicality. As is currently the case, enforcers will need to ensure that they follow correct investigatory practices and procedures to ensure the integrity of their investigations and supporting evidence. We will not be amending the well developed principles on what amounts to reasonable grounds for suspicion. Many large businesses have a primary authority relationship with a local authority. This includes an inspection plan. Where an inspection plan is in place covering consumer law, this must be considered when deciding whether to carry out an inspection. We are committed to providing good guidance on what the law means; as noble Lords would expect, that is being developed by business and other organisations.
My noble friend also touched on the fact that enforcers risk costs in the civil courts. I reiterate that it is a fundamental principle of civil litigation that one side is at risk of having to pay the other side’s costs if it loses. That would be a difficult principle to change. Of course, the object of that is to deter unmeritorious cases and ensure that the winning party is not too adversely affected.
Amendment 63ZA, on the issue of whether food hygiene visits are covered by the Bill, is a probing amendment. There may be confusion in general as to whether food is covered by the Bill so it is good to have an opportunity to clarify the position. For example, the Bill does not apply to food hygiene inspections carried out under the Food Safety Act. That sort of inspection is normally done by environmental health officers. I should add that, curiously, I was the official Civil Service lead on that very Bill; I remember it with great affection. It was an important Bill at the time. In view of those alternative provisions, we do not see the need for this probing amendment.
On the lessons that horsemeat might give us for this Bill, the issue arose mainly through fraudulent activities of traders. That highlights the importance of greater sharing and use of intelligence sources, and how important that is in safety. The Bill supports the sharing of information and intelligence by local authorities, business and other partners such as the police. That can be used by enforcers to determine whether it is necessary to exercise a power of entry to premises and whether one of the exemptions to giving notice applies.
On Amendments 60, 61, 62 and 63, tabled by the noble Baroness, Lady Bakewell, it is worth noting that currently enforcers such as the Competition and Markets Authority, which has been referenced often today, have to give notice only for civil enforcement purposes. The amendments take us back to that position. However, when an enforcer decides to carry out a visit, they will not necessarily be focusing on whether civil or criminal enforcement action may result. We therefore think it makes more sense to provide a general requirement for notice to be given regardless and then provide a number of clear exemptions to giving notice, such as where giving notice would defeat the purpose of the visit because, for example, counterfeit or illegal software might be destroyed.
I am also keen to emphasise—we will come back to this—that this means notice need be given only for routine inspections. If there is a risk of a breach of a law, enforcers can still carry out unannounced inspections where they need to investigate illegal activities. The exemptions ensure that we have the safeguards we need. Small businesses in particular, which have been consulted about the changes in the Bill, welcome this approach. They welcome clarity, and the noble Baroness, Lady King of Bow, emphasised the importance of that earlier.
I believe that the Bill provides a better and simpler enforcement regime for both businesses and enforcers, whether civil or criminal enforcement action is involved. Hygiene and food inspections are dealt with elsewhere in the statute book. Therefore, I ask my noble friend to withdraw the amendment.
Baroness Bakewell of Hardington Mandeville
I thank my noble friend for her comments and I am slightly reassured. I am grateful for the reassurance that food hygiene certificates are not covered by this legislation but are covered elsewhere. I know that environmental health officers will be reassured because they were extremely concerned about how they were going to operate if they had to give notice.
With regard to competition versus the consumer’s rights and businesses generally, I thank my noble friend for her comments. I have to say that I am not totally convinced but I beg leave to withdraw the amendment.
Lord Best
My Lords, I declare my interest as a vice-president of the Trading Standards Institute, a post I occupy because I chair the council of the Property Ombudsman, which works with trading standards in relation to the world of estate agents and letting agents. I greatly welcome the Minister’s earlier announcement on fees. I also declare my interest as president of the Local Government Association.
The TSI welcomes the Bill and applauds the Government’s efforts to simplify and clarify consumer law. The real problem for the trading standards service is the startling decline in its manpower and budgets. Over the lifetime of this Parliament, the workforce will fall by almost half and budgets will be cut by an average of 40%. These reductions mean that we all face greater risk at the hands of rogue traders. New legislation needs to strengthen the hand of the remaining trading standards officers rather than in any way undermine their good work.
There are two areas of concern to the TSI in this regard. This is the first of two amendments in my name seeking to rectify these. I am grateful to the noble Baroness, Lady Hayter, for adding her name to this amendment and already speaking in support of it. I am grateful also to the noble Baroness, Lady Crawley, for doing likewise.
Baroness Crawley
My Lords, I rise to support the amendment in the names of my noble friend Lady Hayter and the noble Lord, Lord Best. This amendment proposes that the requirement in the Bill for trading standards to give 48 hours’ notice to businesses before entering their premises be removed. In supporting this amendment, I remind noble Lords that it is my privilege to be the current president of the Trading Standards Institute. I refer noble Lords to my entry in the register of interests.
Let us be clear: the power to enter business premises remains but the Bill introduces a new safeguard requiring written notice to be served before entering. Because of the strong response to this highly controversial proposal from the enforcement profession, there is now a list of exemptions to this new proposal from the Government. However, I believe, as do several other noble Lords, that these exemptions will only lead to confusion and the possible introduction of overcautious behaviour on the part of the trading standards profession, which is already seriously stretched. It will also lead to increased financial and judicial burdens, as outlined by the noble Lord, Lord Best.
I remind noble Lords that the budgets of trading standards departments at local government level have in some cases seen cuts of up to 86% since 2009. While the Government have listened and made some changes to the Bill, the Trading Standards Institute does not believe that those changes yet strike the right balance, which the noble Lord, Lord Best, talked about. It is essential that we achieve that balance between the right to carry on a business unimpeded by officials and the right to protect consumers.
It is not the case that all businesses are clamouring for the removal of unannounced visits. In a recent edition of The Grocer, the chairman of a large cash-and-carry business in the north-west stated:
“It is independent retailers saying that local authority test purchasing is less effective if there has to be 48 hours notice of a visit.”
Many retailers welcome spot checks because they want to see a level playing field in the high street and with larger retailers.
Last week I spoke to a trading standards officer about food fraud in the light of the very important Elliot report into the horsemeat scandal, which the Minister has referred to. She told me that while checking one of those large storage units that are so prevalent nowadays—we seem to have a lot of things to store in our lives, do we not?—she came across a unit that was being used to cut up some kind of raw meat. This was a unit that was usually used to store furniture; it had no running water or utilities necessary for processing meat. The trading standards officer had the unit closed down immediately. She was able to close it down under the Food Safety Act—which the Minister has also referred to—because, unlike this proposed legislation being brought forward under BIS, food fault is an area where spot checks are still allowed: 48 hours’ notice is not required. Had that unit been processing highly dangerous electrical goods—such as in the tragic case of the phone chargers to which the noble Lord, Lord Best, referred, or the hair straighteners that I have seen in trading standards offices and which can be very detrimental to health when they are criminally produced—she would most likely have had to give 48 hours’ notice. No doubt she would never have seen the rogue trader again.
Life is hard enough for the seriously overstretched trading standards service—which still does a magnificent job on behalf of the public—without putting another bureaucratic obstacle in its way. Such an obstacle could only allow rogue traders to prosper, damaging legitimate businesses—which are, of course, the vast majority of businesses in this country—and diminishing consumer protection.
Before I sit down I would like to ask the Minister where the evidence is that these inspections interfere with or hamper the operation of a business. The recent Elliott report on food fraud highlights the value of unannounced inspections, so why are the Government moving away from them in this Bill? The amendment of the noble Lord, Lord Best—which is also signed by my noble friend—denotes the line between the honest business and the hard-pressed consumer on the one side, and the rogue trader on the other. I call on noble Lords to support this amendment.
Lord Harris of Haringey
My Lords, I repeat my declaration of interest as chair of National Trading Standards. Will the Minister tell us what exactly is the problem that the clauses we are debating now are there to solve? What is the evidence that this has been a power that has been abused or misused by trading standards departments? If she can give us chapter and verse today, I would like her to do so but, if not, I ask her to lay in the Library all the complaints that the Department for Business has received on this specific point. It is not clear to me that this has ever been a significant problem or burden on anybody.
We have to recognise that, certainly as initially put forward, this proposal was a complete nonsense. It was essentially saying that: if you were a rogue trader who had something to hide, you would have 48 hours to make sure that it really was hidden before the trading standards department came around to do an inspection. Since then, we have made some changes which are the exclusions in paragraph 23(5) of Schedule 5. However, as the noble Lord, Lord Best, suggested, they pose a whole series of new potential problems. For example, the power of entry is to be exercised by an officer when,
“the officer reasonably suspects a breach of the enforcer’s legislation”.
What does “reasonably” amount to in this case? I have seen how litigious some of the people against whom enforcement action has been taken can be. They will string things out and argue abuse of process. The more serious the case, the more they argue. The litigious will say that there were no “reasonable” grounds. What is going to be the basis of the reasonable suspicion? All of this will have to be defined and the danger is that that will lead to litigation which takes up more time and generates more problems as a result.
If the officer reasonably—that word comes in again—suspects that there is an imminent risk to public health or safety, that is fine, but that is about public health and public safety. Other issues may arise where the evidence will disappear. What is it that is being gained by these changes? The whole point of having the power of random inspection is not just to find something on the occasions when a random inspection is made; it is also the deterrent implication for all those whom the inspector may or may not visit. There is a chance that they will be inspected, something will be found and the consequences will flow. If that is taken away, frankly, one of the most effective deterrent mechanisms as far as these issues are concerned will be lost.
Baroness Hayter of Kentish Town
My Lords, at Second Reading and at the start of this Committee I said that this was not a bad Bill, it is just a weak one. I also said that there was one exception, and this is it. I hope that when the noble Baroness replies, she will allow herself—using what is probably not a very Hansardian term—some “wriggle room”. The debate we have already had will be loud and clear at Report. The Minister will know better than me how well this could come across in the House. It would perhaps be much easier to withdraw gracefully rather than to try to fight to the bitter end. As I have offered to Ministers before, we will give them all the credit and say what wisdom they brought to it, although we will allow the noble Lord, Lord Best, some credit.
It is a nonsense—I do not know who used that word before—to require trading standards officers, who work to protect consumers, to warn traders of an inspection visit. My noble friend Lady Crawley asked what evidence there is of misuse and my noble friend Lord Harris asked what the problem is that this has been set up to solve. I will add three more questions. First, what is the benefit of this measure to consumers? Secondly, who asked for it? Thirdly, what consultation took place? Before anyone jumps to the 2013 consultation, which I have read very carefully, I would remind the Ministers that businesses were mixed in their responses and were not unanimous. Only some of them supported this notice. Some of them said it would lead to better co-operation between enforcers and businesses, but I thought that enforcers were meant to act on behalf of consumers rather than work too closely with businesses.
The consumer reps who responded to the consultation were worried that giving notice would hamper enforcers’ ability to tackle rogue traders. There were three categories. The third category, comprised of local authorities and regulators, was similarly concerned about the requirement to give notice before exercising a power of entry as it could encourage the obstruction of officers or hinder an intelligence-led approach. Local authorities and regulators also commented that on-the-spot checks would be necessary where there was intelligence about non-compliance, but of course, some of that intelligence could never be used in a court of law. If challenged in the way we have heard either over costs or whether it was reasonable, there would be times when a trading standards officer would not be able to cite the intelligence that led him to that particular retailer. It is true that the respondents supported the restriction on powers, but that was in relation to private dwellings, and that is not what this whole issue is about.
While the Minister tries to find some more persuasive answers to the questions posed today, I will make a couple of extra points. Even with the let-outs mentioned by my noble friend Lord Harris, it still makes no sense to give notice to those who are potentially breaking the law about when enforcers are going to check on them. As we have heard, food safety officers do not have to do this, although very often they are the same people. It is hard to know why they should have to do so here. As we have just heard, it is difficult for the very same person to need to have different criteria in their head and different lots of powers depending on which breach they are trying to check up on.
The Government have said—certainly to us, but I am not sure if in public—that a trading standards officer can always enter the premises as a member of the public. That way, they can see what any ordinary shopper could, assuming it was a retail rather than wholesale area. However, I have to tell noble Lords that retailers do not keep the counterfeit drink on top; they keep it underneath for those who come in with a nod and a wink. They do not put counterfeit cigarettes out on top either. They are put where a member of the public could not see them but where, on our behalf, we want trading standards officers to be able to see them.
The Government have also argued that this amendment would help small businesses so that they are not troubled by too many visits from the TSO. However, trading standards officers these days work very much on a risk-based programme. Having looked at some of the detail behind that, small businesses are actually very low risk. One TSO said, “We never go to small businesses”. Please do not tell small businesses this, but actually TSOs go to the big ones much more because they work on a basis of risk. The idea that one should constrain the powers across the piece because apparently some small businesses do not like it is worrying.
Another issue, of course, is that wanting 48 hours’ notice in writing still does not allow the trading standards officer to politely phone or text to say, “Can I come on Tuesday?”, which may well be what is best for the small trader that the Government seem to be worried about. It would anyway be perfectly possible for a trading officer to give notice; it is only the absolute requirement that we are worried about. Good practice would be, for many routine visits, that notice would be given for exactly the reason that has been given: so that the right person is there. None of this would prevent that.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord, Lord Best, for provoking a wide-ranging and thoughtful debate. As I mentioned in respect of the previous amendment, we are consolidating and updating consumer law investigatory powers in order to make enforcement more efficient and more effective. I will try not to be too repetitious of that debate, but I will repeat something I said in earlier sessions of this Committee: I feel strongly that trading standards officers around the country do a very good job. I have dealt with them a lot over many years and I am very grateful for the work they do.
The Government are keen to support the honest trader and to tackle the rogue, so there is a joint and agreed objective in these areas. I am going to speak at some length, for which I apologise in advance. I hope that noble Lords will realise that our heart is in the right place and we are trying to do the right thing in this area. As I have said, we are consolidating and simplifying consumer law investigatory powers across 60 pieces of legislation, setting them all in one place. This variety of instruments can be a cause of confusion and a burden for enforcers as well as businesses. We are also clarifying the law to make it easier for trading standards to work across their local authority boundaries in order to tackle the rogue traders who cause real harm to consumers and damage consumer confidence and reputable businesses.
The noble Baroness, Lady Hayter, asked about what had happened with the consultation and about the benefit to consumers. I can confirm that we did have mixed responses, but the British Retail Consortium and the Federation of Small Businesses, which together represent a large number of small businesses, support the notice provision. Businesses in general welcome it for reasons that I will come on to explain. It reduces the burdens and unnecessary costs that they are facing, and those costs are in turn passed on to consumers in a competitive market. The Government consider it vital that trading standards and other consumer law enforcers can protect us from businesses that are deliberately or inadvertently breaking the law.
Lord Harris of Haringey
I am sorry to interrupt her, but can the Minister tell us why it is more costly for a business to be inspected without notice than it is to be inspected with notice?
Baroness Neville-Rolfe
If the noble Lord would bear with me, I have an example which we can debate.
While we share some common objectives, there are clearly real differences of opinion about how trading standards officers and other law enforcers should carry out their duties. The Government start from the principle behind the Protection of Freedoms Act 2012, which aims to protect civil liberties and reduce burdensome and intrusive powers of entry. It starts from the simple premise that an investigating officer should have good reason for entering premises. This is really important because both as private individuals and as businesses we should rightly expect to be treated as law-abiding unless there is a justification. The requirement in the Bill for enforcers to give two days’ written notice for routine inspections—I emphasise routine—flows from this principle. However, we take very seriously the importance of ensuring that enforcers such as trading standards can continue to tackle rogue traders. I am sorry to keep repeating this but I think it is common ground, and I can assure noble Lords that we are doing nothing to prevent enforcers investigating illegal activities—quite the opposite.
Let me explain in more detail why we have decided to require notice for routine inspections. Enforcers currently have some very intrusive powers such as the power to enter commercial premises without a warrant to carry out their inspections. They can demand that documents are produced and break open containers, and any person on the premises has to provide assistance and the information requested. Small businesses have told us that unannounced inspections are burdensome and inefficient. In particular, the Federation of Small Businesses is concerned about unannounced visits and has said that booking inspections in advance will allow the businesses to ensure the appropriate staff and paperwork are available. This ensures that neither the trader’s nor the enforcer’s time is wasted in these routine inspections. The owner or manager might be visiting a supplier away from the premises, leaving a junior member of staff not equipped to deal with an investigator’s questions or to find the documents needed. Staff may be in the middle of receiving deliveries or busy dealing with customers or an important new client when the enforcer arrives. This can be disruptive and embarrassing for the business. While large retailers may be able to cope more easily—the noble Lord mentioned them—it is really difficult for compliant businesses to see why they should be so disrupted when they are giving no cause for suspicion.
Business disruption hits the bottom line. We estimate that this measure would generate net savings to the economy of almost £50 million over 10 years. This net figure includes the savings to business as well as the costs and benefits to enforcers arising from a greater degree of efficiency in inspection.
Of course, I agree entirely that businesses cannot expect to have notice of an inspection when there is risk of a breach of the law. We have listened very carefully to enforcers’ concerns on that: to local authorities, regulators and trading standards officers, as I think was hinted at earlier in the discussion. Therefore, the Bill provides a number of very clear exemptions that still allow enforcers to carry out unannounced inspections, as they do at present, where they need to investigate illegal activities and matters of urgency. I will go through those and try to pick up the examples that have been quoted in debates and which have obviously been concerning people.
The first exemption would apply where an enforcer reasonably suspects a breach, for example where the sale of counterfeit alcohol is suspected or where a test purchase has been made and failed, e.g. on an age-restricted purchase. The noble Baroness, Lady Crawley, asked about access to warehouses and whether, if the officer suspects a breach, the exemption applies. Of course, that is particularly important in relation to rogue traders and the same would be true of the example of the sale of counterfeit goods.
Lord Harris of Haringey
Is it then reasonable for a local authority to invoke that grounds of reasonable suspicion if, for example, it is clear to the trading standards department in a small town that a certain form of counterfeit or dangerous goods is circulating and there are eight potential retailers who might be selling it? Is it then reasonable for the trading standards department to inspect all eight? If it is reasonable to inspect all eight in that town, is it reasonable to inspect 200 in a city?
Baroness Neville-Rolfe
In my opinion, that is reasonable if there is a suspicion—for example, if trading standards officers have had some intelligence. There is an example I am coming to about cigarette butts, unless we cut that out. In relation to each of these exemptions, I am trying to explain why they are generously drafted so that we can do what we think is needed.
The second exemption would apply where giving notice would defeat the purpose of entry, for example, where an enforcer suspects that counterfeit DVDs are being sold and the enforcer considers that the traders in question are likely to conceal the illegal products if notice is given. The third exemption would apply where it is not reasonably practicable in all the circumstances to give notice, for instance because an officer reasonably suspects that there is an imminent risk to public health or safety. For example, enforcers may find evidence of illicit tobacco, such as stubs and papers, in the street near a couple of suspected outlets. The enforcers need to act swiftly to remove it from sale. I know that illicit tobacco is a concern.
A fourth exemption would apply where the enforcer is carrying out market surveillance, for example to check the safety of toys. Finally, notice need not be given where the trader has waived the requirement to give notice so that agreement to an immediate visit is always possible. We also carefully listened and have already responded to the BIS Select Committee’s very sensible recommendation on this issue by simplifying the exemption for giving notice where that would defeat the purpose of the visit. That is the second safeguard I referred to and I think that noble Lords commented favourably on that earlier in the debate.
I have set out these examples to show that we really are only talking about giving notice for routine inspections. In my view, it is perfectly reasonable to do that and highly desirable. Routine inspections are where a business, such as a DIY store, may be operating properly without any significant breaches of legislation. Trading standards may consider them to present a risk simply due to the nature of the sector in which they operate or because of the time that has lapsed since an inspection. Trading standards officers have raised with us a number of examples where they felt they would need to inspect without notice and, without exception, we were able to show how the powers of these wide-ranging exemptions could be used.
For example, another area which has been referred to in the debate is where an officer wishes to check whether petrol is being sold in short measures. The officer can use the power to carry out a test purchase and if that discloses a potential breach by the trader, he can immediately exercise a power of entry in order to investigate. Another concern that was raised is when an enforcer comes across a new shop during visits to other premises. I am happy to confirm that an enforcer can enter those premises immediately, using the power to observe the business, or indeed he can undertake a test purchase. If while on the premises he discovers that fireworks, for example, are being sold in breach of regulations—or mattresses, as one noble Lord mentioned—the enforcer can make a test purchase. If that discloses a potential breach by the trader, the officer can exercise a power of entry immediately.
Baroness Crawley
The noble Baroness mentioned that when it comes to a new business, there would be a power for trading standards officers to observe. What is meant by “observe”? Does it mean going behind the counter, as my noble friend Lady Hayter asked, or does it mean “observe” as if the officer was a member of the public? In that case, it would hardly be worth walking in.
Baroness Neville-Rolfe
It means observing as though the officer was a member of the public, but obviously a test purchase can be undertaken. The officer can speak to the trader and agree that there should be an exemption, in which case the exemption would apply. Moreover, if the officer suspects a breach, that also implies.
Lord Harris of Haringey
Perhaps I may press this point a little because it is important and getting to the root of the issue now might save the Minister time later. What is sufficient for a suspicion of an individual trader? The officer has made a test purchase and now he has prima facie information to suggest that the trader is up to something. That is straightforward and no one would see any issues around that. However, I will come back to my example. It is known that something is circulating in a town and it is likely that it has only been purchased from retailers in that town. Is that sufficient to cover all the retailers? Does that change if we are talking about eight retailers or 200 retailers? That is also possible. If it covers 200 retailers, that would certainly reduce any concerns I might have, but if it covers eight retailers, I would like to know what the cut-off number is.
Baroness Neville-Rolfe
As my noble friend the Chief Whip has just mentioned, you must have some sense of proportionality. I think that I gave a clear answer to the question of eight retailers earlier and I stand by that. Once we get to 200 retailers, we could be in slightly different territory. However, if there is a reasonable suspicion of a breach—although 200 premises seems to be rather an unlikely example—
Lord Harris of Haringey
I am sorry to interrupt the noble Baroness, but perhaps I may give a specific example. There is a suspicion about a dangerous electrical fitting such as a plug adaptor which the trading standards department has come across and knows is circulating in the area, and those plug adaptors might be on sale in several hundred small retail outlets, local shops and newsagents which sell a range of other things. Without being unreasonable about it, there might well be several hundred outlets in an area. It may be thought that the device was such that it could kill someone, which means that the test would be proportionately higher. That is what I am trying to get at.
Baroness Neville-Rolfe
I can reassure the noble Lord on that point. There is of course another exemption on the grounds of health and safety and I am absolutely clear that it would apply in that case.
Baroness Neville-Rolfe
The officers would be looking for a faulty electrical product that might be in circulation in an area; there would be a suspicion. That is exactly the kind of thing I am talking about. I am sorry, but I wanted to take the noble Lord through the examples in order to explain how the power will be used.
Perhaps noble Lords will bear with me while I make another point about powers of entry. The powers that other law enforcers have when they investigate offences are of interest, and the noble Lord has raised one or two of those. The police have no general powers of entry to commercial premises. They can enter a premises only with reasonable suspicion or a warrant. So there is, if you like, a form of notice. Even with a notice requirement, enforcers such as trading standards will have very substantial powers—more powers than the police, who deal with serious offences and serious crimes.
A noble Lord mentioned Ofsted—a question I have asked, actually. For practical purposes, Ofsted does give notice. It normally gives up to two working days’ notice before a planned inspection to a further education college—that is, a routine visit—but for schools, notice is given by midday on the working day before the start of the inspection. But it also has the right, quite rightly, to undertake unannounced inspections in cases of serious concern.
The noble Lord, Lord Best, asked about interpretation. I assure the Committee that we will be providing guidance. We are not creating principles such as reasonable suspicion. They are already well understood but obviously we will need to explain them for day-to-day work.
The noble Lord, Lord Harris, asked about evidence of the abuse of powers. This is not about abuse of powers; it is about reducing the burden on business from intrusive powers of entry and protecting civil liberties. It is about routine inspections, which, in my opinion, should be the subject of a warning. Where there are reasonable grounds of suspicion, obviously you can proceed immediately. I am a businessperson and I think business planning can have value in these circumstances.
I was also asked how notice can be given. Notice can be given by post or e-mail to the occupier or by leaving it at the premises. Actually, we have engaged extensively with the trading standards community while formulating the exemptions. That brings me on to the point that a number of noble Lords have made about the funding of the trading standards service. Obviously, spending and resourcing decisions are made by individual local authorities, which are better placed to make decisions about the enforcement needs of their communities than central government. Like all parts of central and local government, the services have faced budget reductions in recent years. There is no point denying it; that is agreed.
As noble Lords know, the Government are committed to tackling the inherited budget deficit by making savings and trying to improve value for money for the taxpayer, and this is part of that effort. We greatly value the work of trading standards to protect consumers from rogue traders and scammers, and we want to develop a better understanding of the impact it has across the economy. That is why, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake research to build an evidence base on the impact, effectiveness and efficiency of services, how improvements can be made, what works well and how we can do partnerships. This sort of evaluation is really important in public policy.
I think I have pretty well finished. I was asked about the deterrence effect of inspections. We would be concerned about the resource implications for trading standards services where uncovering breaches by chance is seen as an effective strategy for the future, even on the basis that it has been useful in the past. Targeting finite enforcement resources using an intelligence-led approach is a more efficient and effective strategy. I speak as a former businesswoman, with experience of a pretty small business trying to do a good job, and I think that better planning and targeting can save money both for business and for enforcers.
In conclusion, it has been an important and good debate. I have listened. I have tried to explain where we are coming from in the way in which we have drafted the Bill. I am trying to ensure that the investigatory powers in the Bill, modernised and brought together, strike the right balance between protecting civil liberties, reducing the burden on compliant businesses and ensuring that enforcers can tackle rogue traders.
Baroness Hayter of Kentish Town
The noble Baroness said that the balance is between civil liberties and business. Unfortunately, she did not use the word “consumers”. Perhaps I might leave her with three questions. I know she will not be able to answer them now but they are extremely serious ones. First, she alleges that £50 million will be saved. I would like to know how many visits are included in that £50 million. Secondly, as I understand it, test purchases can be made only in a retail outlet and someone would not be permitted to go into a warehouse or a wholesaler’s premises to make such purchases. Thirdly, the biggest worry about this issue is suspicion, as I mentioned. How could suspicion be proved in a court of law if it was the result of an anonymous tip-off? I am very content for her to write to the Committee on those questions as I do not think that she has answered them this evening.
Baroness Neville-Rolfe
I thank the noble Baroness. Perhaps she will also read Hansard on these points. We carried out an impact assessment and I think that the £50 million figure comes from that assessment, which I can certainly make available. I wanted to say that I was going to mention consumers at the end because this is the Consumer Rights Bill. It is important that we have a deal that is good for all sides. There are various different pressures relating to investigatory powers. I have tried to explain the wider picture and the parallels elsewhere. I am very keen that this should be an effective part of the Bill, which is obviously designed to modernise and improve both consumer rights and consumer enforcement. I therefore ask the noble Lord, Lord Best, if he will consider withdrawing the amendment.
Lord Best
My Lords, that was a powerful exchange all round. Clearly, this is an issue of great interest and concern to your Lordships. I am grateful to the noble Baroness, Lady Crawley, who, among other things, welcomed the fact that the Government have already made a number of concessions along the way—that needs to be on the record. However, she pointed out that there are considerable costs involved for the trading standards service because there is a lot of bureaucracy involved in sending out 7,000 notices of intention to inspect each year, and the correspondence that has to go back and forth on all that. This is not a cost-free new regulation.
I am grateful to the noble Lord, Lord Harris, for calling into question whether there was a problem here that needed to be solved at all. He pointed out that this measure is bound to lead to endless litigation if we are not careful and made the important point that the ability of trading standards officers to make unannounced visits is, in itself, a deterrent, and it is uncertain what the world would look like if that deterrent effect was removed.
I am grateful to the noble Baroness, Lady Hayter, for raising key questions. She asked what would be the benefit of this measure to consumers and whether they would really benefit from it. She made the important point that an awful lot of unannounced visits follow anonymous tip-offs. Other traders know what is going on down the road. They do not want to get into a fight over it but want trading standards to know about it. However, there is a difficulty with that information being used later in a court of law since it is important but confidential information. I can see that that may cause a problem in future.
The Minister provided reassurance under a whole series of headings, which was extremely helpful. We have made some progress on these issues tonight. She paid tribute to trading standards officers, which I welcome, and emphasised continuously that this is about routine inspections only and that the legislation is generously drafted. We are reassured that suspicion is good enough in these cases. If a suspicion of a breach in the law is enough to trigger a perfectly legitimate unannounced visit, that covers an awful lot of cases. However, it leaves unanswered whether it is really worth putting on statute this new regulation and the binding condition on trading standards officers if they are to be able to bypass it in an awful lot of circumstances.
To conclude, we have a lot of new and extra reassurance on the record from tonight which is more than helpful. Putting this in the Bill also seems rather heavy-handed when we know there will be guidance in any case following the legislation. Guidance not statute sounds rather less of a sledgehammer to crack the remaining nut after we have heard about the many exemptions and exceptions. With those words, and the thought that we might need to bring this back again, I beg leave to withdraw the amendment.
Baroness King of Bow
“( ) For the purposes of the enhanced consumer measures set out in Schedule 7, the Secretary of State shall publish a review of the powers of Trading Standards Officers to consider—
(a) the number of enforcement actions by Trading Standards taken under the enhanced consumer protections set out in this Act,(b) any additional operational costs to Trading Standards Services associated with the new powers and procedures under sections 77 and 79 of this Act, and(c) the establishment of a statutory minimum standard for all officers carrying out Trading Standards functions in any local authority and the role of a competent body to set, test against, apply and monitor those standards.”
Baroness King of Bow
My Lords, I finally rise to speak to Amendment 63ZAA, in the names of my noble friends Lady Hayter and Lord Stevenson. This returns us to the issue of the enforcement landscape. The amendment would review whether the powers of enforcement given in the Bill are adequate. Surely this is absolutely critical.
I know we go in for a lot of hot air in politics—or that is what we are accused of—but this Bill is a quite good example of the detailed work politicians do to improve things for people going around their daily business. Yes, on this side we think the Bill could go much further but still it is a good Bill. What an irony it would be if we lose hours and weeks of our lives putting this consumer law into place—although for part of the debate on that last group I was worried less about losing hours of my life as the will to live—but the end result after all these words is that nothing changes because trading standards officers do not have the powers to enforce this law. Enhanced consumer powers and more flexibility are all well and good but unless we back them up with serious intervention traders might simply feel that they do not have to comply.
Will all enforcers always be able to back up with legal action any threat of intervention and the use of enhanced consumer measures, which are after all designed to avoid legal action? Which? expressed the following concern:
“The threat of court action is not always sufficient to encourage traders to engage meaningfully in negotiations with enforcers over remedies ... This risk is likely to be especially acute as enforcement budgets are streamlined”.
That is a quite nice way of putting it. Which? is therefore keen to see,
“enforcement mechanisms ... extended. This could include either the ability for enforcers to impose monetary penalties or a simplified and streamlined court process”.
This amendment takes the first step in remedying the imbalance between consumer protections on the one hand and enforcement powers on the other. As we know, trading standards departments have undergone significant cuts yet they are supposed to enforce a vast array of legislation, apparently amounting to 200 pieces of law. For example, earlier on we discussed letting agents. Trading standards have to enforce whether estate agents are members of a redress scheme. Then again, we also heard today about their responsibilities in other critical areas such as care homes. It will be very hard for them to balance those competing demands but we know that they will have to go for those that grab the headlines and also that carry more serious risk.
Given their reduced resources, is it realistic for us to increase their responsibilities on the one hand while having no overall idea of whether their powers are commensurate with their duties? Apart from anything else, it leaves the Government a bit exposed on the critical issue of ensuring enforcement. How can we guarantee that trading standards have the financial capacity, never mind the legal capacity and expertise, to use this legislation? The amendment is a sensible measure which would help ensure consumer protection is actually enforced. I beg to move.
Baroness Crawley
My Lords, I support my noble friend’s amendment and her very important call for a government review of the powers of trading standards officers, given the responsibilities inherent in the Bill.
In the trading standards workforce survey of March 2014—despite the health warning on it from my noble friend Lord Harris—a picture emerges of a service that is still excellent but is teetering on the edge of sustainability. Trading standards staff numbers have fallen by almost half in the past five years. Numbers of trading standards officers per service range from half an officer in one local authority to 48 officers in another, with apparently little reference to the population size of the areas they serve or the number of businesses in those areas.
The Minister has just spoken, in relation to the previous amendment in the name of the noble Lord, Lord Best, about needing to be an intelligence-led service, particularly in the future. I applaud that but what if there is no one left to gather the intelligence? We are seeing that in some places now. We all want a service that is effective and capable of meeting current and future expectations in the Bill, in order to fulfil its public safety remit and its consumer protection remit.
Trading standards officers take great pride in their work and they welcome the support that they receive from government. They want to make a full contribution to economic growth, public health, environmental protection and safer communities but their depleted numbers make that more and more difficult. In the workforce survey, more than 30% of trading standards authorities that responded mentioned stopping or limiting several second-tier advice services to consumers. Nearly all respondents stated that service provision would be reduced, with most proactive work ceasing and some services providing only the statutory minimum.
The functions under threat in local authorities include underage sales work, intellectual property, food sampling and animal feed. Non-statutory community projects such as the no cold-calling zones, which have been very successful, and trusted trader schemes, as well as the provision of free business advice, are also at risk. Several authorities will be introducing a system of responding only to complaints from vulnerable consumers or those with very immediate risk to their safety.
The trading standards service is centuries old. We have recently been commemorating the trading standards officers who gave their lives in the First World War. Many trading standards officers have in the past travelled to countries around the world to share our best practice. Ours is considered to be one of the finest services globally. We should be proud of that. Therefore, I ask the Minister, who I know is a good supporter of trading standards, to look favourably on my noble friend’s amendment and not simply say that this is the domain of local government and that therefore she is unable to intervene.
Lord Harris of Haringey
My Lords, this is probably a helpful amendment from my noble friend. The reason I say “probably” is that I am not sure that it is asking all the right questions: it is asking two of the right questions, but I suspect that there is a third one as well. One of the good provisions—which I actually think should be incorporated in all of the legislation that goes through Parliament—is the one introducing some mechanism for reviewing, once the legislation has passed, how much the powers that have been granted to whoever have been exercised, whether they have worked, and so on, and what the cost has been. Paragraphs (a) and (b) here are very much a part of that. I would like to see those incorporated in every piece of legislation that we pass because it would be helpful. I sometimes think that government departments put forward these things and then nobody ever looks at them again until perhaps 20 years later, when there is a Law Commission review as to whether anything has actually happened. This would provide the raw material to see what happened. It is particularly critical in this area because we know the extent to which trading standards departments are overstretched and in real difficulties. Therefore, it would be extremely valuable to understand whether this has been yet another set of powers, duties and obligations placed on them that they simply cannot cope with.
The second important thing done by the amendment is to try to set a standard for individual trading standards officers; to say essentially that there should be a properly recognised qualification and describe how all that would work. That is also extremely helpful. The amount of law that trading standards officers are expected to enforce—I think there are 250 pieces of legislation and the number rises constantly—covers an enormous range of areas of activity and requires a degree of specialist skills. Some of them require investigatory skills and financial skills in addition to all that, so having some minimum standard as to what officers should do is helpful and useful.
What the amendment omits is the minimum standard that our citizens—from whichever local authority—have the legitimate right to expect from local trading standards. What is the minimum level of protection that we can expect from local trading standards? That is the area where this amendment could be strengthened. Obviously, if the Government accept this amendment today, there would be progress and no doubt my noble friends would then introduce an amendment on Report which focused just on this issue. Otherwise, if they bring it back, perhaps they could look at this wider issue as well. This is important because there is enormous variation between local authorities in terms of trading standards provision.
As a former local government leader, I absolutely espouse the importance of local accountability, localism and so on. That is an absolute principle, but there were plenty of areas when I was a council leader where, yes, we had local discretion and espoused the principle of localism, but we were expected to achieve certain minimum standards. That is not the case as far as trading standards and consumer protection are concerned. It would be helpful to try to find some way to enable the Department for Business to look at whether there was an acceptable minimum standard or level of trading standards provision in every local authority. I am conscious that the level of provision made by local authorities necessarily depends on their block grant. That is determined not by the noble Baroness and her colleagues in the Department for Business, but by the Department for Communities and Local Government. Consumer protection is one very miniscule part of that block grant. It would be in everyone’s interest—particularly in the interest of all of us as citizens or consumers—if there were some clear minimum standards laid down. Perhaps some work done on the back of a small amendment to this Bill over the next year or so would be extremely helpful in setting out what that minimum should be.
