House of Commons

Monday 15th June 2015 Commons Chamber

Monday 15 June 2015

The House met at half-past Two o’clock

Prayers

Monday 15th June 2015 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 15th June 2015 Commons Chamber

The Secretary of State was asked—

[William Wragg (Hazel Grove) (Con)]

1. What plans she has to review the school funding formula.

[Jeremy Lefroy (Stafford) (Con)]

4. What plans she has to review the school funding formula.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

14. What plans she has to review the school funding formula.

[The Secretary of State for Education (Nicky Morgan)]

Before I begin, Mr Speaker, I welcome you back to your Chair. I also congratulate one of the Clerks of the House of Commons, Jacqueline Sharpe, who was awarded a CBE in the honours list at the weekend for her service to Parliament. It is a pleasure to welcome my hon. Friend the Member for Hazel Grove (William Wragg) to his place in this House.

It is clearly unfair that a school in one part of the country can attract over 50% more funding than an identical school elsewhere. That is why the Conservative party committed to making school funding fairer in our manifesto, and we will come forward with our proposals in due course.

[William Wragg]

I thank my right hon. Friend for that reply. She will recall from our discussions when she visited Mellor primary school in April that the school receives £1,000 less than the national average per pupil per year. What assurances can she give to parents and schools in my constituency that she will do all she can to address this unfairness and bring about greater fairness to school funding arrangements?

[Nicky Morgan]

I was delighted to be able to visit Mellor primary school in my hon. Friend’s constituency. I particularly welcome his contribution, as a former primary school teacher himself, to debates on education in this House. It was a very enjoyable visit, and I am glad that perhaps it played a little part in his overall victory. I went to see the work that was going on to paint brand-new classrooms, the larger school hall, and the new library. As I said, I am committed to fairer funding for schools so that schools such as Mellor primary have the right resources to allow all their children to achieve their potential.

[Jeremy Lefroy]

I thank my right hon. Friend for the down-payment of £319 million on fair funding achieved in the previous Parliament. Does she agree that for my constituents who see similar schools nearby in other authorities with much higher rates of funding, this is a matter of transparency and fairness?

[Nicky Morgan]

I am well aware that my hon. Friend and his colleagues in Staffordshire have long campaigned for fairer school funding. They have made a strong argument, and we will continue to listen to them. My hon. Friend the Minister for Schools looks forward to meeting them shortly. I am committed to making funding fairer, as set out in our manifesto. These are complex issues that we have to get right, so we will consult extensively the sector, the public and hon. Members in all parts of the House, and set out the detail of our plans in due course.

[Daniel Kawczynski]

I am very pleased with the progress that the previous coalition Government made in this regard, and we in Shropshire are benefiting from £10 million extra as a result of the changes. However, as she has already heard, there are significant differences in funding between areas, and I hope that she will give us the assurances requested that more will be done during this Parliament to redress that.

[Nicky Morgan]

As my hon. Friend rightly points out, Shropshire received over £10 million of additional funding from the reforms made in the previous Parliament. I particularly pay tribute to my hon. Friend the Member for Worcester (Mr Walker) for his work on fairer funding. I have absolutely no doubt that he will continue that work admirably in his new role. Pupils, parents and teachers in Shrewsbury will see the big difference that the £10 million funding will make, but I am committed to building on this first step and, as I have said, making the funding system fairer.

[John Healey (Wentworth and Dearne) (Lab)]

Good value for public money is arguably as important as the funding formula. Does the Secretary of State accept that earlier this year the Public Accounts Committee produced a damning report on the deficiencies in the oversight and accountability system in our schools, made much worse by the headlong rush to academies? What steps are there in her Education and Adoption Bill to deal with the long list of flaws in the system?

[Nicky Morgan]

We do not accept the conclusions of the Public Accounts Committee, as we made clear in the evidence that was given to it at the time. I do not agree with the right hon. Gentleman that we should put to one side the issue of fairer school funding. It cannot be right that children in one part of the country are receiving less per head than those in other parts of the country. That is not fair on schools. The formula has been flawed for a long time, and this Government have committed to ensuring that funding is fairer.

[Louise Haigh (Sheffield, Heeley) (Lab)]

Mossbrook primary school, a special educational needs school in my constituency, cannot put drawing pins in its walls for fear of disturbing asbestos, and it cannot access the condition improvement fund because it is not an academy. Will the Secretary of State consider opening up that fund to non-academy schools?

[Nicky Morgan]

I thank the hon. Lady for her question and welcome her to the House. Before the last Parliament was dissolved, the Government published a report on asbestos. There are other programmes available to schools in relation to school building improvement funds, but, if the hon. Lady wants to write to make the case for that particular school, we will, of course, look at it.

[Kate Green (Stretford and Urmston) (Lab)]

Trafford is a relatively wealthy local authority, but there are areas of serious deprivation, and schools in my local authority are funded to a much lower level per head than those in neighbouring authorities. What will the Secretary of State do to ensure that schools with high levels of deprivation among their intake are covered by a fair funding formula?

[Nicky Morgan]

As I have said, we will consult extensively among not only Members but members of the public and schools in relation to a fair funding formula. The hon. Lady is right to say that there are inequities of funding right across the country. The last Government introduced the pupil premium, spending billions of pounds on the most disadvantaged pupils, and this Government have made a commitment to continue that funding at the same level.

[Sir Nicholas Soames (Mid Sussex) (Con)]

21. Will my right hon. Friend agree to receive a delegation from West Sussex, a county that has been significantly badly treated in local settlements? Is she aware that, during the general election, a number of headteachers asked to see Members in Mid Sussex, and it is clear that, unless there is a move towards a national funding formula, schools in Mid Sussex and West Sussex will continue to be significantly badly treated?

[Nicky Morgan]

I am, of course, always pleased to discuss those issues with my right hon. Friend and his fellow Sussex MPs. He captures very well the reason we can no longer afford to sit back and allow the formula to work as originally designed—the inequities in funding across the country. We have made a clear commitment to tackle the issue and I look forward to working on it with my right hon. Friend and other Members.

[Robert Flello (Stoke-on-Trent South) (Lab)]

Even within an area there can be inequalities of funding. May I use this opportunity to draw the right hon. Lady’s attention to a letter written by a number of north Staffordshire Members requesting a meeting so that we can discuss urgently our concerns about funding for local schools?

[Nicky Morgan]

I shall certainly look out for that letter; it has not crossed my desk yet, but I will ask officials to look out for it. Whether the meeting is with me or with the Minister for Schools, who is working on the detail, I think that the hon. Gentleman and hon. Members on both sides of the House will continue over the next few months to set out why this inexorable funding cannot continue.

[Mr Henry Bellingham (North West Norfolk) (Con)]

2. What plans she has to widen and enhance the academy sponsorship programme; and if she will make a statement.

[The Minister for Schools (Mr Nick Gibb)]

Since 2010 the Government’s academies programme has ensured that more than 1,100 of the worst-performing schools have been taken over by successful sponsors or headteachers. Regional schools commissioners, working with headteacher boards, continue to encourage and invite new sponsors so that more pupils have the opportunity to benefit from the transformation that great sponsors can bring.

[Mr Bellingham]

Is the Minister aware that the successful academy in my constituency, Springwood high school, has recently taken over the academy sponsorship of St Clement’s high school and that the results are already showing huge improvement? Will he join me in paying tribute to the executive headteacher of West Norfolk Academies Trust, Andy Johnson, and his team? Will he also agree to visit this huge local success story in the near future?

[Mr Gibb]

I would be delighted to add my tribute to Andy Johnson. The vision of the West Norfolk Academies Trust is to produce world-class standards of student achievement, and it is the application of that vision that has resulted in its approach improving other schools in the area. I shall be delighted to visit schools in my hon. Friend’s constituency as soon as he invites me to do so.

[Marie Rimmer (St Helens South and Whiston) (Lab)]

When a school has been rated inadequate by Ofsted and is therefore subject to an academy order, the Government say there will be no requirement to consult on conversion to academy status. With that in mind, what are the merits of removing the right of parents to be consulted, and how does that sit with the Government’s rhetoric on accountability to parents?

[Mr Gibb]

The new Education and Adoption Bill is designed to ensure that those groups of people who are ideologically opposed to academisation are not allowed to disrupt or delay the process of academisation for those schools that have been letting down pupils year after year. This is about social justice and ensuring that every child, regardless of their background, has a good quality education. I hope the hon. Lady will support the Bill.

[Mark Spencer (Sherwood) (Con)]

Before the general election, the Secretary of State visited Dukeries college in Ollerton. Will the Minister find time to visit Sherwood and Dukeries college to see its exciting plans to improve information technology in the new academy?

[Mr Gibb]

I understand that the Secretary of State had a very enjoyable visit and I, too, would enjoy visiting the school to see the innovative approach it is taking to IT and other elements of the curriculum.

[John Pugh (Southport) (LD)]

Coasting schools are to be forced to become academies. What is going to happen to coasting academies? Are they to be forced to become schools?

[Mr Gibb]

The Government have powers to issue pre-warning notices to a trust, demanding urgent action to improve, and ultimately a warning notice can be issued by the Government to change sponsors. We have in fact changed the sponsors for 69 academies. The academisation programme is delivering higher standards across the board. Schools that have been academies for four years are improving their GCSE results by 6.4%, and there are similar high improvements in primary schools that have become academies. This is about improving standards across our school systems, and I expect the hon. Gentleman to support this approach.

[Andrew Stephenson (Pendle) (Con)]

3. What plans the Government have to support investment in school buildings.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

In the last Parliament, we protected the schools budget, gave more then £5 billion to tackle Labour’s school places crisis and spent £18 billion on school buildings—more than Labour spent in their first two terms combined. In this Parliament, we will again protect the schools budget, and we plan to invest a further £19 billion on school buildings, of which £7 billion will be spent on school places.

[Andrew Stephenson]

Colne Park high school is in desperate need of funds to improve the state of its building, but it is receiving inadequate support from the local county council. Will my hon. Friend consider meeting the school’s leadership team to help to find a way forward?

[Mr Gyimah]

I appreciate that the school will be disappointed that its application to the second phase of the Priority School Building programme was unsuccessful. The programme was highly over-subscribed, and we had to prioritise the buildings in the worst condition. However, Lancashire’s indicative allocation to maintain and improve its schools is £34 million for 2015-18, and I expect it to consider carefully the needs of all schools in its area. I will do what I can to support my hon. Friend with that.

[Keith Vaz (Leicester East) (Lab)]

May I congratulate the Minister on his reappointment? I remind him that this is not just investment in buildings, but the facilities around buildings. Last Friday, I accepted a petition from 300 parents of the Krishna Avanti school and St Paul’s Catholic school about the lack of crossing facilities in Spencefield Lane. Can we look at that as part of the budget?

[Mr Gyimah]

The budget is not just for school buildings. As the right hon. Gentleman is aware, it is also for improving the facilities of school buildings. If there is a specific issue in his constituency that has not been dealt with, he can by all means write to me and I will look at it.

[Chris Skidmore (Kingswood) (Con)]

I have been campaigning with a secondary school in my constituency, King’s Oak academy, as part of its bid for the Priority School Building fund. Unfortunately, the school was unsuccessful in relation to the last tranche of that fund. Will the Minister update the House on what future opportunities there will be for schools that were unsuccessful in the last round to re-bid for this funding?

[Mr Gyimah]

I know that the Secretary of State visited the school in question and recognised its brilliant leadership. Of course, as we go through the spending review and set the budgets for this Parliament, there will be other opportunities to look at the Priority School Building programme.

[Kevin Brennan (Cardiff West) (Lab)]

At the start of the last Parliament, the Government set out their plans for the Priority School Building programme for 537 schools. To date, 25 have been completed. Would the Minister describe his Department’s performance as failing or just coasting?

[Mr Gyimah]

I will describe the Government’s performance as getting great value for money: the build cost for a number of schools was halved during the course of the last Parliament. We will make announcements this autumn about how Priority School Building programme 2 will be rolled out.

[Craig Tracey (North Warwickshire) (Con)]

5. What steps she is taking to ensure that there are sufficient childcare places to meet demand.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

I of course recognise that we have to look at the issue of nursery places. In the past few years, 230,000 places have been created in early years nationally. However, the biggest way in which we can create nursery places is to support the early years sector. We have committed to increasing the average funding rates that providers are paid for the free entitlement so that the sector can grow substantially.

I can confirm that a cross-Government review of the cost of providing childcare is under way to inform decisions on the funding required to secure sufficient quality childcare provision at good value for money to the taxpayer and consistent with the Government’s fiscal plans. I am today launching a call for evidence to inform this review, which will report and be published in the autumn.

[Craig Tracey]

My constituents in North Warwickshire and Bedworth welcomed the commitment in the Conservative manifesto to provide 30 hours of free childcare and look forward to its delivery. What plans are being made to bring that forward?

[Mr Gyimah]

I am delighted to welcome my hon. Friend to the House. His victory in Labour’s No. 1 target seat carved the first letters in Labour’s electoral tombstone and ensured that the ridiculous “Ed stone” did not make its way into Downing Street.

As the Prime Minister announced on 1 June, we are pressing ahead with reforms to increase the childcare support that is available to hard-working families. We are bringing implementation forward to 2016. The Childcare Bill was one of the first Bills we introduced in this Parliament. I have just announced the funding review. Further to that, there will be a consultation with parents and providers so that we can implement this policy.

[Carol Monaghan (Glasgow North West) (SNP)]

I welcome the Minister to his place, and I welcome the UK Government’s decision to follow the Scottish Government’s lead in expanding free childcare to 30 hours for three and four-year-olds. How much additional funding will be made available for the planned childcare expansion?

[Mr Gyimah]

I welcome the hon. Lady to the House. The Government are making more support available for childcare than any previous Government. We set out in the general election campaign our plans to fund. We expect to make savings from tax-free childcare and from universal credit. The policy will therefore be funded to the tune of about £350 million.

[Carol Monaghan]

I thank the Minister for that answer. Will he give the figure for how much additional funding will come to Scotland as a result of the Barnett consequentials from the planned expansion of childcare in England?

[Mr Gyimah]

I understand that Scotland already provides about 25 hours of free childcare. I am happy to write to the hon. Lady to provide details of the Barnett consequentials from the expansion of this programme.

[James Heappey (Wells) (Con)]

24. On Friday, I visited St Cuthbert’s Church of England infant school in Wells, where the head and her staff are doing a fantastic job not only in educating the children but in providing before and after-school care for them. Will the Minister share with the House his plans to give the teachers of that school the resources they need to provide that vital service for working parents?

[Mr Gyimah]

Local authorities have a duty to provide sufficient childcare and we are supporting them to deliver that. We are very supportive of breakfast clubs and after-school clubs. We are also liberalising the childminding sector to allow childminders to operate for 50% of the time off domestic premises. They should therefore be able to support schools to expand that sort of care.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I urge the Minister to talk to the National Day Nurseries Association, which is based in my Huddersfield constituency, because it is very worried. Members all around this House want there to be more affordable childcare, but the NDNA is worried about the cost implications, because the money does not add up; about the pressure on building new facilities; and about the recruitment of staff. Those are real concerns, so will he talk to the NDNA?

[Mr Gyimah]

I talk to the NDNA all the time. I am very much aware not only of its concerns but of the concerns of other players in the sector. We were the only party to commit to a review of the funding rate in the general election campaign. Today, I have announced that the review is under way. We will consult the sector and get its views not only on the exact rate, but on how to implement the 30 hours policy.

[Mr Gordon Marsden (Blackpool South) (Lab)]

6. What assessment she has made of the adequacy of current arrangements for key stage 4 students to access business and work experience.

[The Secretary of State for Education (Nicky Morgan)]

Ensuring that young people leave school or college prepared for life in modern Britain is a vital part of our plan for education. We have put more emphasis on mastering vital skills and on more respected qualifications, and we have given employers greater influence over the content of courses, so that young people have the skills that universities and employers value. One reason I am delighted to continue as Secretary of State is that I can continue to make progress with the new employer-led careers and enterprise company, which will help young people access the best advice and inspiration by encouraging greater collaboration between schools, colleges and employers.

[Mr Marsden]

That sounds all fine and dandy, but the Government’s dropping of mandatory work experience from the school curriculum has not helped the small businesses I speak to in Blackpool, which want to take young people on. Nationally, the British Chambers of Commerce found that three quarters of employers were worried about a lack of work readiness. Will the Secretary of State make a fresh start and bring forward substantial initiatives to improve work experience, thereby making apprenticeships more accessible to 16 to 19-year-olds?

[Nicky Morgan]

I am afraid I will not be changing course. We are focusing on high quality and meaningful work experience post-16. The blanket requirement to provide work experience at key stage 4 and under had fewer and fewer employers willing to accommodate young people. They were worried about health and safety, red tape introduced under the previous Government and, exactly as the hon. Gentleman says, being without the work readiness skills that this Government are focusing on to ensure our young people are ready for life in the world of work.