Baroness Jolly
My Lords, on behalf of the team I thank the noble Baroness, Lady King of Bow, for her kind words at the outset.
The enhanced consumer measures will give enforcers of consumer law greater flexibility to get better outcomes for consumers. When there is a breach or potential breach of consumer law, the measures available to enforcers can be limited. Prosecutions in the criminal courts can lead to a fine or even imprisonment, while actions in the civil courts can stop the infringing conduct. However, neither option tends to lead to consumers getting their money back, nor does the person who has broken the law have to take positive steps to put right the damage they have caused.
The enhanced consumer measures will allow public enforcers to seek a range of innovative and positive measures in the civil courts, aimed at achieving one or more of three outcomes: redress for consumers who have suffered loss, increased business compliance with the law or more choice for consumers. Measures must be just, reasonable and proportionate. Once they have settled in, we expect the measures to lead to consumers getting around £12 million in redress annually. Although a business might be required to spend money in order to pay redress to consumers, to increase compliance or to provide information to consumers, a simple penalty payable to the enforcer or to the Treasury would not be appropriate.
Turning to the amendment, and to answer the points made by the noble Lord, Lord Harris, we have already committed to a post-implementation review of both the enhanced consumer measures and the changes we are making to trading standards powers in the Bill. Our impact assessments for both state that the policies will be reviewed three to five years after they come into force. In addition, when we introduce the power to extend the enhanced consumer measures to private enforcers, we want to see how the measures bed in, and the experience of public enforcers using them, before deciding whether the use of them should be extended. Clearly, when deciding whether or not to extend the use of the measures, a key consideration will be how often they have been used and the cost to trading standards of using them.
The enhanced consumer measures represent a real change in how public enforcers such as trading standards will approach enforcement. The measures will be innovative and far-reaching. We have already circulated draft guidance on using them to our implementation group for comment.
On the proposal to establish statutory minimum standards for trading standards officers, if not the service itself, local authority trading standards are required to have regard to the Regulators’ Code, which is a statutory code of good regulatory practice. This code makes it clear that regulators should ensure their officers have the necessary knowledge and skills to support those they regulate, and that regulatory activity should be proportionate and consistent. A post-implementation review of the code was undertaken in 2012, and, following a consultation in 2013, an updated and simplified code came into force in April 2014.
The Government have committed to monitor regulators’ published policies and standards to ensure that they are consistent with the principles in the code. There will be a post-implementation review of the revised code to check that it is operating as intended. In the mean time, the Better Regulation Delivery Office offers assistance to all relevant bodies to implement the provisions of the code. At a local level, we think that local authorities are best placed to determine their officers’ competence. They will have a better understanding of local priorities, taking into account new models of delivery or collaborative approaches with businesses and other neighbouring councils.
As I have already said, the Government greatly value the work of trading standards and that is why we have commissioned research on the impact and effect of trading standards on the economy, to build on the evidence base. The research will conclude in the autumn, and the outputs will inform future policy. I therefore ask the noble Baroness to withdraw the amendment.
Baroness King of Bow
My Lords, I thank the Minister for her reply and other noble Lords who have taken part in this short debate. My noble friend Baroness Crawley spoke powerfully about trading standards services as they teeter on the edge of sustainability. Anyone who has worked with them and followed their trajectory over recent spending reviews and spending rounds cannot help but feel that there is a bit of a chasm between what we are talking about in theory here—the laws that we want those trading standards officers to promote—and the powers and resources available to them to do so, not least because, as my noble friend pointed out, their numbers have been halved.
If we are on the brink of ending current services and giving up on proactive work, it does not seem realistic that they may be able to make use of any powers, which is another reason why we feel a review of this sort would be very helpful and important. My noble friend Lord Harris of Haringey gave me qualified support—thank you.
Baroness King of Bow
I was very lucky. He said I got two of the questions right; perhaps a 66% ranking is not too bad. He said that the areas that this amendment promotes that are important relate, first, to providing the mechanism for reviewing whether powers have worked and what the costs are, and, secondly, setting a standard for individual training standards officers. That is extremely important; it is why we are asking for support for this amendment. My noble friend Lord Harris pointed out that this whole area of minimum standards has resulted in a postcode lottery nationally. If we are to tackle that postcode lottery and also ensure that the Bill’s objective of enhanced consumer protection is fulfilled, we need the powers set out in the Bill to be used proactively in the pre-emptive way in which they were intended. This amendment would give us the information we need to make sure that happens in future.
My noble friend Lord Harris said that the Government might accept the amendment. Obviously, we need not worry about that, so I will leave it to one side and end on the point that the Minister referred to, that effectively it will be local authorities who have to make sure that this works. That brings us back to the point where we started. We do not see how we can avoid a dissonance between the powers that local authorities have and their inability to use those powers and meet their obligations because of a lack of resources. We do not think that those two issues can be split up, but the review would illuminate where the problems really lie. None the less, I beg leave to withdraw the amendment.
Baroness King of Bow
“Report on work of Implementation Group for this Act
On commencement, the Secretary of State shall report to Parliament on the work of the Implementation Group to ensure consumers and businesses are adequately informed of the changes in the law made by this Act, especially with regard to the key rights at the point of sale.”
Baroness King of Bow
In moving Amendment 63AA, I shall speak also to Amendment 105J in the names of my noble friends Lady Hayter and Lord Stevenson. Amendment 63AA deals with the implementation group and is interesting, not least because during the Bill’s passage in the other place the shadow consumer rights Minister, Stella Creasy, spoke about the mythical implementation group because often in the other place the answer to every question raised was, “The implementation group will sort it out”.
What will the implementation group look at? It will look at the point of sale information and identify the best way to communicate and teach people about their rights. It will look at a range of ways to ensure that businesses and consumers know what the law is regarding the point of sale questions being asked. It will look at statutory rights, what they mean and how people will be told about them. It will also identify clear, understandable wording, not just how to tell people about their rights but the words used to describe those rights. It will also look at the point of redress. It will answer questions about the information given when someone complains about the goods, service or digital content. We also heard that the implementation group will look at the guidance given to trading standards; it will look at how this will be drafted for a wide range of organisations.
With that said it is clear that the implementation group is not simply an add-on to this legislation. It is integral to the way in which it will work. The Bill is a framework. As we know, most of the law is then implemented via statutory instruments and guidance. Unfortunately, Parliament too often thinks that its job is done at that point, but implementation is really the most important part. The implementation group will be working behind the scenes—for example, preparing businesses. Consumers can be empowered only to know what their rights are, and therefore we need the implementation group to succeed and its recommendations to have bite. The key work of the group relates to Part 1 of the Bill, improving business and consumer education on their new rights and obligations, as well as spending some time informing trading standards officers.
After all that, what do we know about this mythical, important, integral implementation group? It is an all-statutory group. So first, we do not actually know what it is doing. Secondly, without Amendment 105J its recommendations will have no teeth. We hope that the advice of the group would be taken by the Minister to turn into a code of conduct. There definitely should be a statutory code of conduct. We want the implementation group to succeed. I beg to move.
Baroness Jolly
My Lords, I thank the noble Baroness for highlighting both the work that we are doing on the implementation of the Bill and that this implementation is vital if the measures are to make the differences that we intend.
We have published our plans for implementation online, at GOV.UK, and we have written to all noble Lords about them. These plans have been drawn up in close co-operation with the experts on our implementation group. These are the people who know how this really works on the ground for business, consumers and enforcers. We intend the Consumer Rights Bill to come into force in October 2015. Work to inform businesses of the pending changes in the law will begin in earnest in April 2015. This will include the publication of guidance that is easy to understand and will be supported by the sterling work of trade associations and enforcers to educate and assist businesses.
Businesses will have six months to make any changes to processes and information to meet the requirements under the Bill. They will be able to see at a glance the key changes in the law. They will also easily be able to find more detailed guidance as and when they need it. The noble Baroness rightly emphasised the need for consumers to be aware of their rights, while other noble Lords expressed similar thoughts. As we have said many times, the Government believe that we must ensure that consumers understand their new rights and obligations. That is essential and I know that is something on which we can agree.
That is why we are working closely with relevant organisations, particularly consumer groups, to ensure that consumers have a basic awareness of their updated rights and that they know where to get advice on a specific problem with faulty goods, services and digital content. The primary source of this advice will be the excellent Citizens Advice website and helpline, but of course the work of other consumer groups will be vital and we will work with key organisations to get the message across.
Baroness King of Bow
My Lords, if this implementation group is to take on so many of the issues that we have raised in Committee, we need to know in good time when this information will be made available to consumers and businesses. That is why it is very helpful that the Minister has outlined the timeframe for some of the critical tasks that the implementation group is responsible for. I heard what the Minister said about the timing of publicising consumer rights. I was going to ask if she could write to us with an integrated summary of when both business and consumers will be informed, but the Minister has said that she will place something in the Library of the House. If it is possible to write to us in advance of that, that would be welcome.
The key point, though, is not when these organisations, stakeholders or citizens are informed; the key point is how they are informed, and whether it is in a common-sense, plain manner that they can understand. That will be down to the implementation group and, given that group’s importance, it would be helpful for us to know more about how it will operate. In the mean time, I beg leave to withdraw the amendment.
House of Lords
(9 years, 6 months ago)
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Introduction: Lord Goddard of Stockport
(9 years, 6 months ago)
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Police and Crime Commissioners
(9 years, 6 months ago)
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Lord Hoyle
To ask Her Majesty’s Government what standards and guidelines are given to Police and Crime Commissioners upon taking office.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, the Police Reform and Social Responsibility Act 2011 provides the broad structure within which police and crime commissioners must operate. The legislation is necessarily permissive to allow PCCs to innovate and deliver policing more effectively than the unelected police authorities that they replaced.
Lord Hoyle (Lab)
I thank the Minister for that considered but short reply. Already between 2012 and 2014, these police and crime commissioners have cost us £9,636,264. That is just in salary and expenses and does not take into account the people who are directly employed by them. The public do not understand why police and crime commissioners were appointed, what they are supposed to do and what they have achieved, but they do know that they cannot be sacked. Does the Minister agree with the Deputy Prime Minister that this is a failed experiment and that they should be scrapped?
Lord Bates
I hear what the noble Lord says, but of course 5.49 million people voted to put those people in place. I would argue that they are much more accountable than the police authorities and the local government systems that existed before. As for the comments of the Deputy Prime Minister, of course this was a coalition agreement that was supported through this House, but the Liberal Democrats are entirely entitled to change their mind whenever they choose.
Lord Blair of Boughton (CB)
My Lords, it is said that Churchill described democracy as the worst system of government except for everything else that had been tried. Does the Minister agree that the coalition has achieved the converse by the introduction of police and crime commissioners, which is the best system of police governance in England and Wales that could have been invented, except for anything else that you could have thought of?
Lord Bates
I respect the noble Lord’s great experience in this area, but we need to remember what the system was before. The previous Government commissioned an HMIC report—entitled, appropriately for the time, Police Governance in Austerity—which found that only four of the 22 police authorities inspected were judged to have performed well in two of their primary functions: setting a strategic direction and ensuring value for money. There has been a change there, and that is to be welcomed.
Lord Paddick (LD)
My Lords, one of the two objectives that the Government set for police and crime commissioners was to save money. In addition to the vast expense of many of these police and crime commissioners appointing deputies, we have also had to have two by-elections—once, tragically, because of a death and once because of resignation—which have cost between £1 million and £3 million. How much money has the change actually saved?
Lord Bates
Police budgets overall are reducing, which is not something that we chose to do but was the situation that we were faced with when this Government came into office. It should be said that the police are also overseeing one of the largest falls in crime that we have ever had in recent years. That is to be welcomed. The average salary of a police and crime commissioner is about half that of a chief constable. In many areas, people will regard them as delivering value for money. If people feel that they are failing in their responsibilities, they can vote them out, which they could not do before.
Baroness McIntosh of Hudnall (Lab)
My Lords, the noble Lord mentioned the number of people who voted for police and crime commissioners when the elections were originally held. Will he remind the House what percentage that represents of the people who could have voted?
Lord Bates
Yes, it was 15% of those who could have voted. This was a new role introduced to increase accountability, and 15% is a sight more than were present in the smoke-filled rooms to elect the chairmen of the police authorities which existed before.
The Earl of Listowel (CB)
My Lords, what advice is given to PCCs on the value of high-quality youth services and well supported mentoring and peer mentoring services? What evidence can the Minister cite of consistent investment by PCCs in that vital area to prevent children and young people entering crime?
Lord Bates
The noble Earl is right to raise the concern. PCCs can be responsive in local areas in a way that did not exist before. For example, in Northamptonshire, Adam Simmonds has introduced a new victim witness service. In Cumbria, Richard Rhodes has introduced an office of victim services. Those are exactly the type of changes which are responsive to local needs that the commissioners are now delivering.
Earl Attlee (Con)
My Lords, is the Minister aware that I was unable to name any member of a police authority who was not a Member of your Lordships’ House?
Lord Bates
My noble friend makes a fine point. Police and crime commissioners, through the press, through discussion and through the elections, are much more widely known and recognised. Therefore, people will increasingly come to them with their issues, to which they can respond.
Lord Harris of Haringey (Lab)
My Lords, is it not the case that a fifth—it may be more, but it is seven or eight at least; no doubt the Minister can tell us—of the elected police and crime commissioners are under current or recent investigation by the IPCC for fraud or other misdemeanours? Are the Government, or at least the Conservative part of the coalition, still intent on giving PCCs more powers and more responsibilities and doing nothing about the accountability mechanisms?
Lord Bates
I thought that when the noble Lord began by speaking about seven or so police and crime commissioners, he was referring to the number of former Labour MPs and Ministers who are now holding those important positions in this country. The reality is that of course they are accountable to the police and crime panels, but ultimately they are accountable to the people who elected them.
Lord Bew (CB)
My Lords, is the Minister aware that the Committee on Standards in Public Life recently announced an inquiry on local policing accountability, leadership and ethics, which is reviewing how ethical standards are being addressed within the current structures for police accountability, including police and crime commissioners? I declare an interest as chairman of the Committee on Standards in Public Life.
Lord Bates
I was aware that that process is under way and I pay tribute to the noble Lord, Lord Bew, as chairman of that committee. In the context of this, I encourage all Members of your Lordships’ House, particularly those with policing experience, to feed in their views to the Committee on Standards in Public Life so that it can look thoroughly at this issue.
Lord Patel of Bradford (Lab)
Can the Minister give us an ethnic breakdown of the police and crime commissioners?
Lord Bates
I cannot give that at the moment, but I will write to the noble Lord.
Child Abuse: Police Investigations
(9 years, 6 months ago)
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Baroness Smith of Basildon
To ask Her Majesty’s Government what assessment they have made of recent research by the NSPCC into police investigations of child abuse.
Baroness Williams of Trafford (Con)
My Lords, we will always ensure that police and other crime-fighting agencies have access to the powers and resources that they need to tackle child abuse in all its forms. The National Crime Agency is currently leading an unprecedented operation against online child abusers in the UK. In the past 12 months it has safeguarded or protected more than 1,000 children, and 706 arrests have been made by forces.
Baroness Smith of Basildon (Lab)
My Lords, in July 2012, the Canadian police passed to CEOP—now part of the National Crime Agency—hundreds of names of people involved in downloading abusive images of children here in the UK. It was not until September 2014, over two years later, that Essex police interviewed deputy head teacher Martin Goldberg. He was found dead the following day, with thousands of images of children on his computer, some taken with a secret camera.
Reliable evidence shows that more than 50,000 people may pose a risk to children in the UK—and yet, by the noble Baroness’s own figures, only some 700 have been arrested. The Government say that those who pose the greatest risk are prioritised. How are they prioritised? How many of the 50,000 on the NCA list have been identified as posing the greatest risk, and how many have now been interviewed?
Baroness Williams of Trafford
It is fair to say that Project Spade—as it was called—was a very regrettable incident, to the extent that the NCA has actually referred itself to the IPCC. There was no excusing what went on there. In terms of who is prioritised, they are the people who proved the most harmful to children. That is how the priority is worked out.
Baroness Walmsley (LD)
Will the Minister work across government to ensure that the whole children’s workforce in all sectors are trained to recognise the early signs of child abuse so as to help the police by reducing the need for cases to come before them at all? That will protect children.
Baroness Williams of Trafford
My Lords, it is a general duty of those working with children to safeguard them. Certainly every single officer who works in the NCA has a legal duty to safeguard and protect children.
Lord Campbell-Savours (Lab)
My Lords, can we draw a distinction between “most harmful” and “harmful”?
Baroness Williams of Trafford
In terms of harm, I would say that “most harmful” applies to children in immediate danger of being harmed.
Baroness Butler-Sloss (CB)
My Lords, what training are the police being given in relation to child abuse, whether it is porn images or the appalling stories of Rotherham and others right across the country? It is perfectly obvious that the police are not being trained at the moment. What is being done about it?
Baroness Williams of Trafford
There are highly trained officers within the NCA. The CEOP officers, of which there are 141 at the moment, are highly trained in terms of safeguarding and in terms of image viewing on the internet. I can provide the noble and learned Baroness with more information on that subsequently.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister care to comment on my noble friend’s question: do the authorities take physical harm towards children outside the country as seriously as they do harm towards those within it? Is her definition of “most harm” inclusive of children who are abused anywhere else in the world?
Baroness Williams of Trafford
My Lords, British national children, whether they are in this country or outside it, are of the highest priority for the Government. That is why some of the work being done on the internet has global reach. In fact, we are global leaders in this area.
Lord Laming (CB)
My Lords, can the Minister assure the House that progress has been made in training front-line staff and others to listen to children and take their concerns seriously—not necessarily without a critical view—and make sure that the full range of services is brought into play at the right time?
Baroness Williams of Trafford
My Lords, the development of multiagency teams in this area has been very helpful over the years. Obviously, some organisations do it better than others but I am happy to write to the noble Lord in terms of where we have got to on this.
Lord Swinfen (Con)
My Lords, there appears to be far more abuse of children today than there was 30 or 40 years ago. Is it known why?
Baroness Williams of Trafford
My Lords, I think that there appears to be more abuse of children these days; I do not necessarily think that there is more abuse. We are just far more aware of it and willing to deal with it.
Lord Foulkes of Cumnock (Lab)
My Lords, there are reports that the Home Office is reviewing the position of Lord Mayor Fiona Woolf as chairman of the inquiry. Is this correct?
Baroness Williams of Trafford
My Lords, Fiona Woolf stated to the Home Affairs Select Committee that she had no close association with the Brittans. I think that noble Lords would agree that it is time that we got on with this inquiry.
Baroness Benjamin (LD)
My Lords, can my noble friend the Minister tell the House what support is given to children who have been abused?
Baroness Williams of Trafford
My Lords, there is a wide range of support available to children who have been abused, but in the time that I have here I will not go through it all. I will write to the noble Baroness to outline some of the detail.
The Earl of Listowel (CB)
My Lords, is the Minister aware of the important report produced by the Office of the Children’s Commissioner on children who are abused when taken from residential care in children’s homes and on how gangs sexually abuse children?
Baroness Williams of Trafford
Yes, those are some of the most vulnerable children in our society and it is right that we should deal with this and bring the perpetrators to book.
Baroness McIntosh of Hudnall (Lab)
My Lords, is the Minister aware that the General Medical Council did some work a couple of years ago, with which I was involved, on the involvement of general practitioners and other doctors in spotting child abuse? Is she also aware that one issue that was most clearly a problem was the multiagency relationships that she talked of in one of her earlier answers? Although there are good intentions in relation to multiagency work, is she confident that it is being carried out in a coherent way?
Baroness Williams of Trafford
The noble Baroness raises a very valid point. That is why I mentioned earlier the different pictures across various multiagency teams. This is an area for improvement.
Gaza: Reconstruction
(9 years, 6 months ago)
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Baroness Tonge
To ask Her Majesty’s Government what contribution they are making to the reconstruction of infrastructure in Gaza.
Baroness Northover (LD)
My Lords, at the Gaza reconstruction conference in Cairo, the United Kingdom committed £20 million to assist those affected by the recent conflict in Gaza, including the hundreds of thousands left homeless or without access to water. This funding will include support for the disposal of unexploded ordnance, rubble clearance programmes and reconstructive surgery for those injured in the conflict.
Baroness Tonge (Ind LD)
I thank my noble friend for her Answer but how does she intend to reassure taxpayers in this country, who are increasingly worried about expenditure on international aid, that the money for reconstruction in Gaza will not be squandered when Israel launches another attack in a couple of years’ time? Can she also say why so many of the contracts for building materials and the reconstruction of Gaza are going to Israeli companies, thus ensuring that Israel profits from the destruction that it caused?
Baroness Northover
No one benefits from destruction in Gaza. In terms of the rebuilding, we are looking very carefully at the implications of any damage to internationally funded structures. Meanwhile, our partners assure us that relief items are largely sourced in Gaza, the West Bank or internationally.
Lord Turnberg (Lab)
My Lords, it is clear that we need to get much building material into Gaza to help rebuild all those destroyed homes, but is the noble Baroness aware of the statement made by the Hamas spokesman last week? He said that the avowed intention of Hamas is to start rebuilding the tunnels into Israel immediately. Is there any way of preventing this?
Baroness Northover
We urge restraint, as we always do, on both sides. Peace is in the interest of both sides—of the Palestinians and the Israelis.
Baroness Eaton (Con)
My Lords, last month Israel, the Palestinian Authority and the UN agreed to a tripartite mechanism to enable vital reconstruction materials to reach Gaza, while also ensuring they do not end up in the hands of the terror group Hamas. Does the Minister agree that this is welcome news and that we must encourage further such co-operation, which recognises the concerns of both parties?
Lord Anderson of Swansea (Lab)
My Lords, it is surely quite right that vast sums should be pledged by the international community for reconstruction. But what assurances were given by Hamas and its successor that the sums they receive are conditional on good conduct—in particular, on not provocatively raining ever more rockets on Israel?
Baroness Northover
It is worth bearing in mind that, as I said, we urge restraint on both sides. In that conflict, 71 Israelis lost their lives and 2,131 Palestinians were killed. It is extremely important that we move forward into a proper peace process.
Lord Hylton (CB)
My Lords, am I correct in understanding that Turkey has offered a ship with sufficient generating capacity to supply electricity to the whole of the Gaza Strip for six months? If that is correct, will the Government ensure that the offer is accepted and the thing is made use of?
Baroness Northover
I do not know the details of that but I will write to the noble Lord. I know that we are gravely concerned about Gaza’s fuel and energy situation.
Baroness Falkner of Margravine (LD)
My Lords, my noble friend will be aware that the Egyptian Government are starting to clear eastern Sinai to create a buffer zone to close the Rafah crossing, which will further limit supplies going into Gaza. Given that very limited construction materials are already agreed, how does she see Gaza being rebuilt in these very constrained circumstances?
Baroness Northover
We were very clear at the Gaza reconstruction conference in Cairo that movement, including access restrictions, needed to be improved to have the kind of meaningful reconstruction that my noble friend is talking about. We have welcomed the agreement on the UN mechanism for importing construction materials as an important first step. Egypt’s actions in this regard are less than helpful, but Israel has primary responsibility as the occupying power and we continue to urge it to ease restrictions and reach a durable ceasefire agreement.
Lord Collins of Highbury (Lab)
My Lords, at the Cairo conference, the DfID Minister declared on his return that a key ingredient for stability is a long-term strategy for Palestinian economic growth. What action is the department taking to ensure that that comes into place?
Baroness Northover
This leads back to the previous question. What is extremely important here is lifting many of the Israeli restrictions. Lifting restrictions in Area C alone, as he probably knows, could increase Palestinian GDP by $3.4 billion.
Lord Ashdown of Norton-sub-Hamdon (LD)
My Lords, earlier the Minister quoted the relative numbers of people killed on both sides. Taking these into account as well as the extent of the destruction, including two declared UN safe-haven facilities, do Her Majesty’s Government share the White House’s view that Israel’s actions in this matter were disproportionate and indiscriminate?
Baroness Northover
We certainly condemn the actions of Hamas in terms of the rocket fire but we have also urged that Israel, which has a right to defend itself, should do so in a way that is indeed proportionate.
Viscount Slim (CB)
My Lords, it is a known fact that the Palestinians inside Gaza are not in control of their own destiny. Hamas dictates in Gaza. Unless Her Majesty’s Government, and DfID in particular, are very careful, they will discover that most of this reconstruction money goes towards the rebuilding of Hamas’s destroyed houses and, as one noble Lord said, the tunnels and hides for its armaments and munitions. There is a great danger that if this money and equipment get into the wrong hands, our country will be liable for supporting one of the nastiest and most vicious terrorist organisations in the world at present—one that is primed and supported by Iran. This will mean that we are supporting a terrorist organisation.
Baroness Northover
I assure the noble Viscount that no UK aid money goes to Hamas, but of course Hamas needs to be part of the ceasefire negotiations and it is extremely important that the peace process moves on. The region is a tinderbox, and the sooner that it moves on, the better for all concerned.
European Arrest Warrant
(9 years, 6 months ago)
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Lord Harris of Haringey
To ask Her Majesty’s Government what steps they are taking to ensure that the United Kingdom is able to opt back into the European Arrest Warrant.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, the Government are close to agreeing a package of 35 measures with the European Commission and other member states that the UK will seek to join in the national interest. That package includes the reformed arrest warrant, with increased domestic powers to block arrest warrants where the offence is disproportionately minor or where the relevant conduct that occurred in the UK is not a crime. The discussions continue in Brussels.
Lord Harris of Haringey (Lab)
Given that nearly 100 foreign criminals are removed from this country under the European arrest warrant every month, can the Minister give us a guarantee that we will have opted back in by 1 December? When will this be put to the House of Commons? When it is, because of the level of opposition to the European arrest warrant by the Taliban majority of the Eurosceptics in the Conservative Party, will the Government be relying on Labour votes for us to opt in, in the national interest?
Lord Bates
My Lords, the noble Lord is right to point to the importance of this; 5,000 foreign criminals have been deported since it came into effect in 2009. Of course the desire is to opt back in by 1 December, but this needs to be negotiated and there need to be agreements. Those negotiations are continuing. Her Majesty’s Government’s position is that we want to be there by 1 December. In terms of when the House will have the opportunity to discuss this, discussions are ongoing between the business managers to make time for that to happen before 20 November.
Lord Deben (Con)
My Lords, does my noble friend accept that the only people who gain from our non-membership of the European arrest warrant arrangements are fraudsters, child molesters and gangs? Should we not say that this is another example of the excellent reasons why we should be full and really committed members of the European Union?
Lord Bates
My noble friend is absolutely right in respect of these measures. To keep a balance, though, let us remember that being part of the European Union is not just about signing up to everything that comes down the track. With regard to justice and home affairs, there were 135 measures in the package, 100 of which we did not feel passed the test regarding our national interest. However, 35 did and those are what we want to rejoin.
Lord Elystan-Morgan (CB)
My Lords, does the Minister accept that committees of this House have heard overwhelming evidence from law enforcement agencies from England, Wales, Scotland and Northern Ireland, as well as the Republic of Ireland, of the wholly invaluable role that the European arrest warrant plays in the war against serious crime? Does he also accept that, although there are minor infractions that can so easily be put right, it would be a severe blow to the administration of justice if, for any reason—particularly in relation to any tactical or political consideration—the European arrest warrant were to be prejudiced in any way?
Lord Bates
The noble Lord is absolutely right. That is why the Government are bringing this forward and seeking urgent agreement on it.
Baroness Smith of Basildon (Lab)
My Lords, the Minister will be aware of the comments in the letter from the Irish Government expressing their concern that if there is any gap between the Government opting out of the international arrest warrant and opting back in again, that will have serious implications for arresting those involved in terrorism. What response have the Government made to this, and what discussions have they had with other countries which may be expressing similar concerns?
Lord Bates
The noble Baroness is absolutely right. That is why we want to ensure that there will be no gap in respect of this, and I am confident that there will not be. Only one country out of the 22 with which we are currently in bilateral negotiations has a concern about this. We believe that that concern can be overcome within a matter of days.
Lord Blackwell (Con)
My Lords, does my noble friend accept that there are serious concerns about the principle of British citizens being arrested on British soil and sent into the custody of foreign judicial systems, where there is no democratic control by other British citizens, without a chance for British courts and British justice systems to take a view on it? Will my noble friend assure us that this House will have a full opportunity to debate and vote on this proposal before it is taken forward?
Lord Bates
We will certainly have that debate and vote. That was one of the important safeguards we negotiated that have been introduced: to say that a crime must be a crime in this country as well as in the country to which the extradition has been sought for a warrant to be agreed to.
Lord Blair of Boughton (CB)
My Lords, is the Minister aware that European arrest warrants are a two-way process, and that should the Government fail to renegotiate an entry back into the European arrest warrant system for Britain, then the criminals of Europe would know that and what used to be called the “costa del crime” would arrive on the shores of Britain?
Lord Bates
My Lords, I am sure that the representatives of the Spanish Government, with whom we are negotiating bilaterally, will of course have noted the noble Lord’s comments carefully.
Baroness Suttie (LD)
My Lords, does my noble friend the Minister agree with Sir Hugh Orde, the president of ACPO, when he said that the European arrest warrant,
“gives us a stronger, more effective means of arresting dangerous criminals across borders and thus keeping our communities safe at home—it is not an instrument which we can afford to lose”?
Lord Bates
My noble friend is absolutely right. I agree with ACPO in respect of this and of course the European affairs committee, the security services and the law enforcement services, whose views the Government have listened to and acted upon.
Lord Low of Dalston (CB)
My Lords, will the Minister say if the Government are willing to reconsider their opt-out from the measure on xenophobia and racism? I think that to opt out of this measure portrays the United Kingdom in a very bad light and sends a very bad signal.
Lord Bates
I will write to the noble Lord on that. He is right to raise concerns about it and I will make sure that he gets an absolutely accurate and speedy reply.
Arrangement of Business
(9 years, 6 months ago)
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Lord Taylor of Holbeach (Con)
My Lords, my right honourable friend the Leader of the House of Commons recently announced a February Lenten Recess for that House. It may be for the convenience of the House that I now do the same. I hope that we will be able to rise for a short recess at the end of business on Thursday 12 February and return on Monday 23 February 2015. I must emphasise that these dates are provisional and subject to the progress of business. That is of course the usual caveat for all our recess dates, but I must underline it on this occasion, for this will be the final recess in this last Session of the Parliament.
I hope that the House will also find it useful if I take the opportunity to highlight that this morning’s edition of Forthcoming Business advertises three more sitting Fridays before we rise for Christmas: 21 November, 5 December and 12 December.
Scotland: Devolution
(9 years, 6 months ago)
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Baroness Stowell of Beeston
That this House takes note of devolution following the Scotland referendum.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, I am delighted to open this debate on devolution following the clear decision of the Scottish people to remain part of this great United Kingdom.
As delighted as I am, I will allow a little time for noble Lords leaving the Chamber to do so before I continue to open this debate, because I would be very disappointed if noble Lords remaining for the debate did not get to hear just how delighted I am.
The clear decision of the Scottish people to remain part of this great United Kingdom was a once-in-a-generation decision that confirmed once again what we all know to be true: that we are a family of nations bound by a rich history and the strength of our democracy. The referendum campaign electrified politics in Scotland. Door by door, street by street, the Scottish people showed just how much people are truly interested in the big decisions that affect them. I know that many noble Lords from across the Chamber were involved in that campaign. I pay particular tribute to my noble and learned friend Lord Wallace of Tankerness, who will respond to today’s debate and who, let us not forget, is a former Deputy First Minister of Scotland.
Eighty-five per cent of people in Scotland voted in the referendum: a truly remarkable figure. More than 2 million people voted for Scotland to remain part of the United Kingdom. They voted for a stronger Scottish Parliament backed by the strength and security that comes from being part of the United Kingdom. With their support, we can now firmly say that the debate has been settled for a generation—or, as Alex Salmond himself said, perhaps for a lifetime.
Before the referendum, the three pro-union parties made clear commitments with a clear timetable to devolve further powers to Scotland. We have since published our Command Paper on Scotland ahead of schedule, setting out the proposals from each party. This is not just talk. The noble Lord, Lord Smith, and his commission have already begun work to take those commitments forward, working with one aim: to produce a unifying set of proposals by 30 November. For the first time, I am pleased to say that all major parties are involved in shaping that result. Based on that work, the Government will publish draft clauses by the end of January—by Burns Night, to be precise—so that the legislation is ready to be implemented after the next general election. Let me be clear: we have delivered, we are delivering and we will deliver on our devolution commitments, just as the United Kingdom Government have always done.
Let me turn now to Wales, where we have also been making good on our promise of further devolution. We have delivered a referendum on lawmaking powers, we have set up the Silk commission and we have introduced the Wales Bill, where I am particularly proud of the role that this House is playing. That Bill implements nearly all the Silk 1 recommendations, which alone devolve significant tax and borrowing powers to the Assembly and Welsh Ministers—but we went further. By removing the lock-step, we will provide the Welsh Assembly with the power to vary income tax rates. Not only will those new powers help the Welsh economy to become more dynamic, they will make the Welsh Government more accountable. Those are big steps forward, but we must make sure to keep Wales at the heart of the broader debate before us today.
As Noble Lords will know, the Silk commission recommended a move to a reserved powers model in part 2 of its report. It will fall to the next Parliament to make that change, but the Secretary of State for Wales has made it clear that in considering the best way forward he wants to hear views from across the political spectrum in Wales.
It is also vital that we consider the future of devolution in Northern Ireland. I need not remind the House that the settlement there is the result of the hard-fought and hard-won Belfast agreement. Providing additional powers would involve changes to that agreement, so any changes would need to command the support of all parties in the Assembly. It is right that the focus there is on making the existing settlement work well and in the best interests of the people of Northern Ireland.
This does not mean that the devolution settlement in Northern Ireland is fixed. The ability to vary long-haul air passenger duty has already been devolved, and the Northern Ireland Executive are committed to devolving corporation tax. The Prime Minister has made it clear that there will be a decision on this no later than the Autumn Statement.
As I have already set out, the Government respect and support the calls for greater autonomy and devolution in Scotland, Wales and Northern Ireland—but we cannot ignore England in this equation. England is the most decentralised nation in the United Kingdom. The Localism Act 2011 marked a historic shift in power to the local level. In doing so, we did not create new layers or structures or more politicians; we moved money to local areas in order to make things happen. Thirty-nine local enterprise partnerships bring together civic and private sector leaders to promote growth. We have devolved the money—£2 billion a year from next year—for them to do their work. We have delivered on city and local growth deals. Eight so-called core deals have been signed, creating around 175,000 jobs and 37,000 apprenticeships over 20 years. With the second wave now in place, there are 18 more on the way.
Those steps are part of the answer, though I am sure that more can and will be done. However, they do not answer the fundamental, so-called West Lothian question—how to deal fairly with legislation affecting England. For the people of England this is a matter of fairness. Who decides their laws? With further devolution to Scotland, Wales and Northern Ireland, we must ensure that the voice of England is heard as well. This means establishing a clear principle. When decisions affect only the people of England, they should be made by—or with the consent of—the MPs whom those people have elected to represent them.
There has been much talk that a constitutional convention must discuss all these issues before we can make progress on the matter of English votes for English laws. I reject that suggestion. A convention may well be desirable, but it should not delay progress on the West Lothian question. At a time when we are looking again at devolution to Scotland, Wales and Northern Ireland, it cannot be right that England should be left out once again. To those who argue that we are moving too quickly, I remind the House that we have been discussing the question for at least the last 17 years and that, in that time, we have had plenty of material to inform us. From within my own party, for example, my noble friend Lord Norton’s Commission to Strengthen Parliament made considered recommendations in 2000. More recently, noble Lords will recall the work of the McKay Commission in 2013. A commitment to address the problem has been in the last three Conservative manifestos.
In Scotland, Wales and Northern Ireland, all the major parties have come together across party boundaries to work towards new settlements. It is only at Westminster, on the issue of fairness in England, that the Opposition have not accepted our invitation to move the issue forward. It is a shame. As a member of the Devolution Committee, I was looking forward to working with Members on the Benches opposite.
Lord Forsyth of Drumlean (Con)
I am most grateful to my noble friend. None of these arguments is new. They were gone through in great detail in the 19th century at the time of Irish home rule. The conclusion then was that the way to deal with this fairness was to reduce the number of MPs coming from Ireland. Why can the same not be applied in the case of devolution to Scotland?
Baroness Stowell of Beeston
Certainly—and I speak for the leadership of my party—we are clear that the best way in which to deal with this is through English votes for English laws within the House of Commons. That is something that we can tackle and deal with quickly.
Lord Thomas of Gresford (LD)
So much of the legislation affects England and Wales. When the noble Baroness says England, does that include Wales?
Baroness Stowell of Beeston
Certainly in the context of legislation that affects England and Wales only, of course that includes Wales.
I assure the House that my right honourable friend the Leader of the House of Commons and chairman of the Devolution Committee, to which I have already referred, will do everything that he can to resolve the West Lothian question before the election, and I applaud his efforts and commend them to this House. It cannot be clearer that now is the time for a better and fairer settlement for the whole United Kingdom. We are absolutely committed to the timetable set out for further devolution to Scotland. We are committed to providing further powers to Wales and to meeting the special needs of Northern Ireland. We on the Conservative Benches are committed to bringing forward a solution to the West Lothian question before the end of this Parliament. There will be a time and a place for a constitutional convention but that should not be a device to prevent the other issues before us being addressed now. We are all responsible for ensuring that decisions are made fairly and in the interests of all people in the United Kingdom. Now, more than ever, we must uphold that responsibility. I beg to move.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful to the Leader of the House for agreeing to table this significant and necessary debate in government time. I have long recognised the importance of constitutional change, and I am proud of what my Labour Government achieved. But in recent years, with the country facing so many challenges, many as a consequence of coalition policies, I felt that such changes should not be a priority for legislation. However, the experience of the Scotland referendum has made me think again, and I am now firmly of the view that we must urgently consider profound changes in our governance.
Thomas Paine said:
“Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one”.
Government, Parliament and our politics have for too many of our citizens become intolerable. There is much that we can learn from Scotland’s referendum: the tremendous participation was a shot in the arm for democracy. People thought that the result really mattered. There was great passion in the yes campaign and the no message, and in many ways they both reached the same conclusion, that the status quo is simply not acceptable. What it clearly illustrated, despite the resounding outcome in favour of the union, is that people feel powerless that they have no influence over distant decisions taken for them rather than with them. As with their fellow citizens in England, Wales and Northern Ireland, people in Scotland want power closer to where they live, rather than what they see as a cosy circle in Westminster and Whitehall. They want this because they are fed up with inequality and being left behind while those at the top continue to thrive. They are disappointed by what they see as the “yah, boo” of party politics, which either bores them rigid or reinforces alienation, and they are angry about being let down by elite decision-makers—not just in politics, but in the banks, media, police and church. In a nutshell, people’s faith in some of the major institutions of our country has crumbled.
Granting votes at 16 was a real lesson for the UK as a whole. I have long supported this policy, which has now been adopted by both my party and the Liberal Democrats. My view was reinforced this morning by a meeting with a hundred National Citizen Service leaders, and I was delighted to hear my noble friend Lady Liddell of Coatdyke say recently in the Chamber:
“I was one of the people who thought that it was wrong for the franchise to reduce the voting age to 16. I was comprehensively proved wrong. I heard some of the best debates I have ever heard in a lifetime in politics from 16 and 17 year-olds”.—[Official Report, 16/10/14; col. 295.]
Like her, I urge the Government and the Hansard Society to consider the specific lessons to be learnt from empowering young people at the ballot box, then act on their findings.
I take this opportunity to pay tribute to those Conservatives who during the referendum campaign were committed to the union. The party’s leader in Scotland, Ruth Davidson, and the Prime Minister both pulled out all of the stops to secure a no vote.
However, soon after the counting ended and the results began to emerge, Mr Cameron, I am afraid to say, reverted to type. He parroted the response of his general election strategists and political advantage took centre stage, by making the link between the promises made to the people of Scotland and English votes for English laws. Once again, Mr Cameron was caught looking over his shoulder at the threats from within his own party, along with UKIP’s bluster, rather than responding to the needs of our country.
The Prime Minister, the Deputy Prime Minister and the leader of the Opposition made a commitment—indeed, a vow—to further strengthen and empower the Scottish Parliament. My party is participating in the process under the leadership of the noble Lord, Lord Smith of Kelvin, in a spirit of partnership and co-operation with others. I would be grateful for an assurance from the Leader that the commission will at all times be led by the outcome of the referendum. The result indicated that people wanted a strong Scotland inside a strong UK with the continuation of sharing both our resources and achievements.
The necessary further devolution to Scotland, together with the clear discontent of the British people, means that it is imperative that we consider and address the English constitutional anomaly. England has been tolerant for a long time and I understand some of the frustrations expressed. However, English votes for English laws is not the answer.
The Cabinet committee, referred to by the noble Baroness, chaired by William Hague, hastily convened and meeting behind closed doors, simply will not do. People will no longer tolerate a Westminster stitch-up, when what our country needs is an open, transparent discussion. A piecemeal approach to constitutional change for political advantage is unacceptable. Embittered nationalism is always wrong. The fact that some in the party opposite want to put what the Telegraph calls “English home rule” at the very heart of their election campaign is not a sound basis for action. In fact, it is morally wrong and further erodes trust in our politics. The future governance of our country is much bigger than one party’s demands or vision. As Vernon Bogdanor pointed out in an excellent article last month:
“the British constitution is not the private property of the Conservative party or”,
any other party. He continued:
“A constitutional settlement, if it is to be lasting, needs the support of all parties, and endorsement by the people as a whole after measured debate”.
English votes for English laws, of which, contrary to expectation there are few, is a purely separatist proposal and one that would produce a two-tier system that would enshrine existing inequalities; drive a wedge between the Scottish and English systems of government; and risk the future of the Union, when what is needed is a constitutional reform that strengthens its integrity.
Earlier this year, colleagues in the Lords Labour group published an excellent report entitled A Programme for Progress. Among its recommendations was the setting up of a constitutional convention. The group was, indeed, prescient. My party leader, Ed Miliband, has announced proposals for a constitutional convention rooted in the UK’s nations and regions. It would address the need for further devolution, not just in Scotland, Wales and Northern Ireland, but in England too, and reform of Westminster, including this very House. It is the best means of arriving at a consensus on the governance of our country and it would give our citizens a stronger voice in politics.
I recognise that this is also the policy of the Liberal Democrats, so I strongly urge the noble Baroness to commit the Conservatives to something that has broad support, including among civil society and our citizens. Now is not the time for partisanship. Consensus has to be the way forward and we should learn from the experiences of Ireland’s post-2008 constitutional convention and Scotland’s own pre-1997 convention.
The process must be time limited and involve not just the political class. A convention driven by the people, for the people, with views and voices from communities across the country would mean that change could be part of addressing feelings of powerlessness in the face of globalisation and its impacts. It would encourage participation in the decision-making process, both within our new constitutional arrangements and the democratic system that it delivers.
Greater devolution is at the heart of my party’s policies, with radical plans to disperse power and responsibility downwards. My right honourable friend, Hilary Benn, has announced a new English deal, in which the equivalent of £30 billion pounds of spending would transfer away from Whitehall. This is crucial because, notwithstanding what the noble Baroness says, right now our country is too centralised. Only a quarter of public spending is at a local or regional level compared with an OECD average of a third, and our subnational taxation is 1.7% of GDP compared with 16% in Sweden.
A report released last week by the City Growth Commission, chaired by Jim O’Neill, focuses on how to push power down to our top 15 metropolitan areas. Starting from the position that “This is the age of the city”, it makes an eye-catching observation that these 15 areas, performing to their potential up to 2030, could net an additional £79 billion for our economy. However, it is not just about cities; our more rural and coastal areas are just as important, as recognised by the excellent review of my noble friend Lord Adonis entitled Mending the Fractured Economy. They, too—the counties within county regions—need greater powers to chart their own course on infrastructure, skills and employment.
City regions and county regions are of course already taking shape across England. Councils of all political persuasions understand that working together, whether to deliver better local services, be more efficient in the use of public money or market their economic and cultural potential on a wider international stage, makes sense. As a consequence, they are building up local university, IT and service sectors with the jobs and prosperity that all that promises. The cohort of authorities around big cities such as Manchester, Liverpool and Birmingham has been doing this for years, as, too, are less urban areas such as Derbyshire and Staffordshire.
Therefore, it is no wonder that some are now saying that if it is good enough for one part of the UK, why not the rest? Many who voted yes in Scotland’s referendum did so not out of a new-found belief in Scottish nationalism or support for gesture politics; they voted yes because they believed that nobody else was listening to their concerns that politics was not working for them and their families. Nobody was offering them hope of better times, if not economically then at least an opportunity to flourish and grow. The conversations that our great parties wanted to have with them often started from a different premise and, as such, failed to reflect what people were actually worried about.
It would seem to make perfect sense, therefore, that Scotland should be looking to devolve internally in the same way as England—not just to city regions around Glasgow, Dundee and Aberdeen but perhaps to county regions, too, with more powers closer to home for local authorities to work together, influence change and offer the promise of a better future not just to those youngsters who voted yes but to their younger siblings who were not yet old enough to vote but might hold similar views. Such an approach could also help to deal with the false promises of the SNP and its political bedfellows, for whom a centralised—a more centralised—Scotland is everything.
It is only two short years since that wonderful summer of 2012, when we all came together to celebrate the Olympic and Paralympic Games. The Games may have lasted just one month but they were the culmination of a decade’s hard work from the initial bid to the event itself. This was not the achievement of any one party: we all played our part in making it a success, and that work goes on through the benefits of the Olympic legacy.
In many ways, the glorious summer of 2012 already seems a long time ago: our huge feeling of optimism and togetherness—dare I say “one nation”?—as people in communities across Britain took an interest in sports to which we usually pay little or no attention just to see how well the Team GB competitor had done; our excitement in looking at the medals table evening after evening to see how far we could climb, competing with the likes of China and the US; our pride in the modern, diverse, outward-looking, optimistic Britain that was on display during that extraordinary opening ceremony; those wonderful volunteers, the Games makers; and of course that “Super Saturday”, when Jessica Ennis, Greg Rutherford and Mo Farah all won gold in what must have been the greatest 46 minutes of British sporting history. We felt like a nation at ease with itself and we felt like a country that could achieve anything we set our sights on if only we put our differences aside and worked together.
Two years on, that feeling has gone. We have seen a sometimes bitter referendum campaign in Scotland, the debate about Europe and immigration gets more intolerant and feeds people’s fears, and distrust in politicians and government goes from bad to worse. We are not, however, going to find solutions with partisan politics and playing people in different parts of the UK off against each another. A constitutional convention will not resolve all of our problems but it would certainly make a start.
Lord Tyler (LD)
My Lords, today I am celebrating: the concept of a federal approach to our previously grossly overcentralised system of government seems to have come of age. After a political lifetime promoting this concept, I am delighted that this f-word is no longer considered unutterable. Perhaps we should also allow two c-words to be used in polite political society: the Commonwealth of Australia has something to teach us, as does the Confederation of Canada. We are so insular in this country that we have failed to examine the good examples in other mature democracies, even when we Brits had a hand in devising their constitutions. I will make three broad points.
First, I hope and trust—and this has been evident from the contributions so far—that there is complete unanimity across the House and the three main parties that the delivery of the vow to the people of Scotland will not be delayed by any proper considerations of the implications for other parts of the United Kingdom. That is important for all sorts of reasons. Nothing could stoke up further resentment, increase disenchantment with our whole representative democracy and, indeed, play into the hands of separatists, more dangerously than delay and dithering over this.
Secondly, there is also a widespread recognition that there are consequences of greater devolution for the way in which we legislate and apportion tax responsibilities and expenditure here in Westminster and Whitehall. Thirdly, there must be recognition that the most oversimplified, knee-jerk, hasty reaction of calling for English votes for English laws is simply inadequate: EVEL is not enough. It is far from simple; decisions taken on English matters in the United Kingdom Parliament have financial implications for the whole union. It is hard enough to define what an English Bill is. As my noble friend Lord Thomas has already said, very often it is an English and Welsh Bill and falls outside that definition during its progress through both Houses.
Of course, the United Kingdom Parliament is not unicameral. There are two Houses and we here do not represent any one territory: we are United Kingdom Peers. Only an elected House—so far elusive—could resolve that anomaly. However, in the mean time, the McKay commission completely ignored our evidence on this point. What would this House do if its recommendations were accepted by the other House?
Although we must be conscious that obsessing about England per se does no service at all to the already increasing pressures for true subsidiarity and a bottom-up approach to devolution, we must recognise that within England there are pressures for devolution. Simply creating an English institution does not deal with the underlying problem of overcentralisation. People are already rightly asking, if Scotland and Wales, with five and three million people respectively, can take significant legislative and fiscal power, why not London or Yorkshire? Indeed, might it not again be time to ask the people of the north-east—or parts of it—whether they want the top-down, minimal devolution-lite they were offered in 2004, or whether they would prefer something serious, along the lines already experienced in Wales and which we hope will be increased there. In Cornwall, of course, there is substantial demand for an assembly to take on similar responsibilities.
Dealing with this demand for real legislative devolution—not just administrative decentralisation—is a construct that people in England already recognise, and we must require a bottom-up process, not a top-down imposition, as a vital first step in sorting out the English question. I say to my noble friend on the Front Bench that the Localism Act did not instil in the British people a recognition that we have adequate local accountability in England. It simply is not there. That is not enough. It was never thought to be enough.
Clearly this would leave much less for the Westminster Parliament to do. There would be far fewer English issues. There would be less for Whitehall to do, offering an opportunity for substantial bureaucratic slimming. However, I and my colleagues acknowledge that there would still be some distinctly English issues. For those, it may be that an English Grand Committee might be an appropriate mechanism—but that is a consequential change. That is not the initial change that is so critical. In setting that up, we would have to be clear what the options for such a committee would be.
First, it could be an impotent talking shop—there is plenty of precedent for this. If, as with the McKay proposals, the full House of Commons, the United Kingdom House of Commons, and your Lordships’ House were simply to overrule everything that was said in the English Grand Committee, how would that play with our fellow citizens? That would just make the problem worse, not better.
A second option would clearly be a full legislative decision-making parliamentary vehicle. If so, we must face up to the fact that there would be a need for an Executive to deliver those legislative decisions. Do we want an English Executive with an English First Minister? I do not think that the public are ready and willing to go in that direction.
Thirdly, the committee could have the power of veto to prevent MPs from Scotland or Wales, or wherever that legislation was likely not to have any effect, pushing it through at the risk of constant cost and tax implications exclusively for England—or England and Wales. That veto option seems the most likely to prevail. It underlines why so much legislative power needs to be transferred out of Westminster before it happens, because it is only half the answer—or no answer at all—to the English question.
We must also consider that each devolution settlement so far has built in a firm commitment to fair representation. That is why my right honourable friend David Laws, on behalf of our Party, has set out this essential element for a new parliamentary vehicle, if there is to be one, to be truly and fairly representative of English voices, in a submission to the Cabinet committee.
In his Guardian article on 2 October, David Laws set out an unanswerable case when he stated:
“Every time Westminster has devolved powers in the past—to Scotland, Wales, Northern Ireland and even London—it has insisted that the devolved authority that wields those powers be put together on the basis of proportional representation … What was right for Scotland, Wales, Northern Ireland and London is also right for England”.
That approach was endorsed by the Economist on 21 September this year.
From these Benches, we will continue to argue that further devolution to Scotland must proceed immediately. We should go even further than the present Wales Bill does for Wales. We should introduce a devolution-enabling Bill to bring about transfers of more power from this Parliament to other institutions in England, and those institutions should be elected on the basis of fair representation. Residual English powers operated in Westminster by a Grand Committee should be similarly subject to fair proportionality so that English votes and English voices represent the will of English voters.
Next year, 2015, is the 800th anniversary—
Lord Tyler
I am coming to a conclusion. Next year is the 800th anniversary of this Parliament, as set out in the Magna Carta. Barons led the route to greater democracy 800 years ago. I hope that Barons and Baronesses will make a very positive contribution to the next move forward on devolution.
Lord Empey (UUP)
My Lords, this debate is on devolution following the Scottish referendum. Unlike many colleagues in this Chamber who, after the Scottish referendum, expressed the view that it was a great victory, I do not think that is the case. It was a damned close-run thing. Not only that, having succeeded in winning, the ink was barely dry on the ballot papers when we were busy snatching defeat from the jaws of victory. I am no constitutional expert but there are two things that I know. First, you cannot sensibly reform a constitution such as ours on the hoof.
The second thing I know is that we are perfectly capable of destroying a similar constitution on the hoof. These things need to be thought through, and we have had years to think them through, but little or nothing has emerged. All of a sudden we get a shock. I have to say to noble Lords that it does not matter what we do with the vow that was made by our leaders. Of course it must be implemented, but whatever is put forward will not be enough because the people who will reject it have no gain to make by accepting it.
That is my biggest concern. I have always been in favour of devolution, and I accept that there will inevitably be an asymmetric situation in the United Kingdom. I also accept the frustration of the people in England. Let us face it: we have a Cabinet Minister outside this building telling the people of Scunthorpe how many times a month their bins are going to be emptied. That does not strike me as being somewhere where power should be, so we have a long way to go and we know it.
As the noble Lord, Lord Tyler, asked a moment ago, what will become of your Lordships’ House? Are we to go around with badges on us, or with flags on our foreheads, to say when we can go into a Lobby and when we cannot? What are we going to do? These things are fundamental and can be dealt with in a coherent manner only when everybody sees the working out of the constitutional changes that are inevitable now. We have set our shoulder to the wheel. Did we intend the machine to run down the hill out of control? Probably not, but that is where we are.
The nationalists in Scotland will never accept anything that we do here unless they get their own way. People like me know how nationalists think. It does not matter what we do in Stormont either—the same thing will apply.
The noble Lord, Lord Sewel, is in his place, and I want to say something about the convention in his name, which has been mentioned. That roughly said that this Parliament would not interfere in the day-to-day affairs of the devolved Assemblies. I understand that. However, as a result of that, we have turned the devolved Assemblies into giant ATMs. The politicians in them spread out the largesse—and I was one of them. We were spending billions of pounds, and if we did not have enough to spend, this place was to blame. It was a shot to nothing, as snooker players would say. We cannot possibly win in Westminster. There has to be some link so that the people understand where the money comes from and what the consequences are of overspending.
At Stormont today they are in crisis because they cannot control their own budget, something that has never happened before, despite being in charge of this for years. It is a mess. My fear is that, unless there is a clear link between what is spent and clear accountability by the devolved regions for what they spend, there is no way that we will have any United Kingdom identity or brand. It will simply be Holyrood or Cardiff or London or Belfast or wherever.
We have a lot of work ahead of us if we are to have a coherent constitution that meets the needs of our citizens. I feel very strongly that in Northern Ireland after 1920, Whitehall and Westminster thought the problem was solved. Northern Ireland was dealt with by a junior officer at the back of an office in the Home Office. I believe that, if this Parliament had had a meaningful role, oversight of and a say in what was happening in Stormont, we would never have got into the mess we got ourselves into in the 1960s and 1970s. We are going to repeat the same mistake, because it was clear when the Northern Ireland (Miscellaneous Provisions) Bill was brought forward earlier this year that the same thinking and mentality are still there.
I can say only that I am a great believer in our union—a great believer in the United Kingdom. The chairman of our Constitution Committee, the noble Lord, Lord Lang of Monkton, who will speak shortly, spelt out a vision for the union for the years ahead. We need that vision first, and then we have to decide what the function is, and the form will follow. I think we are doing it back to front.
The Lord Bishop of Chester
My Lords, bishops need to tread warily when discussing matters Scottish. Although I am thoroughly English by birth and background, I can, I think, claim rather closer connections with Scotland than some whom I observe wearing the kilt at the Chester Caledonian Association dinners which I regularly attend.
Let me explain. I have a Scottish wife—my one and only wife, I hasten to add—and two Scottish degrees, all three from Edinburgh. I trained for ordination in Scotland as somebody sponsored by the Scottish Episcopal Church, and I have owned a house in Scotland for 25 years and will happily retire there in a few years’ time. I am Anglican co-chair of the current Church of England-Church of Scotland ecumenical conversations. So tread I shall, if nevertheless warily. If I have learnt one thing in my discussions with the Church of Scotland, it is that were the Kirk ever to contemplate having bishops, which remains, I think, doubtful, they would need to be very different from English bishops to be acceptable.
My learning curve about Scotland began soon after I had enrolled at Edinburgh University in 1974. I was in the student common room watching a football match between England and Russia. Russia scored first, and the whole room exploded with joy and everyone cheered. Had it been in an equivalent English university and Scotland had been playing Russia, the English students, I think, would have been enthusiastically supporting Scotland. But in Scotland things were clearly different. I suddenly awoke to the fact that I was in a foreign land.
What I was beginning to learn 40 years ago was that Scotland is self-consciously a different nation from England. In all my subsequent contact with Scotland, not least during the recent referendum campaign, which I observed closely, I have been on a progressive learning curve about the separate dignity of Scotland as a nation. I think that the English often find that hard really to take in. Even some aspects of the recent campaign rather undergirded that to me.
Let us never forget that, for most of human history, Scotland has been a fully independent country, with its own culture, and Hadrian’s Wall stands as testament to that. The question on the ballot paper, “Should Scotland be an independent country?”, ought to have been, “Should Scotland revert to being an independent country?”, which is how it has been for most of the time. I say all this as a supporter of the union.
Baroness Quin (Lab)
I am grateful to the right reverend Prelate for giving way. May I point out that Hadrian’s Wall never has been the border between England and Scotland? It is not near the border today and, in fact, runs through the middle of the city of Newcastle upon Tyne.
The Lord Bishop of Chester
I do know where Hadrian’s Wall runs, but the fact that the Romans did not get to the rest of this island is significant, even though I fully accept that the border, which has moved over time, is not coterminous. But the very fact that the Romans did not conquer Scotland reinforces the underlying point I am seeking to make.
I chose not vote in the recent referendum, although I was entitled to do so, because I felt it was a question which the Scots should decide. If I had voted, I would have voted no. However, I found the recent no campaign disturbing to the point of embarrassment. It was conducted largely on negative, almost threatening terms—“worse apart” rather than “better together”. When this did not seem to be working, after the second televised debate in particular, the strategy changed towards promises and inducements, with the Prime Minister suddenly to the fore. How much better it would have been had he headed up the principled case for the union from the start and made that case on a positive basis, as indeed did former Prime Minister Gordon Brown.
I would draw two conclusions from what I have said so far in relation to today’s debate. First, the English in particular need to be very careful not to be seen to take the union with Scotland for granted—a lot of this is about perceptions—or to take the union as a foregone historical conclusion, which it clearly is not. The English and the Scots may share a great deal but fundamentally they are different cultures and nations which, for the past 300 or so years, have formed a richly creative political union. That union now needs to be nurtured on a new basis, especially given the dismantling of the British Empire. The English tendency to view Scotland in a slightly paternalist, patronising way needs to be consigned firmly to the past as the new devolution arrangements are negotiated. I hope that is the key in which all that is now going to be discussed is conducted.
Finally, I would be cautious before drawing any lessons from the recent referendum for wider questions of devolution in the UK. What will now happen in Scotland reflects the particular historical dynamic of English-Scottish relations. Perhaps elements will be replicated in relation to Wales and Northern Ireland, and even some regions of England, but not necessarily so. The resounding outcome of the referendum in the north-east on a regional assembly a few years ago illustrates the specific nature of the Scottish question. To regard the English-Scottish relationship as simply the primary and maximal example of broader devolved relationships in the UK would be to invite a repetition of recent errors of judgment.
Lord Lang of Monkton (Con)
My Lords, it is a great pleasure to follow the right reverend Prelate and to reassure him that the Romans did indeed get well into Scotland—but it did them no good. I am sure the whole House looks forward to the maiden speech in today’s debate of the noble Lord, Lord Lennie.
I welcome this further debate on devolution, although it takes place in greatly changed circumstances. What should be happening now? I think the ideal answer is calm reflection, consultation and consideration of a way forward, not just for Scotland but for the whole United Kingdom. Unionism won the referendum but for a secure future it is clear that the union now has to change. I believe now that a wide consultation process should take place and that it should involve the interests of all the component parts of the United Kingdom.
Few can now dispute the causal link between the establishment of a Scot-centric, lopsided, asymmetrical, tax-free, unstable form of devolution in the Scotland Act 1998 and the slow but accelerating landslide towards separation that has ensued. That approach has not brought stability or fairness. Successive changes have fed the flames and come close to destroying the United Kingdom. Under that approach, devolution has become a separatist policy. It has been the gift that keeps on taking. The slogan that Labour coined in the 1990s, “We didn’t get the Government we voted for”—that self-deluding piece of constitutional chicanery—is the same slogan that the separatists have picked up and run with ever since. That is why we have to pause, step back and bring the whole nation into the debate. That is why I am uneasy about the rush to action to which we all find ourselves firmly committed, although of course we do have to honour the commitments that have been given.
I would like to try to be constructive, in particular to seek information from the Government to head off any threats that the latest devolutionary proposals create, because I think I see a potential impending problem. The core of what is contemplated now is the raising of a higher proportion of what the Scottish Parliament spends from direct taxation by it, instead of from a grant from the Treasury. There will of course be a read-across in due course to Wales and Northern Ireland. Of the variations on offer, I support the Strathclyde commission’s proposal to transfer the whole of income tax as it forces the issue directly towards the pockets of those who will have to pay. It will be a democratic stimulus. But my concern is this: I do not understand how it can possibly work. The funding system for public expenditure in Scotland is much misunderstood, in particular the Barnett formula. A formal submission from the Scottish Labour Party to the Smith commission referred to the “Barnett grant”. But there is no such thing as a Barnett grant. It does not exist. Barnett is a mathematical formula—no more, no less. It has no funds to grant. The funds come from the Treasury’s Scottish block grant, annually disbursed. The block grant is the key to the whole thing. The baseline of that block grant is not recalculated every year except to take account of relative population changes. Rather, it is the accumulated mass of past settlements and favours won for Scotland by past administrations, to which is added a new sum each year. It takes no account of relative need. The disbursement of that annual sum is where the Barnett formula comes into play.
I will spare your Lordships the details of how the mathematics of the formula works. It is intended to, and it does, erode gradually—very gradually—the excesses contained in that grant. In due course, it will become increasingly irrelevant as the block grant itself is cut into. It is the block grant that enables Scotland still to spend much more per head than England on many public services, and England and Wales are right to feel short-changed. It is the block grant that is now about to be hacked into by the 10% income tax provision in the Scotland Act 2012, not yet implemented, and by whatever further devolution of taxation the Smith commission decides on.
I wonder how the product of that 10% income tax and future tax transfers will be calculated and the block grant therefore cut. The impact of that and the further tax transfers proposed could be substantial, reducing the block grant by a large amount. Out of date though it is, and largely irrelevant as a true measure of relative need, the block grant is a pot of gold compared to the uncertainties that lie ahead with its replacement by Scottish income tax. The tax base in Scotland is weaker than in England. There is a larger public sector and correspondingly smaller private sector. With the machinations of the nationalists stirring up uncertainty and loss of confidence, that is likely to get worse. Investment decisions and productivity look endangered just when they will need to be enhanced. But the cushion embodied in the block of some £4 billion, which Barnett does not touch, could now evaporate along with much of the block. The consequences for current spending levels and future taxation could be extremely serious.
I have long argued that the surplus that has built up in the Scottish block grant should be addressed to bring fairness to the rest of the United Kingdom, but in the context of tax changes now facing us, we urgently need clarity on that potentially very difficult issue. What plans has the Treasury to erode or retrieve part of that £4 billion? Does it plan in some way to identify and hypothecate spending within the reducing block, thus second-guessing how the Scottish Parliament might spend it? Then the block grant would no longer be a block grant.
I ask my noble and learned friend to tell the House how that transition will be managed. What will happen to that £4 billion cushion that I referred to? It is an excessive figure, but some of it is deserved and, at the least, a transitional period is needed if it is to disappear. Will there be what is urgently needed across the whole United Kingdom: a new, needs-based study of relative need and new arrangements introduced to meet what will be fair and just forms of support, once the facts have been accurately established? The matter is now becoming a burning issue.
That brings me back to my central theme. It is only by establishing fair and balanced systems and powers of government across the whole United Kingdom, varying in detail but harmonised in their underlying principles, that we can hope to achieve the stability that will secure the long-term future of the United Kingdom.
Baroness Liddell of Coatdyke (Lab)
My Lords, more than 2 million people in Scotland voted no; almost two to one. That is where the mandate lies. The people of Scotland wish the United Kingdom to remain united. We must be very cautious in our deliberations that we do not jeopardise that. Some of the issues raised since the devolution referendum put that in peril.
Let us start with English votes for English laws, following what the noble Lord, Lord Lang, said. It is very difficult to have English votes for English laws because of something called the Barnett consequentials. I will not go into the detail of the Barnett formula—I have only six minutes and it has taken me about six years to understand it—but the key issue is that we must not have two levels of Members of Parliament. That is absolutely essential. We begin to destroy the United Kingdom if we go down that route.
The other issue, again taking up a point from the noble Lord, Lord Lang, is about proposals for the devolution of taxation. One of the key issues in the referendum was the pound; it was central to the campaign. I should be very grateful if the noble and learned Lord, when he is summing up, could explain to me how a currency union, which is what sterling is, can operate without a fiscal union as well, leading to proper monetary union. We must be very careful that we do not scupper that.
If you read the Scottish press and look at the atmosphere in Scotland, you would think that no had lost. We have a responsibility to every one of those 2 million to recognise the mandate that they have given us. They were the silent majority. The noble Baroness the Leader of the House referred to how wonderful the devolution referendum had been with the high turnout. Frankly, it was the worst election I have ever seen. It was divisive, it was aggressive, it was thoroughly unpleasant and it did not represent the good people of Scotland, whom we saw weeks beforehand at the Commonwealth Games welcoming the world. And, yes, in some places there was an anti-English feeling, and Mr Salmond and Ms Sturgeon were the joint architects of that.
The division is having an impact even yet on Scottish businesses. Some of your Lordships will have seen the analysis of Standard Life the other day recounting their strengths, their opportunities and their weaknesses, and the risk still being independence. The noble Lord, Lord Empey, was absolutely right to say that we are going at this the wrong way round. This is piecemeal, reacting in the space of weeks to a situation that has taken generations to build up. The start of this long progress towards devolution may have been 300 years ago, but in my lifetime it was when two royal commissions were published—Kilbrandon and Wheatley. They were done separately; if they had been done together, the outcome would have been very different indeed.
As we move into this next phase of looking at the consequences of devolution, I would like us to concentrate on how we bring our society together. Some of that is bringing the business community together. Some of that is recognising that women very clearly voted for no. I had never gone to someone’s door and had someone say to me, “I’m voting yes”, and then shake her head and say, “I’m actually voting no, but I’m scared to say that I’m voting no”. There was a silent majority that was frightened to say how it was voting. I know of one lady who put yes stickers on her car because she was frightened of getting a stone through the windscreen, despite the fact that she was voting no. We must bring society together. We had the appalling situation of Louise Richardson, the principal of St Andrews University, being bullied by the First Minister’s office to support devolution. That is against everything that devolution is about.
I realise that these are difficult issues for all the United Kingdom. There is a democratic deficit in this country, and it applies to England. The way to resolve it is not with a sticking plaster; it is by looking in depth at the issues that we have to confront and by being confident enough about the strength of the union. We were all far too apologetic about the union. It was a great support to all of us who were involved in the campaign to receive messages from down south. I am in front of my noble friend Lady Quin, who was on the doorsteps more than I was, and my noble friend Lord Soley, who was very active in getting the English vote together. Let us not squander the benefits of the union. It has brought us together and served us well for many years. Do not let those who are doing a lap of victory in defeat undermine the union by the back door. We have a responsibility to stand up and defend it.
This House has a role to play. A constitutional convention sounds like a very good idea, but, frankly, what I would like to see is a royal commission on the constitution that looks in detail at the devolution settlement and at the role that your Lordships’ House can play in that as a House that represents and has the potential to represent—hopefully, directly elected—every part of the United Kingdom, with the background, experience and knowledge that this House brings together.
I keep hoping to escape Scottish politics—I went to the other end of the world to escape it—but thank goodness the people of Scotland made their voice known clearly and without question. We must not prevaricate. They have the mandate, which is for the union of this country. We must not squander it.
Lord Steel of Aikwood (LD)
My Lords, it is a particular pleasure to follow two former Secretaries of State for Scotland in this debate, given the important speeches that they made.
I begin by echoing something that was said by the Moderator in the sermon during the reconciliation service at St Giles’ Cathedral. He pointed out that despite the flaws, which the noble Baroness was quite right to mention, the fact is that the turnout produced an enthusiasm for political discussion and debate in Scotland that we have not seen before. It was 84%; we have not seen a turnout like that since my by-election in 1965. That gives me the chance to say how proud I was that the Scottish Borders was the area that produced the strongest positive no vote in the referendum—apart, of course, from the Orkney Islands, before my noble and learned friend intervenes. However, I discount Orkney because I think that if there had been a yes vote, they would have followed that by voting to go back to Denmark. On the mainland of Scotland, the borders had the highest turnout.
The immediate consequence of the referendum is the appointment of the Smith commission. I am perhaps a little more optimistic about it than many others are. I know that it has been given a tight timetable but my former constituent, the noble Lord, Lord Smith, is an extremely able and patient man. More importantly, I notice that each of the four political parties has appointed to that commission people of good common sense. I include in that the SNP because while it could have produced some wild cards, both John Swinney and Linda Fabiani, who I know from my time in the Scottish Parliament, are sensible people who will work with the others in that commission to try to produce a consensus agreement. It is perfectly obvious that no political party will emerge from that commission with everything that it wants. That cannot be done but if there is good will in that commission, which has certainly got off to a good start, there is no reason why it cannot come up, in a very few weeks’ time, with a package of further measures amounting to the maximum of home rule consistent with common sense.
Going beyond that, we have to look at what happened on the morning after the referendum. The Prime Minister made a great mistake by coming out into Downing Street at seven o’clock in the morning. Nobody, not even the Prime Minister, should be out at seven in the morning making pronouncements on anything, in my view. I am glad that my noble friend Lord Ashdown is not his place because I used to stop him phoning me at 6 am. In fact, I gave a general instruction that nobody was to phone me before 10 am, which is a much more sensible approach. However, it was a disastrous statement that the Prime Minister made at 7 am. Trying to link the immediate issue of further powers to Scotland with the English question was a serious error.
However, we have the report of the McKay commission, which was published some years ago and has been around a long time. It proposed simply that there should be an English, or an English and Welsh, Grand Committee. I see nothing wrong with that. My noble friend Lord Tyler was right to say that it might just be a talking shop but I was a member of the Scottish Grand Committee in my early days, which was a talking shop but quite a good one. We had debates on our own issues and dealt with the early stages of legislation, although at the end of the day the whole House of Commons had a vote. There is no reason why an English Grand Committee could not be composed on the same basis.
Admittedly, in the early days of the Scottish Grand Committee we had conscripted English members to make up the party balance. That was madness; they were usually appointed by the Whips on the basis of their being guilty of misconduct. They would say, “Two days on the Scottish Grand Committee for you if you don’t turn up for the three-line whip tonight”. Eventually, they were abolished. My noble friend Lord Hamilton, who is not in his place, claims not to remember an episode which brought the conscripted members to an end but I remember it. We were having a debate on tourism in Scotland and, to our horror, Mr Archie Hamilton MP got to his feet. This was unheard of, as the conscripted members were not supposed to speak. He began his speech by saying, “I recognise that by intervening in this debate, I run the risk of not being appointed to this committee again”. That was what led to the end of the conscripted members. In its latter years the Scottish Grand Committee, as my noble friend Lord Forsyth will well remember, operated without a government majority. That did not do it any harm. It was a perfectly workable instrument, as I believe an English Grand Committee could be, too, without upsetting the basic nature of our constitution.
In the end, we will have to take a long-term look at our systems of government. I am one of those who strongly support either a constitutional convention or, as the noble Baroness suggested, a royal commission. I do not know which would be the better instrument but it would need to take time. If you count the pre-period of the Campaign for a Scottish Assembly, then the Scottish Constitutional Convention, of which I had the honour to be the joint chairman, took nearly 10 years to come up with the devolution proposals. We cannot even pretend that we got those 100% right. It is not a quick-fix issue. I believe that we have to move in a more federal direction. That is where a replacement for this House—a senate elected by the component parts of the United Kingdom—makes good sense. It needs all parties, including my own, to rethink their policies on this so that we come up with a proposal for a proper United Kingdom Parliament, where the upper House really represents the component parts of the United Kingdom.
Out of the Scottish referendum can come good, and I am more optimistic than perhaps some others in this debate. I wish it well.