[Fiona Bruce (Congleton) (Con)]

7. Which provisions in the Education and Adoption Bill will ensure that more children in care are placed in loving and stable homes.

[Lucy Allan (Telford) (Con)]

16. Which provisions in the Education and Adoption Bill will ensure that more children in care are placed in loving and stable homes.

[The Minister for Children and Families (Edward Timpson)]

Every child deserves a happy and fulfilling childhood, including those who cannot be brought up by their birth parents. To ensure that for the many thousands of children every year waiting to be adopted, the Education and Adoption Bill will increase the scale at which adoption services are delivered by introducing regional adoption agencies to work across council boundaries. That will help to provide a greater pool of approved adopters with whom to match vulnerable children successfully into loving and stable families.

[Fiona Bruce]

What steps are being taken to ensure that advice about adoption is more widely available in local communities, including as an option for consideration by women with unplanned pregnancies?

[Edward Timpson]

I welcome my hon. Friend and neighbour’s interest in this important issue. In 2013, we set up the first ever national adoption advice and guidance service, First4Adoption, which to date has had more than 416,000 of what I am told are called “unique users”. The NHS website also has information on all the options to consider in the circumstances my hon. Friend describes, and makes specific reference to adoption. This is a very sensitive issue and we need to tread carefully. I am happy to discuss it further with my hon. Friend to make sure we get the balance right.

[Lucy Allan]

I thank the Minister for visiting Holmer Lake primary school in Telford earlier in the year to hear about the excellent child safeguarding work being done for year 6. With increasing numbers of children entering the care system, and with rates in my constituency significantly above the national average, what will the Minister do to ensure that all alternatives to adoption are fully explored before children are put up for adoption, resulting in permanent family break-up?

[Edward Timpson]

I congratulate my hon. Friend on her election; I am pleased to hear that my visit was not only helpful but did not prevent her from getting over the finishing line.

A key principle of the Children Act 1989 is that children are generally best looked after within their families, save where that is not consistent with their welfare. That was reiterated in the Children and Families Act 2014. Of course, where concerns arise it is right that the local authority takes the appropriate action, but the point of having an independent court system is to ensure that that is proportionate and that in children’s upbringing their welfare and their best interests are the paramount consideration. That should remain at the heart of all the work we do with vulnerable children and I am happy to work with my hon. Friend to achieve that.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

Despite what the Minister says, local authority cuts have had disastrous consequences for children’s social care services. Ofsted is now reporting that independent reviewing officers are so stretched that poor planning and delays for the most vulnerable children are going unchallenged. What will the Minister do to defend the service from further cuts?

[Edward Timpson]

It is wonderful to see the hon. Lady back. She was extremely vocal on these issues in the previous Parliament, and very effective in raising them to the profile they deserve. They are often missed at local, as well as national, level. The truth about children’s social care is that, at a time when it has been difficult for local councils, good decisions have been made to protect spending on children’s safeguarding. That is something I hope they will continue, while considering how they can be more effective and efficient in delivering those services. That is one of the reasons why the adoption Bill, which the House will soon be discussing, considers how they can work more closely together to achieve better services for children wherever they are from in the country, so that we have greater consistency everywhere.

[Bill Esterson (Sefton Central) (Lab)]

The Education and Adoption Bill will presumably mention adoption, but will it contain provision for improving the quality of fostering, residential children’s homes and kinship care, which in the past the Minister has agreed are incredibly important opportunities for children? This is about finding the right way forward for children, not necessarily adoption for all.

[Edward Timpson]

The hon. Gentleman is right that, whatever the route to permanency a child has, we must ensure they have the right support and that the best decisions are made in their interests. The Bill, which we will be discussing in the next few weeks, will deal with the post-decision issue and ensure that we can access a wider pool of adopters to get children matched more quickly. At the moment, we have over 3,000 children in care waiting to be adopted, half of whom have been waiting for more than 18 months. We need to address that, but I agree that we need to do better to ensure that foster children and those with residential or kinship care arrangements get better deals.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I remind the House of my entry in the Register of Members’ Financial Interests.

Will the Minister comment on the Government’s intention to expand the outsourcing of children’s social care services to third-party providers involved with children in the care system and adoption? He has just announced that they will no longer be regulated and inspected by Ofsted. How will he ensure quality of care for these particularly vulnerable young people?

[Edward Timpson]

I pay tribute to the role that my hon. Friend has played in keeping these matters fairly and squarely at the top of the national agenda, but we have not just announced that. These services will still be inspected. In the past, I have alluded to the social work practice in Staffordshire that was outsourced by the county council and which was inspected by Ofsted and received a “good” rating.

We want to ensure the best possible services on offer to children across the country, and we should not get too tied up in thinking about delivery and who will be ensuring the services are the best they can be. Let us get quality at the heart of everything we do and make sure that that is what we inspect.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I welcome the Minister back to his post. I had entertained the idea that we would swap places—but what will be will be. I am pleased he has retained this portfolio and I genuinely wish him well for the future.

Will the Minister give an assurance that nothing in his adoption proposals will have an adverse impact on smaller voluntary adoption agencies, which often specialise in finding families for harder-to-place children—a group the Government say the proposals are designed to help?

[Edward Timpson]

I welcome the hon. Gentleman back to his post. He and I have an interesting electoral history, but I see he managed to increase his majority at the last election, so he is doing better in his own constituency than he managed in Crewe and Nantwich in 2008.

The hon. Gentleman raises an important point. We have an array of extremely competent, professional and dedicated voluntary adoption agencies across England and the wider United Kingdom, and we need to ensure that they are fully part of the new adoption landscape that we are creating. I made that point when I spoke at the Consortium of Voluntary Adoption Agencies conference only last week. We will make sure that they are central to the vision going forward.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

8. What steps her Department is taking to raise educational standards in failing schools.

[The Secretary of State for Education (Nicky Morgan)]

At the heart of the Government’s commitment to delivering social justice is the belief that every child deserves an excellent education and that no parent should be content with their child spending a single day at a failing school. The Education and Adoption Bill introduces new measures to tackle failure by speeding up the process for converting failing schools into sponsored academies. It also includes measures to tackle coasting schools for the first time. This will speed up the process by which the worst schools are transformed in order to bring about rapid and sustainable improvements.

[Dr Poulter]

Suffolk county council has rightly identified education and improving educational standards as its top priority. With 80 schools in the county requiring improvement or rated “inadequate”, with what specific support can my right hon. Friend provide the council in order to raise educational standards?

[Nicky Morgan]

I thank my hon. Friend for his question and pay tribute to his work as a Health Department Minister in the past two and a half years.

Like my hon. Friend, the Government want every child in Suffolk and throughout the country to receive an excellent education. The regional schools commissioner, Tim Coulson, is in regular dialogue with Suffolk County Council, and the Department is offering support, including introducing five new strong academy sponsors, encouraging the local authority to use its intervention powers, and making Suffolk a priority for national programmes such as Talented Leaders and Teach First. I hope my hon. Friend will support those measures.

[Peter Kyle (Hove) (Lab)]

Schools standards are the responsibility of Ofsted. As anyone involved in running schools knows, there are gross inconsistencies in how Ofsted inspects between schools. Does the Secretary of State agree, and if so what will she do to solve the problem?

[Nicky Morgan]

I welcome the hon. Gentleman to the House. I am not entirely in agreement with him that school standards are the responsibility of Ofsted. School inspection is carried out by Ofsted—school standards are the responsibility of Ministers and the Department, and of schools, local authorities and sponsors. I agree with him about the inconsistencies and that concerns have been expressed by school heads. The head of Ofsted—the chief inspector—is bringing inspectors back in-house, and therefore they will be much more under the control of Ofsted. That will mean many more consistent inspections, but I am always open to receiving reports when schools are concerned about what has happened in an inspection. We will always take those up with Ofsted.

[Mr Stewart Jackson (Peterborough) (Con)]

One common area of concern related to failing schools in my constituency is the level of churn and English-as-an-additional-language pupils—63% of primary school pupils in my constituency have English as an additional language. What concrete steps is my right hon. Friend taking to address that pressing and challenging problem in Peterborough and across the country?

[Nicky Morgan]

My hon. Friend is right that that is an issue, but schools up and down the country respond magnificently to the language demands placed on them by pupils. We see over the course of an education that having English as a second language does not hold pupils back, but I agree there is pressure on primary school children and the Department is looking at it. There are schemes, and measures such as pupil premium funding can make a difference.

[Jonathan Ashworth (Leicester South) (Lab)]

With respect to failing schools, the Secretary of State has insisted that Uplands junior school in the Spinney Hills part of my constituency should convert to an academy. Down the road in the Eyres Monsell part of my constituency, the Samworth Academy has the worst GCSE results in the whole of Leicester—the results have gone down again—the chair of governors has resigned and there have been problems with senior staffing. Why does the Secretary of State insist on an academy in one part of my constituency, and yet is seemingly complacent about an academy in another part?

[Nicky Morgan]

There is no complacency on the part of the Department. The Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), has already set out the action the Department can take—the swift intervention—when an academy is failing. That can result eventually in an academy being rebrokered. Uplands junior school had 17 months to appoint its interim executive board and turn things around, but progress has not been sufficient. That is very unfair on the children in that school.

[Liz McInnes (Heywood and Middleton) (Lab)]

9. What plans her Department has to increase the number and quality of apprenticeships for 14 to 19-year-olds.

[The Minister for Skills (Nick Boles)]

We are determined to create 3 million apprenticeships in the next five years, building on the 2.2 million created in the past five years. We will be requiring all public sector bodies to employ apprentices, and will legislate to protect the term “apprenticeship” against misuse.

[Liz McInnes]

Figures from the House of Commons Library show that there were 440,000 apprenticeship starts in England in the last academic year, but almost 40% of those starts were made by over-25s, and starts made by under-19s have declined as a share of total starts since 2010. Why is the Minister not doing more to help young adults into apprenticeship schemes?

[Nick Boles]

The Government do not share with the Opposition the obsession with the idea that, somehow, anybody over the age of 25 doing an apprenticeship is wasting their time or the Government’s money. We absolutely agree that we want as many young people as possible to have the opportunity, but that includes people aged between 19 and 24, and over-25s. We want the entire programme to expand, which is why we are investing in it. We will deliver 3 million apprenticeships to people of all ages over the next five years.

[Alan Mak (Havant) (Con)]

Five years ago, Staunton community sports college in the Leigh Park area of my constituency had one of Britain’s worst GCSE records. Following its conversion into Havant Academy, it is now one of Britain’s most improved schools. Does my hon. Friend the Minister agree that the Government’s free schools and academies programme is transforming the lives of young people?

[Mr Speaker]

Order. The question is in relation to apprenticeships for 14 to 19-year-olds, upon which I know the Minister is focused.

[Nick Boles]

I am delighted to hear that Havant Academy is making progress. That will ensure that many of the young people at the academy will themselves be able to go on to do apprenticeships, which is why I am so delighted to congratulate my hon. Friend.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

Let me—grudgingly, but sincerely—welcome the Minister back to his place.

For all that the Government have said about apprenticeships, the barriers that prevent far too many companies, especially smaller ones, from taking on apprentices remain too high. What more will the Government do for those small businesses? In particular, how will the Government deal with the fear felt by many that they will put all their resources into training a young person, only for that young person to be poached by one of the big boys further up the supply chain once he or she is qualified?

[Nick Boles]

I hope that it will not destroy the hon. Gentleman’s chances in his new position if I say that I cannot imagine anyone with whom I would rather be debating over the next few years, because I rate him highly both personally and professionally. Not surprisingly, he has raised a very important point. It is extremely important for us to make the apprenticeship programme attractive and easily accessible to small as well as large companies. There are specific grants for small employers, but we need to make the system much easier for them to navigate. It is possible for businesses to place some restrictions on people who complete apprenticeships for which those businesses have paid, although not many people know about or take advantage of them. If someone leaves very soon after qualifying, a business can receive back from that person some of the costs of his or her training.

[Derek Twigg (Halton) (Lab)]

rose—

[Mr Speaker]

I am sure the hon. Gentleman is hoping that he will not be similarly lavishly praised.

[Derek Twigg]

We shall have to wait and see, Mr Speaker.

Further education colleges have an important role in the training of apprentices. In view of the recent announcement of reductions in the education budget, will there be any reductions in the budget for the education and training of those aged 16 to 19?

[Nick Boles]

On that point, I entirely agree with the hon. Gentleman. Further education colleges do indeed have a vital role in delivering the training for apprenticeships, and I wish more of them would do more of it. I can confirm that the allocations for the education of 16 to 19-year-olds in the 2015-16 academic year that were announced in March remain in place, and we are not planning to change them.

[Richard Burgon (Leeds East) (Lab)]

10. If she will make it her policy to maintain the number of Sure Start centres in England.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

I welcome the hon. Gentleman to the House. I note that he is already making friends in the right places: the hon. Member for Hackney North and Stoke Newington (Ms Abbott) described his maiden speech as “socialist to the core”.

In November 2014, 2,800 children’s centres were open, and there were 674 additional sites offering children’s centre services. Obviously, the most important thing is not the number of buildings but the number of people whom we reach, and I am pleased that more than 1 million parents and children are using our centres.

[Richard Burgon]

I thank the Minister for his reply, and for his mention of socialism.

The Government have already cut half a billion pounds from the early intervention grant since 2010, and funding has been cut by 30% in real terms in Leeds. More than 700 Sure Start centres have closed. Can the Minister assure parents in my constituency that their centres will not be threatened with closure or further cuts?

[Mr Gyimah]

I assure the hon. Gentleman, first, that the funds for children’s centres have not been cut—in fact, the overall pot grew from £2.3 billion in 2012-13 to £2.4 billion in 2014-15—and, secondly, that there is a presumption against closure. Local authorities have a duty to consult when they plan to change their children’s centre provision.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Will the Minister consider accepting the recommendation of the Centre for Social Justice that children’s centres should become “family hubs”, so that we can

“focus on… the stability and quality of family relationships”?

[Mr Gyimah]

I have met the members of the Centre for Social Justice who have advocated that change of use, or alternative provision, of children’s centres. I think that it is an interesting idea, and one that we should look at in detail.

[Jo Cox (Batley and Spen) (Lab)]

25. Cuts to council funding—the abolition of a series of grants and credits by the coalition—mean that Sure Start centres in my constituency are providing more basic services than ever before. I am hearing now of children in Kirklees coming to centres on a Monday morning having not had a hot meal since the previous Friday, yet Sure Start budgets in the north of England have been cut by 39%. Does the Minister share my assessment, and that of the London School of Economics and the Centre for Analysis for Social Exclusion, that even the most dedicated of Sure Start children’s centres will not be able to withstand further cuts?

[Mr Gyimah]

As I have said previously, it is down to local authorities to consult when they plan to change their children’s centre provision. Just to be clear on the number of children’s centres, only 142 have closed and eight new centres have opened since 2010. We must move on from the lie being perpetrated. [Interruption.] In some cases children’s centres have merged. [Interruption.] When they have merged, they have not closed. [Interruption.]

[Mr Speaker]

Order. I am sure the Minister was using the term generically; he would not suggest for a moment that anybody would lie in, or to, this House.

[Mr Gyimah]

Yes, generically.

[Mr Speaker]

Indeed. Nobody is lying to this House. That is clear and we are grateful.

[Seema Kennedy (South Ribble) (Con)]

11. What plans she has to support working families by helping provide extra childcare.

[Andrew Bingham (High Peak) (Con)]

13. What plans she has to support working families by helping provide extra childcare.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

We have many plans to support hard-working families with the cost of childcare. In addition to the 30 hours of free childcare for three and four-year-olds which we are introducing in this Parliament, we have legislated for free childcare to give parents 20% off the cost of their childcare up to £10,000, and the childcare element of universal credit will be going up from 70% to 85%.

[Seema Kennedy]

Quality is vital in early-years education. Will my hon. Friend set out the steps being taken to ensure that childcare provision in my constituency is of the highest possible quality?

[Mr Gyimah]

That is an excellent question, because the debate often focuses on affordability and availability of childcare, but obviously quality is vitally important, too. We are focusing on quality by ensuring that we raise the status of the early-years workforce. That is why we are raising the standards of literacy and numeracy of the level 3 people entering the profession, and we are also raising the early-years bar through the Ofsted accountability framework so that nurseries have to perform that bit better.

[Andrew Bingham]

There was widespread welcome among High Peak residents for the 30 hours of free childcare pledge at the general election. However, I will be meeting a group of providers in the constituency on Friday who are concerned that there may not be enough funds to cover their costs. Can the Minister provide me with some reassurance which I can pass on to them that there will be enough money to meet their costs?