Lord Hope of Craighead (CB)
My Lords, it is a very real privilege to follow the noble Lord, Lord Steel of Aikwood, who has done so much to inform the debates in this House. I am sure that many noble Lords will be grateful for the note of optimism which he has sounded.
When I spoke near the end of the debate at the end of the summer, when we were still wondering what the result of the referendum would be, I spent a little time trying to inject a note of caution. It seemed to me that there was a real danger that, if the vote had gone the other way, things would have moved extremely fast, to the timetable that Mr Salmond was going to set for us, and we would not be in a position to resist whatever demands he was going to make. Of course, the vote has gone in the other way—to preserve the United Kingdom—but I still feel a sense of unease about the commitment that was made in the closing days of the campaign. In a way, that is playing into the same trap where we find ourselves with a commitment to achieve a great deal within a very limited period of time.
I am sure that the noble Baroness the Leader of the House was right to underline the commitment that was given, because it would be quite unthinkable, as the noble Lord, Lord Tyler, said, to withdraw from that now. We have some reasons for comfort, some of which were mentioned by the noble Lord, Lord Steel—in particular, the commission which the noble Lord, Lord Smith of Kelvin, is chairing. We can have absolute confidence in the ability of the noble Lord, Lord Smith, to chair that commission. He has made it clear that we should leave the commission to get on with it. He is assuring everybody that the essential is that each of the participants around the table should have the authority to agree what can be agreed.
There is a reason for unease about that, however. Not everything that everybody is asking for can be agreed, and there will certainly be things left lying around which the Scottish National Party will be asking for. I urge caution again that we do not move too fast in giving way to whatever it is suggesting. The whole point of the commission is to assume, as indeed the voters told us, that Scotland remains part of the United Kingdom. That is one of the essential principles. We can draw comfort from that. But there we are; we have to hold firm to whatever the noble Lord recommends at the end of his discussions.
There is another reason for comfort, and that is that we have in existence a framework within which the result of the commitment can be delivered—that is, the Scotland Act 1998. It is a well tried system, which at least has the advantage of a system within which things can be adapted, according to some adjustments of the Schedules that set out the reserve powers and so on.
That is under the overall supervision of the Supreme Court, and perhaps I might just say a word about that. An essential part of keeping the devolved systems within the United Kingdom was that, ultimately, should there be an issue about the compatibility of legislative measures, it would be decided by the United Kingdom Supreme Court. I notice that one of the points being made by the Scottish National Party is that it wants to abolish all appeals to the Supreme Court—all appeals, not only civil appeals but also appeals under the devolved system. There is a great danger in that. I hope the Minister will assure us that the position of the Supreme Court as the ultimate court for deciding these issues will remain, as it is part of the United Kingdom structure.
This morning the Deputy First Minister was quoted as saying that the United Kingdom is just,
“a family of nations, not a unitary state”.
There is something in what she said, but it is certainly not the whole truth. The whole truth is that the UK is to a very large degree a unitary state because of the structures that hold it together: Parliament—these Houses—the Supreme Court and the other institutions that exist. No doubt the Scottish National Party wishes to separate them, which is why the proposals about the Supreme Court are there, but we must hang on to the idea that the UK is united in various essentials; it is not just a family of nations, as we are being led to believe.
As for the future, I feel, as others have been saying, that we have to move forward with some kind of commission to decide how the structures throughout the entire United Kingdom have to be designed. Again, I see the Supreme Court as having a vital position at the end of whatever package may be designed, but we have a framework that could be borrowed and used for England as well as the other parts of the UK. The devolved systems give some kind of sign as to the kind of framework that might be used. Mention was made by, I think, the noble Lord, Lord Tyler, of other countries that have systems of this kind. The South African constitution is another where you see a schedule with various powers that are devolved to the provinces, of which I think there are nine. So these structures can be used. It is not my position as a non-politician to say whether or not that is the right way forward, but we have some advantages on which we can build.
We may find as a result of the 2016 elections in Scotland that the SNP once again moves back with an overwhelming majority, and that will almost certainly result in a demand for another referendum. I hope that we do not go down the line of the Edinburgh agreement and the Section 63 order that followed it. If there is to be any discussion of a further referendum, surely that must be done in both Houses by means of primary legislation so that it can be fully debated in the interests of everyone—above all, people in England, Wales and Northern Ireland, who have a very clear interest in what goes on in Scotland.
Lord MacGregor of Pulham Market (Con)
My Lords, I am hugely relieved by the clear decision of the Scottish voters against independence. The consequences if the vote had gone the other way would have been severe indeed for the Scottish economy, but also for the rest of the UK in terms of the economic implications, currency, the division of assets and liabilities, debt, defence, the EU and international bodies and the need to tackle all these issues when we have so many other issues to deal with, not least the continuation of the economic recovery. It would have been severely disruptive and difficult.
We must all confine ourselves to a small number of issues, and I wish to concentrate on two: English votes for English laws, and issues around tax and expenditure, including the Barnett formula. As the Prime Minister, the Government and my noble friend on the Front Bench today have made clear, this is fundamentally a question of fairness. It has nothing to do with “morally wrong”. What is morally wrong about fairness? Frankly, we all know that it is not about morals; it is purely about politics. I believe that that is a very important point.
I shall speak first about English votes for English laws. I have just looked up the Hansard of one of the earlier debates that we had in the House of Commons on devolution shortly after I entered Parliament in 1974, a Scot representing an English constituency. It was in January 1976 on the then Labour Government’s proposals for devolution in Scotland and Wales. A number of colleagues who are now in your Lordships’ House spoke then, and it is interesting to see how many of the points made then are still fresh today. I shall give just one quote from my own speech. I said then:
“Although I accept the list of subjects which”,
the Government,
“have put forward for devolution to the Scottish Assembly … it seems that there will be a growing demand, which is right in logic and fairness, for the same devolution to be given to England. That is a demand that must grow. We have already seen much evidence of that during this debate … There is the feeling that the Scottish people will have a power over the subjects that are devolved to them that is almost total and complete … whereas Scottish Members will be totally involved at Westminster in the discussion of issues that affect England”.
I went on to suggest two possible solutions, and concluded:
“Let us remember that the English also have their rights”.—[Official Report, Commons, 15/1/76; cols. 676-77.]
Tam Dalyell was listening intently throughout that debate and henceforward argued constantly about what became known as the West Lothian question. It must be solved now. We surely cannot continue with a situation in which a Scottish Parliament can have total control over health, education and so many other crucial issues in Scotland—transport, et cetera—while in England, Scottish MPs can continue to vote, sometimes conceivably having the crucial deciding votes, on these same issues in England. It is relevant in this context to note that the Scottish population is 5.2 million while the English population is 53.1 million. In a vote where the Scottish MPs voting on a purely English matter could be crucial, what is fair in that for the 53 million?
I believe that the solution to this lies in the proposal for the Speaker to be able to denote a bill in the UK Parliament as an English Bill and that only English MPs would be able finally to vote on that matter.
Lord Lea of Crondall (Lab)
The noble Lord is discussing a very interesting point. Would it be fair to characterise it as a UDI for England approach, although he might not like that phrase? Would that make UDI for Scotland less likely or more likely?
Lord MacGregor of Pulham Market
It is really quite simple. If the Scottish people have Scottish issues, as delineated now, voted upon entirely in the Scottish Parliament, then the same ought to apply to purely English issues in the English Parliament, and it should be English Members of Parliament who should vote on them.
I entirely agree with the Leader of the House in the other place when he said:
“We must establish the principle that when this House makes decisions affecting only the people of England, or only the people of England and Wales, those decisions should be made only by, or with the consent of, the MPs elected to represent them”.— [Official Report, Commons, 14/10/14; col. 176.]
It is high time that we did this.
I turn now to tax and spending, both complex and crucial issues. I have just a few quick points. I hope that we can soon have a full debate on all this. First, there are good arguments in favour of more devolution of various tax measures, provided that tax and spending are taken together. In principle, having the possibility to raise or lower taxes, while at the same time recognising that there are spending consequences, is attractive. Borrowing limitations must also be taken into account, as should the consequences for UK tax revenues.
Secondly, what cannot be accepted is the freedom to lower taxes and decrease revenue, with the expectation of consequential upward adjustments in the block grant from the UK Exchequer at the same time.
Thirdly, this raises the whole question of the block grant and the Barnett formula. I well remember the discussions on the Barnett formula in 1976, when the noble Lord, Lord Barnett, was under great pressure to reach conclusions on the expenditure settlement. He has said that, because of that pressure, he had to find a solution to one particular part of the expenditure arrangements and that it was a temporary expedient, never expected to last; he is strongly opposed to its continuation. There is a strong feeling in the country—I have long felt this in East Anglia—that the formula is unduly favourable to Scotland. Current figures show that public expenditure per head in East Anglia, where I come from, is £7,865, in England £8,529 and in Scotland £10,152. I believe that this issue must be addressed.
Fourthly, many have argued that the formula should be adjusted to a needs basis. I have long argued that myself. A committee of this House reporting in 2009 argued that,
“the Barnett Formula should no longer be used to determine annual increases in the block grant for the United Kingdom’s devolved administrations … A new system which allocates resources to the devolved administrations based on an explicit assessment of their relative needs should be introduced”.
I actively believe that this should be introduced and that there should be a transitional arrangement.
In conclusion, I believe that this must all be tackled in the negotiations and that the Barnett formula should go at last. This will be a critical part of the negotiations; I hope that this House will have another opportunity to debate it before they are completed.
Lord Prescott (Lab)
My Lords, in the 45 years that I have been a Member of this Parliament, I have been involved in the argument for decentralisation and devolution and strongly believe in them. I have taken part in every referendum campaign in Scotland and Wales and, indeed, in the north-east, where I introduced and failed to get my Assembly. All of them, after a first refusal, were voted for a short time later in a referendum. The point to draw from that is that the public did not believe there were sufficient resources or powers in what was being offered to them in either the Scottish Parliament or the Assemblies. That is the first lesson.
We are always behind public opinion on devolution and decentralisation. The evidence from all Governments is clear. It is clear to me. When I argued in the Labour Cabinet for more resources and powers to be given to the North East Assembly, I could not get them. They were fixed in a central system, and very few of my colleagues were prepared to give the north-east the powers it was entitled to, and which they were quite prepared to give to Scotland and Wales. The people saw that I was offering a consultative body with quango powers—that was all it really was—and they rejected it. It was another form of local authority. The lesson to learn from that is clearly that we should understand the problems involved and find a proper solution.
Some of the discussions, and the questions posed by the noble Lord, Lord Lang, about tax are fundamental. The Barnett formula always comes into it. I remember arguments in the Cabinet about whether the Barnett formula is fair. In this referendum, the argument was that Scotland gets far more per head than England. That is an argument about having a fair system, as the noble Lord, Lord Lang, said. That means that we really have to look at that taxation proposal.
Looking at the regions, the population of the north alone is 9 million and 83% of our population falls under central government. You want to throw up your hands. In the north, we are not very happy about Tory Governments, just as the Scots were not. This business of English laws and English votes is just a political fix. It is nothing to do with redistributing power, which is what devolution and decentralisation are about. Indeed, the McKay commission suggested that it was told that it could not deal with finance. The White Paper before us does so in a fundamental and radical way, with changes in our tax. When people see how money is distributed between nations and regions, we will begin to get the problem of people seeing that more is being given in a very unfair way. That was part of the argument that came out of the Barnett formula. The commission left that alone. The McKay commission was concerned only with governance and how you identify an English or Welsh person voting in the Commons Chamber. God knows what we would do in this Chamber, but let us leave that aside.
The commission deliberately said that it was not going to deal with English regionalism because it was firmly rejected in the north-east. In all those referendums in Scotland and Wales there was consultation. That was mentioned by the noble Lord, Lord Steel, who said that that discussion lasted 10 years. We have not had two days on English votes, with the Prime Minister then coming out and making that point. He promised a vigorous discussion on decentralisation and alternatives for the English regions. What discussion took place on that? I know it was in the manifesto, but you need to consult the people. If there is a lesson that comes from Scotland, it is that the people took a very strong view and participated in a way that we have not seen anywhere else in this country, with the type of discussion that took place. The English regions are surely entitled to have the same discussion, to find the alternatives and how they fit in.
I hear another argument coming up. I know Tam Dalyell well. He was on one of the delegations and we worked together on the West Lothian question. Why do we not approach it the other way? Why not distribute the powers and resources mentioned in the White Paper and the Government’s proposals to the English regions? They can all be fitted in. Whether in health or education, adjustments can be made. It may be a challenge within our constitutional framework, but there would not then be a West Lothian problem.
Certain parts of the UK are being given far greater resources and powers. That will be resented in the English regions. I am from the northern region, where are 9 million people living in an area stretching from Liverpool to Hull, and on to Newcastle. That is a far greater number than in Scotland, Wales and Northern Ireland put together. What would be fair and have the greatest consensus would be a settlement with fairness built in. We talk about it, but we do not deliver it. Great damage is being done to decentralisation and devolution when the Prime Minister connects the English problem, as he would see it, to the Scottish promise, the Scottish vow. That will undermine the consensus. A system must be found to achieve that fairness.
A year or so ago, the Prime Minister promised a vigorous debate. Has the debate in the Cabinet committee now simply been what has been announced in Parliament or outside No. 10 Downing Street? Or are Members of Parliament and people in constituencies going to be given a say in deciding what is going to happen, as they had in Scotland and Wales? That is the least that can be done for the English regions. If not, there will be resentment; there will be a revolt—a call for the same treatment as there was for Scotland.
Concentrating on the northern region, 9 million is an awful lot of people. The Government announced that the Northern Way that I introduced in 2004 was becoming the Northern Powerhouse. They cancelled it when they came in and have now rebranded it. The north is not just about economics, it is also about accountability. These are essential issues but, above all, it is about consensus. This cannot be achieved two days after a Number 10 statement; it can only be done by consulting the people. We demand that right. We want a proposal in the White Paper that the Government will consider a reform of the English regions in some way. This must be on the agenda, as it was with the Scottish referendum. We support devolution for Scotland and in Wales, but we are not going to allow it to advance to our disadvantage and with the contempt of this Government.
Lord Maclennan of Rogart (LD)
My Lords, the referendum in Scotland was ultimately satisfactory in that it gave us time to consider how to reform our constitution in a fairer way. The anxiety that I felt was in part due to the possibility that Britain would be broken up and we would cease to have influence on international events affecting our future. It seems that less consideration has been given to the part we play in global government, and to the susceptibility of this country to decisions taken against us, than to looking at the navel. We need to contemplate that as well as the fairness of the arrangements between theusb different nations and regions of the United Kingdom. Consequently, I am concerned that the decision to appoint the Smith commission to consider taxation and care has been taken with such a tight schedule. It seems, however, that it is at least possible that the implementation of the Smith commission recommendations will have more time, since the publication of the Bill to implement these matters will not be the date on which conclusions are reached.
The Government have said that the Bill will not necessarily come into effect before the next general election, and that will give a certain amount of time for scrutiny—the proper scrutiny that we need to give. I take the point that the noble Baroness, Lady Royall, made from the Front Bench opposite: we need to rethink our constitution. The scrutiny should not be done by individual political parties; we need a constitutional convention, which should be a high priority. I do not see any reason why the three main British political parties cannot now set up such a convention. I do not think that it should go on for ever, but it should certainly have enough time not only to take into account the outcome of the next general election and to reflect on the Smith of Kelvin recommendations but to consider subsidiarity. What issues can be decided in national or regional Governments and Parliaments that do not adversely affect the other parts of the United Kingdom? If we grant huge tax-raising powers to Scotland, it may also give the power to England, which is considerably wealthier than Scotland, to distort the distribution between the member nations and regions of the country.
I recommend that the three main political parties get together now and agree on how to involve the general public in such a convention and how to ensure that it is not just a political sword fight, and that information is given by those who are expert in all the areas that this needs to involve. We have heard the suggestion from the noble and learned Lord, Lord Hope of Craighead, that we should look again at the judicial consequences. I totally agree with him in criticising what was said by Lord Salmond—by Mr Alex Salmond, I mean—about appeals to the Supreme Court. If we are to have a national constitution, it should certainly be subject to review by such a judicial process.
I cannot urge more strongly the need to make the decision about the constitutional convention now, well before the election, when people can jockey for position. It should be made now, and the people participating in this should be drawn from a wide cross-section of the community and nation at large.
Lord Turnbull (CB)
My Lords, in my 35 years in Whitehall, I spent more time on public spending than on anything else, so the Barnett formula was never far from my thoughts. It was therefore with some alarm that I heard that “The Vow” by the three party leaders referred to continuing the Barnett formula. If that means continuing it as it operates now, that is an outcome that I would strongly oppose.
However, the actual text of the vow may offer some reassurance and a hint of a way forward. The front page of the Daily Record of 16 September says:
“And because of the continuation of the Barnett allocation for resources, and the powers of the Scottish Parliament to raise revenue, we can state categorically that the final say on how much is spent on the NHS will be a matter for the Scottish Parliament”.
Thus, if Scotland has a significant control over its revenue, it will ultimately control what the level of spending is on any devolved service. That condition can be satisfied by a wide range of Barnett formulae. It does not commit us to precise figures or method of calculation.
Note also a reference earlier in the vow to,
“sharing our resources equitably across all four nations”.
There is no way that the Barnett formula, as currently operated, can be regarded as “sharing our resources equitably”. Its main flaws are, first, that it adjusts the population proportion with a long lag. If, as is the case in Scotland, the growth of population is slower than in the rest of the United Kingdom, Scotland is always over-rewarded. Secondly, this flaw is compounded by the fact that, when eventually there is an adjustment to the population ratio, it applies only to the increment of spending in England at the next spending review; no attempt is made to correct past overpayment.
The best analogy I can produce is from income tax. Someone sends in a tax return and the inspector finds that the coding has been too generous. But instead of recouping the error in the next year, the inspector applies a new, less favourable coding, but only to the change in income from this year to the next. In this way, all the previous errors, which in the case of Scotland are all in the same favourable direction, are allowed to accumulate. They have now reached grotesque proportions.
Scottish public spending is now £1,600 per head greater than in England and £500 per head greater than in Wales. These are huge sums in relation to income per head, of the order of £20,000 a year. This disparity funds policies in Scotland, such as care for the elderly, university fees and prescription charges, which are simply unaffordable elsewhere in the UK. To put it another way, a Scottish family of four receives the same social security benefits as an English family, but on top receives an extra £6,000 per year in what we used to call the social wage.
What is the explanation for this? The answer, in a word, is appeasement. Over 30 years, neither Conservative nor Labour Governments wanted to confront voters in Scotland. When the House last considered this in the committee chaired by the noble Lord, Lord Richard, in 2009, it was suggested that the way forward was to relate the transfers to needs. But, as Mr Salmond—not Lord Salmond—frequently boasted, Scotland is a prosperous nation. Scottish Government figures claim that Scotland has a GDP per head 11% higher than that of the United Kingdom as a whole. Wales, on the other hand, has a GDP per head of about 25% lower than the UK average.
Had I served on that committee in 2009, I might well have signed up to the recommendation to move to a needs basis. In my time at the Treasury in 1993, we investigated that, although it came to nothing. However, I draw noble Lords’ attention to the analogy of the rate support grant, which is a needs-based thing, which turned out to be a statistical nightmare. I no longer think that this needs basis is necessarily the right answer when the freedom for Scotland to raise taxes is being expanded. Instead, we could move to a much simpler system under which all nations get a block grant of the same per capita amount and the devolved Assemblies are given the freedom to top that up, or not, as they please. In the process, as the noble Lord, Lord Empey, mentioned, they would assume a proper accountability.
The other change is that the population ratios—
Lord Forsyth of Drumlean
I am grateful to the noble Lord, and I agree with everything that he has said. Is not the problem with his recommendation that there would be a huge gap in the Scottish budget, which would mean that Scotland would end up as the highest taxed part of the United Kingdom and worse off in terms of public services?
Lord Turnbull
Not necessarily. Scotland would have to bring its spending into line with England and it would be getting the same grant from the centre as England. My recommendation corrects a favourable anomaly; it is not impoverishing Scotland compared with England.
Lord Purvis of Tweed (LD)
I am grateful to the noble Lord, and I do not intend to take up too much of his time. When he refers to England, is he including a calculation for London, and is he also including what is currently statistically considered as non-identifiable expenditure for defence and how that is distributed across the different nations?
Lord Turnbull
I was referring to identifiable expenditure, not defence expenditure. The latter, of course, runs at a very high level in Scotland, with our major bases there. I have not addressed the issue that the noble Lord, Lord Prescott, raised, which is how you deal with separate regions within England. That is a further thing that we have to address.
The other change is that the population ratios must be kept much more up to date than they have been at present. My plea, therefore, is that we start a new relationship which gives proper weight to the principle in the vow of “sharing our resources equitably” across the whole of the United Kingdom.
Lord Selkirk of Douglas (Con)
My Lords, I enjoyed the noble Lord’s lucid speech and I have no doubt that it will be noted by the commission of the noble Lord, Lord Smith of Kelvin. First, I should mention that I had a past interest as a Member of the Scottish Parliament. I remember the night of that election very well because those counting the votes said that they had had enough at 3.30 in the morning. As a result, those of us in the Lothian region and Edinburgh had to await our fate being determined for a great many more hours. I was one of the last three in Scotland to be elected. The other two were my noble friend Lord Steel of Aikwood and Britain’s first Green parliamentarian, Mr Robin Harper.
I should also mention a second interest. I served as a member of the Government’s Calman commission, which recommended additional powers for the Scottish Parliament. The resulting Scotland Act 2012 included the power to set a Scottish rate of income tax from April 2016, as well as the powers to introduce taxes on land transactions and on waste disposal from landfill, replacing the existing UK-wide taxes of stamp duty, land tax and landfill tax from April 2015.
With that background in mind, I rise to highlight one particular issue—the supreme importance of the guaranteed timetable set out for transferring further powers to the Scottish Parliament. That was endorsed by the three party leaders as part of the vow, published on the front page of the Daily Record. The details of the timetable for action had already been put forward by Mr Gordon Brown in his extremely powerful intervention in the referendum campaign. However, no sooner had the people of Scotland expressed their desire to remain within the United Kingdom clearly and decisively than the leader of the SNP, Mr Alex Salmond, began to construct a narrative of betrayal. He accused the Prime Minister of backtracking on the pledges made, and he was at it again on television last week on “Newsnight”, claiming:
“Yes of course he is trying to renege on the promises he has given. He is a Tory Prime Minister. That is what they do”.
These unfounded allegations go beyond even wishful thinking. They are pure fantasy because not one of the three leaders has actually reneged on anything. I hold in my hands the Prime Minister’s speech on 19 September. These are his words:
“To those in Scotland sceptical of the constitutional promises made, let me say this. We have delivered on devolution under this government, and we will do so again in the next Parliament.
The 3 pro-union parties have made commitments, clear commitments, on further powers for the Scottish Parliament. We will ensure that they are honoured in full”.
A Command Paper has been published on time and, although the timetable is tight, I fully expect that the heads of agreement to be drawn up by the government commission of the noble Lord, Lord Smith of Kelvin, will be made public by St Andrew’s Day, as promised. It has suited the First Minister of the Scottish Government to claim that the Scottish process could be knocked off course as a result of the Government’s plan to come up with proposals for constitutional change in other parts of the United Kingdom.
However, this attempt at obfuscation flies in the face of the facts. Mr William Hague, the leader of the House of Commons, who is chairing the committee looking at possible constitutional change in the other House, has stressed on television that every commitment made with regard to Scotland,
“has so far been kept and will be”.
Even more importantly, he has said that the two matters are not tied in the sense that one is dependent on the other. In addition, all five party leaders who met last week around the table at the commission chaired by the noble Lord, Lord Smith of Kelvin, tried to agree on a way forward for Scotland. They made it clear that enhanced devolution for Holyrood should not be conditional on any other plans for the rest of the UK. In view of Mr Salmond’s determined attempt to cast doubts on the execution of the promises made by the three party leaders, I would be very grateful if the Minister would confirm once more, in the clearest possible terms, that the pledges made to the Scots people will be kept and that there will be adherence to the agreed timetable. It is my strong conviction that those serving on the Smith commission are persons of sincerity and ability. I noted that the noble Lord, Lord Steel of Aikwood, described them as persons of “good common sense”.
To misquote the late John Mackintosh, it should not be beyond the wit of humankind to produce a package on measures for further devolution in line with the referendum results. I would be very grateful if the Minister, who has also served on the Calman commission, will make it clear, beyond doubt, that promises made will be kept and delivered on time.
Lord Greaves (LD)
My Lords, I am sure the whole House regrets that the noble Lord, Lord Barnett, cannot be here today to reply to all the comments about his formula. We all hope he is keeping well. I remind the House of my current interests in English local government. I wish to associate myself fully with the remarks of my noble friend Lord Tyler. I found myself cheering on the noble Lord, Lord Prescott, for his advocacy for devolution in the north of England.
To the surprise of many, certainly in this part of the kingdom, the Scottish referendum showed the intense feelings that people had about the dominance—I will try to use not very emotional words—of London and south-east England in the economy of this country, in investment, the financial sector, political power, government, media and culture. Watching all this on television, it came across to me that the degree of dominance is even greater if you just take England, because Scotland already has a substantial amount of political and financial power based in Edinburgh. This dominance is clearly linked to the distribution of wealth, incomes and influence; it is what people used to call the class system. Nowadays we are supposed to talk about social inequalities and not use the word class. However, it is not just social inequalities; the linked and closely related geographical inequalities are part and parcel of it. People are beginning to understand this much better now.
In the later stages of the referendum, the Deputy Prime Minister led calls for devolution, decentralisation, even a degree of federalism, in England as well as in other parts of the kingdom. To our surprise and horror, at the same time, we suddenly had calls at 7 am. I agree entirely with my noble friend Lord Steel about the nonsense of making announcements at this time but it is all to do with 24-hour rolling news. Top politicians nowadays think they have to dominate the day’s news agenda and hope to get through to the next day when something else will have taken over as the latest media fad. However, we had the attempt to resolve the West Lothian question by the introduction of English votes for English laws or, to use its appropriate acronym, EVEL.
Therefore, we are presented with a choice: that is, devolution to England and EVEL, however it may be carried out, or devolution within England to the regions—the towns, cities and localities of England. To pick up a point made by my noble friend Lord Thomas of Gresford, when the Prime Minister and similar people talk about England, it is not entirely clear whether they are talking about England or England and Wales. In terms of legislation, it is nonsense just to talk about England. Perhaps, instead of EVEL, we should talk about “EWVEWL” or something like that.
You only have to look at a typical Bill, especially a longer one, that comes to your Lordships’ House to see that towards the end there is a clause entitled “Extent”. Most noble Lords probably do not notice it. It states which clauses will apply to the different areas when the Bill passes into legislation. It is always extraordinarily complicated. When we were in opposition and I was responsible for overseeing the Marine and Coastal Access Bill from the Liberal Democrat Benches, I had the help of my noble and learned friend Lord Wallace of Tankerness to deal with the Scottish clauses. That was all built into the Bill and extremely complex. A lot of a typical Bill applies to England and Wales. Sometimes it applies to the Welsh Office directly and sometimes it applies to permissive powers to the Welsh Assembly and Welsh Ministers. Some of it applies to England, Scotland and Wales; to England, Northern Ireland and Wales; or to the whole of the UK. It is always complicated. If there is a serious attempt to deal with English votes for English laws, the whole way in which legislation is dealt with will have to be reorganised substantially. I suspect that often we could end up with three or four Bills instead of one.
When we were writing the constitution for the new party on the merger of the Liberals and the Social Democrats, my noble friend Lord Steel once accused me of being a north of England nationalist. I am not a nationalist; I am a north of England home ruler. I want as much local decision-making in the north of England as we can get. The problem is that throughout England, including the north of England, there is absolutely no consensus about the direction in which we want to go. My noble friend Lord Steel reminded us that it took nearly 10 years for the Scottish convention to get to the point where the Scottish Parliament was set up. At the beginning, the parties taking part all had a general consensus of the general direction in which they wanted to go; namely, home rule of some sort for Scotland.
There is no consensus in the north of England. We talk about city regions, which are a blind alley in many places because huge areas of the north of England are not in city regions. Some people talk about local authorities having more powers, which is a good thing in the short term, and some talk about regional bodies for the north-west, the north-east or for Yorkshire. I would like to see one for the whole of the north of England. Bodies such as One North, which was set up by some of the big cities to look at the transport links, lead us in that direction. However, there is no consensus. Before we can start talking about what we want, we must have debate and discussion in the north of England and, I suspect, in other regions of England to get some consensus of where we are going and what we want before we can stand up and say, “Home rule for the north of England”, which is what I should like to campaign on.
Lord Lennie (Lab) (Maiden Speech)
My Lords, I speak for the first time in your Lordships’ House and do so with a degree of humility, nervousness and some trepidation. My particular fear is that this piece of prompt technology will fail part the way through what I have to say. If it does, I have no doubt that someone will rush from somewhere to my aid, which has been my experience thus far in this House at every turn, or every wrong turn, that I have taken. I pay tribute to all the staff, officers and Members of this House on all sides who have been generous and kind, and have welcomed me here. I also thank my two supporters, my noble friend Lady Armstrong and my noble and learned friend Lord Falconer, who is unable to be here today—I will come to that in a minute—for doing me the great honour of introducing me to the House on Monday. Both have been my friends and political allies for many years and I hope will be for many more years to come.
With regard to my noble and learned friend Lord Falconer, I have an important leak to reveal to the House. A confidential source has revealed to me that he has been approached by a leading publisher to write a book. The working title is “The Ten Apples and Ten Cokes a Day Diet”.
Lord Lennie
Noble Lords may have seen some pre-publicity about this in the Sunday Times this week. It was not just a puff piece—it was a strategically placed article. The plan is to publish this as a pre-Christmas stocking filler. The problem with the plan is, of course, that my noble and learned friend Lord Falconer, subject to his successful diet, can no longer fill a stocking, so the plans are somewhat in disarray as far as publication is concerned.
I start my comments about devolution. I am somewhat unusual in this House in that I have experience of an English region rejecting devolution of power. A decade ago, as my noble friend Lord Prescott has said, the north-east chose by a large margin not to accept my party’s kind offer of a regional assembly. At that time I was the Labour Party director in the north of England. It is often said that we are shaped by our experiences. Having to explain the north-east rejection to my noble friend Lord Prescott certainly helped shape me.
Despite that defeat, I believed then, and I believe now, that there is an appetite for devolution of government in order that we improve lives, or seek to improve lives, and increase opportunities across England. For devolution to succeed, however, we must understand the reasons for its past failure in terms of what happened in the north-east. There was a disconnect between politics and people. That fundamentally explained the rejection of the regional assembly. The opponents simply asked voters whether they wanted more politicians at more cost, meddling more in their lives. The answer was a resounding no, thank you very much.
I suspect that the climate for politics is less favourable today than it was then. I may be wrong, but that is my suspicion. For devolution to succeed, the distance and disconnect between politicians and voters has to be narrowed, not just here at Westminster but in councils too. After all, an out-of-touch political elite is equally offputting, whether clad in ermine or mayoral robes.
Devolution must not be something that politicians want to do to voters, but a change delivered with, by and for the people. Proposals bringing this devolution to English regions and cities must be judged not by how they solve the problems for political parties but by how they will make things better for citizens in every region of the country. There needs to be a convincing argument that devolution means government done at lower cost, with clear, tangible benefits to the electorate at large. That is a huge challenge.
How do we go about this? First, devolution in England needs to be considered purely on its own merits. Otherwise, voters will see English devolution proposals as the unforeseen or unintended consequence of the Scottish referendum. They will see politicians trying to apply a fix to a problem they themselves created.
Further, we need to be clear that English devolution and English votes for English laws—EVEL—are not the same issue. Today we have a hugely centralised English government; changing who votes on which legislation may be a good thing or a bad thing in reflecting an English will, but it devolves little power. It cuts no costs. It makes the delivery of government policy no more streamlined than before. If we want devolution, we surely have to look beyond the question of who votes in Westminster. That means that we must devolve the process of devolution. It is easy to say that you are in favour of devolution, but if your deeds undermine your words, you will fail to impress voters who you want to support your proposals.
We must reach beyond politics and ensure that whatever we put before the English voters commands public support from a broad consensus of civic society, who can then seek to reassure those who are suspicious of politics—and I believe that they are currently the many, not the few.
Finally, I would like to say that I chose the title of Longsands Tynemouth. It was featured in a photograph in the Times last Friday; your Lordships may have seen it. It is where I live; it is worth a visit; and if you go there, go to the wonderful beach bar, Crusoe’s. It is where I spend much of my family time.
My home region, the north-east, is engaged and energetic and sceptical of easy promises. Those are qualities that I shall endeavour to replicate to the best of my ability. It is an honour beyond measure to be one of those of all parties and none who will speak up for my region in your Lordships’ House.
Lord Hennessy of Nympsfield (CB)
My Lords, it is an honour to be the first to congratulate the noble Lord, Lord Lennie, on his fine and witty maiden speech. There will be many more occasions when your Lordships’ House will relish his wit and wisdom, his intimate knowledge of the north-east, and his great experience both of what makes a political party tick and of the trade union movement. I already sense a special sense of solidarity with him: he is a devoted supporter of Newcastle United, with the emotional rollercoaster that that brings—I see the noble Lord, Lord Beecham, nodding madly. I am a West Ham boy; I know how he feels.
I declare my membership of the All-Party Group on Reform, Decentralisation and Devolution.
Relief that we are intact as a United Kingdom is still surging through every one of my capillaries, nearly six weeks after we knew the result of the referendum on Scottish independence. However, it is a relief suffused with anxiety, for the referendum campaign showed just how brittle the union had become and how brittle it remains. Now, not only do we have great repair work to do in terms of the emotional geography of the United Kingdom but we find ourselves on a vast construction site for the remaking of multiple aspects of our constitution beyond the sculpting of a new constitutional settlement for Scotland. It is largely without plan, substantial forethought or consensus.
There is a critical, pivotal sentence in chapter 3 of the Government’s Command Paper of earlier this month, The Parties’ Published Proposals on Further Devolution for Scotland. It is this:
“Proposals to strengthen the Scottish Parliament provide an opportunity to reach a strong and lasting constitutional settlement across the UK”.
Perhaps I may offer just a few thoughts on what it takes to frame “a strong and lasting constitutional settlement”.
The coming extra surge of powers for the Scottish Parliament will require constitutional legislation of a fundamental and first-order kind, as will any serious moves towards greater devolution and decentralisation within the wider United Kingdom. Can we reach for the Gladstonian solution of “home rule all round”, with the predominance that that would give to an English Parliament serving more than 80% of our people? Can we somehow carve a surrogate English Parliament out of the existing House of Commons along the lines suggested in the McKay commission report of 2013? Should we follow the developing economic geography of several parts of the kingdom and foster the growth of city statelets? The possibilities are multiple and every one of them stretching.
First-order constitutional legislation, in my view, needs to meet certain tests. It requires durability and predictability in its operation once it has received Royal Assent. For that to be achieved, it needs to live and breathe in a stable yet sensitive relationship with the other adjacent moving parts of the constitution. There is a prior requirement if these tests are to be met: a high level of parliamentary and, by extension, public consensus. To achieve this takes thought, consultation, care and time.
I appreciate the need to move with some deliberate speed towards fulfilling the promises made to the people of Scotland by the three party leaders on the front page of the Daily Record two days before the referendum poll. Great responsibilities rest on the shoulders of the noble Lord, Lord Smith of Kelvin, and the five political parties engaged on the task of converting those proposals into workable practice. However, I fear the consequences of excessive rush, not just for Scotland but for those other parts of the kingdom that will feel the percussive effects of the vote to stay together. Every fibre of me sympathises with the party leaders’ desire to save the kingdom in the last days of the campaign, but placing a series of staccato pledges on the front page of a newspaper is not the most desirable way of refashioning a constitutional settlement that had been 300 years in the making.
We are in the rain shadow of a general election. The metabolic rate of the party competition is rising and will continue to rise. I regret that very soon after the referendum votes were counted, as the English question shifted from a rumble to a roar, political partisanship inserted itself over the matter of English votes for English laws, with the Conservative leadership making it plain they would make EVEL an election issue if Labour did not go along with the idea. That Friday was when the party leaderships should have risen to the level of events and met as fellow Privy Counsellors to agree that, alongside the Scottish timetable, a broadly based constitutional convention or royal commission should be created to range wide and deep over the constitutional questions facing our country.
In the debate on Scotland that we had in your Lordships’ House last January, the noble Lord, Lord Lang of Monkton, whom I am delighted to see in his place, said that we needed to learn once more how to do things together as a union. Here was a shining opportunity to do just that. We need a set of constitutional arrangements that will allow the constituent nations and regions of our United Kingdom to live in a condition of “mutual flourishing”—to borrow a phrase used by the most reverend Primate the Archbishop of Canterbury in a different context. For this we need a broader-gauge approach: to think high, to go wide, to fashion a settlement that will endure.
Has the moment passed for this? I think not. I do not know whether the will can be generated within our political leaderships to stand back, rise to the level of events, meet as Privy Counsellors and make a joint proposal for a constitutional convention or a royal commission, but there really is a glittering prize of a better governed United Kingdom to be grasped up there on the higher ground.
Lord Lyell (Con)
My Lords, I thank my noble friend the Leader for being here for this debate. I have attended many debates on Scotland and we have not had all the assistance and help that we shall get from my noble and learned friend Lord Wallace and have already had from my noble friend the Leader. This is one of the most important debates that I have attended in 50 years—I shall say that again: 50 years—in your Lordships’ House. Fifty years ago I was an apprentice accountant in that great city of Glasgow and I never imagined that I would have the chance to discuss what we are discussing today—the onward march of devolution and political developments in Scotland—but we have it and here I am.
I declare an interest as I live in the boondocks of Scotland. To the real happiness of the government Whips who have tried to find me, I live about one station before Vladivostok, but I manage to get here in 12 hours on the train each week. I spent the whole of our Summer Recess in rural Scotland. Day after day, the electronic media, both visual and aural, told us that this was a major decision. It was, but feelings ran very high and I certainly listened with great care and appreciation to the remarks made by the noble Baroness, Lady Liddell. In my little town of Kirrie—known to the rest of the world as Kirriemuir—never in my 74 years have I seen not one or two but four policemen at the town hall where the vote was taking place. It may have been an 80% turnout but, as the noble Baroness pointed out, passion and feelings of varying degrees were whipped up to, I might say, “Bash the English”. That was behind it all. Certainly, I felt that in my neck of the woods in Scotland and it really rather worried me.
Happily, things turned out very well on 19 September and since. What happened and what have we had since then? I am pleased that the noble Lords, Lord Foulkes and Lord McAvoy, are here, because the three of us frequently hear, when the men in dark blue have not done terribly well, “We were not defeated; it was the referee”. That has been the great cry of the yes voters, and we are still hearing it today. It has been gradually calming down, but it will be an ongoing battle, probably for the rest of my career in your Lordships’ House or elsewhere.
I was in the boondocks of Scotland. I was very lucky; fortunately, in Kirrie, they regard me as something of an intellectual—they are quite wrong—because I obtain and pay for a copy of the Financial Times. One of the most hard-hitting articles that I read was by the noble Lord, Lord Robertson. I warned him that I would mention him although I knew that he would not be not here today. He wrote the most devastating article for the centre pages of the Financial Times. He was speaking to a taxi driver in Glasgow who said, “I want to be part of the United Kingdom, but I am going to vote yes to give those so-and-sos south of the border something to think about. Anyhow, all the negotiations will be done by the likes of you”—that is, the noble Lord, Lord Robertson, Mr Darling and the rest. As the noble Lord, Lord Robertson, said, that is sheer brass neck.
I fear that that was what was appearing in the electronic media but, happily, not in the printed media. Two days later, I read another article, again in the Financial Times, which I have no hesitation in praising because it is read throughout the world. My friends in America and New Zealand know precisely what is going on, even without the BBC World Service. Martin Wolf wrote a searing article for the centre page, saying, “You had better take care in Scotland; I have a shock for the Scots if they were to vote yes”. He looked at the economic and political aspects throughout Europe if there were to be a yes vote.
Happily, it did not turn out that way. Professor John Kay, who I understand is a leading adviser to the Government of Scotland, wrote that, “nationalist sentiment” will not,
“be assuaged by the transfer of responsibility for housing benefit”.
There is an awful lot more to be done. He concludes:
“Effective political leadership and a strong economy are the only way to define the resentments expressed in current public opinion”.
I started, and will finish very quickly, to the happiness of the Whips, by saying that I commenced my apprenticeship in Glasgow. I am very lucky to be followed by the noble Lord, Lord McConnell. In that great city, we have enormous industry. There is the Weir Group, which my noble colleague, the noble Lord, Lord Smith of Kelvin, chaired and ran for many years. I think that he has one year more than me as a qualified accountant. You could not find anyone in Britain or in the United Kingdom who would do a better job than he will for Scotland, its industry and its economy.
Five minutes ago, we had a huge group of young Royal Navy ratings up in the Gallery. Barr and Stroud is a world leader in naval equipment; once again, it is in Glasgow. We also have British Aerospace, or BAE, and the shipyards. My noble friend Lord Stephen came with me to Babcock International in Renfrew—world leaders in energy, microwelding and nuclear security. Those four firms are world leaders and they are in Scotland. They will provide the foundations and the seed corn for any development or devolution that will be discussed in my lifetime or further on.
I am very grateful to your Lordships for giving me five minutes.
Lord McConnell of Glenscorrodale (Lab)
My Lords, the result of the Scottish referendum was clear enough to resolve the issue of Scotland’s place within the United Kingdom for at least a generation, but it was also close enough to make all of us in positions of responsibility, elected or otherwise, sit up and listen to the message that it sent. Probably the most used phrase in Scotland over recent months has, I suspect, also been used across many of the towns of the north of England and elsewhere in the UK: “They just don’t get it”. That is a telling reminder for us of the disconnect that exists today between the Government, Parliament and the people that they are there to serve. In recent years there have been bonuses paid that appear to have been completely unjustifiable, scandals covered up at the British Broadcasting Corporation, the ongoing scandal over many years of expenses for Members of Parliament, and the “jobs for the boys” culture that appears to exist in and around British institutions. The feeling that they—the metropolitan elite in one form or another—are in it for themselves ran deep in Scotland in August and September. Those voting yes were not all nationalists, but they did all want to kick the establishment and the established order.
Lord Foulkes of Cumnock
Does my noble friend not agree that there have been some problems in Holyrood just as much as in Westminster?
Lord McConnell of Glenscorrodale
Yes, but I do not think that the issue there in any way reflects the perception in the country, not just in Scotland, of what happens between people in positions of responsibility and in established institutions in London and the metropolitan centre.
It is a matter of real regret for me that the fantastic atmosphere, very similar to that described by my noble friend Lady Royall, that existed in Glasgow and the rest of Scotland in July during the Commonwealth Games dissipated so quickly and turned into such bitterness and bile. It is also a matter of regret for me that it took Dan Snow, Bob Geldof and others to positively express what was good about the United Kingdom and worth keeping, in a way that most of the politicians seemed unable to do. It is a matter of deep regret for me that so many of what I would describe as UK politicians seem unable to see and praise, even from time to time, the good that has happened in the devolved Assemblies and Parliaments since they were created. That resonates with the people because it adds to that perception of being out of touch and at a distance. It is also a matter of regret for me that, in an unnecessary panic, commitments were made about additional powers for the Scottish Parliament that will be a challenge to keep. However, we are where we are, and keep those commitments we must.
I believe very strongly that the Smith commission must drive its work based on the following principles: the principle of subsidiarity, by which decisions should be made at the most local level possible; the principle of mutual respect between the two Parliaments and between the two Governments; and the principle of fiscal responsibility, but also fiscal opportunity for the Scottish Parliament so that it can make decisions that might spark off entrepreneurial activity and other developments in Scotland, in addition to having responsibility for the expenditure that it has made so far and will make in the future. The Smith commission should absolutely commit itself to doing nothing that would damage the UK single market. It should also have firmly in its thoughts the need to redistribute across the UK from rich areas to those that have more needs.
I believe strongly that the unionist parties will need to move their current policy positions. A settlement based on any of the current submissions will not be sufficient to create stability and allow the debate in Scotland to move on to using powers rather than more powers. The final settlement will require somewhere between half and two-thirds of expenditure being the responsibility of the Scottish Parliament through tax-varying or tax-setting powers. I believe that those powers should be not just for income tax; they should be partly income-related, partly business-related and partly sales-related. There must be the power to vary rates of tax up and down but not to assign revenues. If these additional powers are to be devolved to Holyrood, Holyrood itself must reform to ensure that government and decisions there have more accountability, and more checks and balances, than they appear to have at the moment.
With regard to the situation in the UK, coming out of the referendum it is vital that the UK looks at votes for 16 and 17 year-olds. The issue of English consent—not necessarily English votes—for English laws will have to be addressed in due course. Reform of this House, based on more equal representation for the regions of this country, will be essential. Individual matters such as the recall of MPs and the future of the territorial Secretaries of State will need to be addressed. I would have preferred it if these issues had been addressed in a constitutional convention, and I hope that that option might still be on the table.
Finally, I really wish that the Prime Minister, instead of standing on the steps of No. 10 the day after the referendum, had come to Scotland and said thanks. It would have been the right thing to do: to come to Scotland and say to people, “We are grateful that you voted the right way and we will be back. We mean it. We meant it when we said that we would change and improve this relationship, and in future our Ministers, both government and opposition, will come to Scotland and other parts of the kingdom not just when there is a problem and a vote is taking place. We will come all year round and will engage with you, and we will govern for the whole United Kingdom”. If the Government would do that, the whole kingdom would be a happier place.
The Earl of Glasgow (LD)
My Lords, I very much agree with the last point made by the noble Lord, Lord McConnell, but I suspect that some of your Lordships may never fully appreciate how close we were to the break-up of the United Kingdom last month. Those of us Scots who believe passionately in the union were having sleepless nights in the weeks running up to the day of the referendum. I really believed that the nationalists were going to win. Alex Salmond had masterminded a brilliant campaign. He had persuaded a large number of Scots that it was unpatriotic to vote for anything other than independence. His followers had whipped up my normally canny countrymen into a frenzy of excitement, promising us a new, fairer, more caring and more prosperous Scotland—and never mind the collateral damage and mess left behind; that was just Westminster scaremongering. He even engineered the question to be put to the voters. Those of us who were desperate to keep the United Kingdom were obliged to vote no, and those who wanted to see it broken up were asked to vote yes.
On the day of the vote, I really believed that the nationalists were going to win. More importantly, Alex Salmond and Nicola Sturgeon did, too. When they lost, they did not believe it, nor did their supporters. Clearly, it could have been explained only by some sort of Westminster stitch-up. At the last moment, Mr Cameron had made an agreement with the owners of all the big businesses in Scotland that they would announce that their companies would leave Scotland if there were a yes vote, and this had frightened a large number of Scots into voting no. Furthermore, the three unionist parties in Westminster had got together in a state of panic and bribed the Scots into voting no with unspecified promises of further devolution. Thus the no vote had been secured only by a number of last-minute dirty tricks. These arguments are still being expressed by angry nationalists in newspapers all over Scotland.
If dirty tricks had been employed in the campaign, it was those of the nationalists that had been the most effective. Large numbers of small businesses in Scotland were scared to declare their voting intentions in advance for fear of reprisals if the nationalists won. In certain parts of Scotland, life had been made very uncomfortable for those Scots with English sympathies or connections. By comparison, the Better Together campaign seemed mild, unthreatening and relatively ineffective. It came alive only at the very last minute, when people like Gordon Brown and Jim Murphy started to put the case for the union with some passion. David Cameron may have helped, but I am not sure about that.
In any case, Alex Salmond and Nicola Sturgeon may now have accepted the verdict of the referendum, but they certainly do not believe that this is the end of the story. They now regard the referendum as no more than a further step towards total independence at a later date. After all, they got 45% of the Scottish vote and that is why the threat of Scotland breaking away from the union is far from over. You English must remember that the nationalists govern Scotland and that, unless the Labour Party can get its act together fairly quickly, they are likely to go on governing Scotland for the foreseeable future.
A lot now depends on the deliberations and conclusions of the Smith commission but, here again, the nationalists hold all the cards. If the commission recommends that significant new powers should be devolved to the Scottish Parliament, these will be accepted by nationalists as useful stepping stones to full independence. If they are denied the sort of new powers that they seek, they will cry out that Westminster has broken its promises to the Scottish people and that the referendum was lost only through Westminster lies and subterfuge. They will then feel justified in demanding a new referendum or something like it. It is heads they win, tails we lose. The nationalists are not going to give up, as my noble friend Lord Lyell has already pointed out.
The noble Lord, Lord Smith, and his commission therefore have a difficult and delicate task to perform. They are going to have to keep reminding the nationalists that they lost a referendum fought largely on nationalist terms and that Scotland will remain part of the United Kingdom for the foreseeable future, whether they like it or not. That issue is no longer negotiable.
Against the wishes of our Government I have one plea, directed mostly to those English politicians who understandably seek to deny Scots MPs the right to vote on purely English matters in Westminster, but who also believe as passionately in the preservation of the union as some of we Scots do. It is: please let the West Lothian question remain unanswered, however unfair you may think it is. This Westminster Parliament is a British Parliament representing England, Scotland, Wales and Northern Island. It is not an English Parliament, as the Scottish Nationalists wish their supporters to regard it. Nothing could provide them with better ammunition than putting Scottish MPs into the position of being second-class Members in a British Parliament. Such a move would greatly strengthen their case for independence. Can those of you seeking a purely English Parliament please shut up? Talk of English independence is food and drink to the ears of Scottish nationalists. It plays it straight into their hands.
Alex Salmond, Nicola Sturgeon and an army of Scottish nationalists are not going to go away. They remain a continual threat to the union and we must give them no opportunity to open up this whole independence issue again. Personally, I am dreading the forthcoming referendum on Europe.
Lord Blencathra (Con)
My Lords, I wish to concentrate on the English question—or the West Lothian question, as it was originally called when the great parliamentarian Tam Dalyell first asked it in 1977. I am afraid that the question will have to be answered sooner or later.
First, however, I support the proposals in the White Paper by the parties on further devolution but I believe that they need to go further. The Conservative Party has additional devolution proposals. I think those are the minimum that we can do and for this reason: if we do not go as far as we sensibly and safely can, there will be a demand in the next Parliament by the SNP for another referendum. The noble and learned Lord, Lord Hope of Craighead, was right as if the SNP takes more seats in the general election of 2015 and increases its numbers above 69 in the 2016 Scottish Parliament elections, another referendum is more than likely. It is probably inevitable, especially if the SNP can point out that there are some matters that were capable of devolution and we failed to devolve them. I am afraid that this matter will not have been settled for a generation, or a lifetime, as has been suggested and as we hope. It will come back again and again until the yes vote for independence finally wins.
The Barnett formula has completely outlived its usefulness and should be scrapped, as the noble Lord, Lord Barnett, has repeatedly suggested. Indeed, he has called it a “terrible mistake” and a “national embarrassment”. However, the Prime Minister made a promise to retain it and it would be fatal to renege on that promise now. I hope that the formula will decline in importance if Scotland raises more of its own expenditure. If Scotland is to get the additional powers, which it must get, and continues to get £1,600 per head of population more than England, then it is vital that England is treated fairly, which it is not at the moment. We must therefore have English votes for English laws.
Some will say, as we have just heard, that we would then create two classes of MP but we have had that for 14 years in the Commons. We have had 59 Members of Parliament from Scotland being able to vote on all matters, including issues that are English-only and nothing to do with Scotland. English MPs do not have that reciprocal right to vote on a host of Scottish matters. That has unbalanced Parliament. It is morally wrong and needs to be changed. The McKay commission stated quite firmly that:
“The constitutional principle that should be adopted for England (and England-and-Wales) is that decisions at the United Kingdom level with a separate and distinct effect for England (or for England-and-Wales) should normally be taken only with the consent of a majority of MPs … in England (or England-and-Wales)”,
as the case may be.
I consider it one of our fundamental democratic and parliamentary principles that if, as a Member of Parliament, we vote for higher taxation, student tuition fees or whatever, then we have to be accountable to our electorate in our constituencies. We have to go back there at the weekend, look them in the eye and face the consequences of our actions but that has not been the case for Scottish Members of Parliament voting on English matters for the last 14 years.
When he was Secretary of State for Health in England, the noble Lord, Lord Reid, pushed through the NHS foundation trusts with the help of Scottish MPs. Health is a devolved matter in Scotland; so is education. I think that the policy of the noble Lord, Lord Reid, on foundation trusts was jolly good but it was pushed through by a Scottish Member of Parliament with Scottish MPs’ support, when the Scottish Government and their MSPs were making it abundantly clear that they would never adopt that policy in a million years in Scotland. That cannot be right.
The list of matters devolved to the Scottish Parliament includes agriculture, forestry and fisheries, education and training, environment, health and social services, housing, law and order, local government, sport and the arts, tourism and so on. On all these matters, English MPs have no say whatever since only MSPs decide on them. When I was an MP, I did not want a say in them but it is wrong for Scottish MPs to vote on these matters when they apply to England, since they have the freedom to do as they like and are not accountable to an English electorate. What a wonderful life that must be: to have power without accountability, voting through policies applying to England knowing full well that you will not face angry constituents in your surgeries at the weekend. That is why, for the last 14 years, English Members of Parliament were second-class citizens in the House of Commons Chamber, where everyone should be an equal. We already have a two-tier House of Commons and that inequity cannot continue.
There is an answer to Tam Dalyell’s West Lothian question. It is to implement English votes for English laws. England does not want piecemeal regional devolution. The noble Lord, Lord Prescott, tried regional devolution in the north-east and it was rejected by 78% of the electorate. I say to him that it was rejected not because the powers were grossly inadequate but because the majority of people, while feeling detached from Westminster, trusted it a lot more than they did politicians in Newcastle—or, in our case in Cumbria, politicians in Manchester and Liverpool—to divvy up the money fairly. The McKay commission pointed out that giving extra powers to local government in England and its northern cities, which I support as it may be part of a future solution, does not answer the fundamental question of the governance of England itself.
Some have suggested that the number of Scottish MPs should be reduced, as in the Stormont solution, on the basis that half the Scottish MPs’ workload is now the responsibility of MSPs. However even if there were only 40, 30, 20 or 10 Members in the United Kingdom Parliament from Scotland, they would still be voting on English matters. That fundamental injustice would need to be resolved.
Finally, having English votes for English laws is not too complicated to implement. The clerks in the Commons, as in this place, are experts at detecting hybrid Bills or amendments. They can easily identify a Bill which is UK-wide or for England only. It is not rocket science, as the McKay commission pointed out. There is overwhelming demand in England for such a change. I found that my English constituents in that magnificent border area were very tolerant and patient people, despite 600 years of border reiving—or probably because of it. They were very happy for Scotland to get additional powers but their view now is that 4 million electors in Scotland have had their say and it is time for the 40 million people in England to get fair treatment. I think that I am one of only 10 noble Lords participating today who has served as an English Member of Parliament. I say to your Lordships that we ignore the views building up in England at our peril. We should legislate for English laws and do it urgently, in tandem with any further legislation on devolution for Scotland.
Lord McFall of Alcluith (Lab)
My Lords, in the referendum, no has won the battle, but it has not won the war of words. Those words were pretty ugly, divisive and depressing throughout the referendum campaign. What we saw was an intolerant streak, demonstrated in the social and political debates; so much anger, venom and sneering contempt directed by individuals and groups at one another. The social media mirrored this throughout the referendum.
To have a decent debate you have to have a good tone at the top. That is where the First Minister and his deputy were lacking. They were lacking in the area of business. I was engaged with businesses for many months on this issue and they were afraid to put their heads above the parapet. I was engaged with academia, and that was a mirror image. The only one who stood out against that was Dr Louise Richardson of St Andrews University. In a personal call with Alex Salmond, she told him, no, she was going her own way. We also saw that with the SNP-inspired demonstration against the BBC for Nick Robinson asking a hard question—the sort of hard question that he asks politicians in Westminster day in and day out. Alex Salmond took exception to that.
What has happened is that Westminster has become a toxic term as a result of this debate. Both Alex Salmond and, indeed, Nigel Farage in his own way, have enhanced that toxicity. What does that mean? That means that Westminster is to be very much involved in ensuring that we progress this devolution debate. We need to ensure that we correct our politics and ask the question: how do we contain and how do we eliminate the disturbances that we have seen? There is something unnerving in the air—witness the social and political fragmentation. Westminster needs to reassert its authority and produce a confident voice in this debate; one that respects the constituent parts.
EVEL has been mentioned. If we go down this line as a primary consideration, we will not achieve that. Let us reflect on the situation. The English voice is alive and well in the mother of Parliaments: 650 constituencies with 533 English ones. That voice is alive. England remains the dominant nation. There is no need, as Vernon Bogdanor, the Prime Minister’s Oxford tutor, says, to beat the drum or blow the bugle. If we beat the drum and blow the bugle too much, that will strain the devolution settlement to breaking point—as will the 100% tax devolution to the Scottish Parliament. This is a slow way to independence. Why? If there is 100% tax devolution, Scottish MPs will not vote on the Finance Bill or indeed debate it as we do here. There will be no Scottish Chancellor and, given that the Prime Minister is the First Lord of the Treasury, there will be no Prime Minister from Scotland.
There is another way of getting independence. Members of Parliament and parliamentarians here have to realise that. If Westminster is to maintain its voice, there has to be no dereliction of duty by the Prime Minister in the future. A dereliction of duty was undertaken with the Edinburgh agreement. There was a casual treatment of the Edinburgh agreement by the Prime Minister. It was way in the future, so the timing, giving a two-year timescale, was given away—just like that. Also, the wording of the question was given away. The wording, style and tone of a question are crucial in determining the value and quality of the answer received. As one who campaigned, I can tell the House that it is very hard to enthuse people if one is proposing a negative. That should have been looked at at the very beginning. The constitutional debate since 1999 has been all about process; what further powers can be devolved to the Scottish Parliament or the Welsh Assembly? There has been little focus on the effectiveness of the delivery of politics. The concept of devolution as a process of events needs to be re-examined.
I have some very close friends who voted yes. I challenged them on why they were voting yes. I put it to them about the currency union, “Do you agree with Jim Sillars about stupidity on stilts?”. “Yes”. I asked about Trident and NATO. “Can you get rid of Trident while simultaneously getting in to a nuclear club? Do you think that is consistent?”. “No”. “What about EU admission? Do you think there will be problems about that? Will there be automatic entry?”. “No. There will be problems, but we are voting yes”. One highly sophisticated friend said to me that he voted yes and hoped that the result would be no. That illustrates the disconnection that there was. When I asked them why they were voting yes, they said it was for a fairer, more socially just society. But there was no means to deliver that. There is a disconnect and we must appreciate that here.
Arsène Wenger, in the Times this morning, made the point that we are moving from a thinking society to an emotional one. We are losing our sense of perspective on events because of the requirement for instant reactions and opinions. As Nobel laureate Daniel Kahneman said in his bestselling book, instead of thinking fast, we should start to think slow. We have thought fast in the past and we have got ourselves into deep problems. We need a constitutional convention or a royal commission; one which is thought out; one where there is citizen engagement; one where we have to think out the purpose and the terms of reference. A constitutional convention or a royal commission is the way forward. We should do it slowly so that we get wise decisions out of it—wise decisions which can secure a union that is not safe yet and wise decisions which, through reconciliation and good disagreement, can secure the peace.
Lord Kerr of Kinlochard (CB)
My Lords, I agree with almost all the points that the noble Lord, Lord McFall, has just made. A great deal of wisdom has been on offer in this debate so far, but I am a little uneasy that we are looking back too much, with a little too much retrospection and recrimination. The noble Lord, Lord Hennessy, got it right when he said that the fundamental thing that was wrong with the 7 am Downing Street statement was that that was a time for binding up the wounds. It was not a time for inflicting a new wound and making a link that had never been mentioned when the promise was made.
The first thing that we should do in this debate is send a message of congratulations to Ms Sturgeon in Edinburgh, the next First Minister of Scotland and the first woman to hold that position—clearly a doughty fighter and a worthy successor to Alex Salmond. I disagree with almost everything that she stands for, but I think that it is extremely important that we have a civilised debate. I would like us to send a message to her. I am very pleased to see the Leader in her place, and I hope that she will consider advising the Prime Minister to send this message: we in this House believe that our debates would be greatly improved if the voice of the 37%—only 37%, to correct the noble Earl, Lord Arran—who voted in Scotland for independence was heard in our debates. It seems to me that it is very easy for us always to be attacking the Scottish National Party. The Scottish National Party should be here. I have never understood the logic of the position that it is possible for them to take seats in the House of Commons but not in the House of Lords. It is in their interests, it is in our interests and a warm invitation should be extended straight away to Ms Sturgeon to change her party’s position and agree that the party should be represented here.
I want to make two points, risk two unfashionable paradoxes and make one proposal. My first point has been made already—the ATM point, as made by the noble Lord, Lord Empey. I think that “no representation without taxation” is a good rule. Any parliament that is responsible for expenditure but does not have to raise the money is always going to be irresponsible about expenditure. I am strongly in favour of the Strathclyde proposal on the devolution of taxing power.
Paradox one: why is the European Parliament always so determined to increase expenditure more than the member states are prepared to allow? For the same reason: it has no power to raise revenue. Most other Governments believe that the taxing power for the EU, raising the 1% of GDP that is the EU budget, would be better than a levy or a Barnett formula, which occasionally leads to a review and, if a review has been postponed and resisted for very long, can lead to a very large correction that can provoke tantrums and kerfuffles. The tax would seem to be more logical, but if one proposes that to the British Government, they draw back their skirts in horror. Yet the logic on Strasbourg and on Holyrood should be the same. Just as we are all to be content to see more taxing power even than in the 2012 Act given to Scotland, so we should think again about whether the Government are right to have decided to make no contribution whatever to the review of the revenue side of the EU budget that Prime Minister Mario Monti has been asked to undertake, and which we have decided we will not contribute to. That is a very unfashionable analogy, but I think I have just about got away with it.
My second point is of course about EVEL. The correct answer to the West Lothian question in today’s political circumstances is: “Get over it”. It is a problem that has existed for a very long time and it does not need a solution now. A quick off-the-cuff solution of the kind that could emerge from Mr Hague’s commission seems to be just the way to reopen the wounds of the Scots that we should now be trying to bind up.
The European analogy is perhaps relevant again, so I might try to get away with it a second time. For three years the French have argued for a two-tier Parliament in Strasbourg. With perfect Cartesian logic, they have pointed out that, since the British have decided not to join monetary union, the so-called fiscal union or the banking union, it is pretty odd that the British should be voting on eurozone laws in all three areas. The British Government have—completely correctly, in my view—resisted that, pointing to the folly of deliberately widening the Channel and to the importance of retaining the single market. So we have hotly opposed what the French have suggested, and it seems that we have won.
I had the privilege yesterday of being in Brussels with the noble Lord, Lord Boswell, in his capacity as chairman of the Select Committee, and it is a pleasure to see him in his place. We discovered that nowhere in the European Parliament is there any eurozone-only structure. We discovered, although of course we knew already, that Mr Juncker, the President of the Commission whom we decided to insult and oppose, has decided that all EU laws must reflect the interest of all EU members, and has given the noble Lord, Lord Hill of Oareford, responsibility for the laws of the banking union that we would not join. Now that is magnanimity and statesmanship, and in my view that is what was lacking the morning after the referendum.
That was my second paradox; I now come to my little proposal. Actually, this proposal has been made already. I am a very strong believer in the royal commission or the constitutional convention, but I think that there is a House of Lords angle to this, rather as the noble Lord, Lord Steel of Aikwood, was suggesting—some sort of solution whereby the devolved Parliaments indirectly elect representatives here. That would be a very good way of cementing the union for which the Scots have voted. Promises must be kept, of course, so let us press ahead with the commission of the noble Lord, Lord Smith—I wish him good luck—but one should go very slowly on EVEL and, as the noble Lord, Lord Maclennan, suggested, one should be thinking now of the correct form of convention or royal commission.
Lord Dobbs (Con)
My Lords, the last time that I had the pleasure of being squeezed between the formidable frames of the noble Lords, Lord Kerr of Kinlochard and Lord Foulkes of Cumnock, was in the debate on the EU Referendum Bill. That was a bracing experience, and I am sure that this one will be just as much fun.
That wonderful novelist and Scotsman Walter Scott once wrote that there is no path that leads through the Highlands that has not at some time or other offered a little danger for an Englishman. He added that the clans may squabble among themselves, but in the end they will always unite against those who wear breeches on their bottoms and have purses in their pouches. Those of us who are enthusiastically English—or indeed Welsh, or Irish—might be forgiven for feeling that we have escaped that moment of danger and reached our goal, with a referendum result that has reaffirmed our union. But like so many Members of this House today, I wonder. The moment of greatest danger may yet lie ahead.
I want to salute Scotland and its people. When I was there campaigning, there was not a single voter that I met of any political hue who did not take the task in front of them with extraordinary seriousness. For Scotland, the referendum was a triumph, the turnout Herculean—almost Romanian—in proportions, and the result, thankfully, was decisive. Yet, on that long march back home, we picked up a few pebbles in our boots.
Financially, things will not be easy. The Barnett formula will live on, even when its own creator says that it should be dragged off to the knackers’ yard. The English will still be expected to pay, and the poor Welsh will undoubtedly still complain of injustice. Fiscally, with the threat of different income tax regimes either side of the border, how will companies and individuals resist the temptation to move perhaps only a handful of miles to greener pastures? If there is to be different provision on a wide scale, not just in health and education but in social services, how will we stop families border-hopping in search of the best outcome?
Perhaps the most difficult challenge of all, though, will be political. The West Lothian question has now become the “West-Minster” question. How do we guarantee fairness to English voters to ensure that they are not treated as second-class citizens? Many commitments have already been given. All those vows that were made shortly before the referendum were clearly a result of high principle rather than low panic, but the hounds still snap persistently at our haunches. How on the one hand do we satisfy the legitimate expectations of Scotland without, on the other, arousing the largely dormant demands of the English?
We should never underestimate the natural pride of the Scots. After all, why else—and I may never be forgiven for saying this—is Judy Murray still in “Strictly”? Not for the strength of her Scottish reels, I fear, but, I suggest, because of the depth of her Scottish roots. Yet we ignore the English, their sense of fair play and their tolerance at our peril.
I have one fundamental anxiety about this bright new world that lurks just around the corner. If, after the election next May, the English wake up to discover that they are being governed by a party, or particularly by a coalition of parties, that they themselves rejected in decisive numbers, in those new circumstances it could be the English who start questioning the union. If that coalition were to be held in place or even imposed on the English through the support of MPs from an overrepresented and devo-maxed Scotland, our union boat could be rocked to tipping point.
Lord Foulkes of Cumnock
My Lords, I am pleased to follow the noble Lord, Lord Dobbs, in spite of what he said. I hope that he will forgive me if I return to the opening speech by the noble Baroness, the Leader of the House, for whom I have the greatest of respect. I fear that in parts of her speech she gave away the fact that Whitehall seems to have learnt nothing from the referendum. I do not think that she and Whitehall realise how near to disaster we were. We were at the edge of a precipice and we nearly went over it. We only avoided it because, thankfully, the silent majority in Scotland saw what was at the bottom of the precipice and came back and voted no. Otherwise we would have gone over that precipice, with all of the United Kingdom’s institutions behind us, into total disaster. We really need to learn from that. This was a vote against separation, it was not a vote for the status quo. Paradoxically, the losing side are energised by what has happened and we, the winners—2 million of us—have been forced to come back, like King Edward, to think again. If we do not come up with a sensible, credible and, above all, stable alternative, we will be back to the precipice sooner rather than later. We must find a long-term solution.
I will look carefully at two aspects. First, on Scotland and the Smith commission, I agree with my noble friend Lord McConnell. Its decisions I hope will be based on principles and not on party horse-trading. Two key principles are that the powers to be devolved should be devolved for a purpose, that is sensible and appropriate to be carried out at the Scottish level, benefiting the Scots but not harming citizens of the United Kingdom; and that we need not what the nationalists call full fiscal economy, but what I call fiscal responsibility. As others have said, we should devise a way for them to be responsible for raising the money that they spend. That will not be easy. Some have pointed to the difficulties and others have pointed to the way forward. Surely with all the expertise that we have in the Treasury and elsewhere, something can be worked out. I look forward to the third Scotland Act. This is becoming a Shakespearean drama—but I must not go down that line or we will end up with “Macbeth”, and we all know how that ended: not very well.
We must also look at the English democratic deficit. Not the West Lothian question; the English democratic deficit. I remind noble Lords that before devolution, when we had peculiarly Scottish legislation decided here at Westminster, it was voted on for nearly 300 years by a large majority of English MPs. If we can thole that for 300 years, surely the English can thole the problem for a few months or years more. To try to solve it by changes to the Standing Orders—as others have said, creating two classes of MPs—is the wrong way of going about it. Others have said, and noble Lords have heard me say time and again in this Chamber, that we need a coherent and comprehensive look at our constitution through a convention or a royal commission. I think that we should move towards a federal, or quasi-federal, system. I said this when the Liberals were being quiet about their policy. I am not saying that there should be an English Parliament, or English regions, or a bit of both; that is for the commission to decide, as it consults widely and listens to people.
I am pleased that the noble Lords, Lord Maclennan and Lord Hennessy, in their excellent contributions, said the same thing—if the three party leaders can come up with a vow overnight, surely they can come up with an agreement in a week to set up a constitutional commission. It could be up and running now. That would make the English feel happier that we are addressing the question and we are under way. I hope that each of us, in our own party, will try to twist the arms of our leaders. I have been twisting the arm of my noble friend Lady Royall—she made a brilliant speech, all of which I agree with—that the Labour Party should go ahead with this and encourage the other parties to go ahead with it as soon as possible.
Such a convention could and should also look at the reform of this place and move towards what Ed Miliband described at the party conference as,
“a senate of the nations and regions”—
SONAR. I like the French system of choosing the senate, where grands électeurs—all the elected representatives in each of the départements—choose their senators. There are many other suggestions that can be put to the constitutional commission.
No one supported the status quo in the referendum. I did not hear anyone argue in favour of that. Unless we heed the call and realise the disaster that has been avoided, we will find ourselves facing another referendum. I hope that I will not shock my noble friend Lady Liddell of Coatdyke, the Secretary of State emeritus, but if we do face that, and if there have been no changes at the United Kingdom level, even I would be tempted to vote yes in that referendum. That is an indication of the problem that we face. We should all be warned that we need to change. We need radical change. The status quo is not an option.
Lord Tope (LD)
My Lords, I detected some surprise when the Leader of the House said in her opening remarks that England is the most decentralised part of the United Kingdom. However, she is right. It is the most decentralised part of the United Kingdom as well as, by some measure, the largest. That is really a comment about the state of the other three countries of the United Kingdom. I have heard it said many times that Scotland has become far more centralised under its own Parliament than when it was ruled from Westminster. The fact remains that the four countries of the United Kingdom, and therefore the United Kingdom as a whole, are the most centralised countries in the European Union. What we will do about that, particularly in relation to England, is for me the real English question.
I accept, because it has been placed so high on the agenda, that the West Lothian question must be addressed. I have a lot of sympathy with my noble friend Lord Glasgow, who said that we have lived with this for 30, or even 300, years, let us leave it alone. However, it is on the agenda and we must deal with it. If we think that a solution can be found by some rearrangement within the UK Parliament, or even worse the creation of an English Parliament, we are fooling ourselves. That does absolutely nothing to deal with the question of the centralisation of power in England and the need to devolve power in England. If that is all that we Westminster politicians can come up with in this debate, then many of the people of England will be deeply disappointed. Addressing the question of devolution within England is the real and major English question, of which the West Lothian question is a part, but only a part.
The Leader seemed to be suggesting that the Localism Act, on which I and many noble Lords spent many happy hours, was all that was needed to devolve power in England. I accept that, if properly and effectively implemented, it would have been a good start to devolving some power to some communities in England. It was particularly unfortunate that it coincided with the time of the greatest budget cuts that local government has ever known. We were encouraging local government and local communities to devolve at just the time when the resources needed to do so were being taken away very quickly and in very large measure, which was very unfortunate.
At this point, I should declare an interest as a vice-president of the Local Government Association. We still need to address the question of devolution to English communities, not just to local government, although we should remember that local government is made up of the elected represented representatives of local communities and has an important part to play. Even before the budget cuts, local government was working increasingly closely with other parts of the public sector and, especially, with the private sector. When we look at the devolution of power in England, it has to be to the whole community. We have to look at the public sector as a whole, not just one part of it, albeit an important part, called local government, and it has to involve the private sector in a new partnership relationship. City deals and the regional growth fund have been a very good start, but they are still central government giving money—very welcome and necessary money—and largesse to local government. We need to start to address the issue of local government in its representative role being able to raise more money and being responsible for the charging rate as well as receiving a greater share of the proceeds.