[Mr Gyimah]

In the last Parliament we increased the amount of money going into free entitlement by 50%, from £2 billion to £3 billion. There are issues around how the money actually gets to providers, and some local authorities top-slice the funding. Also, different local authorities have different policies in terms of whether they support maintained providers versus private and voluntary providers. I would ask my hon. Friend to encourage his providers to engage with the call for evidence I launched earlier today and to let us know exactly what problems they are experiencing.

[Catherine West (Hornsey and Wood Green) (Lab)]

Does the Minister regret the closure of 700 children’s centres when they could have helped fulfil the Government’s 30-hour pledge?

[Mr Gyimah]

As I said in answer to a previous question, 142 children’s centres have closed, not 700, but the most important thing is the number of families being reached, and record numbers of families are accessing children’s centres up and down the country.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Notwithstanding what the Minister has just said, details of the Childcare Bill, which receives its Second Reading in the other place tomorrow, remain extremely thin on the ground and we still have little or no clarification of things such as funding or eligibility. Therefore, to help parents gain more clarity, will the Minister confirm that there are no provisions in the Bill to allow parents to spread the overall amount of free hours they receive over the full year, or perhaps even over 48 weeks, rather than just the 38 weeks as at present?

[Mr Gyimah]

I welcome the hon. Lady to her post. I think she is the third shadow childcare Minister I have faced in the nine months that I have been in post. She asked how the number of hours would be spread over the year. I would advise her not to pre-empt the consultation that we will carry out with parents and providers to find the most flexible way of implementing the scheme so that it works for them.

[Mr Peter Bone (Wellingborough) (Con)]

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for Education (Nicky Morgan)]

It is a great honour for me and all the Ministers on the Front Bench this afternoon to have been asked to continue as Ministers in the Department for Education and to implement our manifesto commitment to build a Britain that gives every child the best start in life. It is right to pay tribute to our coalition colleague, the former right hon. Member for Yeovil, David Laws. We did not always agree, but I hope that the House will appreciate the impact of his hard work and his dedication to raising standards in England’s schools.

In this Parliament, we will continue with our plan for education, which has led to higher standards, to discipline being restored, to expectations being raised and to 1 million more children attending good or outstanding schools. Our mission is to provide world-class education and care that allows every child and young person to reach his or her potential.

[Mr Bone]

On Friday, I had an urgent meeting with Victoria Bishop, the principal of Sir Christopher Hatton Academy, which has just been given outstanding status by Ofsted. It wants to become a teaching academy—[Interruption.] This is particularly pleasing as the intake is from a multi-ethnic, multicultural part of my constituency. Would it be possible for the Secretary of State to meet Mrs Bishop as soon as possible?

[Mr Speaker]

I think the sound went off or died down during the hon. Gentleman’s question. The idea that he should not be heard is beyond even the most vivid imagination. I have never known such a thing, and I doubt that he has either. I am sure Mrs Bone hasn’t.

[Nicky Morgan]

Fear not, Mr Speaker, I heard my hon. Friend very clearly. He spoke of a school in his constituency that has been rated outstanding, and I know that that was the result of hard work by the school leadership and no doubt by everyone else working in the school. I am delighted to hear about such achievements and I hope that I will have an opportunity to visit the school in due course.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Let me congratulate the right hon. Lady on being reappointed Secretary of State for Education. Let me also, on behalf of the Labour party, extend our thoughts to Mr Vincent Uzomah, who was stabbed last week while simply carrying out his job as a teacher at Dixons Kings Academy.

No parent wants their child to attend a failing or coasting school. As we approach the Second Reading of the Education and Adoption Bill, I am sure the whole House will support any measure that is shown to raise standards in our schools. In 2012, the National Audit Office condemned the cost of the Government’s Academies Act 2010 that had resulted from poor ministerial planning, but it looks as though we are now facing a similar scenario. Will the Secretary of State take this opportunity to set out her legal definition of a coasting school, and tell us what measures her Department is taking to prevent another black hole in the Department for Education budget?

[Nicky Morgan]

I thank the hon. Gentleman for his welcome. He is also right to pay tribute to the teacher from Dixons Kings Academy who was stabbed last week. Members will be relieved to hear that his injuries do not appear to be life-threatening.

The hon. Gentleman asked about the Education and Adoption Bill. I am sure that he will have seen the answer to the written parliamentary question tabled by the hon. Member for Cardiff West (Kevin Brennan), which stated that we intend to publish the definition of “coasting schools” when the Bill reaches its Committee stage. I am glad to hear that he wants action to tackle failing schools, and I wonder whether he stands by the comments that he made in February 2011, when he said:

“I think when a school is not delivering for its pupils it’s quite right that you have a change of governance.”

I hope that he will remember that as he supports our Bill.

[Mr Speaker]

I must gently point out that we cannot have the Front-Bench exchanges taking up an excessive proportion of the time. I want to get Back Benchers in, and pithiness is of the essence.

[Tristram Hunt]

I will be very pithy, Mr Speaker. The Secretary of State does not have a handle on her own Bill. One week before we are being asked to vote on the Bill, she cannot explain the first words of the first clause on its first page. She cannot tell us what the words “coasting schools” mean. It is great, inspiring teachers who turn around coasting schools, but teacher vacancies in crucial subjects are soaring. If she cannot tell the House what her Bill means, will she listen to the headteachers when they tell her that the Tories’ teacher recruitment crisis is undermining the efforts to turn around coasting schools?

[Mr Speaker]

May I say in the nicest way at the start of this Parliament, without discrimination between the sides, that this must not happen again, because it is not fair on Back-Bench Members, for whom topical questions are especially designed.

[Nicky Morgan]

The hon. Gentleman clearly does not know the meaning of pithiness. I have explained when the definition of “coasting schools” will be published. He has admitted that he failed to convince his former leader of the merits of campaigning on education policy, and I am beginning to understand why he is so failing in his persuasiveness.

[Mr Christopher Chope (Christchurch) (Con)]

T2. Does my right hon. Friend agree that a local education authority should not be allowed to give itself planning permission to build a school on green-belt land, in breach of the local core strategy? That is exactly what Dorset County Council is proposing to do in Marsh Lane, Christchurch. If the Secretary of State cannot answer today, will she have a meeting with me to discuss this important matter?

[Nicky Morgan]

I thank my hon. Friend for that question. The national planning policy framework contains clear guidelines on building on green-belt land, and of course he, like others, has the opportunity to call in any planning application for determination by the Secretary of State. If he wants to give us further details, I am sure we will follow them up.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

T3. On 3 June, during an interview on “BBC Breakfast”, the Education Secretary was asked five times, “How many academies are inadequate?” She has had two weeks to find the answer, so how many academies are failing, and what is she doing for children who are being let down in those schools?

[Nicky Morgan]

I welcome the hon. Lady to her position. The answer is 133. As I have set out, this Government take swift action to turn around all failing academies, and we want that same opportunity for children who are in failing local authority maintained schools.

[Mark Pawsey (Rugby) (Con)]

T7. Many parents in Rugby have told me of their concerns about the dangers posed by congestion around school gates as they drop off their children for school. What steps is the Secretary of State taking to encourage more children to walk and cycle to school? What discussions has she had with other Departments about enforcing parking restrictions around school gates?

[The Minister for Schools (Mr Nick Gibb)]

I am grateful to my hon. Friend for raising this issue, because we have the same problem in my constituency, too. The local authority is responsible for enforcing parking restrictions around schools, and it should do that. The authority must also promote sustainable travel and transport, in order to reduce the number of car journeys to schools.

[Andy McDonald (Middlesbrough) (Lab)]

T4. May I declare a yet greater interest in the education of the nation’s children, as I became a grandfather when our first grandchild, Molly O’Neill, was born on Saturday morning? [Hon. Members: “Hear, hear.] Thank you very much. May I also press the Secretary of State on the issue of coasting schools, as it does cause great concern and uncertainty, and this would be the ideal opportunity to send some reassurance to parents and grandparents as to exactly what she has in mind?

[Nicky Morgan]

I congratulate the hon. Gentleman on becoming a grandfather and I wish him and his family, including his new grandchild, all the very best of success.

I have been very clear that the right time to publish the definition is when the Bill reaches the Committee stage. It is significant that the Labour party appears to be rowing back from wanting high standards for all children in all schools.

[Rehman Chishti (Gillingham and Rainham) (Con)]

T8. Will the Minister welcome the new apprentice teaching sports assistants coach programme put on by Gillingham football club in my constituency, which is working with primary schools to get more sports coaches into primary schools?

[The Minister for Children and Families (Edward Timpson)]

I can do that. It is always encouraging to hear of programmes such as that being run by Gillingham football club, which bring the expertise of community sports clubs into schools. The quality of expertise that coaches provide in schools is of paramount importance, and it will be supported by our physical education and sport premium—£150 million that goes direct to primary schools every year to make sure that every child gets the best possible PE and sport on offer.

[Jess Phillips (Birmingham, Yardley) (Lab)]

T5. I have worked with lots of children who have suffered domestic violence, rape, grooming and exploitation, and I have seen the damage it does to their lives. When will the Government respond to the Education Committee’s fifth report from the last Session and the recommendation that the Department for Education should “develop a workplan for introducing age-appropriate…SRE—sex and relationships education—as statutory subjects in primary and secondary schools”?

[Nicky Morgan]

I thank the hon. Lady for her question and welcome her to the House. I take great personal interest in that issue. We have until 26 June to respond to the report and we intend to do so by then.

[Neil Carmichael (Stroud) (Con)]

T9. What assurances can the Secretary of State give to this House on the strength of the flexibility and accountability system of academies and free schools, especially the new 500 free schools that we expect to open?

[Nicky Morgan]

I thank my hon. Friend for his question and I am grateful to him for his support. I was delighted to visit his constituency and hear more about the Berkeley Green University Technical College. Free schools are accountable to me, through their funding agreement, for operation, governance and finances. They are responsible through the Ofsted inspection framework for the quality of their education and they work closely with their relevant regional schools commissioner.

[Ian Austin (Dudley North) (Lab)]

T6. I am absolutely delighted that the brilliant headteacher at Ellowes Hall school in Dudley, Andy Griffiths, was honoured with an OBE at the weekend. Popular and successful schools such as his have to turn away countless children every year because they do not have enough space. Will the Secretary of State update the House on the discussions that he and I had with her predecessor and Lord Nash about putting parents in charge, thereby enabling well run over-subscribed and financially sound schools to provide the places that are needed and to pay off the loans with the revenue that the extra pupils will bring?

[Nicky Morgan]

I thank the hon. Gentleman for his question. I too welcome the honour awarded to the former headteacher of Ellowes Hall sports college. He and I have discussed that matter already; we want to look at it again. Academies can apply for loans for capital works as part of the condition improvement fund. I understand that the college did not apply for such a loan in the last CIF round, and it is something that we will consider further.

[Caroline Nokes (Romsey and Southampton North) (Con)]

Spending a third year in sixth form can be vital for some students, particularly if they have suffered from mental or physical illness or have come from challenging backgrounds. Will my hon. Friend tell me whether he has any plans to review the funding rate for 18 to 19-year-olds, which is currently 20% lower than for those in the 16-to-18 group?

[The Minister for Skills (Nick Boles)]

My hon. Friend asks a very good question. We had to make a difficult decision about whether to continue to fund particularly heavy programmes more generously, which meant making savings elsewhere. The cut in the funding rate for 18-year-olds was the saving on which we decided. I accept her argument that there are some individuals for whom that third year is vital. All of those things will be considered in the spending review, but for this financial year, the funding rates will be as announced.

[Fiona Mactaggart (Slough) (Lab)]

T10. On 5 June, the Chancellor, rather unusually, announced amendments to the budget for further education. I do not think that we have yet had full details of how that will affect those 14 to 18-year-olds in further education. Perhaps the Minister could update the House on that matter.

[Nick Boles]

If I am right in understanding that the right hon. Lady wants to know whether the 16-to-19 funding rate will remain as was announced in March, I believe that I gave an answer in a reply to an earlier question. I am happy to restate that the funding rate for 16 to 19-year-olds for the 2015-16 academic year will remain as announced in March.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

Last year, Dorset schools welcomed £3.1 million in additional funding, and Poole schools £3.2 million in additional funding. What reassurance can my right hon. Friend give me and schools in Poole and Dorset that this was but a downpayment for fairer funding for our underfunded schools in Mid Dorset and North Poole?

[Nicky Morgan]

I thank my hon. Friend for his question and I welcome him to the House. As I said in reply to an earlier question, I recognise the need to look at all aspects of school funding in the round, and we will take further decisions on fairer funding and implement the fairer funding commitment in our manifesto after extensive consultation with parents, schools, local authorities and any other interested parties.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Why have apprenticeship starts in IT and construction fallen so dramatically since 2010?

[Nick Boles]

The apprenticeship programme is demand-led, because we require employers to create jobs. That is what apprenticeships are under this Government, unlike under the Government the hon. Lady supported, when they took place at college full time. We have seen a dramatic expansion in the apprenticeship programme, and we will see a further expansion. I would have thought that she welcomed that. I am absolutely sure that one reason she is sitting on the Opposition Benches rather than on the Government Benches is the success of our apprenticeship programme.

[Robert Jenrick (Newark) (Con)]

Schools such as Tuxford Academy near Newark, which were built under poorly worded private finance initiative contracts, are finding it expensive to maintain their buildings because the maintenance costs set out in the PFI agreements are higher than school funding. Will the Minister look into that and come back to me?

[Nicky Morgan]

We are aware of the costs involved in the PFI agreements. In some schools, we are having to put walls back into schools so that there are individual classrooms. We are keeping that whole matter under careful review.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

We have touched several times on failing academies. Will the Secretary of State give an undertaking that Grace Academy in Coventry should rigorously enforce and increase standards in the interests of pupils and of their parents?

[Nicky Morgan]

I thank the hon. Gentleman for that question. I am not aware of the circumstances that surround that individual school, but he can rest assured that the Government’s determination to raise standards for all pupils extends as far as all schools in Coventry, too.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I have sought to extend the envelope, but I am afraid that we must now move on.

Petition

Monday 15th June 2015 Commons Chamber

Andrew Stephenson (Pendle) (Con)

- Hansard - - Excerpts

I would like to present to the House a petition signed by a large number of Pendle residents about the high cost of car insurance.

The petition states:

The Petition of residents of Brierfield and Nelson,

Declares that the Petitioners believe that the price of car insurance has risen rapidly within the BB9 post code area making it unaffordable for many, as a result of a minority of drivers making fraudulent insurance claims.

The Petitioners therefore request that the House of Commons urges the Government and the insurance industry to work together to reduce insurance costs for car drivers living in the BB9 post code area so that owning a car can be made more affordable.

And the Petitioners remain, etc.

[P001528]

Point of Order

Monday 15th June 2015 Commons Chamber

15:35

[Louise Haigh (Sheffield, Heeley) (Lab)]

On a point of order, Mr Speaker. You will no doubt be aware that on Friday the Independent Police Complaints Commission announced that it would not be investigating the allegations of serious misconduct against South Yorkshire police regarding the events at the Orgreave coking plant in 1984 and suggested that doing so would require a Hillsborough-style public inquiry. In response, the Home Secretary made a statement to the media but not to Parliament. Given that the victims of Orgreave have been waiting for more than two years for this decision from the IPCC, is there any way you can encourage the Home Secretary to make a statement to this House and can you give guidance on how else I can raise this issue with the Government as a matter of urgency?

[Mr Speaker]

Yes. I am grateful to the hon. Lady for her point of order, and I congratulate her on her ingenuity in raising a point of order so early in her tenure. The question of whether a Minister chooses to make a statement is a matter for the Minister, not for me. That said, her remarks are on the record and will have been heard by those on the Treasury Bench. In response to her specific inquiry about advice about what mechanism she might use to highlight this matter, I would suggest that she goes to the Table Office. There are debates that can be had that would enable her to highlight the matter not just momentarily but very fully. I feel sure that she would be encouraged and supported by a number of her colleagues in so doing. I should say that the Table Office is a friendly place for Members and I encourage them to use it, just as they would want to use the Library. They will not find it unprofitable.

Scotland Bill

Monday 15th June 2015 Commons Chamber

[1st Allocated Day]

Considered in Committee

[Mr Lindsay Hoyle in the Chair]

Clause 1

The Scottish Parliament and the Scottish Government

15:36

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move amendment 16, page 1, line 7, leave out first “A” and insert “The”

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 37, page 1, line 7, leave out “is recognised as” and insert “shall be”.

Amendment 17, page 1, line 7, leave out “recognised as”.

Amendment 58, page 1, leave out lines 7 and 8 and insert—

‘(1A) The Scottish Parliament is a permanent part of the United Kingdom’s constitution.