In the short time that remains to me, I shall say something about London because I think I am the only avowedly London politician who dares to speak in what appears to be a rather anti-London debate. I have had 40-plus years as a London politician, and in all that time I have heard my noble friend Lord Greaves telling me about the evils of the domination of London. I have tried over and over again to explain to him that there is a world of difference between government in London and the government of London. As I have been a London borough councillor for 40 years, I have to say to him that London or, as we in London usually call it, Whitehall, is frankly as far distant from the London Borough of Sutton as it ever is from Pendle or Newcastle. That is the issue, not the number of miles involved—the right to govern oneself. The dominance of London within the United Kingdom, certainly within England, is at least as important for London as it is for the rest of England and the rest of the United Kingdom.
One of the most encouraging things coming out of the debate about devolution within England is the joining together of Core Cities, which was originally formed to combat the influence of London, with the Greater London Authority and London Councils to recognise their shared interest in bringing about much greater devolution, not only to cities and the so-called city regions but within the United Kingdom. Every week, learned and erudite reports are being published—there are three more coming out in the next few months—about not whether to devolve but how to devolve real power and real fund-raising opportunities to local communities. The demand is there, the expectation is there, and it is now for government and all political parties to respond to that expectation.
Lord Birt (CB)
My Lords, patriotism is a positive force rooted in pride of place, common endeavour and shared culture, perspectives and values. Nationalism, on the other hand, can be a destructive force, and no one expressed that to me more keenly than Eric Hobsbawm, the late, esteemed Marxist historian. Eric was a near neighbour of mine in mid-Wales, and he and I would oft-times hike the glorious hills of Brecon and Radnor together. In the 1930s, as most will know, Eric as a child had to flee Berlin and the Nazis, and he had been forced to move once more in his life, in the 1980s, from north to mid-Wales to escape the poisonous nationalistic hostility that had confronted him in Snowdonia.
Lord Elis-Thomas (PC)
I am sorry to intervene on the esteemed noble Lord, but as the Member of Parliament at the time and as the Assembly Member for Meirionnydd, I can assure him that his version of events borders on an imaginative treatise that I will never be able to subscribe to.
Lord Birt
I can only say that, on our long walks together, he felt extremely passionate about it and it caused him to move home. He had lots of chapter and verse to support his feelings.
Though many on the yes side of the Scottish referendum campaign behaved with propriety and conviction, others acted dishonestly and with menace. The noble Baroness, Lady Liddell, brought that out extremely forcefully. The evasion about the critical issues in the referendum campaign—the currency, a central bank, the NHS or membership of the EU and NATO—was without precedent in any election or referendum campaign that I ever experienced.
There was no better example of menace, among the many, than the singling out by the First Minister of Nick Robinson and the BBC. At a very difficult moment in the campaign for the yes side, towards the end after a series of highly unwelcome interventions from business leaders, the First Minister held a press conference for foreign correspondents, extraordinarily packing it with fevered and noisy supporters. To distract from his difficulties—as usual playing the man and not the ball—the First Minister orchestrated an argy-bargy with Nick Robinson, the BBC’s political editor, a correspondent universally respected for his insight, independence and integrity.
Following Mr Robinson’s report of that conference, there was a demonstration against the BBC and its political editor, as the noble Lord, Lord McFall, mentioned. Some thousands of yes supporters gathered outside the headquarters of BBC Scotland, an intimidating and frightening experience for BBC staff. The First Minister was, however, to describe this demonstration as “joyous and peaceful”. Nick Robinson could only continue to report the final stages of the campaign with a bodyguard at his side.
The next challenge for the United Kingdom is a resurgence of English nationalism. What Eric Hobsbawm made me deeply conscious of on our walks was how nationalism evades the essential discourse between left and right about wealth creation, social justice and income distribution. For nationalists, there are always easy targets: immigrants are stealing your jobs; the Jews your money; the white farmers your land; the English your oil. Nationalism thrives on economic reverse and volatility.
It is a commonplace at the moment to claim that there is widespread disaffection with the Westminster classes and that the remedy is therefore to tear up our constitution and to devolve power here, there and everywhere. We should be very careful. The modern state is indeed a terrible tangle. It is indeed vital to ensure that real responsibility and power are lodged at the appropriate place, whether globally or at national, regional or local level. I agree with all noble Lords who said that we need to tease away at identifying the right balance between centralisation and devolution or decentralisation. We must, of course, honour our promise to Scotland, but we should take our time about everything else and answer the questions properly.
In particular, we should be extremely cautious of so-called English votes for English laws. It is indeed anomalous, as I am sure everybody agrees, that Scottish MPs vote on English matters, but perhaps, as the noble Lord, Lord Kerr, suggested, it is an anomaly that we should simply live with, for England is by population 84% of the United Kingdom. It is one thing to create special arrangements for three national regions representing respectively 8%, 5% and 3% of the population, but it is quite another to make special arrangements for 84% of the population. That would simply drive us further apart.
Let me cite an extreme example to illuminate a point. The noble Lord, Lord Tope, mentioned London. Imagine if London and the south-east, at some point in the future, pressed to be a city state. It is by far the most prosperous region in Europe, not just in the UK. Enormous wealth passes from London to the rest of the UK. Picture the impoverishment that would result in Wales and elsewhere from London’s independence. Picture also the vulnerability of a highly fragmented British Isles. Remember the Romans, the Vikings and the Normans, as well as the Nazis. A united nation shares its wealth and stands shoulder to shoulder when threatened.
The root of widespread disaffection in the electorate, which has been much mentioned in this debate, is not our constitution but the monumental failure of governance in the last decade or more. Governments the world over, including in the UK, have been fiscally irresponsible. Regulators have failed to protect us against systemic breakdown and the finance sector has failed to act with prudence and probity.
Lord Higgins (Con)
My Lords, 50 years ago, referendums were virtually unknown. Since then they have become increasingly fashionable. This is very often prompted by the argument that referendums are democratic. However, I have always felt that that is not really the case, at least not if you are trying to find the best form of democracy. Referendums tend to produce a situation that is really the dictatorship of the majority. I go along with Edmund Burke in taking the view that the better system is a representative system of parliamentary democracy, in which Members of Parliament are elected as representatives, not as delegates.
I therefore had considerable misgivings about the proposal for a Scottish referendum and I feel bound to say that my worries have been amply justified. We have avoided falling over the cliff to which many noble Lords have referred in terms of the vote going the wrong way but, at the same time, the referendum has made more acute many of the underlying problems which might otherwise have been dealt with in a more considered and leisurely manner. We now have to deal with a whole series of things and I feel it might have been better if we had not had the Scottish referendum at all.
That is water under the bridge but what has come out clearly in this debate is how acrimonious much of the debate in Scotland was. The situation was exacerbated by the panic ahead of the vote following the so-called vows by the party. As far as I can establish, these vows were made with absolutely no consultation whatever with their parties. It was further exacerbated by the immediate reaction of the Prime Minister following the vote, which set down a very tight timetable—a timetable reaffirmed by my noble friend the Leader of the House.
My noble friend did not deal at any great length with the ways in which the West Lothian question, which has been such a feature of this debate, would be dealt with. My own feeling is that it would be a serious mistake to try to deal with the problem by primary legislation. Making changes to the Standing Orders in the other place might be a better way of dealing with it. Perhaps the Speaker of the Commons could simply certify a Bill as being an English Bill, in the same way that he certifies whether a Bill is a money Bill. I suspect that the number of purely English Bills would be far fewer than one might think. Then there might be voluntary abstinence on the part of Scottish Members from voting on particular items where such matters were clearly dealt with in Scotland by the Scottish Parliament and so ought to be matters for English Members in the English Parliament. We should be very cautious about anything formal and certainly not establish such a thing as an English Parliament, which would undoubtedly lead to the break-up of the United Kingdom. The same problem would arise if we had two classes of Members of Parliament. That would also tend to lead to further fragmentation.
I turn quickly to the implications of the devolution of further tax-raising powers to the Scottish Parliament. In particular, I hope that the Smith commission will look very carefully at how the system will work if tax is devolved more to Scotland and there is then a situation where the Chancellor of the Exchequer has to deal with the consequences. We want a clear mechanism. I presume the Scottish situation would have to be clarified first and the Chancellor would then decide how he ought to respond. I also have some doubts about the motivation for having greater tax paying and, in particular, income tax changes in Scotland. If it is merely to alter the various rates and allowances, it is not clear why the situation in Scotland should be so different that they need a different set of rates. The difference between the two countries is not so great as to argue for it. If there is to be more devolved control over taxation in Scotland, it may be that the Scottish Parliament and the Scottish people would feel that they would get some benefit from it. The Government’s White Paper makes it clear that whatever changes are made in the devolution of taxation to Scotland ought not to result in a change in the balance of the allocation of resources between the two countries. If this goes ahead, I feel that there will be considerable disappointment in Scotland at the effect that controlling income tax rates and allowances actually gives.
Finally, because time is running out, I turn to the question of the balance between the two economies and, in particular, the Barnett formula. My noble friend Lord Lang of Monkton, in his splendid speech, spelt out very clearly all the problems associated with the so-called Barnett formula and, in particular, the allocation of the block grant. The present situation is not fair on England and the block grant probably needs to be adjusted. This point came out to some extent in the course of the referendum campaign. One must wish the Smith commission well on a very difficult range of issues. It will have to decide how to reconcile the devolution of tax powers to Scotland with the overall macroeconomic management of the economy by the Chancellor of the Exchequer on behalf of the United Kingdom as a whole.
Baroness Quin
My Lords, like others I welcome the fact that this debate is taking place after a no victory in the referendum in September. I also welcome the fact that the debate has been marked by the maiden contribution from my noble friend Lord Lennie, who gave us a very entertaining and thoughtful speech. As a fellow north-easterner, I am very pleased to welcome him to the House and echo his kind words about that special and historic town of Tynemouth, where I was born and lived for a number of years.
I spent most of the summer campaigning for Better Together in the borders region of Scotland, which is not far from my home just south of the border in Northumberland. It was an exhilarating and troubling experience—exhilarating because it was a real pleasure to work alongside young volunteers in the borders regional office. It was the first time in many years of political campaigning that I have taken my leafleting and canvassing instructions from 19 and 20 year-olds, but they were extremely able and inspiring young people, to whom I pay a very warm tribute.
At the same time, there were many troubling elements of the campaign, referred to particularly by my noble friend Lady Liddell. Even in the borders, where it was clear that the no vote was in a strong majority, people were nervous about putting no posters up in their window or no stickers in their car. There was an intimidatory side of nationalism which really troubled me throughout the whole of that campaign; that is something that we have to think very carefully about when we move forward in the period that lies ahead.
In my experience, people voted no not because of the last-minute promise of powers, although they are important and I support them. They voted no for two reasons. First, Scots are well aware of the interdependent nature of the UK economy in terms of trade, business and currency; but the other reason, which I think was just as strong, was their recognition of the close family links and bonds that unite us across the United Kingdom and make people in the borders and elsewhere in Scotland feel British as well as Scottish and not wanting to destroy those links for the future.
My conclusion from the work that I did during the campaign was really that our first priority should be to ensure that the UK as a whole works better together for the future. Indeed, crossing, as I did, the border every day, I would certainly like to promote some cross-border infrastructure projects, which would be very necessary—in particular, the long overdue dualling of the A1 between Newcastle and Edinburgh, which I seem to have berated every Government about for the last 30 years, yet we still have not made the progress that we would like. There are also train links, which are very topical at the moment with all the talk about HS2 and HS3; so far, they do not seem to benefit hugely the north-east and Scottish link. Perhaps that could also be looked at. Furthermore, we should try to make the devolution settlement that we have at the moment work better, perhaps by having a better dialogue between the different bodies. I thought about this when supporting what the Welsh Government did in terms of plastic bags. We in England may at long last be going down that route, but surely it would have been good to have had more dialogue about it between the devolved authorities. When it is a good idea, perhaps we can work together and perhaps in a more timely way than has been done so far.
Unsurprisingly, a lot of this debate has been devoted to the so-called English question. I am not at all attracted to the kind of pan-England or all-England solution that has been mentioned, particularly that of English votes for English issues. Even if Scotland, Wales and Northern Ireland did not exist, there would be a very great centralisation problem in England, which would need to be addressed. We should keep that firmly in our minds. I feel that very strongly in the north-east. In many ways, I think that we would feel as marginalised in an English Parliament as we would in a UK Parliament—perhaps particularly so because our voting patterns are much closer to voting patterns in Scotland and Wales than they are to certain parts of England.
Devolution is not just about nationality; it is also about taking decisions at an appropriate level. I remember when I was Prisons Minister for a short time, in 1997, when we put forward the devolution legislation. In the course of my work, I spent two days with the Scottish prison service; at the end of that, I felt that it would rather be Scottish Prisons Minister than England and Wales Prisons Minister, simply because the scale on which the Scottish Minister operated meant that it was possible to get prison governors and the people involved in the prison system around a table to hammer out a policy on an appropriate scale. We must keep thinking of the appropriateness of decision-making when we approach this devolution issue in England.
We should not hurry. We should deliver on our promises to Scotland—that is vital, because we have made those promises—but then we should think carefully, either via a royal commission or a constitutional convention, and not impose a top-down solution. While I personally favour regional government in the north-east and hope that it can come back on to the agenda as my noble friend Lord Prescott outlined, I none the less think that England will need different solutions for different areas. Simply trying to draw something up within Whitehall and Westminster is not good enough. We have to think carefully about how we involve people as we move ahead.
Lord Thomas of Gresford
My Lords, it was a great pleasure to hear the noble Baroness, Lady Quin, deal with the most outstanding achievement of the Welsh Labour Government, and that is to put a charge of 5p on plastic bags.
Home rule is a Liberal invention. Mr Gladstone said in Aberdeen in September 1871:
“This United Kingdom which we have endeavoured to make a united kingdom in heart as well as in law, will, we trust, remain a united kingdom. If the doctrines of Home Rule are to be established in Ireland, I protest on your behalf that you will be just as well entitled to it in Scotland. Moreover I protest on behalf of Wales, in which I have lived a good deal and where there are 800,000 people who to this day, such is their sentiment of nationality, speak hardly anything but their own Celtic tongue—I protest on behalf of Wales that they are entitled to Home Rule there”.
Mr Lloyd George echoed those sentiments in 1891, calling for “Home Rule all round”. Jo Grimond believed that power was not to come top-down, as the noble Baroness said, but to spring up from the people. He wrote:
“I find it difficult to see how, if the case for Scottish and Welsh self-government is accepted at all, any powers can be reserved to the UK government except foreign affairs, defence, and the wider issues of economic policy linked to a common currency and common trade policies”.
This was the model in the Hooson Bill for a Welsh Parliament in 1967, which I drafted myself.
Home Rule is not independence. We in Wales agree with Mr Gladstone that this is a United Kingdom of the heart, as much as of political economy. The first impact of the Scottish referendum on Wales was to reduce the support for independence for Wales from 7% to 3%. This was according to a BBC random poll of over a 1,000 adult respondents between September 19 and 22. This is not in the least surprising. Welsh nationalism has always been focused more on cultural identity, tinged perhaps with a little bit of arson, rather than political power. The Scottish referendum campaigns revealed only too starkly the impact that independence was likely to have upon the economy in the relocation of banks and of industry, upon the pound in the pocket, upon relationships world-wide, upon defence obligations and upon jobs.
It was argued by the yes campaign that Scotland paid more in taxes than it received; it would easily be more than self-sufficient, and they could afford to go their own way without detriment to the people. This calculation, dubious in itself, was in any event dependent upon the total success of all their claims in negotiations with the rest of the United Kingdom. That assumed a hearty goodwill and a desire on the part of the taxpayers of England, Wales and Northern Ireland to underwrite the economy and banking system of an independent country north of a newly defined border. It was a fantasy.
Wales is not Scotland. We raise in taxes only 70% of the money we spend. It is not because we are weak or poor in ability or ingenuity; it is because our basic industries of coal, slate and steel are exhausted. Wales shares its wealth, as the noble Lord, Lord Birt, said. We did not call it Welsh coal when it was mined.
However, today, according to key economic indicators published by the Office for National Statistics last July, we are the poorest part of the United Kingdom. We had hoped that a devolved Government would lift us economically, but it has not happened. Public services in education and health are falling behind England. It is clear that a devolved Government in Wales requires some form of equalisation funding.
The Barnett formula, while generous to Scotland, as the noble Lord, Lord Lang, pointed out, underfunds Wales, according to the Holtham commission, to the tune of some £300 million a year. We need fair funding: a needs-based formula which would restore parity to our communities and our public services. As an immediate stop-gap, the Holtham commission recommended a “Barnett flaw”. If anybody wants to know what that is, perhaps they would like to buy me a drink afterwards and I will explain.
In the medium term, a formula must be devised which takes into account an ageing population in Wales, the additional health burdens which mark a post-industrial society, but above all the need to revive and develop the Welsh economy and create jobs. I remain wholly committed to devolution. There are signs of progress. The coalition agreement in paragraph 24 recognised the concerns of the Holtham commission and undertook to establish a process similar to the Calman commission in Scotland. This resulted in the Silk commission and we are currently putting through this House part 1 of its proposals, which will chiefly introduce borrowing and taxation powers. It is a sad commentary that the Government in Wales refuse to hold the referendum which would bring those taxation powers into operation.
We also have it in our Liberal Democrat manifesto to implement part 2 of the Silk commission, which will move Wales to the reserved powers model called for—
Lord Elis-Thomas
Did I hear the noble Lord right? Did he accuse the Government of Wales of refusing to hold a referendum on taxation powers? How can a Government possibly hold a referendum on something which has not yet been passed by this House?
Lord Thomas of Gresford
I am sorry, I did not quite catch what the noble Lord said.
Lord Elis-Thomas
I am grateful to the noble Lord for allowing me to intervene again. I heard him imply that the Welsh Government had refused to hold a referendum on tax-varying powers in Wales. How is it that a Welsh Government, or any other Government, for that matter, can hold a referendum on a matter which has not yet been legislated?
Lord Thomas of Gresford
That is the stated policy of the First Minister of Wales, as the noble Lord knows perfectly well.
We have in our own manifesto the intention to implement part 2 of the Silk commission, which will move Wales to the reserved powers model that was called for by Jo Grimond and which operates at the moment both in Scotland and Northern Ireland. We hope that normal political processes will operate to install in the Assembly a Government which will use the levers that they are being given to deliver the infrastructure upon which an expanding economy depends: outstanding education in accordance with Welsh traditions and a healthy NHS. Let us see if Scotland can match us then.
Earl of Stair (CB)
“Should Scotland be an independent country?” is the straightforward question which was put to the people of Scotland and voted for on 18 September. The result, by 55% to 45%, was a clear statement of the settled will of the people, with the largest turnout in recent times. It will, I hope, be respected.
Scotland should stay united with the remainder of the country. Whether the result would have been any different without “The Vow”, and all the other last-minute promises and speeches, we will never know. I can only say that the majority of people that I spoke to in a mostly rural area were adamant that they had made their minds up several months before September, and many had already voted by post.
Irrespective of the result, there would always be approximately 50% of the population who would be dissatisfied with the result. This prediction has sadly proved to be correct. Those supporting independence have always been more vocal, and we should be in absolutely no doubt that the passion for independence is as strong as ever before. Add to this the new leadership of the SNP and the claimed increased membership, and I would urge the Government in this House and the other place not to be complacent about the present result.
However, I feel that I should not only acknowledge the SNP and the work that it did on the campaign that it conducted, which was extremely well organised, but also pay compliment to many individual members of the other political parties—MPs, Peers, and MSPs—who worked so hard for the no campaign, sometimes, as we have heard already, under extremely unpleasant circumstances. Sadly, at the regional and lower levels of campaigning, the issues started getting confused, and deep divisions were created between families and friends.
What started as a clear question became further confused when the Westminster leaders began to realise that what had been considered to be an unlikely yes result was in fact a very real danger to the 300 year-old United Kingdom. That a referendum in the United Kingdom should provoke foreign Governments and businesses to comment should have been a further warning. I met an ITN cameraman who had arrived in Scotland to cover the referendum day. He was deeply surprised by what he found in comparison to the briefings that he had been receiving in London.
I agree with the noble Lords, Lord Steel and Lord McConnell, that the Prime Minister made a terrible mistake on 19 September, when rather than quietly accepting the result and making every effort to reunify the United Kingdom, he chose to open two new issues that have completely distracted from the referendum result. The West Lothian question and devolution for cities and regions in England and the remainder of the United Kingdom should never have been raised until the Scottish referendum had been dealt with and put finally to bed. It would have been a very good idea if, rather than standing on the steps of Downing Street, he had gone to Edinburgh and made a statement there.
We now have the Smith commission, which will produce recommendations for further devolution. This will almost certainly involve devolving further financial control, tax-raising powers and many other recommendations. Many of these are being put forward by independence supporters and could lead to virtual independence by the back door. I hope that there will be very careful consideration of the recommendations and the debate will not become a political mêlée in the lead-up to the general election.
Whatever is concluded from the Smith commission, the organisation that started life some 15 years ago as the Scottish Executive has evolved to a Government and is soon to be an even more powerful Executive. Because of this, I would like to raise a question. When the Scotland Bill was debated in this Chamber many years ago, there were numerous exchanges between the late Lord Mackay of Ardbrecknish and the noble Lord, Lord Sewel, on the necessity for a second Chamber in the Scottish Parliament. It was deemed not to be necessary. This has proved not to be correct. I believe the following is still in the Westminster Government’s power, but may require primary legislation—I am sure that the Minister will correct me. With the inevitable greater powers, will the Scottish Parliament be reorganised to allow for a second Chamber, or at least have the committee system reorganised to prevent the party in power from scrutinising its own legislation, particularly in the light of further financial and other powers being transferred?
I conclude with two brief statements. First, the clear majority wish to remain in the union and this must not, under any circumstances, be forgotten. Secondly, the obligations that have been mentioned before to the vows must be fulfilled, but not at any cost that we will all later regret.
Lord Cormack (Con)
My Lords, we are having a fascinating debate, as we always do on these topics, and we have heard some remarkable speeches, including a very notable maiden speech.
There is a danger of losing sight of the fact that it was a very positive result. If in the general election next year one party had 10%-plus more votes than the other, the papers would be writing about landslides. That is the context. We also have to remember, as someone pointed out earlier, that the percentage of the Scottish electorate who actually voted for independence was 37%. The figures are just under 45% of those who voted and 37% of the electorate. However, that should give us no cause for complacency.
We have heard various views and I want to turn to England in a minute, but one thing that has run through this debate is that everyone believes that the pledges that were made must be honoured. I happen to believe that some of those pledges were unnecessary and that some of them were made as there was a lurch from complacency to panic based on one rogue poll. Nevertheless, we must not devalue the political currency or the credibility of the United Kingdom by reneging on those pledges.
I agree very much with those, including the noble Earl, Lord Stair, who say that it was a pity that in the immediate aftermath of the referendum a commitment was made to accelerate the examination of the wider implications and to fix an English timetable. I was in the other place when we debated devolution in the early 1970s. I did not vote for it because I feared—and I said so at the time—that some of the things that have happened would come to pass. However, that is all over; we cannot go back. We have the Scottish Parliament and we must sustain it, but the West Lothian question has been around for 37 years and it does not need to be solved in 37 days.
Concerning the acronym EVEL, I would say, “Speak no evil, see no evil, hear no evil”. “English votes for English laws” is a phrase that comes trippingly off the tongue, but it does not recognise the fact that almost 85% of the population of the United Kingdom is in England. We are not able to have a normal federation in this country, nor do I want to drift down that road. However, the 85% have to exercise a degree of magnanimity in order to maintain the union. Although, when new powers have been devolved, there has been a case for fewer Scottish MPs—there is a precedent for that both in Ireland and in Scotland itself—I do not believe that there is a case for having two classes of MP at the other end of the corridor. I think that would be a retrograde step and it would indeed be playing to English nationalism.
The noble Lord, Lord Birt, talked about the difference between patriotism and nationalism. English nationalism could be a very ugly force. It could do great damage and could indeed lead to the break-up of the United Kingdom. I hope very much that there will be considered reflection in high places and that all the calls that have come from this Chamber today for a commission or a convention will be heeded. I personally would favour a royal commission, and I am glad to see the noble Lord, Lord Hennessy, who I thought made a brilliant speech, nodding at that point. There are not trite solutions that are right solutions, and there are not glib answers that are glad answers. It is crucial that we get this right because we have to look to the future.
Half my family is in Scotland. My eldest grand-daughter voted at the age of 16. I do not necessarily agree with the noble Baroness, Lady Liddell, on that, but I know that my grand-daughter and all her classmates took this matter exceptionally seriously. Why did they vote as they did? They did so because they believed that the opportunities and the heritage would be greater if they remained British and part of the United Kingdom. That is something that the campaign lost sight of. How right the noble Lord, Lord McFall, was to talk about how unfortunate we were to put ourselves in the position where, to maintain the United Kingdom, people had to vote no. That should never have been conceded. If there is a referendum in the future, it has to be under the auspices of the United Kingdom Parliament and we have to look very carefully at the question. I hope and believe that that will not be necessary.
I believe profoundly in this United Kingdom and I believe profoundly in the good that it has done. We should not forget that the greatest days of this country were when there was one Parliament for one country. Although those days will not return—I accept that entirely—we should try to recreate the spirit of the United Kingdom. It took us through the war and we will be commemorating the 70th anniversary of its end next year. As we commemorate that and the 50th anniversary of Churchill’s death, let us remember that the United Kingdom together is, as we have said before, so much more than the sum of its constituent parts. In satisfying certain demands within England, we must not forget that magnanimity in victory should always be our English slogan.
Lord Beecham (Lab)
My Lords, I refer to my local government interests contained in the register, and I join other noble Lords in congratulating my noble friend Lord Lennie on a remarkable maiden speech. He has the somewhat dubious distinction of having at one time been a constituent of mine, and I suppose it is possible that he might even have voted for me in the odd council election—or not.
There is a danger when debating devolution of being sucked into discussions about systems, processes and boundaries when what matters is outcomes in localities. I prefer to frame the debate as one about decentralisation in one of the most centralised countries in Europe. I concur with the dissent expressed by the noble Lord, Lord Tope, from the Leader’s view to the contrary. The prime duty that we have if we are to acknowledge and deal with varying local needs and local opportunities in the economy, the environment and social provision is to ensure that local government is strengthened and enabled to work effectively with central government and its agencies.
I have long been interested in the problems of the north-east and what became known as regional policy. I served on the regional policy group of my noble friend Lord Prescott in the 1990s and regret that the Labour Government did not adopt its more ambitious proposals. But, perhaps more relevantly, I was also involved with the Local Government Association in developing the concept of Total Place—the idea that councils should lead partnerships in which the totality of public spending for an area could be brought together, with government departments and agencies, local councils and the directorates getting out of their silo-based approach to policy development and service delivery. In that way, they would be much more strategic and effective, with the added potential bonus of generating efficiencies by sharing services. To their credit, the Labour Government adopted the idea, with the Treasury being particularly supportive alongside the DCLG. Sadly, other departments were not similarly engaged and progress was slow, with very little evidence of any enthusiasm for the concept in the last four years.
There have been some welcome initiatives—for example, city deals, which have been mentioned this afternoon—but little in the way of bringing together such programmes as health, welfare, education, including further and higher education, housing, transport and others, which, in addition to economic development, need to be marshalled if the problems of communities are to be effectively addressed.
The creation of combined authorities, with Greater Manchester leading the way—I note that my noble friend Lord Smith of Leigh will be speaking in this debate and no doubt will refer to it—offers a potentially powerful mechanism to drive part of this agenda. Although it seems obvious, for example, that the Highways Agency should be accountable to authorities in the different areas in which it operates, and that it and other public services and agencies should be part of the Total Place partnerships, there are two critical requirements without which decentralisation will fail.
The present Government have deliberately offloaded responsibilities to local authorities, for example in the area of council tax support, without the necessary financial resources. I have described this process as passing the buck without passing the bucks. Moreover, they have deliberately skewed the system of local government finance to impose much larger reductions in grants, and therefore cuts, on predominantly urban authorities. This has led to huge and disproportionate cuts, not only for the north and Midlands but also for inner London boroughs such as Newham, Lambeth and Hackney, and coastal towns such as Great Yarmouth and Blackpool. This has had devastating consequences for essential services. Merely passing tax-raising and tax-collecting powers to local councils will avail little if the tax base is inadequate. The grant system must be based on need. In effect, we need an English version of the Barnett formula, as recommended by the noble Lord, Lord Lang.
Higher priority needs to be given to infrastructure investment. Compare, for example, the £15 billion spent on Crossrail with the estimated £7 billion that just might be spent, at some point in the dim and very distant future, on the misnamed HS3 project to improve the rail system linking the north-west, Yorkshire and the north-east, with a population roughly the same size as that of London. In addition, there should be national minimum entitlements to key services, not the minimal entitlements to which we are rapidly descending.
We need to redress the profound inequalities which disfigure our society and hamper our efforts to grow the economy in a globalised, competitive world. We need to restore hope to a generation of young people and to communities where too many lives are stunted by poverty, ill health and the sense of being neglected. Power and resources must be restored to democratically elected local government, in partnership with central government. To facilitate these developments and ensure genuine cross-government involvement, we should also restore a regional presence for government itself. In the 1980s, the Conservative Government established regional offices, eventually involving most departments, which became an invaluable two-way conduit for concerns, information and dialogue between localities and the centre. The present Government abolished them, along with the regional development agencies, a piece of politically inspired vandalism which has greatly weakened the intelligence base of individual departments and the Government as a whole, as well as the capacity to harness resources across the board.
The changes I advocate seek to address the real problems we face, not the political gamesmanship of English votes for English laws. It is an agenda of decentralisation and partnership. Call it what you will; call it devolution if you must, but let us get on, with the urgency that the situation demands, with empowering local government and central government to work together—and, yes, with the private sector—in the interests of ensuring that they make the necessary impact on the lives of communities and citizens.
Baroness O'Neill of Bengarve (CB)
My Lords, I begin with two declarations of interest, one of the heart and one of the head. Both are relevant to this debate. From the heart, I have four grandparents, one Irish, one Scots, one Welsh and one English. That means I have a stake in many parts of this debate. I spent a lot of the six months leading up to the referendum with sleepless nights, worrying, not just about what would happen to Scotland, but about the results for Northern Ireland had there been a yes vote. The noble Lord, Lord Empey, has already hinted at these and I suspect the noble Lord, Lord Bew, will tell us more. Thank goodness we will never know what those results would have been, but those people in both Belfast and Dublin who knew the situation best thought that they could well be catastrophic. It is a fragile settlement.
From the head, because I chair the Equality and Human Rights Commission, I have had occasion to look at some aspects of our ragged devolution settlements. They are quite different, but it is worth noting that both the Scottish and Northern Irish settlements refer directly to the Human Rights Act, yet we have suggestions from some quarters that that legislation might be repealed. If it were, we do not know whether that means unpicking the Scottish and Northern Irish devolution settlements. I hope not—I think it may just have been overlooked—but that was the implication of what has been proposed.
Some noble Lords may think it has now gone away, but I have another worry, which is about the notion of devo-max. It played a very large part in discussions, over the last couple of years, about what would happen in the event of a no vote, which is what we actually got. It is a very unclear slogan and I suppose it was meant to indicate an aspiration. However, it seems to me that it was well chosen to indicate an illusory and ill defined aspiration. Devolution is the sort of thing that anybody would be pretty ill advised to try to maximise. To me, maximising means that you have got some clear unit and you get as much as possible. What is devo-max and what was it meant to be? As we think forward about devolution we should surely aspire, not to maximise something but to get something coherent and workable in which powers are not devolved without the responsibility to exercise them or without the resources or tax-raising competence to do so or without accountability for how it is done. The overall aim must be to secure devo-coherence for each part of the United Kingdom, not devo-max. My slogan is, therefore, the not very enlightening one: devo-coherent.
I will say a little bit about devolution and delegation. Mere delegation of powers, responsibilities and resources does not constitute a feasible scheme of devolution. Devolution is not the same as delegation for many different reasons, but I will emphasise one which is often overlooked. Powers have often been delegated on the assumption that, at the other end, there are bodies that are delivery agencies of centrally prescribed aims. There is little gain for anybody in devolving powers and then prescribing exactly how they have to be discharged. The supposed gain in democratic accountability that might be achieved by a coherent scheme of devolution would be entirely lost if it was accompanied by a centrally prescribed set of boxes to be ticked, performance indicators to be met and measures that effectively remove all discretion in the use of the supposedly devolved powers. This has corollaries that may not always be welcome. If devolution is about permitting variation and decision-making at a lower level and if variation is allowed then complaints about postcode lotteries when various decisions are made are simply out of bounds. This does not mean that accountability for devolved decisions is out of bounds; on the contrary, it becomes more essential. However, it does mean that the forms of accountability adopted must fit the case and in smaller jurisdictions where, as we say, everybody knows everybody, thinking how to make forms of accountability effective can be quite divisive.
Devolution, variability and parity are aims we should all have. I return to our ragged set of devolution settlements. There is no need for uniformity. Inevitably, the settlements for Scotland, with its ancient legal system, and Northern Ireland with its partly necessary—if considerably dysfunctional—consociational constitutional settlement, will need to be varied to take account of realities. However, it is also essential to take account of and respect the unitary status of citizenship in the United Kingdom and to ensure that fundamental rights and protections are there for all, and that advantages and disadvantages are traceable to accountable, devolved decisions and not to asymmetries in the way the overall devolution settlements treat those living in the various jurisdictions. We need to think very hard about the rights of citizens and the sorts of redress for breaches of rights that must be available to all. Like the noble and learned Lord, Lord Hope of Craighead, I believe that common citizenship requires devolved structures that respect the same underlying standards and provide rights of appeal to the Supreme Court for all in every jurisdiction.
We have to accept that Scotland will get ahead in devolution. The promises, the vow, guaranteed that. We probably have to accept that for a time Scotland continues to enjoy more favourable financial terms than the rest of us. Again, we had better swallow that. But we do not have to accept that the status quo is the future. I believe that it will take a constitutional convention and genuine leadership if we are to have a wider and coherent form of devolution.
Lord Lexden (Con)
It is an enormous pleasure to follow a most distinguished member of one of Ulster’s oldest families with strong family links, as we have heard, throughout the United Kingdom. I take the view that the union on which our great country is based gained no more than a reprieve in the recent referendum. I could not disagree more with those who say that the referendum result made the union secure for a generation. We face the extraordinarily difficult task of putting our United Kingdom on a secure, long-term basis for the future to preserve it for the generations that are to come. Above all, we must work to infuse all four constituent parts of our country with a sense of common purpose which they have increasingly lacked as devolved institutions develop separately from one another in three of the four parts. That should be done by revivifying unionism, of which my noble friend Lord Lang of Monkton and others spoke eloquently in the debate in January.
Once upon a time unionism was practised successfully by the Conservative and Unionist Party, particularly in the days when it was known simply as the Unionist Party, a name which it retained in Scotland until 1965. The Conservative Party needs to recover its unionist mission, and fast, just as the leaders of all political parties need to recover a sense of statesmanship, the central point in the truly brilliant speech made by the noble Lord, Lord Hennessy.
I hope that I will be forgiven for dwelling a little on certain aspects of the past, which provide one or two useful points for the present. The extraordinarily difficult constitutional terrain in which we now find ourselves was very familiar to our country’s politicians in the 30 years before the First World War, as they grappled unsuccessfully with the problem of putting the Government of Ireland on a secure long-term basis within the union.
The Irish home rule proposals brought forward by Mr Gladstone in 1886 to provide for limited devolution to a Parliament in Dublin at once exposed to view the central difficulties of Westminster representation and taxation. Mr Gladstone anticipated Tam Dalyell and Enoch Powell by nearly a century. His notes for the great speech in which he introduced the first home rule Bill in April 1886 contained poignant words of enduring interest. He said:
“Ireland is to have a domestic Legislature for Irish affairs”,
and “cannot come here” for,
“English and Scotch affairs … The one thing follows from the other. There cannot be a domestic Legislature in Ireland dealing with Irish affairs, and Irish Peers and Irish Representatives sitting in Parliament at Westminster to take part in English and Scotch affairs.”.—[Official Report, Commons, 8/4/1886; col. 1055.]
Scotch, incidentally, was a widely used alternative to Scottish before it became confined to the most delicious beverage known to man.