(1B) Subsection (1) or (1A) may be repealed only if—

(a) the Scottish Parliament has consented to the proposed repeal, and

(b) a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”

This amendment is to ensure that the Scottish Parliament can only be abolished with the consent of the Scottish Parliament and the Scottish people after a referendum.

Amendment 38, page 1, line 8, at end insert

“and may not be abolished without the consent of the Scottish people given effect by an Act of the Scottish Parliament”.

Amendment 18, page 1, line 12, leave out “recognised as”.

Amendment 59, page 1, leave out lines 12 and 13 and insert—

‘(1A) The Scottish Government is a permanent part of the United Kingdom’s constitution.

(1B) Subsection (1) or (1A) may be repealed only if—

(a) the Scottish Parliament has consented to the proposed repeal, and

(b) a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”

This amendment is to ensure that the Scottish Parliament can only be abolished with the consent of the Scottish Parliament and the Scottish people after a referendum.

Clause 1 stand part.

Amendment 89, in clause 11, page 13, line 42, at end insert—

‘(2A) In paragraph 4 of Schedule 4 (protection of Scotland Act 1998 from modification), insert new sub-paragraph—

“(5A) This paragraph does not apply to amendments to Schedule 5, Part II, Head A, Section A1 insofar as they relate to:

(a) taxes and excise in Scotland,

(b) government borrowing and lending in Scotland, and

(c) control over public expenditure in Scotland.”

This amendment would enable the Scottish Parliament to amend the Scotland Act 1998 to remove the reservation on taxation, borrowing and public expenditure in Scotland, with the effect that the Scottish Parliament could then legislate in these areas to provide for full fiscal autonomy in Scotland.

New clause 2—Constitutional convention—

‘(1) The Prime Minister shall establish a Constitutional Convention within one month of the day on which this act is passed.

(2) The Chair and Members of the Constitutional Convention shall be appointed in accordance with a process to be laid before, and approved by, resolution in each House of Parliament.

(3) The Chair of the Constitutional Convention is not permitted to be a Member of Parliament or a member of a political party.

(4) Members of the Constitutional must include, but not be limited to, the following—

(a) members of the public, chosen by lot through the jury system, who shall comprise the majority of those participating in the convention;

(b) elected representatives at all levels;

(c) representatives of civil society organisations and, in an advisory role, academia.

(5) The Constitutional Convention shall review and make recommendations in relation to future governance arrangements for the United Kingdom, including but not limited to the following—

(a) the role and voting rights of Members of the House of Commons;

(b) democratic reform of the House of Lords;

(c) further sub-national devolution within England;

(d) codification of the constitution.

(6) The Constitutional Convention shall engage in widespread consultation across the nations and regions of the UK, and must provide a report to both Houses of Parliament by 31 March 2016.

(7) The Secretary of State must lay before both Houses of Parliament a formal response to each recommendation of the Constitutional Convention within four months of the publication of the final report from the Constitutional Convention.’

This New Clause provides an outline for a Constitutional Convention selected from the widest possible number of groups in society to analyse and design future governance arrangements for the United Kingdom, and to report by 31 March 2016.

New clause 3—Transfer of reserved matters—

‘(1) Schedule 5 (which defines reserved matters) to the Scotland Act 1998, has effect with the following modifications.

(2) In Part I (general reservations) omit paragraph 6 (political parties).

(3) Part II (specific reservations) is omitted.

(4) Insert Part IIA (UK pensions liability) as follows—

Part IIA

UK Pensions liability

The consent of the Treasury is required before the enactment of any provision passed by the Scottish Parliament which would affect the liabilities of the National Insurance Fund in respect of old age pensions.”

(5) In Part III (general provisions) the following provisions referring to Part II of the Schedule are omitted—

(a) paragraph 3(2);

(b) paragraph 4(2)(c).’

This Amendment would allow the Scottish Parliament to make provision for the registration and funding of political parties, but would otherwise retain the Part I reserved matters covering the constitution, foreign affairs, public service, defence and treason. It would entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.

New clause 6—Constitution of Scotland—

‘(1) The 1998 Scotland Act shall be cited as The Written Constitution of Scotland.

(2) A standing Scottish Constitutional Convention shall be convened jointly by the Secretary of State and the Scottish Ministers to conduct reviews and to make recommendations to the Scottish Parliament and the Parliament of the United Kingdom.’

The New Clause renames the Scotland Act 1998 and introduces a standing Scottish Constitutional Convention.

New clause 7—Application of the Parliament Acts to the Scottish Parliament and the Scottish Government—

‘(1) The Parliament Act 1911 is amended as follows.

(2) In subsection 2(1), after “other than a Money Bill”, insert “or a Bill amending sections 1 or 2 of the Scotland Act 2015.’

The New Clause entrenches the permanence of the Scottish Parliament and the Scottish Government by ensuring that changing Clauses 1 and 2 of the Bill once enacted would be possible only with the consent of both Houses of Parliament.

New clause 8—Scottish Parliament nomination of members of the House of Lords—

‘(1) The Scottish Parliament shall nominate members for appointment to the House of Lords, in a method to be determined wholly by the Scottish Parliament.

(2) The number of members of the House of Lords appointed in accordance with this section shall at any time be in broadly the same proportion to the total membership of the House of Lords as the population of Scotland is to the total population of the United Kingdom.’

The New Clause would require the Scottish Parliament to nominate members to sit in the House of Lords in proportion to Scotland’s share of the United Kingdom population.

New clause 9—Constitutional convention—

‘(1) Within one month of the day on which this Act is passed, a constitutional convention is to be held to consider and make recommendations on the constitution of the United Kingdom.

(2) The Secretary of State must make regulations to—

(a) appoint a day on which the convention must commence its operations,

(b) make fair and transparent rules about how the convention is to operate and how evidence is to be adduced,

(c) make further provision about the terms of reference prescribed under section 2, and

(d) specify how those who are to be part of the convention are to be chosen in accordance with subsection (8).

(3) The date appointed under subsection (2)(a) must not be later than 31 December 2016.

(4) A statutory instrument containing regulations under subsection (2), if made without a draft having been approved by a resolution of each House of Parliament, is subject to annulment in pursuance of a resolution of either House of Parliament.

(5) The convention shall have the following terms of reference—

(a) the devolution of legislative and fiscal competence to and within Scotland and the rest of the UK,

(b) the devolution of legislative and fiscal competence to local authorities within the United Kingdom,

(c) electoral reform,

(d) constitutional matters to be considered in further conventions, and

(e) procedures to govern the consideration and implementation of any future constitutional reforms.

(6) The convention must publish recommendations within the period of one year beginning with the day appointed under subsection (2)(a).

(7) The Secretary of State must lay responses to each of the recommendations from the convention before each House of Parliament within six months beginning with the day on which the recommendations are published.

(8) The convention must be composed of representatives of the following—

(a) all registered political parties within the United Kingdom,

(b) civic society and local authorities of the nations and regions of the United Kingdom.’

The New Clause would require the appointment of a convention to review the operation of the Act resulting from the Scotland Bill in the wider context of the Union.

Amendment 1, in clause 63, page 67, line 24, leave out paragraph (a).

This amendment provides that section 1 will not come into force on the day on which the Act is passed, in order to link the commencement of Part 1 of the Act (Constitutional arrangements) with the work of the Constitutional Convention, outlined in New Clause NC2, which would be required to report by 31 March 2016.

Amendment 2, page 67, line 26, at end insert—

‘(1A) Part 1 comes into force within one month of the publication of the report of the Constitutional Convention appointed under section (Constitutional Convention).”

This amendment provides that Part 1 of the Act (Constitutional arrangements) comes into force after publication of the report of the Constitutional Convention, as outlined in New Clause NC2, which would be required to report by 31 March 2016.

[Mr Carmichael]

Amendments 16, 17 and 18 are essentially probing amendments, authored by the Law Society of Scotland. Subject to the response that we hear from Ministers and from those in other parts of the House, it is not my intention to seek to press them to a Division.

The amendments change the nature of clause 1 from one that recognises the permanence of the Scottish Parliament to one that declares it. The genesis of the clause was the Smith commission report, which required that there should be a statement in the legislation to follow it that the Scottish Parliament and the Scottish Government were permanent institutions. The form of words in clause 1 was inserted by the draft clauses published at the end of January, which recognised that permanence. The permanence of the Scottish Parliament is to be found not in any amendment or statutory enactment, but in the will of the Scottish people. It is a permanent institution because, frankly, it is unthinkable that it would be repealed at this point. For that reason, and given the comments of the Scottish Parliament’s Devolution (Further Powers) Committee, it is right that we should revisit the issue.

At the heart of this debate is the issue and the definition of sovereignty. The context is a classic Diceyan definition of sovereignty, which says that Parliament here is sovereign. Although matters have moved on somewhat over the years and although it remains the case that Parliament cannot bind its successors, it is undoubtedly the case that since the European Communities Act 1972 we have taken a different view of parliamentary sovereignty, one in which sovereignty is shared with the European Union, as it now is, in Brussels, the Scottish Parliament, the Welsh Assembly, the Northern Ireland Assembly and even the London Assembly. It was the subject of considerable debate during the constitutional convention back in the late 1980s and early 1990s.

The view that was taken then, which as I recall was contained in the claim of right, was that in Scotland the Diceyan version of sovereignty—that Parliament is sovereign—has never been the case, and that sovereignty has always been vested in and remained with the people of Scotland. From that point of view, I see considerable merit in amendment 58 in the name of the hon. Member for Moray (Angus Robertson) and his colleagues in the Scottish National party, requiring that if there were ever to be a repeal of the Scotland Act 1998 it could be done only with the consent of a majority voting in a referendum. That honours and respects the view that sovereignty lies with the people in Scotland.

However, even that clause could be got around by a simple repeal, a consequence of the doctrine that Parliament cannot bind its successors. As long as we try to do these things by way of primary legislation, we will keep tying ourselves up in knots and any solution that we bring forward will lack permanence and will be unsatisfactory.

[Mr Graham Allen (Nottingham North) (Lab)]

Does the right hon. Gentleman recall that the former Member for Monklands East and leader of the Labour party, John Smith, said that the British constitution, which embraces the Scottish constitution, should not be a matter of judicial archaeology—that was the phrase he used—but should be put down plainly as a written constitution for all to see? Is that where his argument is going? I hope it is.

[Mr Carmichael]

I have long held that view. I cannot remember a time in my conscious political being that I have held a view other than that. It is never going to be easy to get to that point, of course, and it will require a fundamental change in the way we do things. The reference to judicial archaeology is interesting, because it would render some of the things that were done in this place reviewable in the courts. As long as there is a proper separation of powers, I am quite happy with that.

[Mike Weir (Angus) (SNP)]

I hear what the right hon. Gentleman says about amendment 58, and he is correct that Parliament cannot bind its successors, but if we put it into the Bill that there has to be a referendum of the Scottish people before there can be a change, that is a very powerful moral argument against this place, and the strongest we can make under the current constitutional settlement.

[Mr Carmichael]

Indeed, and it is for that reason that I said that I saw some merit in the proposal. The hon. Gentleman would have to accept, though, that the point I have already made—that even that could be repealed by a simple vote in this Chamber and the other place—will always be a problem for any Government seeking to do that by way of primary legislation.

[Frank Field (Birkenhead) (Lab)]

Does the right hon. Gentleman share my hope that English Members here will approach this change with a view to giving Scotland stability? Some of us very much hope to be discussing the English question later in this Parliament, and we will be asking Scottish Members to give us similar stability.

15:45

[Mr Carmichael]

I actually agree with the right hon. Gentleman on that point. Indeed, I see the Bill as the start of a process that must continue, because we risk putting an intolerable strain on the Union if we proceed with constitutional change that relates only to Scotland and not to the rest of the United Kingdom, particularly in relation to the different parts of England. As far as the future of the English constitution is concerned, the only point on which I am clear is that there is absolutely no consensus on the shape that it ought to take. I stood at the Dispatch Box often enough during the previous Parliament, answering questions from both sides of the House, and being told, “This is what we need”, and I rarely heard the same proposition twice. It is for that reason that, if we are to have a written constitution, we must first have a constitutional convention, because we will never build the necessary consensus for this sort of constitutional change merely within Parliament. That was the experience with Scotland’s constitutional convention in the 1990s, and it was then the lesson of the Smith commission and, before it, the Calman commission.

[Frank Field]

While the right hon. Gentleman opposes those doubts, does he not accept that, given that we are now in the process of changing our constitution and meeting the wishes of the Scottish people, we in England will probably not have to wait as long for opinion to come together on what England needs as the pioneers had to wait to get justice for Scotland?

[Mr Carmichael]

I am heartened by the right hon. Gentleman’s optimism in that regard; I always think that achieving consensus in these matters is much easier to talk about than to get. Frankly, that is a debate that England now needs to have for herself. It is certainly not for us to intervene in it, any more than we would have welcomed the intervention of the English, Welsh or Northern Irish in the constitutional convention discussions of the 1990s. I wish the English every bit as much joy with it as we have had in Scotland with our constitutional debate over the years.

The hon. Member for Edinburgh South (Ian Murray) has tabled a new clause proposing a constitutional convention, and there is a great deal in it that I find worthy of support, particularly the requirement that it be convened within a month of the Bill becoming an Act, because I do not think that these matters become any easier by being left. I am also impressed by the fact that it has a reporting date, which I suggest would serve to concentrate minds.

Speaking as a Scottish Member, I think that the hon. Gentleman’s proposal has the further benefit of allowing a constitutional convention to go ahead; we would be saying today that it is something that is going to happen, but it would not in fact delay the passing of the Bill. In order to hold faith with the 55% of the people of Scotland who voted no last September, I think that we should proceed with the Bill with all due dispatch. I do not think that it would be acceptable for the passing of the Bill to be somehow contingent on constitutional arrangements being refined elsewhere in the United Kingdom.

I would have preferred—inevitably so—to see included in the remit of the proposed constitutional convention the question of electoral reform, for which I think there is now greater support in the Labour party, but I would not let that omission stand between me and supporting the Bill today.

[Ian Austin (Dudley North) (Lab)]

I congratulate the right hon. Gentleman on the case he is making in his usual eloquent and persuasive way. Many Members on both sides of the Committee will welcome the fact that he is here and will want to express our support for him and tell him how much we hope that he is successful in standing up to the Scottish National party Members sitting in front of him, who clearly want to create a one-party state in Scotland and whose supporters engage in the most disreputable bullying tactics in order to silent any dissent in that country.

[Mr Carmichael]

I will take support anywhere I can find it, but I am not entirely sure that the hon. Gentleman’s remarks are germane to the matter that is before the Committee.

Amendment 89, which was tabled by the Scottish National Party, will facilitate a debate on the concept of full fiscal autonomy. I shall listen with interest to the hon. Member for Moray and others in their exposition of that, and I shall reserve my remarks on it until the end of this string of amendments, when I know I will be able to catch your eye, Mr Hoyle.

[Sir Edward Leigh (Gainsborough) (Con)]

New clause 3, which stands in my name, would deliver full fiscal autonomy, real home rule and a Scottish Parliament in control of everything save defence and foreign affairs. I am only a Back Bencher and I do not have the assistance of Government officials, so if the new clause is defective in technical detail, I apologise. If it were voted for tonight, however, it would establish a clear principle and a way forward.

The contention is clear: the new clause would deliver full fiscal autonomy. The Scottish Parliament would have full freedom to raise all taxes as it liked. It would not be restricted to fiddling around with bands; it would control all thresholds and all VAT dividends, and it would have full freedom to spend that money as it liked. That is what real Parliaments do, and that is why they are responsible.

The Scottish Parliament is constructed in a manner that is inherently conducive to the culture of grievance, and that would still be true even if the Smith commission proposals were adopted. The Scottish Parliament will raise only 50% of what it spends. Worse, under the 30-year-old, discredited Barnett formula, which even its conceiver condemned towards the end of his life, Scotland’s block grant will be based not on needs but on English levels of spending. No matter which tartan is chosen to clad the Scottish purse, the purse strings will still be controlled by England. That, I believe, has to change.

Following reports by the Office for Budget Responsibility and the Institute for Fiscal Studies, it has been said that Scotland faces a £7 billion black hole. Presumably, however, the SNP wanted independence in the next year. We cannot have an independent Parliament that does not have full fiscal autonomy, so let us have a real, informed debate about the figures.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

When the hon. Gentleman uses the term black hole, does he mean a deficit? When people talk about the UK’s deficit, they say “deficit”. When they talk about Scotland’s deficit, they say “black hole”. Why the use of pejorative language?

[Sir Edward Leigh]

It can be referred to as a deficit. We have listened to the Institute for Fiscal Studies and the Office for Budget Responsibility, so now let us have an informed debate.