Gladstone offered the proposed Dublin Parliament very limited powers of taxation. Reluctantly, he reconsidered his initial plan for the total exclusion of Irish representatives from Westminster. His second home rule Bill in 1893 proposed to cut the number of Irish MPs at Westminster from more than 100 to 40 but without restricting the matters on which they could vote. The same approach was embodied in the third home rule Bill, which Mr Asquith introduced in 1912. Indeed, this was the way in which the issue was settled in 1920 when Northern Ireland’s devolved Parliament was created. Ulster was given 13 MPs, significantly fewer than its population warranted, with a subsequent reduction to 12 when university representation was abolished. The arrangement gained general acquiescence with occasional protests from the Labour Party. It is a point on which we need to reflect.
Significantly, no one in the late 19th century contemplated for long the approach which so many favour in relation to Scotland: arrangements to prevent MPs from Ireland voting at Westminster on matters that were to be devolved to Dublin. Gladstone toyed with the idea but swiftly rejected it. Not for him, not for that generation, was the notion of two categories, two classes of MPs, to be seriously entertained. For my part, I strongly deprecate it as incompatible with a successful union settlement.
It is perhaps a source of some comfort and some relief to recall that the severe constitutional difficulties with which we now wrestle absorbed great political intellects in the past. In the end, they found it impossible to devise a constitutional framework that would satisfactorily reconcile devolution with the existing dispensation at Westminster. Will we in the end be led to the same conclusion? If so, we will find that there is another great figure in the unionist tradition from this period who can help us.
This year marks the centenary of the death of Joe Chamberlain, the radical firebrand who entered into alliance with the Conservatives to preserve the union. He said that it could only be done on a federal basis. There was no other way of reconciling devolution with constitutional harmony and fairness.
Speaking at the inaugural meeting of his National Radical Union on 17 June 1886, Joe Chamberlain said that in any rearrangement of our constitutional system we are bound to see that new provisions are so devolved as to be applicable to Scotland, Wales and other parts of the United Kingdom as well as Ireland. In the weeks since the Scottish referendum and the announcements of further devolution to Edinburgh, I have found myself wondering more and more whether Joe Chamberlain should perhaps be our guide at this grave hour in our nation’s constitutional history.
Lord Judd (Lab)
My Lords, I regard myself as English and Scottish. I had an English father and a Scottish mother who both were very proud of their nationhood. Therefore, I have always seen the United Kingdom as a marriage between two partners, each with their own vivid background. History, culture and religion—each has its identity. I look at the right reverend Prelates opposite and I am glad to see them here as members of the Church of England. When I look at them I think of the vivid stories told to me by my mother and my grandmother. They spoke about the General Assembly of the Church of Scotland and all that that meant to them, and the character and the verve of the General Assembly and the rest. That was very real too. My grandfather was a minister in the Church of Scotland and secretary of its foreign missions.
I keep very close to my English and my Scottish family. I was surprised and rather shaken by the number of them who told me in very firm terms that they were going to vote yes. They were mostly church people. I confess that they were professional, middle-class people who were mainly in the caring professions and education. When I reasoned with them and said, “Look at all the issues facing both England and Scotland, and Wales and Ireland. Can’t we tackle them more effectively together?”. One cousin, in very firm terms, said, “Frank, that is a very powerful argument but it is too late. We are absolutely exasperated and fed up with the arrogance of the south-east and London, which runs the United Kingdom almost totally from that standpoint and does not recognise our identity”.
We have to recognise that there is a powerful feeling in the people of Scotland of a strong desire to express their nationhood, and their self-confidence in their nationhood. We may have won a vote by 55% to 45%, which is a quite significant result, but we have not finished the argument. What now follows will be crucial. If there is disillusion in what follows, goodness knows what will happen the next time that there is a referendum. I agree with those who argue that it will come sooner rather than later. We must discharge what we have promised, and we must discharge it rapidly and by the timetable that has been announced.
Some of these issues, of course, are not just about Scotland. In many parts of England and Wales there is a feeling of alienation from the political system. There is a feeling of loss of significance and identity, and people are yearning for them. When we know that the body politic, of which we are a part here in Westminster, is held in great disrepute by many people in our country, we have to recognise that it is this feeling of loss of personal significance that is very central to it and which lays many people in this country open to appeals from populists and extremists.
We therefore have to get on with the final, comprehensive constitutional settlement. When I look at what has been happening with our constitution in recent years, it seems that it has been a patchwork affair, and very confusing for many people throughout the United Kingdom. It has been dealing with this or that issue, which always has implications for other issues, but there has been no road map, no master plan, no goal, and no sense of destiny or direction. I think that is why a royal commission or other convention is so essential, and quickly, so that we produce a road map which can enable people to look at the interrelated issues and how we are going to take the situation forward convincingly. This is precisely not the time for knee-jerk reactions and populist moves of one kind or another.
That work has to be transparent. It has to engage and involve the widest possible cross-section of the community. I am quite convinced that, unless we have it, we will be facing one constitutional crisis after another. I believe that, given the logic of all that has been happening, with the priority that devolution has been taking in recent years, the logical way is to get on with building a federal United Kingdom. We will have a stronger United Kingdom on a federal basis than we do by trying to insist that it remain upon a unitary basis.
Lord Shipley (LD)
My Lords, as someone who also comes from the north-east of England, I congratulate the noble Lord, Lord Lennie, on his admirable maiden speech.
I am much encouraged by the Government’s achievements in devolving power across the UK since 2010, with the Scotland Act 2012, with the Wales Bill, together with city deals and local growth deals in England, which have enabled local economic areas to lead investment decisions. The referendum result in Scotland is now accelerating that process in England where there is an appetite for greater devolution.
There is, however, a huge difference between Scotland—which already has a parliament and significant devolved powers, and which debated independence for two years—and English regions and subregions, which have no directly elected structures and few devolved powers and have not, with a few honourable exceptions, been thinking much about devolution other than in terms of general ambitions. Defining what is wanted in detail, with clarity about governance and resourcing, place by place, is an essential prerequisite to successful devolution.
There have been a number of think tank reports on devolution within England, together with policy statements by bodies such as the Local Government Association, of which I am a vice-president, Core Cities, the County Councils Network and the London Finance Commission. With the City Growth Commission adding its weight last week and with two further independent commissions reporting over the next three months—the Independent Commission on Economic Growth and the Future of Public Services in Non-metropolitan England and the Independent Commission on Local Government Finance—a detailed set of evidence is being assembled.
Scotland voted no in the knowledge that even a no vote would result in extensive new powers following the vow delivered from Westminster a few days before polling day. Newspapers across the north of England followed up on the day after the Scottish referendum result, asking the Government, “Now what is your vow to the North?”. It is a reasonable question, but it invites the reply “Exactly what powers do you want?”.
Thankfully, ResPublica, with Greater Manchester, has produced for that part of England a route map, Devo Max—Devo Manc. Sensibly, it understands the need for incremental devolution leading within a few years to the full devolution of the £22.5 billion annual public sector spend in that area. This is where we need to be headed for all parts of England willing and able to take on greater responsibilities.
This is because there are two major advantages to the UK in devolution within England. First, it will help to drive growth, as many think tanks have demonstrated, particularly through a better fit in skills investment, which responds more directly to the needs of employers, and in planning for housing and transport. Secondly, it will make public services more efficient because they will be better joined up when run at a local level.
We must combat the silo approach of Whitehall departments and the 50 central institutions which channel public spending into England with more than 1,000 funding lines. I am pleased that my own party resolved at our Glasgow conference that it would introduce a devolution-enabling Bill in the new Parliament to permit devolution on demand to councils or groups of councils.
During the passage of the Scotland Act 2012, the UK Government set out three devolution principles. These were that proposals should have broad cross-party support, should be based on evidence and should not be to the detriment of other parts of the UK. I think those principles should apply to those parts of England now wishing to secure devolved powers from Westminster. There are others.
First, on equalisation of resources, however the detail of devo max for Scotland turns out, it will inevitably and rightly give Scotland much greater responsibility for tax raising. In this situation, even without the Barnett formula, tax raised and public spending would be broadly in balance if Scotland keeps the corporation tax raised there. This is a very important matter, not least because it establishes the principle of geographical ring-fencing within the UK.
Some voices in London, not least some mayoral candidates, are suggesting that what is good for Scotland is good for London. There is an increasing demand for London to keep more of the tax raised in London. This has the potential to become a very dangerous trend for the rest of England and for Wales if it is not handled extremely carefully.
In the case of Greater Manchester, for example, the ResPublica report shows that public spending is £22.5 billion yet tax raised is only £17.7 billion. Devolution of responsibilities to Greater Manchester would make public spending go further and would increase tax revenues by increasing growth. The ambition is to bring tax and spending further into balance, and that is right, but not all places can do this, and we will still need a system of equalisation which protects those areas less able to increase their tax revenues.
Secondly, the UK must remain responsible for UK-wide policies, such as major infrastructure investment, and for the core policies behind public services and welfare provision.
Thirdly, on governance, with devolved powers come extra responsibilities for delivering growth and greater efficiency and for managing investment and risk. Having a governance structure that is fit for purpose and commands public support will be essential. We will have to build on the structures we have, on city regions and, we hope, county regions and combined authorities. As they grow in their responsibilities, such authorities will need a more secure democratic mandate. I think that must mean direct elections using a system of proportional representation.
In conclusion, the next step has to be a constitutional convention to examine powers, responsibilities, capacity building, governance, tax-raising powers and spending powers for devolution within England. I hope that we will do that.
Lord Sanderson of Bowden (Con)
My Lords, like my noble friend Lord Steel, I must congratulate my own Scottish Borders on returning the highest no vote in mainland Scotland, but there is no doubt that the referendum has created the most divisions throughout Scotland that I have ever witnessed. It will take a very long time to heal the wounds. Splits in communities were very obvious and in many families there was division. As the noble Lord, Lord Foulkes, said, we were very near the precipice. The situation was not helped by the Scottish Government’s White Paper, parts of which were more akin to an election manifesto, when we were really dealing with the most fundamental constitutional change for our country.
Having succeeded in that no vote, we are now faced with producing proposals for enhancing the many existing powers devolved to Scotland, which in the case of tax raising have never been used since inception. I have with me the report of the commission of my noble friend Lord Strathclyde, published in May, and I am glad to see one of its members, my noble friend Lady Mobarik, here in her place. That report stated:
“The sad fact is that, even after 15 years of devolution, it is still far too easy for Scottish Ministers to blame difficult financial decisions on others. This is both unhealthy for the Union and unattractive for Scotland. Closing the fiscal gap through the means of fiscal devolution would create a more responsible Scottish politics and would help to remove this grievance culture from it”.
This is a major task for the Smith commission, but one of its most important tasks.
The extended tax-raising powers must ensure that MSPs are held responsible for raising, particularly through income tax, the requisite amount of money to cover devolved expenditure. It will also allow other parts of the UK to vote on their tax and spending issues. This is the only way to get a sustainable solution that fits in with the wider responsibilities of the UK Government. It means that MSPs will have to justify to their constituents the taxes necessary for their schemes and, as the report suggests,
“Scottish versions of the Personal Tax Statements should be issued by HMRC, highlighting taxes under the control of the Scottish Parliament”.
I hope that this can be enshrined in legislation.
On other proposals in the Strathclyde commission report, I would ask the commission to make haste slowly in any changes that involve the universal credit arrangements. It is a difficult and complex area and I would not wish the Government to act hastily and repent at leisure.
I do not wish to comment on the West Lothian question, which others have talked with great knowledge about, but I believe that it has to be settled essentially by the other place.
I turn to the final recommendation of the Strathclyde commission report, which is the creation of,
“A Committee of all the Parliaments and Assemblies of the United Kingdom … to consider the developing role of the United Kingdom, its Parliaments and Assemblies and their respective powers, representation and financing”.
Ever since the devolution Bill was debated in this House, I have been worried about the lop-sided arrangement that was brought about as a result. Some said at that time that it was a slippery slope leading to independence. We now know, 15 years later, how near that possibility came.
Nothing less than what Strathclyde proposes should be acceptable, as a lop-sided house inevitably will in time crash to the ground. If we are to keep the United Kingdom united, whether it is a quasi-federal system or whatever, the matter really needs to be addressed. There is a stirring in England for progress to devolve. The great northern cities are uniting under the banner of the City Growth Commission, headed by the very capable Jim O’Neill, whose aim is to galvanise the north and to start by getting its transport arrangements improved, with a lot of help, I hope, from the Treasury. This is all well and good, but consideration needs to be given to all the major changes taking place in all parts of the United Kingdom. The Strathclyde recommendation is quite clear. The wider effects of the pending Scottish changes should not be underestimated by the rest of the UK and its institutions.
But of one thing I am certain. In keeping the United Kingdom united, we must have the ability to choose a Prime Minister coming from any part of the United Kingdom. In the interests of democracy, that is an essential part of any commission’s deliberations.
Lord Smith of Leigh (Lab)
My Lords, this has been a very wide-ranging debate on all aspects of devolution. I shall start by saying that I am not the noble Lord, Lord Smith, who is struggling to get together by Burns Night the promises made before the referendum—I am sure that he has a very difficult task—but, as my noble friend Lord Beecham said, I am chairman of the Greater Manchester Combined Authority and so declare my interest. You can therefore see that my interest in devolution is devolution to cities in England, which is what I shall concentrate on today.
I was surprised by the contribution of the noble Baroness the Leader of the House, who seemed to say that devolution in England was okay and that we had done everything. The aftermath of the referendum in Scotland, as the noble Lord, Lord Shipley, said, has made people question the overcentralisation that still exists across the UK and England in particular. We have seen numerous reports on devolution come out. The noble Lord, Lord Shipley, referred to Devo Max—Devo Manc, which, obviously, we are particularly pleased with, but the other reports have shown what impact some devolution would have. Every political party in this country now seems to be espousing the idea. Senior members of the Government, of both parties, have made their contribution to that. Even the Labour Party now has a policy on devolution that I am sure we can support, so it is an idea whose time has come. I was therefore surprised at what the noble Baroness, Lady Stowell, said.
Of the three aspects of policy that should be devolved to cities, the first is, clearly, economic powers, the second is place(-based) public services and the third is some form of fiscal devolution. I shall not repeat what people have said about the economic powers, but, clearly, skills, transport and housing are key issues that will make a real difference to our cities. That is particularly true of skills. When we have a Skills Funding Agency based in Whitehall, trying to determine what new skills are needed across Greater Manchester, well, it is no wonder that we have so many hairdressers being trained for jobs that do not exist. We need to get hold of that money and we need to be able to commission it locally, working with the private sector and colleges to make sure that we get a better deal.
I have spoken in this House on a number of occasions on public service reform, about which I am passionate. It was begun, as the noble Lord, Lord Beecham, said, under the Labour Government and what they called Total Place. There has been movement under the current Government in the various experiments that they have conducted—we were a pilot area in Greater Manchester for public service reform—but we have not tackled this fundamental problem of a silo-based approach, where each central government department works on its own and does not understand the nature of what is going on.
We often find that it is the same individuals and the same families who need support, because they have very complex needs. We need to understand that and stop trying to sort out the problems of those individuals in different areas with different people involved; we should look at the position as a whole. We have started in Greater Manchester on a “Work Programme plus”. People have different views about the success of the Work Programme, but quite a large number of people were never shifted by the Work Programme because they were too difficult. Using the resources of local authorities and others, we have begun to understand what problems individuals have in getting jobs. Is it homelessness? Is it some kind of mental problem? Do they have drug issues? We ask what the issue is and how we can support it, and then we can help them get back into work. We need to stop dealing with failures, as public services often do, and try to look at things across the piece.
As the noble Lord, Lord Shipley, reminded the House, in Greater Manchester public spending is about £22 billion to £22.5 billion and it has been that figure for a time. We have had government austerity and the cuts. The cuts have affected Greater Manchester—public services such as local authorities and the police have taken huge hits in their spending—but, because of rises in welfare and health spending, the total has remained the same. We are not going to tackle it unless we get control of that money altogether. We need to do that much more. We are happy to take what we would regard as a risk and reward situation. We will tell the Government that we will make savings and share them with them—some of the savings can come back and some of it we will do.
The benefits of such a system have been shown. We know that there will be better economic growth and it will be better distributed across the country. This country is too reliant on London and the south-east and we need to spread wealth across the country. That will happen. Public services will be more efficient and cheaper and actually deliver better outcomes for the people they are meant to support.
We recognise that with devolution comes responsibility. We cannot simply take it on board now. We probably have the most sophisticated government in Greater Manchester because we have been doing it long enough but we know we need to change. I hope on Friday I will get an agreement on some very significant changes in Greater Manchester to take on these new responsibilities to make sure we are accountable to Parliament and to government. We need to do that.
Most of the changes I have suggested do not need to wait for the big constitutional convention. They do not need to wait for massive new legislation. They can be done now. All that is required is the political will to do it.
Lord Purvis of Tweed
It is a genuine pleasure to follow the noble Lord’s forward-looking and very practical contribution to the debate today. It was very interesting to hear of the broad areas of common ground between him and my noble friend Lord Shipley, pointing out some practical ways forward to noble Lords.
Over the last month since the vote in the referendum I have reflected on two main areas and they have stuck with me. The first is that for many people who voted in the referendum the issue was less what country they wanted to be a citizen of and more about what kind of country they wanted to live in and bring up their children in. It has been something that all parties that believe in the United Kingdom need to continue to reflect on. The noble Lord, Lord Kerr, and others accurately pointed out that of those eligible to vote, 37% voted yes. We can use exactly the same definition when we come to the rather stark figure that 47% voted no. That, for me, is one of the areas where it is quite telling.
The second area, which is a much more optimistic reflection and one that shapes the rest of my contribution to today’s debate, was the discussions, interaction, listening and taking part in debates with 16 and 17 year-olds in the referendum. It was politically reaffirming but it also struck me that as a group a majority of them voted no. Many of them had their own definition of what a country and a state should look like. They frame what they want the country to be like to give them the best opportunity for the future in this fast-changing and complex world. They defined what a state would be and in many respects they rejected what was on offer by the Scottish Government in the White Paper, which they considered remarkably old-fashioned and in many areas incoherent. We need to challenge the threats ahead of us as a country, which take up much of our time in Parliament both here and in the one where I was proud to serve when I was in the Scottish Parliament. That is why for the year I have been in this place I have tried to take as many opportunities as I can to shape the debate about what happens next.
In June this year I was fortunate enough to have a Question for Short Debate:
“To ask Her Majesty’s Government what plans they have for further reform and decentralisation of the United Kingdom in the event of Scotland voting “no” in the independence referendum in September”.
I have been in this House just a year, as I said, but I served two terms in the Scottish Parliament and five years on the Scottish Parliament’s finance committee. My views have been framed over that period. I was well aware very early on that in 1998 we created a devolved legislative but we did not create a Government in Edinburgh that had fiscal responsibility commensurate with legislative competence. Indeed, in many respects it is that key aspect that we are debating today. It is a coincidence perhaps, but a good one nevertheless, that it was the plenary of the Smith commission—a different Lord Smith—meeting in Edinburgh today discussing taxation: what tax basket would be the responsibility of the Scottish Parliament—addressing the very issues on which the noble Lord, Lord Lang of Monkton, and others have been challenging us. A lot of thinking has been done in this area and there are lessons we can learn. There are strong, long-held principles on fiscal federalism from other countries in the world that are more comparable to the United Kingdom—as my noble friend Lord Tyler indicated with Canada and Australia—than perhaps other European federal nations. There are long-held principles of fiscal federalism that we can learn from in the United Kingdom. We do not always need to listen to the Treasury briefings that say that everything is really difficult and the default answer is no. We need to set political leadership and then the Treasury and others will follow.
Between being in the Scottish Parliament and in this place I wrote a series of proposals looking at these areas in detail. It was a regret to me at the time that when I met the Conservative Party it was holding to a line in the sand for no further powers and when I met the Labour Party a senior member of the party said to me, “We just do not like the choreography of being on the same stage as the Conservatives and you Liberals”. When I tried to propose two years ago a Glasgow agreement of common ground, common language and a common platform to go into the referendum campaign with a progressive narrative of what the United Kingdom is and can be, there was rebuff. It is an absolute delight that we are now in a position where all five parties in Scotland are around the table and this Parliament is seized of the positive opportunities ahead of us. We may yet still have a form of Glasgow agreement coming out of the Smith report and I declare an interest as chair of an all-party parliamentary group in this place set up on a cross-party basis trying as parliamentarians to forge that way forward.
Finally, I agree with other Members that one of the ways forward is what I have proposed as a conference of the new union meeting straight after the general election. My final appeal is that this should not be an opportunity to long-grass many of the issues or to rediscover many of the questions. We know what we need to resolve. The difficult part is political parties with vested interests often having to make uncomfortable compromises for their own sake. We have to do it because the figures of 37% and 47% should always stay in our mind. If that is the case, we have that on our shoulder but let us be optimistic and seize the opportunity that has been presented to us.
Lord Elis-Thomas
My Lords, it is always a delight to follow the noble Lord, Lord Purvis of Tweed, in our devolution debates. When we go back to the later stages of the Wales Bill in the coming weeks I hope he will be able to find time to share his wisdom with us as he has done before. I was particularly pleased to hear what he had to say about his experience in the Scottish Parliament and his emphasis on co-operation across parties. As I am sure Members of this House and certainly the Government know well, this is precisely what has been happening in the National Assembly for Wales. Only last week a resolution was passed unanimously by all the four parties, put down jointly by all four party leaders. The essential part of that is the emphasis on the timescale for getting draft legislation— certainly before the end of the current Westminster parliamentary Session—to implement the further report of the commission so ably chaired by Paul Silk, a former clerk and chief executive of the National Assembly.
In a sense, the process in Wales was ahead of that now taking place in Scotland; but it has also been overtaken by events, in that the process in Scotland is going further. The negotiation that the party leaders in Wales are seeking jointly with the UK Government is precisely to sharpen up the proposals in the Wales Bill. It is also important that, as powers mature in Scotland, we have devolution to the English regions—for example, the north of England—alongside what is happening in Scotland, Wales and Northern Ireland. I speak as someone who is highly reliant on transport starting from Manchester, whether trains or planes.
In the short time available, I shall not venture into the English question as a whole, except to emphasise the point that we already have a clear statement at all times of the territorial extent and application of all our legislation. Wherever there are areas which overlap, we work through legislative consent Motions, both in the Scottish Parliament—substantially used, dare I say, by the SNP Government—to ensure that we can co-legislate when that is deemed the best way forward.
I will emphasise the aspects on which the party leaders in Wales are keen to get movement. The leader of the Opposition, the Conservative leader, Andrew RT Davies, is very keen on having the power to determine our electoral arrangements and the size of the Assembly, subject to the use of a super-majority, a two-thirds majority, whenever those decisions are taken.
As I said, there is an emphasis on the need to develop the legislative proposals in what we call Silk 2, but also to ensure that as we get further powers, there is serious co-decision between the UK Government and the Welsh Government, between this Parliament and the National Assembly, whenever we consider a referendum, for example. That is my clear response to what the noble Lord, Lord Thomas of Gresford, said. We must recognise that any decisions taken on holding a referendum on tax-raising powers should reflect the views of the people of Wales, and the UK Government should accommodate that.
It is essential that the discussions taking place between Wales and the UK Government parallel the process that is taking place in Scotland. I join colleagues in saying how good it is to see the SNP Government and the Scottish Greens as part of the post-referendum process.
I get a bit tired of the ideological attacks on a form of nationalism that I certainly never espoused, which does not belong in the 21st century. The civic nationalism of the Ministers who I know in the Scottish Government does not fit the description of my old friend Eric Hobsbawm. Whatever reason he had to leave his home in Croesor, in my former Westminster constituency, I am certain that it was not ethnic cleansing, although he seemed to think that that was the case.
As we look forward to the progress that the coalition Government are leading on devolution across the United Kingdom, for which I thank them, it is an opportunity for us to restate, in this building of all buildings, that in our history the relationships between the nations, regions and peoples of these islands have always been changing. The key thing is to realise that they are relationships. Constitutions are made by relationships, not the other way around.
Lord Horam (Con)
It is probably appropriate in the context of this debate that an Englishman should follow a Welshman and a Welshman should follow a Scotsman. If only we had someone from Northern Ireland, we would have the whole of the United Kingdom encapsulated in the Chamber in one moment.
One of the central points and problems of this debate was raised by the noble Lord, Lord Birt: that 84% of the total population of the United Kingdom is English, with 8% being Scottish, 5% being Welsh and 3% Northern Irish; I hope that that makes 100%. As a result, I have always well understood the desire of the Welsh, the Scots and the Northern Irish for more control over their affairs, rather than the possibility of being swamped by England. I agree that “swamped” is a dangerous word in the present context, but I think that the House appreciates what I mean.
We rightly have devolution to Scotland, Wales and Northern Ireland. In those circumstances, there are really only two alternatives to handle it. The first is that England puts up with it. After all, England gets a huge amount from having associated for so long in our history with Scotland, Wales and, for a long time, Ireland as a whole, but now Northern Ireland. Whatever little disadvantages occur to England and English voters, we should not underestimate that that is a big plus. Who can doubt that if Scotland had left us in the independence referendum, it would have been a massive blow not only to the United Kingdom, obviously, but also to England? Let us bear that in mind.
In that context, the English have been pretty good about all this in the 15 years or so since we have had devolution to Scotland, Wales and Northern Ireland. We have rumbled a bit about the West Lothian question; we have agitated a little about the Barnett formula; but it has not been a huge issue in England. We English are rather mild and tolerant people. I think that George Orwell got it about right: we wear our patriotism rather lightly, although it is none the less deeply felt.
Therefore, the question now becomes, as we have gone through the past 15 years or so with the devolution that we have had: will that attitude be sustained with the greater devolution that we are committed to giving to Scotland? There is no doubt or question that we have to deliver on that. We therefore have to consider whether we can, first, make the devolution proposals being considered by the noble Lord, Lord Smith, work, and, secondly, whether we can make some sort of acknowledgement of the English problem work as well. I think that both of them could work. I see no reason in principle why both of those cannot be made to work, even in the limited time available.
The question of income tax and other taxation has been raised. I do not see that as a problem of principle or an economic problem. There was a very good article in the Financial Times the other day saying that, economically, it could quite well work with income tax devolved in the way that my party has suggested to a very full extent.
Equally, on English votes for English laws, with its EVEL acronym, I must say that I am rather a minimalist. If the Standing Orders of the House of Commons could be changed without primary legislation—which I always abhor where we can avoid it—that would be a way forward. Whether we do that or not, I agree with the noble Lord, Lord Forsyth, on this issue, that a better solution would be to have fewer MPs in Scotland and Wales if we have more devolution.
The House will recall the solution that we came to at the time of the division of Ireland in the 1920s, when they went down to 12 or 13 Members of Parliament for the UK Parliament, and, when direct rule was reintroduced, they went back up to 17. If we are to have MPs all treated the same—they should all be treated in the same way, with no fancy nonsense at the edges if you can possibly avoid it—that sort of solution, having fewer MPs in Scotland or Wales, should and, I hope, will be considered by my good friend William Hague. Who could be better to do that than him? He is an excellent choice for that role.
I would like that to be considered as part of the ongoing discussions of how we can make some sort of sensible commitment in England to dealing with this whole thing without too much of a consequence. However, there is always the danger—it has been obvious throughout—that this will unravel. Therefore, I come to the conclusion, along with others like the noble Lords, Lord Purvis and Lord Judd, who mentioned this recently, that in the final analysis some sort of federal solution may well have to be considered. I do not mean now; I hope that the present arrangements can be made to work. It certainly has to be considered in a calm atmosphere, as I believe the noble Lord, Lord Hennessy, said. Then we could get it before a general election. Some sort of federal solution with Parliaments all round, with the UK Parliament at the top, I think is the final bulwark. That would be fair to everybody and would be the right way forward if we cannot make the rest of this work. I profoundly hope that we can. I am in politics because I am a proud Brit, and I am proud of all parts of the United Kingdom. We have a hugely successful history and I see no reason why we cannot have a hugely successful future.
Lord Soley (Lab)
It is almost a year since I expressed the view to the noble and learned Lord, Lord Wallace of Tankerness, in this House that we were in acute danger of losing the most successful political and economic union that the world has ever seen. I was worried about that throughout this period, but I recently became confident that the Scottish people would throw us a lifeline; they did, and they did it very solidly. Not only did they throw out the nationalist cause of the SNP but, more importantly, what we need to remember now is that they threw us all, the whole United Kingdom, a lifeline. We need to redesign our constitution for the 21st century.
If your answer to a question now is nationalism, then you are asking yourself a question more appropriate to the 19th century. Nationalism of the sort that is very common both in the SNP and in some other groups—and would be common in England if we awaken the English nationalist cause—is profoundly dangerous. It is particularly dangerous to a successful union, so my message is that we should use the opportunity that the Scottish people have given us to take this forward. I would love to spell out how I think that should go but I do not have time. I will just say that the first question to ask ourselves is: what do we want the union for? There is a detailed answer to that but there are a couple of simple answers. Part of it is about what it has given us for 300 years. It has given us political stability, political progress, economic stability, economic balance and things such as the Industrial Revolution and has thrown out the danger of a return to the authoritarian divine right of kings. That was the positive side.
One message I have for the Government is that, instead of playing around with ideas that encourage English nationalism, such as English votes for English regions, we need to get the message out about what the union is for. There is some criticism that the no campaign did not put out a progressive answer about what the union is for. That is a fair comment, although the negative answer was essential because it was vital that the Scottish people understood that, although they could always use the pound—just as the Chinese, the Russians, the Americans or anyone else could do—what you cannot do is use the pound and then have a say in setting the interest rates or determining the regulation of the financial sector or whatever. In other words, you lose independence in the 21st century unless you recognise that you need the integration between nation states.
I would say to the noble Baroness who opened for the Government—in a way, I am sorry about that speech because it focused so much on the question of English votes for English regions—that she is in acute danger of actually aggravating the situation. It is a gift to separatists—English separatists, Welsh separatists, Scottish separatists and Northern Irish separatists. If she does not believe me, she can watch some of the heads nodding when I say this and when others have said it. It plays into the hands of separatists. If that is not a good enough reason for her, let her please get the Prime Minister to read and reread the speech by the noble Lord, Lord Empey. When I got involved in Northern Ireland politics in the 1970s and 1980s, we looked back to what we did in 1922 and saw what a disastrous mistake it was. In effect, we created a statelet which wanted to be part of the United Kingdom, and in name it was part of the United Kingdom, but in fact it was something very different and very separate, with disastrous consequences. If you go down the road of just thinking that we have to have English votes for English regions, you emphasise that separatism.
We have to go down the road of devolution. I, personally, like the city regions that have come to the fore from the Chancellor of the Exchequer. I think that that is a good and positive road to go down. However, if you go down this road of English votes for English regions, look at what you do for England: you awaken English nationalism and threaten the union. If the Prime Minister does not understand that, he is making a truly fatal mistake. It is very important that we look at that.
Devolution is vital not just because Alex Salmond and others were able to play on the idea of Westminster being remote. It is not just remote from parts of Scotland; it is remote from the south-west of England, from the north-west of England, from the north-east of England and, at times, it has been remote from Essex and Surrey. There is a problem about the feeling of distance. Alex Salmond should not be allowed to get away with this either, because Shetland feels remote from Holyrood; so does Orkney, so does the north-west of Scotland and so does the north-east of Scotland. One of the dangers of this, which the SNP and others do not understand at times, is that when countries break up they often disintegrate rather than separating into neat little blocks. Shetland has a very strong view about this. Its inhabitants do not regard their oil as Scotland’s oil; it is Shetland’s oil up there. If anybody goes up there and asks them, they will make it very clear. The dangers in this are very deep.
We need to reconnect with people and to do so by devolving power. This is a problem not just for Britain but around the world, yet Britain has been incredibly successful at doing constitutions. The German constitution, which is one of the most successful in the world, was virtually written by Britain and there are many others. We have been incredibly successful over 300 years of doing this but, at the moment, we are in danger of losing the plot by focusing on one or two issues, such as English votes for English regions. We have to break out of that and recognise that we have to find a form of devolution that works throughout the United Kingdom, while recognising that the union is important because it gives us political and economic strength across the piece.
I wrote to the Prime Minister shortly before the referendum and asked him to look at having a constitutional conference—whether we won or lost that referendum, incidentally. I still think that is the right road to go down. I do not mind whether it is a royal commission but I say to the noble Baroness, so that she may convey it to the Prime Minister, that we do not need simplistic political solutions at the moment. We need statesmanship and we look to the Prime Minister for it. At the moment, we are not getting it.
Lord Stephen (LD)
My Lords, I compliment the noble Lord, Lord Soley, on his insightful contribution. I share his deep concern about the dangers that we faced at one point of this referendum: of losing so much of what the union has been over the last 300 years.
This has been a very good debate and there have been some very wise comments, particularly on the nature, appeal and real dangers of nationalism. Nationalism has the ability, in the right place and at the right time, to whip up passion and fervour among those who feel disconnected, disengaged or disfranchised. I think that the noble Baroness, Lady Liddell, was the first to point out that there was a very nasty edge to this referendum campaign. I spoke in a previous debate about the treatment, for example, of JK Rowling or that of the mother of a disabled child—who dared to say that she intended to vote no—by the First Minister’s media adviser. You could see it on the streets as well. What did it for me was seeing not the treatment of Jim Murphy but rather the ugly heckling and barging of an elderly woman who dared to approach him, simply to ask a question about the campaign. That is not the sort of Scotland that I ever want to see again.
I have no doubt that if the yes vote had won, there would have been a carnival of triumphalism. George Square and its fountains would have been occupied for days. The no voters are very different. There was a sigh of huge relief across Scotland after weeks of agony about the outcome but no triumphalism there. Instead, there was sensible and constrained silence except, sadly, as several noble Lords such as my noble friend Lord Steel and the noble Lord, Lord McConnell, have pointed out, from the steps of No. 10 Downing Street. Rather than the Prime Minister’s essentially partisan speech which was trying to gain party advantage that morning, he and the other party leaders should have travelled to Scotland together to give substance to their pledge, show respect for the decision of the people of Scotland and help to unite and heal. There is still time for that to be done.
I have considerable confidence in the ability of the noble Lord, Lord Smith, and his team to deliver a radical set of proposals for significant new powers on both tax and policy to Scotland. It is worth pointing out that, for the first time, the Scottish National Party is participating in the process of delivering a stronger, more powerful Scottish Parliament. It turned its back on the Scottish Constitutional Convention and the Calman commission but now it is part of the Smith commission, which is a good thing. I wish all members of that commission well in their endeavours. I have considerable confidence in their ability to deliver home rule for Scotland—home rule of the kind for which my noble friend Lord Tyler and I, along with many others in this Chamber, have always campaigned.
There is a kind of federalism which is beginning to develop momentum for the rest of the UK. I have heard many noble Lords, such as the noble Lord, Lord Foulkes, talk about federalism in a passionate way, which bodes well for future debate on this issue. However, I have considerable concern about the issue of shaping the future of the rest of the UK. I do not care whether it is a commission or a convention, frankly, or whether it is royal or not. What I care about is that it should be rapid, radical and federal.
By “rapid” I do not mean that it has to be decided in the next 100 days or by Burns night, or whenever the deadline might be. Quite clearly, Scotland has to come first and that is the vow. However, it does mean getting on with it for the rest of the UK. By “radical”, I do not mean that I want to force a particular solution on England; it means that giving more powers to local government in England is simply not nearly enough. By federalism, moreover, I do not mean a single, fixed solution but more the federalism of the kind emphasised by my noble friend Lord Tyler and the noble and learned Lord, Lord Hope of Craighead. It is the sort of approach that can be taken in Australia, South Africa, Canada or Spain. There are so many examples around the modern democratic world but it appears not to be able to be grasped here in the United Kingdom.
Lord Cormack
But there is no federation where one country within that federation has 85% of its population.
Lord Stephen
Exactly, which is why we must devolve within England; this is exactly the point that I hope to come on to. We can have different approaches in devolving power across England. We need a coherent structure for that, but we can be very flexible inside that structure. Canada is a very good example. However, the current focus on a purely English solution—a sort of English nationalism—is for me simply not good enough. I believe in devolution, not simply because Scotland is a nation and is the only part of the United Kingdom that deserves these powers, but because decentralising power is a good thing. It makes for better decision-making. A decentralised United Kingdom would in my view be a better democracy for us all.
If the referendum in Scotland leads to this—to a better more decentralised democracy for all of the United Kingdom—then there could be no better tribute to those who quietly but passionately voted no. Those who trusted the Westminster party leaders and had faith in something better are the people who have created this opportunity. It is now our responsibility together, across the political divide, to deliver. The very future of our united nation depends on it.