I want to make it clear, by the way, that I am not in favour of cutting Scotland loose. I am in favour of United Kingdom solidarity, and I am in favour of a new grant mechanism, if the need for one is proven. My aim is not to trap the SNP, call its bluff or reveal its timidity. I genuinely want to give the Scots what they want: the freedom to run their own affairs and not to blame others if things go wrong, but all within the buttresses and safety of the United Kingdom. I am a fervent Unionist.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will the hon. Gentleman concede that Scotland has contributed more than the rest of the UK in tax per head of population in each of the last 34 years, and that Scotland with full economic powers would be able to deliver prosperity and social justice for the people of Scotland?

[Sir Edward Leigh]

The hon. Gentleman can vote for my new clause, if that is what he believes. That scenario is on offer tonight, and he can vote for it. As a No. 10 spokesman said helpfully over the weekend—it is not often that No. 10 spokesmen have supported my new clauses, but I am grateful to him—the new clause

“is the acid test for the SNP over whether they will back their own policy”.

A Labour party spokesman helpfully said over the weekend, “They can have full fiscal autonomy by 10 o’clock tonight if they want to vote for it.”

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Those of us who have a Eurosceptic point of view, as my hon. Friend does, have always been very cautious about fiscal autonomy without monetary autonomy. Would his amendment also enable the Scottish Parliament to have monetary autonomy?

[Sir Edward Leigh]

As my hon. Friend made that point last week, I was waiting for it. If he will be patient for a moment, I will finish a couple of sentences and come directly to him, because this is the kernel of the matter.

Under my proposals, the Barnett formula would be scrapped and an alternative formula based on need would be created. In the modern world—in modern finance—we create formulas based on need.

[John Redwood (Wokingham) (Con)]

Does my hon. Friend agree that there will not now be the automatic application of the Barnett formula to solve all the many money issues between Scotland and the rest of the United Kingdom, but there has to be a fundamental renegotiation of the block grant and an attribution to Scotland of revenues by some formula? In practice, the whole financial settlement is in the melting pot anyway, so it will be very interesting to see how the SNP respond to his proposed further development.

[Sir Edward Leigh]

Absolutely; we are a united kingdom. For instance, Lincolnshire gets more money in its educational grant because of the sparsity factor. All these things can be worked out in a constructive manner between the United Kingdom Government and the Scottish Government so that there is a fair support mechanism based on need that takes account of issues such as declining oil revenues, the sparsity factor that I mentioned, declining heavy industries, or an ageing population. The grant should be determined by these matters, not by some ageing formula based on what the United Kingdom spends.

[Mr Jim Cunningham (Coventry South) (Lab)]

Is not the hon. Gentleman being very clever with his amendment because he is ultimately talking about an English Parliament and therefore a federal Government in future?

[Sir Edward Leigh]

My personal view, for what it is worth, is that if we are to create a sustainable Union we must, in effect, create full fiscal autonomy for Northern Ireland, for Wales, for Scotland and, ultimately, for England. This almost imperial Parliament would remain determining the support mechanisms to ensure safety. So, yes, in that sense I am a federalist.

Barnett is a gift to those who want to break up the Union. It is also incredibly expensive for the English, with £1,680 more a year spending per head in Scotland than in England because Scottish spending is inextricably linked to English spending. When that is cut, SNP Members quite understandably—I do not blame them for this; they are good politicians—can cry foul, as they did last week, and say, “The Scots people didn’t vote for austerity but it’s being imposed on us.” They can vote on every education and health measure, and say, “What you spend in England on health and education is going to determine what we spend.” We then get a crazy situation whereby if some taxes in Scotland are raised the grant will go down. This simply does not work. It is not a recipe for preserving the Union or for a sustainable future.

[Mr MacNeil]

The hon. Gentleman mentions the Barnett figures. He will of course point out, for completeness, that Barnett is only about two thirds of total spending. For further completeness, he will also point out, I am sure, that the Barnett figures for London and Northern Ireland are higher than those for Scotland.

[Sir Edward Leigh]

I do not want to get into a sterile debate about whether London subsidises Scotland or vice versa; I simply want to be fair and open. I am happy for Scotland to have all its oil. It can determine its oil policy and its level of taxation, and as the oil revenues decline, if they do decline, I am happy for the United Kingdom Government to step in and increase its grant.

[Frank Field]

Might not the hon. Gentleman be entering into this debate a note of unpleasantness that need not be there? Is it not in the interests of those of us representing English seats that whatever settlement is made for Scotland is durable, taking into account, at some stage, that it will have repercussions for how we settle the English question. Should not we approach this subject as generously as possible because we want it to succeed, not to fail? The more it succeeds, the more we answer the question when we get on to our own requirements for an English Parliament.

[Sir Edward Leigh]

I am grateful to the right hon. Gentleman, who has been a good personal friend of mine over many years, for summing up the situation. I am not trying to play party political games; I really want to be helpful. I want to create the durable settlement for which Scottish people voted: they want to stay part of the United Kingdom. They want to have that buttress if there is a catastrophic shock, as happened in 1929 and 2008, but they also want to run their own affairs.

16:00

I believe that, if we maintain the current Smith formula, combined with English votes for English laws, we will create a toxic mixture that will propel the Union towards collapse. As I said on Second Reading, we are making the same mistakes that were made on the Irish question in the 19th century: we are giving too little, too late. One thing our parliamentary forefathers did get right, however, was to not create two classes of MPs. They simply intended to reduce the number of Irish MPs with full home rule, but, sadly, the great war intervened and the rest is history.

Under the Smith commission, I think we are where we were with the Irish question in the early 20th century. I do not believe it is possible to dribble out complex tax powers such as thresholds, VAT and airport tax while also maintaining support for the Union. The Smith commission was a rapid scissors-and-tape job in response to a vow that was hastily put together by panicked Unionist politicians in the last days of the referendum campaign. Perhaps it was adequate for its time, but I have read it very carefully—it is not that long—and it has now been overtaken by events.

As my close personal friend and one of the most articulate Unionists, Lord Forsyth of Drumlean, said recently in the other place—[Interruption.] I thought I might lose a bit of support with that, but he is a personal friend of mine; I stayed with him over the weekend. He said:

“All the unionist parties stood on a platform of bringing in the proposals of the Smith commission and we ended up with three seats out of 59. This is not a credible position; it has been rejected.”—[Official Report, House of Lords, 1 June 2015; Vol. 762, c. 194.]

I say to the Government that there is such a thing as democracy. The Smith commission has been rejected. We cannot just plough on regardless. We have to listen to what the people have said.

[George Kerevan (East Lothian) (SNP)]

May I thank the hon. Gentleman for the spirit in which he is presenting his argument? I also heard his speech on Second Reading and agreed with the analogies he drew with Ireland. If we are to move to a form of, as the hon. Gentleman describes it, benign fiscal freedom for Scotland, surely that requires a degree of transition, given the scale of the UK deficit and the unique circumstances post-2008. Therefore, the issue of division between us is the transitional arrangements, not the issue of fiscal freedom itself.

[Sir Edward Leigh]

I hear what the hon. Gentleman says and nobody is suggesting that, even if my new clause 3 were passed tonight, full fiscal autonomy would start immediately. Of course there has to be a discussion and, inevitably, if oil revenues are declining, there has to be some sort of support mechanism from the United Kingdom Government. I say to SNP Members that they can have this new clause. Parliament is a democratic Assembly. I do not want to overplay my importance—I suspect the Whips might ensure that my new clause is defeated—but this is an historic opportunity to give full home rule to, and to establish that principle for, Scotland, which is what the Scottish people want.

[Mr MacNeil]

rose—

[Sir Edward Leigh]

The hon. Gentleman is now going to tell the Committee that he supports my new clause.

[Mr MacNeil]

We seem to be very happy with the hon. Gentleman’s new clause at the moment, but he talks about support mechanisms as though they are unique to Scotland. Will he concede that the UK has itself been reliant on support mechanisms since 2001 and that it has not raised the taxes to match its expenditure since then?

[Sir Edward Leigh]

I am afraid we are getting into the historic arguments of who is to blame: is it the UK Government? The Scottish Government face a fundamental problem, in that spending is 20% higher but tax revenues are, inevitably, lower. That is a fundamental problem that SNP Members have to—[Interruption.] Well, I have lost them there—fair enough.

We can have that debate, but let us not get too bogged down on that. They want independence; they can have it—[Interruption]—full fiscal autonomy.

The fact is that the SNP’s capture of all but three of the Scottish seats is an even greater victory than Sinn Féin’s in Ireland in the 1918 general election. Then the Unionists managed to secure 22 of the 105 Irish seats. We have to listen: this is actually a very serious issue.

[Stewart McDonald (Glasgow South) (SNP)]

rose—

[Sir Edward Leigh]

I will make a bit more progress, because I want to get to my hon. Friend the Member for North East Somerset (Mr Rees-Mogg). He has been very patient, and I will get to him eventually.

Like then, everything is different now. What will happen if Smith stays? Can we sustain a permanent settlement that prevents Scotland from setting the initial threshold for income tax or from changing universal credit? What will happen when the Scottish Conservative party promises in its election manifesto to cut taxation? How credible will that be if it affects the block grant available from the United Kingdom? All these issues have to be discussed.

Under the Smith proposals, universal credit will remain a reserved matter. Holyrood will be able to vary the frequency of payments and the way it is paid, while the power to vary the remaining elements of universal credit remain reserved, but I would ask why. I have read the Smith commission. Why?

[John Redwood]

Universal credit has been reserved because if Scotland decided to make it more generous, the issue would arise of how it would pay for that. What we find with fiscal independence is that we have to delegate both sides of the equation—the raising of the money and the spending of it—and then it can decide how much it wants to spend.

[Sir Edward Leigh]

Full fiscal autonomy results in full responsibility. That is what real Parliaments do.

Responsibility for bereavement allowance, bereavement payment, child benefit, guardian’s allowance, maternity allowance, statutory maternity pay, statutory sick pay and widowed parent’s allowance will all remain reserved and administered by the Department for Work and Pensions. Why? The Smith commission further proposes a complex system for sharing responsibility for income tax. Why? That is all affected by an oscillating block grant. As I have said, how can SNP Members promise lower taxes in an election or higher spending unless they are masters of their own fate?

What are the objections to full home rule? What are the real objections to full fiscal autonomy, apart from the fact that we appointed a Lord Smith—with lots of no doubt very worthy people—to produce a report, which has been overtaken by events? We are told that full fiscal autonomy will result in tax competition within the Union. What is wrong with that? That is what keeps the American states vibrant and competitive with one another and continually innovating. Do we not insist that our taxes in Britain compete with those of Europe? We are told that tax competition would create downward pressure on taxes. Well, I am sorry about that. Why should the Scottish Parliament not be able to lower or raise air passenger duty? It can do whatever it likes. I know it has had that power and it will be allowed it under Smith, but if that power is allowed, why not powers for other things?

On Second Reading, my hon. Friend the Member for North East Somerset said that a single currency requires fiscal and monetary union, with the implication that that is proved by the Greek experience. Surely he is not suggesting that the Scots are Greeks, or that the Scottish economy is as different from England’s as Germany’s is from Greece’s. No; Scotland can thrive with full fiscal autonomy because Scotland has the will and the skills to do so. It has universities, research, manufacturing, logistics, light manufacturing, oil and gas, food and drink and a flourishing creative sector. [Hon. Members: “Hooray!”] Vote for my new clause.

[Mr Rees-Mogg]

I agree with all the wonderful things my hon. Friend has been saying about Scotland, which are so clearly and self-evidently true. The point I was trying to make is that if a country has fiscal autonomy and issues debt in a currency other than its own, it may well get squeezed in the way seen not only in Greece, but in Italy and Spain, and in countries across Asia during the Asian financial crisis in the 1990s. For a country to have fiscal autonomy without its own currency is a recipe for economic failure. To go back historically, the same was true of the gold standard in the 1930s.

[Sir Edward Leigh]

That is a very fair point. I agree that that is a matter for debate. I have already made the point that Scotland’s situation is very different from that of Greece. I am actually suggesting that we remain a United Kingdom, with a sharing of the national debt. Nothing is more debilitating in this whole debate than saying, “That bit of the national debt is yours, or this bit is mine.” We are back to the same dreary arguments about who is responsible for spending and when. My hon. Friend makes a serious point. If we achieve full fiscal autonomy, which I believe is inevitable—whether it happens now or in five years time, it will happen—the Scottish Parliament and the Scottish Government will have to act responsibly and live within their means. I have confidence that they will do so.

[Alex Salmond (Gordon) (SNP)]

I can feel the sap rising at various points in the hon. Gentleman’s speech. When he said that Scotland is where Ireland was in the early years of the last century, I felt obliged to check the record, because last week he said we were

“where Ireland was in the 1880s.”—[Official Report, 8 June 2015; Vol. 596, c. 965.]

We seem to have advanced 20 years in a week. Does that mean that in a week’s time, we will be where Ireland was in the 1920s?

[Sir Edward Leigh]

That is an amusing point, but the right hon. Gentleman knows exactly what I am trying to say. This is a very serious point; it is not just a debating point. We have a responsibility to learn from history. What I was saying last week, and what I believe, is that we were wrong to abolish the Irish Parliament, wrong to delay granting Catholic emancipation, wrong not to listen to Gladstone in the 1880s, and wrong not to implement full home rule at the outset of the great war. We were wrong, wrong, wrong and wrong again. We need to have an element of statesmanship and vision in these affairs. The right hon. Gentleman, with all his debating skills, can laugh at what I say, but I assure him that I genuinely believe in what I am trying to do.

[Stephen Gethins (North East Fife) (SNP)]

The hon. Gentleman is highlighting many wrongs. Does he think that Irish independence was wrong?

[Sir Edward Leigh]

If we had granted home rule in the 1880s or implemented the home rule Act in August 1914, it is very probable that Ireland would have remained in the Union or become a dominion. Of course I regret the fact that Ireland chose to break free. There was a tragic civil war. That will not happen in Scotland, but the history of Ireland is one of tragedy and missed opportunities. Nobody is suggesting that we will go down that route with Scotland, but let us learn from history and try to be creative in these matters.

[Mr Stewart Jackson (Peterborough) (Con)]

I am a little puzzled. Just for the record, will my hon. Friend confirm that he is not equating the subjugation of the Irish and the tragic history of Ireland from the Norman period right through to the 20th century with Scotland, which, as part of the United Kingdom, is a modern, liberal democratic country with a successful economy?

[Sir Edward Leigh]

I am absolutely not. I do not want to overplay the analogy. As a fervent, almost romantic Unionist, I believe that Scotland has benefited enormously from being in the Union, which has been a Union based on trust and shared responsibility. I would not in any way suggest that the Scottish people have suffered in the same way that the Irish people suffered in the 18th century. If I gave that impression, I apologise, because that was not my aim at all. The only point I was trying to make was that we have to realise, in these debates, when there is a certain inevitability. If we know that full fiscal autonomy is going to come, it is better to have a serious discussion now on how to achieve it.

[Ian Blackford]

Will the hon. Gentleman give way?

[Sir Edward Leigh]

I must finish soon, because I am going to weary the Committee, but I do give way.

[Ian Blackford]

An important point has been made about opportunity. It is a real sadness that Scotland has lost a net 2 million people through migration over the past 100 years. One reason why we want powers over our economy is so that we can grow Scotland and ensure that we do not see tens of thousands of our young people being educated in Scotland and then emigrating and contributing to countries abroad. We need to grow the Scottish economy. That is why we need the powers over our economy.

[Sir Edward Leigh]

Most of them seem to come down here and run us, but there we go. They have done very well and we have benefited.

[Danny Kinahan (South Antrim) (UUP)]

As one of the only Irish or Northern Irish people here, I am glad to hear the hon. Gentleman confirm that he sees Northern Ireland as part of the Union. I accept that many of the Scots came our way. We see ourselves very much as part of the Union. I am concerned that we are moving forward before we have thought not just about Northern Ireland, but about Wales. We need a convention so that we know where we are going. I am concerned that we are going to put ourselves into a form that we cannot come back from. In Northern Ireland today, we have very nearly got ourselves into a totally dysfunctional Government that we cannot come back from. I am nervous that we are going too far, too quickly.

16:14

[Sir Edward Leigh]

Again, that is a very fair point. I do not mind having conventions, but we, as politicians, have to decide what we want. We should decide the principles and then, once we have decided, by all means employ distinguished people such as Lord Smith, accountants, tax lawyers and so on to work out how it is done, but let us not just push this into the long grass and have a convention of the great and good lasting for years with wall to wall lawyers. Let us, in this House, decide what we want.

This is an historic opportunity to cut through the negativity of the £7 billion black hole doomsayers. Give Scotland control of its oil revenues and taxes and let it decide its own priorities on encouraging exploration and how to tax it as the oil runs out. Then we will be one Union, based on solidarity and need. The UK subsidises Northern Ireland to preserve peace. Why should we not, on the basis of need, subsidise Scotland? I am very happy with that. Are we not brothers and sisters in this Union? Should we not help each other, if needed? Our principles should not be the politics of fear, but the statesmanship of hope.

New clause 3 delivers what I think Scotland wants: power to run her own affairs, but with the consolation of knowing that there is a secure foundation stone against catastrophic shocks, such as those in 1929 and 2008. I wish for there to be solidarity on pension liability and national debt, and for it to be shared. We should not be saying “This is your bit of debt.” We should say that it is our debt. To ensure peace and security, we should share a single defence and foreign policy; not a division based on the auld alliance of the times before James I and VI rode south, but the Union that has given us 400 years of shared identity and prosperity. Those who want slowly to leak this power and that function are setting a trajectory, however slowly, towards independence.

[Stewart McDonald]

There is one part of the hon. Gentleman’s amendment, which he may well be coming on to, that did strike me as slightly curious: the part on keeping treason reserved. Is there a modern day William Wallace or Mary Queen of Scots in our midst that means he sees the need to keep that power reserved?

[Sir Edward Leigh]

I took advice from the Clerks. All right, I will surrender treason if they want, particularly to the right hon. Member for Gordon (Alex Salmond). [Laughter.]

The Smith commission itself admits:

“A challenge facing both Parliaments is the relatively weak understanding of the current devolution settlement.”

What a glorious understatement!

“This is not surprising”—

its report further concedes—

“given what is a complex balance of powers.”

A complex balance of powers has been created and I do not think there is a single Member of Parliament who actually understands what is going to happen under Smith. We need to move to a more federal arrangement whereby the four nations have broadly equal powers. Scotland, Wales and Northern Ireland should have devolved legislatures, with the English MPs at Westminster deciding the same for England, then acting as a pan-European Parliament alongside MPs elected from the devolved countries as well.

The Prime Minister promised Scotland

“the strongest devolved Government anywhere in the world”

and the Scottish people rejected full independence. I suspect that they want full home rule. But will those who have argued for full fiscal autonomy now vote for it, or will they vote for further delay or deeper fudge? Will they go on blaming the United Kingdom Government for what goes wrong, or have the courage to grasp what they say they want? Full fiscal autonomy is inevitable.

[Angus Robertson (Moray) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hoyle. I welcome you back to your role. I wish to speak in support of amendment 58, which stands in my name and in the names of my hon. Friends.

The Scottish National party has submitted a series of amendments to the Scotland Bill based on the three-pronged commitment outlined in our manifesto for the UK general election: first, delivering on the Smith agreement in full; secondly, devolving additional powers in priority areas such as job creation and welfare protection; and, thirdly, enabling the Scottish Parliament to move to a position of full fiscal autonomy. This approach was backed in record numbers by voters in Scotland in May, giving the SNP a clear mandate for change, which the UK Government must recognise and must act upon.

The UK Government must live up to the words of the Prime Minister on 10 September 2014, when he said:

“If Scotland says it does want to stay inside the United Kingdom then all the options of devolution are there and are possible”.

If all options are possible, it is the duty of the UK Government to respond to the clearly expressed desire of the Scottish people for more powers in the Scotland Bill. The SNP amendments include effectively entrenching the Scottish Parliament—that is what we are discussing now—placing the Sewel convention on a meaningful statutory basis and giving the Scottish Parliament the legislative competence to remove the reservation on taxation, borrowing and public expenditure, enabling the Scottish Parliament to legislate to deliver full fiscal autonomy. The SNP also proposes amendments for further priority powers at later stages in the Bill, including powers over tax, setting the minimum wage and taking responsibility for welfare decisions. In this first group of amendments, I will speak on issues relating to the permanence of the Scottish Parliament, and my hon. Friend the Member for Dundee East (Stewart Hosie) will speak shortly on full fiscal autonomy.

Amendment 58 relates to the permanency of the Scottish Parliament and Government. Paragraph 21 of the Smith commission report stated:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

However, in its analysis of the draft clauses published by the UK Government, the Scottish Parliament’s Devolution (Further Powers) Committee raised two main issues. As I stressed in the previous stage, that was an all-party Committee, involving members from the Scottish National party, the Scottish Labour party, the Scottish Conservative party, the Scottish Liberal Democrats and the Scottish Green party.

[The Secretary of State for Scotland (David Mundell)]

It is important to get it on the record that Alex Johnstone MSP has made it perfectly clear that his participation on the Committee is not to be conflated with the SNP press release issued at the time of the Committee’s report. He clearly supports the Committee’s report, but not the SNP’s attempt to distort that report.

[Angus Robertson]

It will no doubt be a relief to you, Mr Hoyle, that I will confine myself to the words agreed by all Committee members, including Mr Johnstone, when he signed up to the report.

That cross-party Committee found that the form of words on permanency proposed in the Scotland Bill was a weaker formulation than stating simply that the Scottish Parliament and the Scottish Government were permanent. We agree with the view of the Committee—and of Mr Johnstone—in paragraph 47:

“The Committee is of the view that the inclusion of the words ‘is recognised’ in draft clause 1 has the potential to weaken the effect of this clause, which would be unfortunate given the all-party agreement to this recommendation as part of the Smith Commission, and the views expressed to us by the former Secretary of State for Scotland that he perceives that the permanence of the Scottish Parliament and Scottish Government is guaranteed.”

The Committee was also told by the former Secretary of State that he was open to reconsidering the wording of draft clause 1, but changes were not made in the published Bill. This suggests that the Government might be open to the amendment.

Paragraph 49 of the report agreed by Mr Johnstone and all other Committee members states:

“In evidence to the Committee, the former Secretary of State for Scotland commented that he was ‘open to thinking about different ways in which…permanence could be achieved’. The Committee welcomes the openminded approach of the former Secretary of State with regard to this issue. The Committee therefore considers that there is scope to further strengthen the permanency provisions.”

The Committee’s analysis of the published Bill, however, confirmed that there was no change between the draft and the final clause.

The Committee called for additional protection in paragraph 50 of its report, supported by Mr Johnstone and all other members:

“The Committee considers that the effect of the clause on permanency, as currently drafted, is primarily declaratory and political rather than legal in effect. The UK doctrine of Parliamentary sovereignty makes achieving permanence problematic. The Committee recommends that the Scottish electorate should be asked to vote in a referendum if the issue of permanency was in question, with majorities also being required in the Scottish Parliament and the UK Parliament.”

That is the purpose of the SNP amendments, which we will be moving.

[James Cleverly (Braintree) (Con)]

Does the hon. Gentleman genuinely believe that there are circumstances in which the permanency of the Scottish Parliament could be called into question without the voice of Scottish people being heard?

[Angus Robertson]

I congratulate the hon. Gentleman on his election. I gently encourage him to remind himself of the position of the Conservative party in the run-up to the referendum on Scottish devolution. It was totally opposed to devolution, so he will perhaps understand why SNP Members, who have consistently supported home rule, wish to see that reflected in the legislation. He will have the opportunity to support the SNP amendment later.

[Mr Graham Allen]

If there is absolutely no threat whatever to the Scottish Parliament, why not put that fully on the face of the Bill, as the hon. Gentleman suggests?

[Angus Robertson]

The hon. Gentleman makes an excellent point. Hopefully, the Committee does not need to divide. If there is support from Labour and from the Government, everybody will be satisfied and we can move forward.

In legal terms, there is nothing to stop the Westminster Parliament from repealing clause 1, according to the doctrine of parliamentary sovereignty and the associated norm that one Parliament cannot bind its successors. The Scottish Government produced an alternative clause that includes a double lock—it would require that the clause cannot be repealed without the prior consent of the Scottish Parliament, and without the people of Scotland voting to abolish the Scottish Parliament in a referendum conducted for that purpose. The Scottish Government clause forms the basis of our amendment.

[Mr Kevan Jones (North Durham) (Lab)]

I have no objection to what the hon. Gentleman is trying to achieve, but can he clarify the amendment? It states:

“The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

The country does not have a constitution, so will he identify the legal definition and what is constitutional?

[Angus Robertson]

The hon. Gentleman knows that the UK does not have such a constitution—we are strong supporters of a constitution, whether for the UK or for Scotland—and that the constitution is based on custom and practice. Legislating on the matter would be an appropriate safeguard.

The SNP approach would strengthen the declaratory and political effect of the clause. It also acknowledges the position of the Scottish Parliament and the long-standing sovereign right of the people of Scotland to determine the form of government best suited to their needs, as recognised in paragraph 20 of the Smith commission report, which states:

“Reflecting the sovereign right of the people of Scotland to determine the form of government best suited to their needs, as expressed in the referendum on 18 September 2014, and in the context of Scotland remaining within the UK, an enhanced devolution settlement for Scotland will be durable, responsive and democratic.”

[Mr Jones]

I am just trying to be helpful. The hon. Gentleman might have the wording “United Kingdom’s constitution” in an amendment, but would it have any legal force? An amendment to the American constitution, or to any other written constitution, is legally binding. What would be the status of the hon. Gentleman’s amendment?

[Angus Robertson]

I am making the point that it would be very difficult for people to go back on legislation with the express wording proposed in the amendment. It is not that difficult a concept to grasp.

The Scottish Government noted in their response to the Devolution (Further Powers) Committee interim report that both the House of Commons Political and Constitutional Reform Committee—I am looking at the hon. Member for Nottingham North (Mr Allen), who served with great distinction as the Chairman of that Committee—and the House of Lords Constitution Committee raised concerns with those aspects of the UK Government’s clause.

The Scottish Government’s alternative clause and the SNP amendments address more minor issues with the UK Government’s clause, using the definite article “the” instead of the indefinite “a”, as that is the language used in the Scotland Act 1998. That was picked up by the right hon. Member for Orkney and Shetland (Mr Carmichael).

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will the hon. Gentleman give way?

[Angus Robertson]

I want to make some progress, if the hon. Gentleman will forgive me. I have given way to Members on both sides of the Committee.

The SNP also suggests using “constitution” rather than “constitutional arrangements”, because the former term is already straightforwardly used in the 1998 Act. “Constitutional arrangements” is a term most commonly used to refer to the governing arrangements of bodies and offices, and is therefore inappropriate for describing the governance of Scotland. That is politically important for both the Conservatives and the Labour party, given that the very first words of the vow were:

“The Scottish Parliament is permanent, and extensive new powers for the Parliament will be delivered”.

In his foreword to the Smith commission report, Lord Smith made the position clear by saying:

“The Scottish Parliament will be made permanent in UK legislation”.

The main body of the report, however, had a slightly weaker formulation:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions.”

The fact that the cross-party Scottish Parliament devolution committee—including the Scottish Conservative party, and now, as a result of amendments to this part of the Bill, the SNP, the Liberal Democrats and Labour—has sought to deliver a stronger legal protection for permanence suggests that the Westminster Conservatives are the only partners in the Smith deal who hold the softer interpretation of what Smith was proposing.

16:30

As an entirely sensible safeguard, the SNP has proposed amendment 58, securing a double lock to protect the Scottish Parliament, which one of us will move formally later. It states:

“The Scottish Parliament is a permanent part of the United Kingdom’s constitution.”

It also states:

“Subsection (1) or (1A) may be repealed only if…the Scottish Parliament has consented to the proposed repeal, and…a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”

The amendment is intended is to ensure that the Scottish Parliament can be abolished only with the consent of the Scottish Parliament and the Scottish people after a referendum, and we look forward to pressing it to a vote.

[John Redwood]

I have always been a Unionist, but my idea of my country, the United Kingdom, is that it must be a democracy at peace with itself, and can only proceed as a happy and successful democracy if it has the consent of most of the people most of the time to the Union institutions and the powers of those institutions.

I am pleased that, because we proceed democratically and understand the need for consent, this Parliament listened to Scotland and, quite recently, granted a referendum to establish whether it was the settled will of the Scottish people to leave the United Kingdom altogether and set up their own arrangements. We discovered two things as a result of that democratic exercise. We discovered that the Scottish National party itself was not arguing for full independence: it wanted to remain part of the currency union, for example. I do not see how it is conceivably possible for an independent country to be part of a currency union.

[Peter Grant (Glenrothes) (SNP)]

Is the right hon. Gentleman seriously suggesting that Germany is not an independent nation?

[John Redwood]

That is exactly the problem: Germany is not an independent nation. No member of the eurozone is an independent nation, and that is why those countries are experiencing such trouble. The trouble is not just for Greece, which is very visibly not independent, because it is being told how to conduct its economic policy. Germany is not independent either. Germany did not wish to lend Greece huge sums of money, but the European Central Bank, acting in the name of Germany, has advanced huge sums of money, which it will find very difficult to get back, but which Germany has to stand behind.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

rose—

[John Redwood]

If SNP Members will allow me a little time, I will say things that they will like. I am not trying to make life difficult for them.

This is my analysis. In the referendum the SNP went for something more akin to home rule than what I would regard as full independence, but at that stage the Scottish people said no even to that. They seemed to say yes to the rather larger devolution of powers that the three main Unionist parties were then offering. However, we are now experiencing new circumstances.

Like my hon. Friend the Member for Gainsborough (Sir Edward Leigh), who has tabled a very interesting amendment, I think that this Parliament must listen to the new voice of the Scottish people. It is clear that there has been a shift of opinion towards more home rule than the Unionist parties were offering at the time of the referendum. That is why we are here today, listening very carefully to what the SNP has to say, and that is why I think it extremely important for us to have this debate on full fiscal independence, or fiscal autonomy. It would be one way for our Parliament to respond when the Scottish people have said, “We do not want to be completely independent as a separate country, but we want much more self-government—or home rule—than was envisaged by the Unionist parties at the time of the referendum, because we can see that that was not very popular.”

The Unionist parties collectively did rather badly in Scotland come the general election. [Interruption.] Well, between them, they received just under half the vote, while the Scottish nationalist party received just over half the vote. Because the Unionist vote was split, practically no Unionist Members of Parliament were elected, but it is still the case that Scottish opinion is fairly evenly balanced. The Scottish nationalists did not get 70% or 80% of the vote. If they had done, then, as far as I am concerned, they would really be in a position to tell us the answer, but, as judged by the vote, they speak for only about half the Scottish people. However, as representatives, they speak for practically all the Scottish people because they have most of the Members in this place.

I am listening very carefully and will want to hear more about what SNP Members want, but I am also very conscious that, in parallel with this exercise on powers as set out in this Bill, in some way far more important negotiations are already under way on what the new financial settlement will be, and those are not yet being reported to this House. That is crucial not just to the SNP and its representation of the Scottish people, but to the people of England. I find the more home rule that is on offer and the more we hear the Scottish voice, the more I have to be an advocate not of the Union, but of England, because someone needs to speak for England and to say that the consequences of much enhanced Scottish devolution, and some fiscal devolution as well, are serious for England. England needs to be in the discussion just as Scotland does, as this is our joint country and a major change in its arrangements will have a fundamental impact on England.

While I am very attracted to the idea of my hon. Friend the Member for Gainsborough that it would be a shrewd move to, for once, get ahead of the Scottish appetite for home rule and on this occasion to grant full fiscal devolution, we need to ask how feasible that is and what the consequences will be for Scotland and England. If Scotland wishes to be part of common welfare and pension guarantees, some limitation is already imposed on the spending side of full fiscal devolution. We have to think about the position of England if cross-guarantees are being offered for some part of that welfare package. If we are going to proceed in the way the Government currently plan and the way the negotiations are currently being undertaken—as I understand it, there is an attempt to find a way of adjusting the block grant for Scotland to take into account the new Scottish responsibilities, as some items of spending will have to be added in as a result of the devolution of new functions, and there will be a reduction in the block grant to take account of those taxes that are now Scotland’s to fix and collect—therein lies an immediate problem.

[Mr MacNeil]

Would not an easier solution be for Scotland to collect its own tax, as Catalonia does, and then pay into the centre, rather than the centre paying out? The taxes should be raised by the Government of the territory paying the taxes and paid into the centre rather than giving them to the centre for it to then pay out. In that way, the centre will have to stop saying it is subsidising people when it returns their own taxes.

[John Redwood]

But if Scotland wisely decides to have lower tax rates to make itself more popular, the Union will be losing out if those lower tax rates collect less money.

[Mr MacNeil]

The right hon. Gentleman should realise that it is not lower taxes that have made the SNP more popular; it is better public services in Scotland—that has given us 50% of the vote versus his party’s 37%.

[John Redwood]

If Scotland wishes to impose higher taxes, the Union has less of a problem with that—unless it chooses to impose higher tax rates which collect less revenue, because those could be a problem for the Union as a whole—but it would be a problem for Scotland if it had to collect higher tax levels and it did not get all the money back; I would have thought it would want to get all the extra money back that it was collecting. Full fiscal autonomy means it would take responsibility for both raising the money and spending it. If Scotland wishes to spend more under fiscal autonomy, she can do so if she has a magic way of getting more money off people through either higher or lower tax rates, whichever work in the particular fiscal circumstances.