Lord Bew (CB)
My Lords, the noble Baroness, Lady O’Neill, has already made this point very strongly. There is one respect in which the referendum result in Scotland has been stabilising for the rest of the United Kingdom, and that is with respect to the experiment in Northern Ireland. There is no possible way, if Scotland had elected to leave the United Kingdom, it could have been stabilising in its implications for Northern Ireland. As a strong supporter of the settlement embodied in the Belfast agreement, along with the noble Lord, Lord Empey, who worked so hard both to see the Belfast agreement pass in a referendum and also to maintain the institutions in the first few difficult years, I am delighted by that really excellent outcome.
In more general terms, however, the mainstream English political mind has had a problem for a century, which is that it tends to be too sentimental about devolution as the answer to problems in the United Kingdom. It may be absolutely necessary—and I have already said that I believe it is absolutely necessary for Northern Ireland, and I accept, in the context in which we live, for Scotland and Wales—but nor has it worked in the way that it was expected to work and we must face up to this. There is a reason for that, I think. For much of the century people believed that, if only we had achieved devolution as a settlement for Ireland, we would have avoided all the violence and the separation of Ireland from the rest of the United Kingdom, but this fine magical solution, because of short-sighted behaviour of some major political players, was not made available to us.
However, the Scottish experience of the last few years raises a major question about that. Scottish nationalism, which I accept is a serious force, does not have anything like the deep historical roots of Irish nationalism, yet it came to the point where 45% of Scots, after a sustained period of devolution, were prepared to vote for separation. Anybody, therefore, who thinks that had we had devolution for Ireland earlier in the century that would automatically have switched off the separatist urge is, I think, deluded. None the less, the idea is there and we think about it in a sentimental way.
Often the poor performance of the devolved regions—look, for example, at the performance of Wales in terms of its educational structures in international tests—does not receive the attention that it should. We say, again and again, “Local people making local decisions—it is going to work and it is going to be better”. Actually, not all the figures, if you look at the educational culture of the devolved regions at any level, would for example suggest that that is necessarily the case. In this debate, many noble Lords whose opinions I greatly respect—
Lord McConnell of Glenscorrodale
Perhaps the noble Lord would address this point. There is a feeling in Scotland that at least part of that accumulation of support for independence is due to increased confidence. That is partly because Scotland’s performance economically today compared to the rest of the United Kingdom is significantly better than when the Parliament was established. Population decline has been reversed and a number of other improvements in Scottish society have been made. That confidence is perhaps part of the reason why people feel they can take on the additional powers of independence.
Lord Bew
I accept the noble Lord’s point, but the same point could be made about Irish nationalism, which also becomes more intense at certain points when there is more self-confidence as a result of good economic performance. Indeed, in the period leading up to Ireland’s break with the United Kingdom, the First World War was a tremendous boon for Irish farmers and most people in Ireland were farmers. So I accept the point.
On the issue of the federalist moment, which so many have conjured up this evening, I have no intellectual objection to it and I understand its appeal, but I just want to express one point of scepticism. In 1910, all the major parties and all the major players had a serious interest in separatism, with Winston Churchill at the heart of it. Why? Because they could see the Irish home rule crisis about to come and they could see the threat of civil war. They could see the danger that the unwritten rules of the British constitution were going to be absolutely torn apart. Federalism was the wonderful, magical way in which all these contradictions could be resolved, everyone could be happily secured in their identity and the Irish could be given the substance of what they wanted. If we could not do it then, when the political class on all sides thought that this was the right way to go, are we likely to be able to do it now, when the pressures are nothing like so great? It may be so, but—this is not a judgment on the concept of federalism; it is a judgment on just what it requires to get people to move in that direction—I am not sure that we are quite there at this point.
The noble Lord, Lord Forsyth, has already made the point about the reduction of MPs in Westminster from the devolved regions being the obvious solution to the West Lothian question. When I met the McKay commission, I made exactly the same point as the noble Lord, Lord Lexden, that this was the approach adopted with respect to Ireland. It is the obvious and logical way of approaching that question. However, we are now in a situation where the McKay commission has decided to go a different way.
I just want to say a couple of words about that commission, because noble Lords are afraid of too speedy a reaction. Sir William McKay, a former Clerk of the House of Commons who deeply respects its traditions, has produced an answer to this difficulty that does not create two fundamentally different classes of MPs, which is the great danger at stake, but allows a greater register of English opinion. If we are in the situation where the West Lothian question will not go away—currently, it is the Conservative Party that is most active on this; in the 1960s, it was the Labour Party, which was furious that a Labour Government with a majority of only five or six had to put up with 12 Ulster Unionist MPs and Labour MPs could not ask questions about what was going on in County Antrim—today it is a different party that finds the West Lothian question hard to endure. However, if we are in a position where we have to act on this matter, a report of this sort may not have the answer but deserves some serious consideration.
Above all, the characteristic of that report, as we might expect from William McKay, is what the union requires to survive: it is dominated by the language of civility. That is the sine qua non for the survival of the UK as we approach these problems.
Lord Forsyth of Drumlean
My Lords, it is a great pleasure to follow the noble Lord, Lord Bew. The great weakness in the McKay report was that it addressed only the West Lothian question and not the much bigger one of the imbalance that arises because of the Barnett formula. I am sure he would agree with that.
Anyone listening to Nicola Sturgeon, who is the sort of First Minister designate in Scotland, on the “Today” programme this morning demanding a Scottish veto on any European referendum result could be forgiven for thinking that the nationalists had not been comprehensively defeated on a massive turnout on 18 September. Not content with one referendum on Europe, she wants to have four. Alex Salmond was absolutely convinced that he was going to win the campaign, where he used the patronage of the Scottish Government ruthlessly—and, by the way, is still doing so, ringing people up and saying he is going to get them because they did not support his side of the argument. Intimidation reared its ugly head at every level, inspired by these nationalists, causing unionists to be fearful about acknowledging their support for their cause.
In the end, Alex Salmond failed because of economic uncertainty. His support, however, came from an electorate, as the noble Lord, Lord McConnell, pointed out, utterly disillusioned with the political system and still hurting from the consequences of the financial crash of 2008. The nationalists, just like Mr Farage and UKIP in the south, offered hope and easy answers, and many hard-pressed voters thought that things could not get worse for them and they could risk taking a chance on separation. The separatists exploited the consequences of poorly thought-out constitutional change and complacency and lethargy in their opponents, as the noble Lord, Lord McFall, pointed out earlier. The Prime Minister allowed Alex Salmond to choose the question, the timing and even the franchise for the referendum, despite it being the United Kingdom’s constitutional responsibility. The result was that we had a two-year long campaign during which all the levers of the Scottish Government were used to advance the nationalist cause and promote a grievance culture. The question on the ballot paper demanded a negative answer to maintain the status quo. Instead of, “Should Scotland remain part of the United Kingdom?”, Salmond insisted on, “Should Scotland be an independent country?”. As my noble friend Lord Cormack pointed out, the unionists were thus forced to campaign for a no vote while enduring attacks from Salmond that the campaign was negative. Of course campaigning for a negative is negative. He deliberately set it up that way.
He promised that this referendum would be a once-in-a-generation event. He said that because he thought that he would win it. His word has proved to be worthless; it turns out that he had the lifetime of a butterfly in mind. He resigned as First Minister in defeat, leaving his left-wing successor—she is left wing—to renege on the nationalist promise and refusing to rule out a further referendum. It is clear that a vote for the SNP is now a vote for divisive, disruptive and damaging neverendums. Salmond himself will almost certainly fight the general election, hoping to win a seat at Westminster, in the Parliament he so despises, and lead a ragbag of disruptive latter-day Parnellites. That is his plan.
The United Kingdom has been put at risk by tactical misjudgments and constitutional tinkering for political advantage. The Conservatives, Labour and the Scottish nationalists have all been opposed to the creation of a Scottish Parliament in my lifetime. They have changed their positions for reasons of political expediency rather than principle and have sought to amend the constitutional position to suit themselves. Alex Salmond was opposed to devolution and the creation of a Scottish Parliament with limited powers but changed his mind when he decided that it could be a Trojan horse to destroy the United Kingdom. Sadly, my Labour opponent is not in his place. As a friend, I have great respect for the noble Lord, Lord Robertson of Port Ellen. When I was Secretary of State, he was my shadow. He predicted that devolution would kill nationalism stone dead. Labour thought that it would enable the left to keep the Conservatives out of power in Scotland and that they could devise a complex voting system which would ensure that no one party could dominate the Scottish Parliament. They adopted the language of nationalism, branding the Conservatives as anti-Scottish, arguing that the Conservatives had no mandate to govern in Scotland and denouncing our policies as Anglicisation. Even today, Labour MSPs have not learnt the foolishness of their actions because I see them in the newspapers contemptuously referring to their Scottish colleagues as Westminster Labour.
In 2011 the nationalists won an “impossible” overall majority in the Scottish Parliament with 69 seats on a manifesto that pledged an illegal referendum on independence. So much for devolution killing nationalism stone dead. Westminster had no choice but to grant it, but had delayed grasping the issue for too long. Gordon Brown as Prime Minister crushed a proposal to hold a referendum in 2008 from the Labour leader in the Scottish Parliament, Wendy Alexander.
In the final few days of the referendum campaign, after many people, including me, had already voted by post, an opinion poll which had eliminated the “don’t knows”—who turned out to be the “no but won’t says”—put the separatists in the lead. The three unionist party leaders panicked and published a joint statement—not a vow—in an exclusive for a tabloid newspaper, pledging more undefined powers to the Scottish Parliament. This was done by three privy counsellors without consulting Parliament and, we now learn, without even consulting their party leadership in Scotland. Not since Henry VIII have we had laws enacted by proclamation, even by such distinguished figures as Nick Clegg, Ed Miliband and the Prime Minister. There have been several references to a vow during this debate. The statement was turned into a vow by the newspaper’s headline writer. It proclaimed:
“We agree that the UK exists to ensure opportunity and security for all by sharing our resources equitably”—
as the noble Lord pointed out—
“across all four nations to secure the defence, prosperity and welfare of every citizen. And because of the continuation of the Barnett allocation for resources and the powers of the Scottish Parliament to raise revenue we can state categorically that the final say on how much is spent on the NHS will be a matter for the Scottish Parliament”.
It is, of course, complete gobbledygook.
The Barnett allocation, as the noble Lord, Lord Turnbull, pointed out, gives Scotland an extra £1 per person for roughly every £5 spent in the rest of the UK and is not based on need. A commitment, such as in this so-called vow, to share resources equitably would mean ending Barnett and would leave an enormous black hole in Scotland’s block grant. We have just won the argument in the referendum campaign that even if Scotland had all tax revenues she would be utterly dependent on the oil price or very much higher taxes just to maintain the status quo. Similarly, Barnett gives Scotland roughly 10% of any increases in expenditure decided at Westminster, and any allocation in respect of the NHS will be determined there, not in Scotland. When water was privatised in England, the block grant was reduced and the funds required to maintain it in public ownership came from the allocations to other services.
These promised new powers and the funding arrangements are not thought through; nor are the consequences for the rest of the United Kingdom which had no say in the referendum. The reason given for having no devo-max question was that it was a matter for the UK as a whole while independence was for Scotland to decide. With a general election due next May, the necessary legislation cannot be put through Parliament and there is no time to find an agreed solution which will bind the United Kingdom together and ensure fairness for each of its constituent four nations. Once again, political expediency is playing its part in handing the game over to the separatists.
The way forward must command support in every corner of the United Kingdom. The fact that 45% of the voters in Scotland on a turnout of 85% were prepared to abandon Britain cannot be ignored or fixed by more asymmetric devolution. Nor can the remedy be left in the hands of political parties. A constitutional convention drawn from Scotland, England, Wales and Northern Ireland and involving central, devolved and local government as well as civic society could address the issue of funding, the role of the Westminster Parliament, regional issues and the central purpose and benefits of a United Kingdom. This is not just a matter for Scotland but one for the British people as a whole if the United Kingdom is to be secured on sound foundations for the next 300 years.
Lord Elder (Lab)
My Lords, moving as we are towards the end of a long debate, I start by wishing the noble Lord, Lord Smith of Kelvin, well and his fellow committee members the best of luck. I say that as someone who spent eight years, I think, on the Scottish Constitutional Convention, most of them on its Executive, who was in the Scottish Office at the time of the White Paper and Bill and who, more recently, was on the Calman commission, so I kind of know the course.
I want to make a couple of general points. First, I suggest very strongly that we take care with the language we use in discussing further devolution. In the years running up to 1997, when we were talking about devolution we said that everything was reserved and then published a long—an increasingly long—list of things that were to be devolved. That was reversed in the 1998 Act, which says that everything is devolved except a much shorter list of central powers that are to be reserved. The issue is not just what powers we need to devolve—I am, of course, prepared to look at further powers to be devolved—but what powers we need to retain if the union, which was backed in the referendum by a substantial majority, is to be upheld. The SNP will always want more powers. We should be more careful, as was Scotland in the referendum vote.
Some of the more extreme suggestions—devolving all income tax, VAT, social security—look to be ending the union by the back door. If all that is left is defence and foreign affairs, and perhaps a residual and declining Barnett formula, then the Scottish people will feel that they have got rather less than they expected. The SNP of course wants to become a member of NATO, a nuclear-backed alliance, though it does not want to have anything to do with nuclear weapons. The fear is that, if we end up with this further great swathe of economic powers being devolved in some way, the majority in the referendum will feel hugely and rightly let down.
There has always been a school of thought in Scotland that you could stifle independence by granting more powers to the Scottish Parliament. That has always seemed to me to be flawed. If you argue for more powers in all circumstances, then you are actually arguing for independence, but with a slightly longer timetable—and that is not what Scotland voted for.
Secondly, I note the very tight timetable that is being followed by the new Commission. I wonder whether we might be in a better position if the same degree of urgency had been shown about the introduction of the Calman proposals, particularly those about tax. I declare an interest both as a member of the Calman commission and as someone who had a heavy hand in these tax proposals.
The commission reported in June 2009 and I believe that the tax changes are going to be introduced in 2016-17. These are substantial powers, and I should have liked to have seen how they might have changed the argument, had they been introduced rather more quickly. It is after all one of the ironies of devolution to Scotland that the income tax powers in the Scotland Act, backed by the people of Scotland in a separate referendum question, were allowed to lapse, not because they were not in the interests of the people of Scotland— who had voted for them explicitly—but because they did not fit well with the very narrow party aims of the SNP.
I hope the day will come when the debate in Scotland is not about more powers alone, but that we will move on to the vastly more important point of what is to be done with the powers that are there. For goodness’ sake, let us get back to the business of health and education policy, the power of local government, and all the rest. That is what is now needed.
Lord McAvoy (Lab)
My Lords, this has been a powerful debate, with some very powerful speeches made by some very powerful speakers. It would take me too long to go through every single one of them but particular mention must be made of the former Secretaries of State for Scotland, my noble friend Lady Liddell of Coatdyke and the noble Lord, Lord Forsyth of Drumlean, as well as of the noble Lord, Lord Lang of Monkton.
I share the view of a number of noble Lords that the most dangerous time was not before the referendum. I believe that the most dangerous time is now. If we do not handle this collectively, if we do not handle it properly in a collegiate way, it will lead to an inevitable separation and a separate Scotland. The word “Westminster” has become an epithet—an insult. This has been contributed to by Mr Farage and by Mr Salmond. There is a disengagement between the so-called establishment parties and the public. The noble Lord, Lord McConnell of Glenscorrodale, mentioned this disengagement in the context of Westminster and the Scottish Parliament. The paradox is that, in Scotland, more people turn out for Westminster elections than they do for Scottish Parliament elections, so there is a quandary there.
More powers are guaranteed for Scotland within the agreement. Although a lot of people do not like this or that power promised in the vow, as it has come to be known, if we do not deliver on it, we are guaranteed trouble. More powers for Scotland are guaranteed, regardless of what the SNP says. We guaranteed these collectively during the referendum campaign and we must deliver on that. My party has always led on devolution and we will engage with the Smith commission in a spirit of openness and partnership with the other political parties. As has been mentioned, it is a good thing for the Scottish National Party to be involved in that.
There are a couple of things that I have been confused about all night. There have been constant attacks on the Barnett formula, and it has been stated by some very knowledgeable people that it is not based on need. Since I came into politics, although I have not studied the Barnett formula—I would not want to be up all night—I have always been told that it is based on need, and in Scotland's case that it is based partly on the geographical nature and the large physical area of Scotland. There is a new gospel out, but I certainly believed that that was part of the calculation, along with the lower incomes in Scotland and social factors. The Barnett formula has been a great boon to Scotland, because it shares the resources of the United Kingdom with a poorer part of the country. However, I accept that there is concern about the democratic deficit, and I think that there is merit in that. I am not a mathematician but, surely, if the Scottish Parliament collects more of its own spending, there is a hope that the Barnett formula—but before I can finish, the gloom and doom merchant from Drumlean is shaking his head at me. He is starting to intimidate me. In the fullness of time, I hope that the Barnett formula can be a less important consideration in the overall look, especially in financial matters.
Lord Thomas of Gresford
The Barnett formula quite simply, as far as Wales is concerned, is a multiplication of departmental spending from the departments devolved to Wales by the population, which is 5.3% of the United Kingdom. That is where the money comes from; it has nothing at all to do with need.
Lord McAvoy
As I said, if you started to debate the ins and outs of the Barnett formula, we would be here a long time. I am being honest in telling your Lordships' House that my understanding of the formula since I came into politics was always that it was based on need.
I want to address the serious question of EVEL. If we get to the stage that there are two classes of Members of Parliament, it will come across as trying to take party advantage of a situation. The noble Lord, Lord Bew, mentioned the Northern Ireland situation. I do not recall the Labour Party in my time in the House of Commons making too much of the fact that there were Ulster Unionist MPs who more or less voted with the Conservatives, because my party and I took the view that that anomaly was worth carrying for the sake of the United Kingdom. I do not recall the noble Lords, Lord Forsyth of Drumlean or Lord Blencathra, or other Conservative Peers, mentioning the injustice of that situation all those years ago. So they seem to be a bit picky about it. There is a danger that that sort of seemingly political calculation by the Conservative Party could ruin its approach to the Smith commission.
My party supports a royal commission and a constitutional convention, because it is clear that we have to establish a mode of operation through the entire United Kingdom that will be settled, will last and endure and will be of value to all the people of the United Kingdom.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, the House has heard a very important and comprehensive range of contributions on complex and interlinked constitutional issues. I am pleased that we have had the opportunity to hear such a range of views and perspectives from all parts of our United Kingdom; it has been very important to hear views not just from Scotland but from England, north and south, as well as from Wales and Northern Ireland.
I was delighted to hear the contribution of the noble Lord, Lord Lennie, in his maiden speech. I understand that he is not only a Newcastle United fan but a participant in the Great North Run. No doubt that will allow him the stamina to take part in debates that go on for the best part of six hours. He summed up a recurring theme of our debate when he talked about the disconnect between politicians and voters that needed to be reduced. He entertained us and he informed us, and I know that the House looks forward very much to his contributions to your Lordships’ House in the future.
As noble Lords will have heard, the issues considered in this debate fall into three broad categories. The first relates to Scotland and the fulfilment of the joint commitment by the three party leaders to deliver more powers to the Scottish Parliament in light of the referendum no vote. The second category of issues relates to how to ensure that power is properly devolved and decentralised to all the nations, communities and individuals who comprise all parts of our United Kingdom. The third, separately but rightly—not as an alternative to devolution within England—considers how we might address the so-called West Lothian question, which has come about as a consequence of devolving power to specific parts of the United Kingdom.
I will address first the issue of the referendum in Scotland. It was legal and fair in its conduct and decisive in its outcome. It is important that we reflect on the points made by a number of noble Lords, including the noble Baroness, Lady Liddell, and the noble Lord, Lord Birt, who highlighted the appalling treatment of Nick Robinson in a country which ought to take pride in the freedom of the press and of the media. My noble friends Lord Stephen and Lord Forsyth also highlighted some of the many real problems that were encountered during the referendum. We should not lose sight of these when we think of what kind of Scotland we want to see in the future.
Some noble Lords questioned the fact that the Scottish Parliament devised the referendum. It was important that the referendum was, as it were, made in Scotland. In its immediate aftermath, we heard today of the conspiracy theories that counters at polling stations were filling in blank ballot papers. If the referendum had been devised at Westminster, the view that it was all a trick and a conspiracy would still be echoing loud and clear. The referendum was devised by the Scottish Government—they had everything going for them, and they lost. That is what makes the result decisive.
The people of Scotland expect that the interests of 100% of Scotland within the United Kingdom are taken forward. No one is under any illusion that a no vote was a vote for the status quo or that, somehow or other, we are out of the woods. As the noble Lord, Lord Hennessy, said—I think he spoke for many of us, myself included—our relief has been suffused with anxiety. As the noble Lord said, we are all seeking to achieve a strong and lasting settlement across the United Kingdom.
That is what we intend to do. The vow made by the Prime Minister, the Deputy Prime Minister and the leader of the Opposition has already been put into practice. My noble friend Lord Selkirk of Douglas sought the reassurance that that would be adhered to. Even those who contributed to your Lordships’ debate, who were sceptical about the commitments made, nevertheless all agreed that it was essential that that promise is honoured. It has been honoured. The Command Paper setting out the parties’ positions was due by the end of October. In fact, it was published two weeks ago. It is continuing to be honoured with the work of the Smith commission. It will be honoured because we have undertaken that the heads of agreement, which we look forward to the noble Lord, Lord Smith of Kelvin, announcing, will be taken forward with clauses by Burns Night.
Equally, the Scottish National Party should remember the statements it made ahead of the referendum that it expected it to be a once-in-a generation or once-in-a lifetime event. Nicola Sturgeon, whom I congratulate on becoming, as she will become, the First Minister of Scotland, said one year ahead of the referendum—on 18 September 2013—that this was a once-in-a lifetime opportunity for Scotland. If our parties are expected to honour commitments, the least we can expect is that the Scottish National Party will honour its commitment to the people of Scotland that this is for once in a generation.
The commission chaired by the noble Lord, Lord Smith of Kelvin, was up and running on 19 September. His terms of reference make it clear that the recommendations will deliver more financial, welfare and taxation powers, strengthening the Scottish Parliament within the United Kingdom. Last week, he convened the first meeting of cross-party talks to reach agreement on proposals for further devolution. All 10 nominees from each of the represented political parties attended. The noble Lord has said that they have,
“committed to work together to achieve a positive outcome to this process”.
The noble Lords, Lord McConnell and Lord Foulkes, emphasised the importance of this being, as it were, a principles-based approach rather than a horse-trading approach. I believe that that is what the noble Lord, Lord Smith, indicated after that first meeting. The parties have agreed a set of principles which include, but are by no means limited to, forming a substantial and cohesive package of powers, enabling the delivery of outcomes that are meaningful to the people of Scotland, and strengthening the Scottish devolution settlement and the Scottish Parliament within the United Kingdom, including the Parliament’s levels of financial accountability. The noble Baroness the Leader of the Opposition, as well as the noble and learned Lord, Lord Hope of Craighead, and my noble friend Lord Glasgow, sought an express assurance that that would be within the context of the United Kingdom honouring the outcome of the referendum. There is also a principle that it will not cause detriment to the United Kingdom as a whole nor to any of its constituent parts.
However, this process is not just about the parties. The referendum saw an opening up of civic engagement, and the noble Lord, Lord Smith, has made it clear that he wants to hear from all the various groups to ensure that the recommendations that he produces are informed by views from right across Scottish society. By St Andrew’s Day, he intends to publish heads of agreement. As I have indicated, the Government are committed to turning these recommendations into draft clauses by Burns Night 2015. It is a demanding timetable but that is because the demand is there, in Scotland, to see change delivered, and it is a demand that we intend to meet.
Scotland will have further powers but we believe that that must be within the context of Scotland being a part of the United Kingdom. It must not start to unravel the fabric that binds us together, because that would be a denial of the outcome of the referendum. However, I very much share the view expressed by the noble Lords, Lord McConnell and Lord Elder, that the exercise of these powers is vital to the whole range of devolved responsibilities. It would be very refreshing to get the political debate back on to how we improve education, health, transport, agriculture, sport and local government in Scotland.
Not surprisingly, the question of funding was raised. I certainly take the point made by the noble Lord, Lord Empey, who referred to the “ATM approach”—a point reiterated by the noble Lord, Lord Kerr of Kinlochard—where there has been spending by the Scottish Parliament without responsibility for raising the funding. Indeed, my noble friend Lord Purvis of Tweed highlighted that fiscal responsibility gap. One of the objects of those who served on the Calman commission—as I did, along with my noble friend Lord Selkirk of Douglas, and the noble Lord, Lord Elder—was to address that and to ensure that there was greater accountability for spending. Therefore, with the additional tax powers come additional responsibility and accountability.
We have been clear as a Government that the act of devolution in and of itself should not result in a change in the budget, but it is important to note that this is also one of the key principles highlighted by the Smith commission. However, we have been equally clear—this addresses a point raised by my noble friend Lord MacGregor of Pulham Market—that if decisions are taken by the Scottish Government which result in a lower tax yield than the current arrangements, the Scottish Government will have to take spending decisions in line with that reduced tax yield. The noble Lord, Lord Kerr, will put me right on this but I think that the Azores judgment means that where tax is fully devolved and there is a shortfall, it cannot be topped up.
The noble Lords, Lord Blencathra and Lord McAvoy, made the point that, as more tax-raising powers are devolved, the amount of money transferred to Scotland under the Barnett formula will decline.
Lord Forsyth of Drumlean
Can my noble friend just deal with the point in the so-called vow where it says that our resources will be shared,
“equitably across all four nations”?
How is that consistent with keeping Barnett? Can he also deal with the notion that, by giving the Scottish Parliament more tax-raising powers, Barnett can be phased out? If the tax base in Scotland is lower than the uplift in the Barnett formula, compared to the average for the United Kingdom, how will that gap be filled?
Lord Wallace of Tankerness
My Lords, an important issue which was always there but was articulated well, not least by the former Prime Minister, Mr Gordon Brown, in the latter stages, was the notion of the social union; the equitable arrangement within our United Kingdom where, if one part of the kingdom is thriving, there is a transfer of resources to a part that is not doing so well. That is one of the important things that binds our United Kingdom together and I see that as an equitable distribution of resources within it.
Lord Turnbull
I query why a country which claims to be more prosperous than the United Kingdom as a whole is the recipient of the highest transfer compared with Wales, which is the poorest part but receives a much lower transfer. That cannot be equitable.
Lord Wallace of Tankerness
The noble Lord, Lord Turnbull, quoted very accurately the words used in the statement in the Daily Record. As I indicated to my noble friend Lord Forsyth, with all his success in getting more money, it is the base line that is applied. With regard to Wales, it is understood and recognised—
Lord Purvis of Tweed
If the Minister will give way I will, for the information of the House, quote from the public expenditure statistical analysis by the Treasury in 2013 which shows that in 2008-09 the DEL resource grant, which may well be considered the transfer, was 7.7% of all of the grants for that year. The plans for 2015-16 are 7.96%, which is below the population share for Scotland. The point has been made about how you would balance that grant with the further tax powers. This is the work of the fiscal federalism principles of looking over a 10-year profile over economic cycles to make sure it is a balanced and fair proposal. The Strathclyde commission did it; the Liberal Democrat commission did it. There is work being done to inform this quite considerably.
Lord Wallace of Tankerness
My Lords, with respect to my noble friend who I know has studied it in great detail, I hesitate before going down the line of a 10-year fiscal federalism profile. I was about to answer the point made by the noble and learned Lord, Lord Hope of Craighead, and the noble Baroness, Lady O’Neill, with regard to the Supreme Court. The Scottish National Party has made a specific proposal. It would be wrong to second guess the Smith commission, but on the noble and learned Lord’s point about the role of the Supreme Court, if you have got a single market you should have a common set of principles and legal interpretation. This is very important and, as he will be well aware, both my own department and the Scottish Government established working groups during the passage of the Scotland Act 2012 to look at the role of the Supreme Court with regard to devolution issues. These are now compatibility issues and I hope that the Smith commission will have regard to that work, as both working groups reached very similar conclusions. I hope that gives some reassurance to the noble Lord.
The commitment to deliver further powers for Scotland is of course in keeping with this Government’s record in decentralising power. As my noble friend the Leader of the House has indicated, this Government have made huge progress in devolving both responsibility and funding for schemes to a local level. Local enterprise partnerships and the ambitious city deals programme, which has been mentioned by a number of noble Lords who have contributed to the debate, are clear examples of our commitment to empowering local leaders to take decisions which best fit local circumstances and needs.
That is a demonstration of open-mindedness about how more powers might be devolved. We certainly do not believe that power should be hoarded at the centre but that it should be devolved to the nations, communities and individuals that will benefit from it. I was struck, in the course of our debate, by the very important contributions from those with a rich experience in local government: the noble Lords, Lord Smith of Leigh and Lord Beecham, and my noble friends Lord Shipley and Lord Tope. They shared very constructive ideas with your Lordships’ House as to how we might improve existing arrangements, what new ones might be made and how powers might be used more imaginatively in our communities, our cities and those parts of the country which are not immediately connected with a major city. That is clearly an agenda which must be pursued as we go forward examining a whole range of constitutional issues.
With regard to other devolution of power within England, my noble friend Lord Dobbs referred to Walter Scott and the path to the Highlands and the danger for an Englishman. Treading into devolution for England by a Scotsman is almost as dangerous. I always tread very carefully indeed. From what was said this evening, it is very clear that this is something which should be addressed. As I indicated earlier, this is not an alternative to the so-called EVEL; it is a both/and rather than an either/or.
As my noble friend Lord Greaves, the northern home-ruler, said, there is no consensus in England as to where we might go. There must be an opportunity for further debate. The noble Lord, Lord Prescott, made a very clear case for greater devolution within England. He said that the regions of England had to be consulted as to where they might go. There are proponents of regional government throughout England. There are difficult issues over the possibility of the creation of extra layers of government. There have been advocates of a separate English Parliament, although that raises questions over location and composition, and whether it would be any more decentralised than the present arrangements. While in Scotland there was a settled role of the Scottish Parliament, the picture in England is less clear. My noble friend Lord Tyler indicated that my own party advocates provisions of flexible and responsive devolution on demand. There is a wider debate to be had. My noble friend Lord Shipley set out a strong, healthy agenda for such a debate.
Lord Blencathra
The latest polls show that 78% of people in England favour English votes for English laws. That seems fairly like consensus to me.
Lord Wallace of Tankerness
I was coming on to the question of English votes for English laws. I do not believe that English votes for English laws is an answer to the whole question of devolution within England; I think that that point is accepted. As my noble friend Lord Tope said, it is not a question of if—it must be a question of how. Moving on to the point raised by the noble Lord, Lord Blencathra, and numerous contributors to the debate with regard to English votes for English laws, I was going to say, “Over the last few weeks,” but my noble friend Lord Macgregor reminded us that the issue was live when he entered the House of Commons in 1974 and my noble friend Lord Lexden reminded us that it was live when Mr Gladstone and Joseph Chamberlain were in the House of Commons. This matter has generated debate and questions for well over a century. The welcome transfer of powers to Scotland, Wales, Northern Ireland and the London Assembly, and the prospect of further devolution have created not just an anomaly but a complex one. The asymmetric devolution of powers to these bodies makes the issue of which MPs’ constituents are affected by which laws a highly varied one. It is not a simple question with an easy answer, but we nevertheless should seek an answer, as my noble friend Lord Macgregor said. It is a question of fairness.
Each of the three main UK parties in the United Kingdom Parliament has expressed its views on the West Lothian question. This House has considered the issue. We have had the views of the McKay commission and reports such that of the democracy taskforce. My right honourable friend David Laws has noted that a grand committee should be appointed proportionately to vet laws that will apply only in England, joined by Welsh MPs when matters affecting Wales are debated.
The noble Lord, Lord Elis-Thomas, mentioned that Bills have a territorial extent. I know that my own Office of the Advocate General looks at all Bills with regard to whether legislative consent Motions will be required in Scotland. It can be complex. The Marine and Coastal Access Bill in which I took part is an example that was referred to by my noble friend Lord Greaves. Although my noble friend Lord Blencathra said that it could be relatively easy, I remember when the legislation was going through the House of Commons with regard to the increase of tuition fees under the Labour Government. When that passed, I was the Minister with responsibility for higher education in Scotland and I knew full well that that had far-reaching consequences for Scotland, which led to the Further and Higher Education (Scotland) Act 2005. It is not always easy. This matter deserves careful consideration.
Lord Foulkes of Cumnock
The noble and learned Lord is absolutely right. Will he deal with the point that I raised that, for more than 300 years, until 1999, all Scottish legislation—on education, on health and on the legal system—was dealt with by this Parliament by a majority of English, Welsh and Northern Irish Members?
Lord Wallace of Tankerness
The noble Lord is right. That was one of the reasons we established the Scottish Parliament. It is a matter which I think ought to be addressed—and far better that it be addressed where there is cross-party working and consensus-forming. That was the basis on which we established the devolved Administrations, and I do hope we can work on a cross-party basis to address this important issue as well.
Baroness Royall of Blaisdon
On the EVEL issue, is the noble and learned Lord content—I do not wish to try to put fissures in the coalition—that the committee that has been set up by Mr William Hague, of which the noble Baroness is a member, is a committee of people from Westminster behind closed doors looking for a quick-fix solution? Is the noble and learned Lord himself content with that as a way forward?
Lord Wallace of Tankerness
My Lords, my experience is that Cabinet committees tend to be that. They are Cabinet committees. However, as we have experienced in this debate, the debate is not confined to those members of the committee. It would be very helpful if there were contributions from not just the two coalition parties, which, as the noble Baroness points out, are not entirely at one in this, as the article by my right honourable friend David Laws has shown. It would be very healthy if we had views, not only from the other political parties but others as well.
Lord Cormack
I am extremely grateful to my noble and learned friend. A variety of views on English laws have been expressed in the debate. But surely one message has come through very clearly: people do not want to rush this. Many people who have made this point have also said that this is an appropriate subject for a commission or a convention.
Lord Wallace of Tankerness
My Lords, we are not just going to park it. I was coming on to the very point that my noble friend makes about the convention. I have a whole list here—I am not going to read it out—of noble Lords who have talked about a convention—that constitutional change should be achieved through a convention. I make it clear that the Government will consider proposals for the establishment of such a convention because, while debate is needed in both Houses, it is important that we engage with the public as well. We should not simply be continuing our constitution behind closed doors, if that is what the noble Baroness the Leader of the Opposition was suggesting. We must listen to other people’s views and opinions on this. The noble Baroness, Lady Quin, and my noble friend Lord Thomas of Gresford said it should not be a top-down approach. Many of us would accept that view.
Baroness Royall of Blaisdon
My Lords, I know that the noble and learned Lord wishes to finish, but, that being the case, that the Government are open to having a constitutional convention, which is extremely welcome, why is it that they are bent on taking a decision on EVEL before the general election and before a constitutional convention has been set up?
Lord Wallace of Tankerness
A view has to be taken on some issues. My noble friend Lord Maclennan has been an advocate of a constitutional convention probably longer than anyone else I can recall. He was perhaps suggesting that the proposals that might emanate from the Smith commission should go to a constitutional convention. I believe there are some things which cannot wait and to try to do that would give rise to allegations of bad faith. We have heard in our debate a whole range of issues which a constitutional convention should raise. My noble friend Lord Steel talked about the role of the second Chamber. Should it be a second Chamber that reflects the different regions and nations of the United Kingdom? The noble Baroness herself mentioned votes at 16, which would be an important constitutional change, one which, again, I think is ripe for debate. It is important that we respond to the suggestions and concerns raised. Our structures need to be responsive to that.
In conclusion, the United Kingdom is the strongest family of nations the world has ever seen. My noble friend Lord Thomas reminded us of what Mr. Gladstone said—that home rule must be in the heart as well as in the law. Many of us feel that it is something that is in our DNA and in our hearts. Together we have made remarkable discoveries and inventions, delivered changes that have improved the lives of citizens not just in the United Kingdom but globally. Together we have one of the most stable currencies in the world. Through our strong internal trade links, we create jobs across the United Kingdom. Together, we make our savings and our pensions more secure. These are valuable things. They should perhaps have been said better and more often during the campaign, but I think that they did actually get through. We must remember that the people of Scotland at the end of the day voted to remain together in the United Kingdom. It is important that we engage not only the people of Scotland as we go forward but that we recognise that the referendum campaign threw up some important issues, not least the disconnect that so often exists between the people and those in power. That is an important issue that has to be addressed.
I am sure that we agree that we should try to do this with the maximum degree of consensus. Perhaps the watchword for us all is to deliver a strong and lasting solution for all the United Kingdom.