We need to have working papers on how full fiscal devolution might work and whether it is truly full fiscal devolution, because if we are going to full fiscal devolution, England will want guarantees that we are no longer acting as a buffer or subsiding the Scottish settlement, just as Scotland will want guarantees that she has got a fair deal and is capturing the benefits of her fiscal independence. If we go for a mixed system, which is where we currently are with the real debate between the Smith commission, the pro-Union parties and the SNP, there is a lot to be worked out, and I hope that at some point those on the Treasury Bench will share some of their thinking with the Committee.

[Andrew Gwynne]

I find myself in the unusual position of agreeing with much of what the right hon. Gentleman is saying. Do not these arguments illustrate the asymmetrical nature of the devolution settlement across the four nations of the United Kingdom? Does he agree that whichever funding model we go for in relation to Scotland, there will be implications for the finances of the other three nations? Does he not think that we need a constitutional convention to put that right?

[John Redwood]

No, I do not think that we need a constitutional convention, because that would create endless delay and complications. I agree with previous comments that we are here to try to solve this problem for our respective constituents. I spent quite a lot of my time during the election speaking for England and saying that I wanted to ensure that England got a reasonable deal out of this. SNP representatives clearly did the same in relation to Scotland, and we both achieved similar levels of success in attracting lots of votes for what we were saying.

[Mr MacNeil]

The right hon. Gentleman talks about getting good deals for the various parts of the UK, but let us look at the wider British Isles. Does he think that the aggregate GDP of the British Isles would be as high as it is today without the full fiscal autonomy that the Republic of Ireland, the Isle of Man and the United Kingdom all enjoy? If the aggregate GDP of the British Isles is higher for those reasons, does he not agree that it will be higher still when Scotland achieves its full fiscal autonomy?

[John Redwood]

I start from the point of view of democracy. A democratic state has to have the full range of powers, including fiscal autonomy and its own currency. That is different from asking: what is your state? I would still rather have the United Kingdom as my state, but I have just explained that if it is the will of the Scottish people that the UK is no longer their preferred state, they must leave—of course they must.

[Mr MacNeil]

The right hon. Gentleman is being very kind in enabling our dialogue to continue. I am sure he would acknowledge that the UK functioned between 1603 and 1707, when the Parliaments were independent.

[John Redwood]

Well, it functioned after a fashion, but I would not have wanted to live through that time. The nations were clearly not nearly as rich as they are today. Labour Members sometimes try to pretend that we have gone back to an ancient age, but I am sure that none of them would willingly go back in time and live in that era, because we are obviously so much better off now.

[Mr Kevan Jones]

I do not want to divert from the subject, but was not the reason for the Scots’ enthusiasm in going forward in 1707—[Interruption.] It was not an economic blockade; it was speculation in the colonies of central America.

[John Redwood]

Yes, it was a kind of early version of the banking crash, which also reminds us that Scottish banks can sometimes get into trouble, and that the Union’s insurance can be quite helpful to them.

[George Kerevan]

May I return the discussion to the here and now? I should like to clarify something that the right hon. Gentleman said, because I think I agree with him. Is he saying that there was a clear desire in the debate that took place in Scotland post-Smith for a fuller measure of complete domestic fiscal control within the UK, but that achieving it would require serious discussions about how it would work in Scotland and how it would affect the fiscal arrangements in the rest of the UK? Does he agree that it could be done reasonably quickly, but would require transitional arrangements? It cannot be done overnight, but it is the way to go. If we do not do this, we will end up having endless piecemeal discussions, which would produce more friction than light.

[John Redwood]

I am making an even more urgent point than that. I am saying that that discussion is going on in parallel with our debates on this Bill. I hope that its content will be shared with Members at some point, because it is a matter of great importance to the United Kingdom, to England, to Scotland and so forth. As I understand it, those taking part in the negotiations are up against these very issues. If, for example, too much independence is given to Scotland on spending patterns, would there be a Union guarantee to pay for it all? How would it be fair to other parts of the Union if Scotland could increase her spending without having to take responsibility for raising the money for it? If Scotland starts to raise more of her own money, how do we adjust the block grant? In the current negotiations, nobody is suggesting getting rid of the block grant and saying that Scotland can have all her own money and just spend her own money. I am not even sure that is what the SNP wants. Negotiation is going on about how far—[Interruption.] If the SNP genuinely wants all that, that is fine. We then have to have a serious discussion, before it could be agreed to, over the borrowing. I will call it “borrowing”; I do not think “black hole” is a terribly useful term.

16:45

It is obvious that the United Kingdom has been living well beyond its means as a state for many years and is still borrowing large sums, and that, collectively, the United Kingdom, including Scotland, has built up those debts. Some of that money has been spent in Scotland and some of it has been spent in England. If we went for so-called full fiscal autonomy, we would face the question of what do we do about the new borrowing and what do we do about the past borrowing. One thing we have surely learnt from Greece and other places in the euro currency union is that the borrowing of a state in a currency union is of great concern and interest to the rest of that union. There would therefore have to be an agreement on borrowing, with past debt levels attributed to Scotland, because it would have to pay an interest bill on those. Future build-up of Scottish debt would also have to be addressed: whether it would be separate Scottish debt or would still come with the full Union guarantee, which would probably make it a bit cheaper. That becomes the centre of the row, rather than it being over which taxes we have.

[Patricia Gibson]

Does the right hon. Gentleman not agree that successive Westminster Governments could learn much from the economic management of the Scottish Parliament, which has balanced its budget, in a fixed budget, every year, while Westminster has run up successive debts?

[John Redwood]

That is because all the time that it is a subsidiary Parliament of the Union, and part of our public expenditure and borrowing plans, it has to abide by the remit. The hon. Lady is right in that it has been given a tougher remit than the Union gives itself, but it is not fair to say that that is of no interest or benefit to Scotland, because of course much of the Union expenditure is also being committed proportionately in Scotland and so it is Scotland’s share of the debt as well. I am making a factual statement; I am not trying to make party political points, wind up the SNP, rerun the referendum or anything like that. I am just trying to get this Committee to understand that grave and big issues are being hammered out elsewhere, we are not hearing about them and they impinge very much on this crucial debate that we are now having.

I have intervened in the debate because I want an opportunity to talk about this financial settlement, which matters to England as well as to Scotland. The proposal put forward by my hon. Friend the Member for Gainsborough brings things centre stage. If we went down his route and had full fiscal autonomy, I would want to know what that meant; how much responsibility Scotland would take, for example, for pensions as well as welfare; and what the borrowing settlement would be. The residual is the borrowing, and unless we know what the answer is on that, we still will not have a happy Union or stable expenditure.

[Ian Blackford]

I thank the right hon. Gentleman for his most gracious speech and his thoughtful remarks about the future of the constitutional arrangements between Scotland and the rest of the UK. It is perhaps worth remembering that when Gordon Brown spoke on behalf of the three Unionist parties prior to the referendum, what was offered was as close to federalism as we could get. What was talked about was home rule in the spirit of Keir Hardie. It is akin to the remarks that the right hon. Gentleman is making. It is perhaps worth remembering that the manifesto commitment the SNP stood on was delivering powers for a purpose to the Scottish Parliament. He is right: that is what the Scottish people voted for in returning 56 Members of Parliament to this Chamber.

[John Redwood]

Then I think we need to have another debate, on another day, which looks at what is going on in these important financial discussions. Although my constituents are interested in what powers Scotland gets, they are far more interested in how the money works between the different parts of the Union. We have no papers before us today to elucidate that.

[Ian Murray (Edinburgh South) (Lab)]

For the second time in five and a bit years, I agree with the right hon. Gentleman. On the complicated nature of the fiscal framework, which I believe he is trying to unpack, does he not agree that the Labour new clause, which will be debated at some point, to set up an independent commission on the costs and implications of full fiscal autonomy provides a much more reasonable and sensible approach?

[John Redwood]

We are where we are. Promises were made, I thought in good faith, by the three Front-Bench teams. They were not my chosen promises; they were made on behalf of the three Unionist parties. They did the job for the referendum, but they then did not do much of a job for the Unionist parties at the general election. However, we cannot now be seen to be delaying for any great length. There needs to be proper work—and I am sure that proper work is going on in the Government at the moment as they try to work out a financial settlement in parallel to this Bill. I am just suggesting that perhaps this Parliament needs to have some of that thinking shared with it.

Today is the first opportunity, within the clear parameters of new clause 3, to try to expose a bit of the thinking on how a limited amount of fiscal autonomy will work, and on how many of these taxes Scotland will not only collect, but be responsible for and have knocked off the block grant. As I remember it, when the leaders came up with this promise, Gordon Brown was a big voice—obviously, he was not one of the leaders at the time—for rather less fiscal autonomy. He was trying to stop Scotland controlling her own income tax revenues, so I do not entirely share the interpretation of the Labour Front-Bench team of what Mr Brown was trying to do at that point.

I will bring my remarks to a close with the simple conclusion that the world has moved on because of the general election result. The debate on money is taking place elsewhere, but we currently have a short debate about money here. I hope that the Front-Bench team will share some of its thoughts on money. Fiscal devolution seems to be attractive to many people in Scotland, but we need to know where it ends and how we sort out all those crucial issues about debt and borrowing as well as about shared policies such as pensions.

[Mr Graham Allen]

Sir David, it is a great pleasure to see you in the Chair this afternoon. Like many colleagues, I had assumed that you would be in your green tights dancing around the maypole with many other dignitaries at Runnymede. [Interruption.] Yes, the thought does bring tears to the eyes. I am talking about a serious occasion, but it is, by necessity, a backward-looking, occasion. Eight hundred years ago, in what was a great leap forward in its time, Magna Carta was sealed, if not signed. What we have been hearing about today—and this has been a really superb debate so far by all parts of the House—is the next 800 years. We are certainly looking at the foreseeable future and at our democracy. One thing we cannot do is go back to business as usual. We have a majority party in the House, and we cannot just ram stuff through the Commons. We must consider all these sorts of Bills seriously.

I mean no offence when I say that the Scotland Bill is not the property of the people of Scotland let alone of the political parties of Scotland. The Scotland Bill is about the Union. Whether we are in a transitional period or whether we have another 800 years of happy family relationships is still to be decided. As we discuss this Bill, the local government devolution Bill, and the European referendum Bill, those colleagues who are new to the House—to all parts of the House—should be excited that they have come here at this moment. It is a time of immense potential. People from all parts of this House have expressed the view that we need to look at this matter seriously. The word “statesmanlike” has been thrown around quite a bit, but it is pertinent to this debate. What we do today and over the next four Mondays will be of great importance to all of us in the Union.

[Mr MacNeil]

As usual, the hon. Gentleman is making a thoughtful contribution. He said that the Scotland Bill is the property of the House, but he will recognise that the House has been forced, kicking and screaming to reach the point it is at the moment. In the previous Scotland Bill, an amendment was moved to devolve Crown estate control to Scotland, and the House would not agree to it. It has now conceded on that point because of the weight and the power of the votes from the people of Scotland and it has done so easily. Is it not a huge mistake for this place to give away too little too late and not to listen to the hon. Member for Gainsborough (Sir Edward Leigh)?

[Mr Allen]

I am probably one of the worst in this House for blaming Westminster. Westminster and, above all, Whitehall—that is a distinction that we can educate each other in over the next five years—deserve to have that blame attached to them, but the hon. Gentleman and his colleagues are now part of Westminster. They will need to use the Westminster system and to be a part of it, if only because they wish to get such Bills passed. The Bills that have been passed to free Scotland in the way that it needs to be freed up, that Nottingham, Leicester and Derby need to be freed up and that England, Wales and Northern Ireland need to be freed up have been passed by this place because of the efforts of people such as Donald Dewar and those who got the Scotland Act 2012 through and because of the efforts of all the parties in this House, who will, I hope, pass the Scotland Bill effectively through this Committee.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

The hon. Gentleman mentions Donald Dewar and I pay tribute to what Donald Dewar did. In the establishment of the Scottish Parliament, sections were given—such as health or education—so that the Parliament could make its own policies without controlling the budget. The problem with Smith is that it is made up of little bits and pieces that mean that the two Parliaments will be forever at each other’s throats. That cannot be sustainable.

[Mr Allen]

The problem with Smith, with 2012 and with Donald Dewar’s devolution is that none of them was perfect. To seek perfection is to be the enemy of good. This is a progress, a process and a way forward, and it might not turn out how any of us first imagined. One key point is for those who represent England—in my case, my city of Nottingham, of which I am very proud—is that nothing in this Bill should be unable to apply to the liberation and progress of such cities. Nothing in my city should restrain or inhibit the progress I would love to see my friends in Scotland achieving, too.

This is all about devolving power. I do not wish to sour the atmosphere, but sometimes separatism and devolution are sworn enemies. I hope that this is not one of those occasions. I hope that we can all see devolution as part of a process.

[Peter Grant]

rose—

[Mr MacNeil]

rose—

[Mr Allen]

If I may just make this point while I am thinking about it, I will then give way. If we continue that process, we might end up in a place that is better for everybody and we might end up with the sort of liberation of our localities and communities that we all want, whichever nation of the Union we represent.

[Peter Grant]

Does the hon. Gentleman agree that the only real separatists in this House are those on the Government Benches, who would quite happily see Scotland dragged out of the European Union against the express wishes of its people?

[Mr Allen]

We all have a stronger common interest than we sometimes dare admit, and we certainly all have an interest in making devolution work. The bigger issues that I want to come on to concern some of the structures through which we might all work together to do some of that. Some were raised by my Select Committee, which was an all-party Committee of this House and proved that we can do other things and move forward on devolution.

Let us imagine where we might be in 20 years’ time with the federal Parliament, which this is. Even the strongest small c conservative—they can be found throughout the House—would not say that we will be in exactly the same place in 20 years as we are today. That would be inaccurate. We will definitely be in a different place. What will it look like? I suspect the position will unfold. It may not be devised at 10 o’clock tonight, as the amendments envisage, but there will be progress over those 20 years. What does it look like? For some it looks like separation or independence. For others, it looks like a Union refreshed and renewed. For me, it looks like my people in my area being allowed to make more decisions of their own as of right, not because people feel they are giving them a little play out of Westminster.

[Mr MacNeil]

rose—

[Mr Allen]

I give way to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who has been waiting a little while.

17:00

[Mr MacNeil]

I see that my patience has paid off and I am grateful to the hon. Gentleman. Is not one of the problems, in yet another Scotland Bill three years after the previous one, that Westminster may give away a little bit here and a little bit there? Would it not be better to turn the telescope around and have the relationship that the Faroe Islands have with Denmark? They can take the powers that they want to take and it is not a big deal for Copenhagen to give Tórshavn those powers. In Westminster it seems a massive deal to give people control over the minimum wage in Scotland—a power that Labour blocked, for goodness sake. It should not be like that. If Scotland wants it, let Scotland take it and let this place be gracious about it.

[Mr Allen]

It is always good to knock off a quick anti-Westminster point, so I will join the hon. Gentleman and say that everything that he resents about Whitehall, I resent at least as much in so far as it impacts badly on one of the 10 poorest constituencies in the United Kingdom, so—I mean this in a friendly way—he does not need to lecture me about how inadequate Westminster and Whitehall are at freeing up and liberating people to get better jobs, improve skills and improve their schooling, all the things that all of us hold in common as we move forward.

What I am saying is that we need to figure out how progress that has been made in Scotland—massive progress, which I fully support—can be replicated, not just in a narrow sense of “This is good for us”, but if it is so good, how it can be good also for Wales, Northern Ireland and England.

[Andrew Gwynne]

I commend the work that my hon. Friend and his Select Committee did in the previous parliamentary Session. Although we are talking today specifically about the Scotland Bill, is this not also about how we re-engage the debate across the whole of the United Kingdom about how we bring powers down to the very local level so that what happens in Scotland today is valid for Nottingham, Manchester, Durham and other parts of the Union tomorrow?

[Mr Allen]

If we have now breached the principle and the wonderful idea of devolution—giving power away, not decentralisation, where Westminster and Whitehall can suck it back—let us look at devolution that is entrenched and can stand the test of time. I agree very much with getting the words right. My Select Committee was clear about the words reflecting the permanency of the Scottish Parliament.

The question is how we achieve permanency in an unwritten constitutional environment. We do it in two or three possible ways. One suggestion in one of my amendments—I tabled new clauses 6 to 9—is that the Scottish Parliament is protected behind the ingenious mechanism of the Parliament Act, which requires both Chambers to agree to any change in the status of those things that are protected. The other idea is related to Magna Carta, which is being celebrated today, and calls for a new Magna Carta—a written constitution. I commend the Scottish Executive for the work that they have already done on that. [Interruption.] If any hon. Member has something to say, please stand up and correct me. I am happy to take a correction.

[Stewart McDonald]

The legislation was changed from Scottish Executive to Scottish Government. It is not a briefcase.

[Mr Allen]

I am sorry for once that I gave way to an hon. Member because this is a serious debate. There is a precedent and if we can build on the precedent, however we name it, and make a broader constitutional settlement for the United Kingdom, there will be fewer occasions on which any of us need doubt when progress is made. If it is clear for every schoolboy and schoolgirl that the structure of their Government is there in writing, there is less likelihood that those powers can be sucked back into Westminster and Whitehall.

[Mr Jackson]

I declare an interest as an adjunct associate professor of British politics. I pay tribute to the fantastic work that the hon. Gentleman did in the previous Parliament. The point that SNP Members are missing is that the progress that has been made since the Scotland Act 1998 was as a result of the sovereignty of this Parliament. May I also respectfully correct the hon. Gentleman? We are not a federal Parliament, because that presupposes a codified written constitution setting out the powers, duties and responsibilities of the centre and the constituent parts of a sovereign nation.

[Mr Allen]

We might not yet be a federal Parliament officially, and we might not yet have the right words for it, but there is absolutely no question but that our Union is moving towards a federal basis, rather than the alleged parliamentary sovereignty referred to earlier. I hope that I live long enough to see parliamentary sovereignty in this House, because I have not seen much of it over the couple of decades I have been here.

The other thing that I think is really important to have clarified—this is also in the interests of my friends in the SNP—is the role of local government. If we have an overarching, federal structure in the United Kingdom, there are certain things that that structure needs to define. Human rights is a classic example, and I would argue strongly that so too are the rights of the sub-national tiers of government. Otherwise, all we would be doing is transferring state power from Whitehall to Holyrood. Some people say that that is precisely what has happened in Scotland, but I am sure that is a false accusation. However, in order to ensure the freedom of those who work at the grassroots, in our communities and neighbourhoods, defining the rights of local government, which is commonplace in every other western democracy, and to do that in our Union while it exists and is flourishing, would ensure that no such accusation could be levelled at my newly elected friends in the SNP.

[Andrew Gwynne]

My hon. Friend will remember that in the early 1990s there was a word that was in vogue in what was then the European Community: subsidiarity. Although it is a horrible word, it has a very serious meaning, which is that decisions should be taken as closely to the people as appropriate. Is not that just as relevant to the devolution debate? We should be talking about handing powers from this place not only to Holyrood, Cardiff Bay and Stormont, but even to places such as Manchester city region, and to local communities beyond.

[Mr Allen]

I think that devolution is so good that it should apply to everybody in the Union. I welcome the breakthrough that has been made in Scotland and hope to see a similar settlement for England, Wales and Northern Ireland. I often say—my hon. Friend will have heard this before—that subsidiarity is the ugliest word in the political lexicon to describe the most beautiful concept.

[John Redwood]

An important part of our Union is that there has been a transfer as well as a fiscal Union, so the richer parts pay in more, relatively, and the poorer parts draw out more. Does the hon. Gentleman feel that that could be sustained with full fiscal autonomy, or is that a problem?

[Mr Allen]

As far as I am concerned, the idea of income tax assignment was applied in the Scotland Act 2012. I think that it is the basis on which devolution can move further forward in Scotland, and certainly on which it can start to move forward more seriously in England so that we have not just piecemeal breakthroughs, as we are having at the moment, but something that can apply to every local authority throughout the whole of England and Wales and, if it wishes, Northern Ireland.

[Stewart McDonald]

rose—

[Mike Weir]

rose—

[Mr Allen]

I will give way to the hon. Member for Angus (Mike Weir), because the hon. Member for Glasgow South (Stewart McDonald) is now in my bad books.

[Mike Weir]

I have listened carefully to what the hon. Gentleman has been saying, particularly about local government. Does he accept that it is not up to this place to determine the form of local government in Scotland, Wales and Northern Ireland? Decisions about local government are already devolved to the Scottish Parliament and the Assemblies of Wales and Northern Ireland. England may determine its own local government through this place, but questions about local government in Scotland, Wales and Northern Ireland are not to be decided here.

[Mr Allen]

We need to think carefully about whether the rights that we would like to enjoy in our constitution should be placed at a federal level or at a national level. Let us fantasise about what would happen if, for example, the European convention on human rights was abolished and the right to torture people was established in part of the United Kingdom—[Interruption.] I know it is a silly example, but let me continue for a moment. I cannot imagine that we in the federal Parliament would not object to that ridiculous state of affairs. In some written constitutions, transcending values—concerning, for example, human rights, structures and democracy—may be in the federal constitution rather than in national constitutions. We need to debate that, and I hope that the hon. Member for Glasgow South will join in that debate rather than simply shaking his head, as he is doing.

[Martin John Docherty (West Dunbartonshire) (SNP)]

rose—

[Mr Allen]

I will give way to the hon. Gentleman. I am sure, since his Front-Bench colleague is telling him not to take too much time, that he will be brief.

[Martin John Docherty]

I am grateful to the hon. Gentleman for participating in this resolute debate about the future of Scotland and the British Parliament. I come back to the Statute of Westminster of 1931. Is the hon. Gentleman suggesting that Scotland should be a dominion?

[Mr Allen]

That was before even my time. I will allow the hon. Gentleman to educate me about that in the Tea Room.

[Ian Paisley (North Antrim) (DUP)]

On a point of order, Sir David. May we have a ruling that there is no such thing as the British Parliament; there is the Parliament of the United Kingdom?

[The Temporary Chair (Sir David Amess)]

Order. I listened carefully to what the hon. Member for North Antrim (Ian Paisley) said, and it was a point of argument, not a point of order.

[Antoinette Sandbach (Eddisbury) (Con)]

The hon. Member for Nottingham North (Mr Allen) seems to be advocating a written constitution, but the problem with that, as we have seen clearly with the Government of Wales Act 2006, is that it invites judge-made law. Recent Supreme Court decisions on the 2006 Act have led, in effect, to judicial decision making on a reserved powers model, which is not contained in the Act.

[Mr Allen]

I am sure that I would be called to order if I went into too much detail on the pros and cons of a written constitution. Suffice it to say that reams and reams of judge-made law exist, but our citizens are not allowed to see the basis on which that framework is put into place.

[Mr MacNeil]

Further to the point of order made by the hon. Member for North Antrim (Ian Paisley), France knows that it is France, but the UK does not seem to know that it is the UK. That is an extraordinary state of affairs.

[The Temporary Chair]

Order. Again I say to the Committee that that is a point of argument, not a point of order.

[Mr Allen]

Perhaps I can turn to a subject that will help the hon. Member for Na h-Eileanan an Iar, who has intervened several times, in his future career: the House of Lords. I have tabled a new clause that would enable the nations of the Union to decide how they would like their representatives in the second Chamber to be chosen, elected or balloted for. Should the SNP have reached its zenith, and should it suffer a catastrophe after the next general election, I suggest that the hon. Gentleman may wish to have his name added to a list of such representatives put forward by the Scottish Parliament.

[Mr MacNeil]

rose—

[Mr Allen]

I think the hon. Gentleman has made more than his fair share of interventions. There may of course be others in the Scottish National party who wish to take his place.

17:14

As we now have a five-year Parliament, one of the answers to this—with Government consent, I hope—is to convene a constitutional convention so that all the parties of good will can come together. I strongly hope that we could benefit from the views of Conservative Members who have spoken today. We could pull together a constitutional convention that did not at all delay Bills coming to this House. The problem is not that we take Bills through too slowly but that we take them through too quickly—although there are cast-iron reasons why this Bill should move forward quickly. We could have a constitutional convention that looks at all the issues—subsidiarity, local government, a written constitution, English devolution, and the human rights that we cherish so much in this country—and takes as long as it likes alongside the ongoing legislative process.

We have had a very good debate that has been good-natured but statesmanlike. People in this House of all parties are looking to how we progress the inevitable movement towards devolution and personal and community liberation that will, I hope, be the hallmark of this five-year Parliament. I hope that we will continue these discussions and come up with answers, very much in the vein of what we have tried to do in this debate.

[Stewart Hosie (Dundee East) (SNP)]

It is a pleasure to serve under your chairmanship, Sir David, and to speak to amendment 89, tabled in my name and the names of my hon. Friends.

If amendment 89 is passed, it will deliver full fiscal autonomy for Scotland. That means that Scotland will collect all her own taxes, fund all her own spending—all the spending that is the responsibility of the Scottish Parliament—and pay a subvention for shared spending on Scotland’s behalf, primarily on defence and foreign affairs, by the UK Government. This is not simply about responsibility for taxation; it is about responsibility for all spending outwith limited and agreed areas.

On the question of why we need this, the answer is clear. We need and deserve important decisions to be taken as close to the people as possible and, more importantly, we need those decisions to be taken in line with the aspirations and democratic choices of the Scottish people.

The next question is what we would do with the powers. The answer depends very much on the view of the Scottish Government of the day, the prevailing economic conditions, and the most up-to-date economic forecasts. I will describe what an SNP Government might do with the powers of full fiscal autonomy to grow the economy, improve conditions for business investment and job creation, and start to make society fairer—all of which are vital for Scotland’s economy and future.

We believe in the transfer of more powers to Scotland not as an end in itself but because through it the Scottish Government can exercise those powers to the benefit of Scotland’s economy and society. For example, we would not merely have control over income tax rates and bands for earned income but have responsibility for all tax on income, including definition, the basic rate starting threshold, and tax rates on dividend and investment income. That would allow for every possible policy choice, delivering to future Scottish Governments the flexibility to craft an income tax system. Likewise, the devolution of corporation tax would allow for a comprehensive tax regime, including an intelligent use of allowances to assist business in investing for the future.

[Ian Paisley]

Does the hon. Gentleman desire air passenger duty to be included in the remit of the amendment? Does he accept that to be fair to all the component parts of the United Kingdom, any change to APD should affect Northern Ireland as well as the north of England?

[Stewart Hosie]

Air passenger duty is to be devolved to Scotland, as it has been to Northern Ireland, albeit in a limited way. I very much welcome that. It is for each of the component parts that have responsibility for a tax to use it wisely in the interests of the people. I think we would agree that serious, proper and justifiable tax competition to grow our economy and attract investment would be a good thing, and I hope the hon. Gentleman agrees that it is always odd to hear Government Members purport to support tax competition except, of course, when it begins to affect them.

[Wayne David (Caerphilly) (Lab)]

It is interesting to hear the hon. Gentleman setting out some of the economic and fiscal priorities of a future SNP Government. Would they increase or reduce corporation tax?

[Stewart Hosie]

Yes, a future SNP Government would increase it, decrease it, keep it the same and use the amount raised in an intelligent way. I know the hon. Gentleman thinks he has asked a really clever question, but we have just had the 2015 election and I am not going to write the 2016 manifesto today.

To answer a little more clearly, we have argued for targeted reductions in corporation tax in order to promote investment in key industries. We have highlighted for many years the relatively low private sector research and development spend in Scotland. However, given that R and D tax credits can be claimed only by companies liable for corporation tax, in order to develop a comprehensive, joined-up approach to encourage more innovation, we need to move to full fiscal autonomy, including the devolution of corporation tax and all related allowances, in order to be able to use that lever.

[Mr Rees-Mogg]

The hon. Gentleman said that Government Members are not in favour of tax competition, but I am thoroughly in favour of tax competition. It would be an excellent idea for both Scotland and Northern Ireland to have control of their corporation tax, because I think they would suddenly discover the virtues of the Laffer curve and reduce taxes quite sharply.

[Stewart Hosie]

Our friends in the Labour party have criticised us for understanding the Laffer curve just a little too well.

We also want to see continued downward pressure on the cost of employing people. That is one of the reasons the SNP proposed in our manifesto to increase the employment allowance from £2,000 to £6,000 per business a year. We cannot do that at present, but we would be able to do so with the devolution of national insurance as part of a package delivering full fiscal autonomy.

[Alberto Costa (South Leicestershire) (Con)]

rose—

[Stewart Hosie]

I will give way in a moment, if the hon. Gentleman keeps calm.

Finally, as I have said, the issue of specific powers and what we might do with them is not all about tax: it is about other decision making, such as the minimum wage. We support a rise in the minimum wage to £8.70 by the end of this Parliament: that is the right thing to do. We do not currently have the power in Scotland to do that. Although we will table amendments to transfer that specific power, the last two examples demonstrate why we need full fiscal autonomy—to deliver a comprehensive, joined-up approach, which would allow us to increase the minimum wage to help those in employment who earn the least, while increasing the employment allowance to help support businesses to pay it.

[Alberto Costa]

How many times in the past eight years have the SNP Scottish Government exercised their powers to increase or decrease income tax? The hon. Gentleman keeps complaining that this place is restricting them from using powers, so could he please remind Scottish people and this Committee how many times they have used their existing powers?

[Stewart Hosie]

I welcome the hon. Gentleman to Parliament, but he does not need to jab his finger and point. The small business bonus has cut or reduced business rates for 80,000 people. At £640 million, the Scottish Government are delivering the most effective business rate tax relief across the whole of the UK. One could make a very strong case that we have ended a tax on ill health by removing prescription charges. The hon. Gentleman’s failure to know what he is talking about was why he was defeated in Angus by my hon. Friend the Member for Angus (Mike Weir).

So far, we have not heard a single speech as to why we should not have full fiscal autonomy. I am sure that one will come, but let me focus on that matter now. The objections that we have so far heard are rather odd and almost entirely without principle. In essence, in order to say no, our opponents fall back on one or two flawed analyses of the Scottish economy, which are basically snapshots of one particular point in time.

[Mr MacNeil]

Was that not an extraordinary intervention from the hon. Member for South Leicestershire (Alberto Costa)? The Conservative party wants to handcuff itself and not use any of its tax powers at all, as we heard from the Chancellor only last week. Does that not show the deep malaise of understanding? When we have tax powers, they are not used all the time. For instance, in the last Parliament, VAT was changed only once. Let us hope that the Conservatives do not use that power again. The point about having tax powers is to use the power that is necessary or important to use at a particular time. Tax powers are not used willy-nilly, as the hon. Gentleman’s own Chancellor has conceded.

[Stewart Hosie]

I fear that my hon. Friend was intervening less on me than on Conservative Members, but he is absolutely right. There is no argument too odd for them to deploy.

On the opposition to full fiscal autonomy, basing an argument on one or two flawed analyses is using a snapshot in time in order to say no. It is less a case of analysing all the facts to come to a considered view, and more one of finding any reason to oppose for opposition’s sake.

[Ian Murray]

I have tremendous respect for the hon. Gentleman, but he is letting himself down by how he is conducting this debate. If he is saying that the Institute for Fiscal Studies is wrong, why has the same figure come out of the Scottish Government’s own accounts?

[Stewart Hosie]

The chief of the snapshot analyses I have just described is the one from the IFS that our opponents pray in aid. They claimed in April that Scotland would face a relative deficit of £7.6 billion, which may rise to £10 billion by 2019-20, and that in itself is enough for them to say no. I also like and respect the hon. Gentleman—I will not finish the rest of that sentence. I would tell him that his argument is fundamentally flawed. In essence, our opponents’ argument is that even if the IFS figures were true, UK Government economic policy has failed Scotland and we should therefore keep economic policy in the hands of a UK Government who have failed. That simply is not credible.

It is of course true that Scotland has a deficit, and so does the UK—borrowing £75 billion this year, almost four times what the Chancellor promised borrowing would be. The majority of advanced economies run deficits, particularly in difficult times. The UK deficit in 2013-14 was £98 billion. Over the five years to 2013-14, the cumulative deficit was £600 billion. The UK was in deficit for 43 of the past 50 years, and 28 of the 34 members of the OECD were in deficit in 2013. If the deficit alone was a reason for a country to surrender its financial independence, the UK economy would be run from Berlin.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

The hon. Gentleman’s desire for independence of taxation seems to be to lower taxation, while he contemplates raising expenditure and he is fairly indifferent to deficits. Does he contemplate any kind of fiscal discipline? Our neighbours across the channel started a single currency, and they—as we would—have a single currency and a single central bank. Had they stuck to their rules on fiscal discipline, the Maastricht criteria, and to their no bail-out clause, they might have done rather better. What fiscal discipline does he propose, or does he think the English will pick up the bill whatever decisions the Scottish Government make?

[Stewart Hosie]

We were very clear in our manifesto that there would be increased tax yield, perhaps from a 50p rate of tax at a UK level, from a bank bonus tax, from the bankers’ levy and from a mansion tax. We supported a number of policies in our manifesto that clearly would have increased yield. We were also very clear on what we wanted to do about borrowing. We laid out explicitly that borrowing would rise, but that it would fund £140 billion of extra investment across the UK throughout this Parliament, as opposed to the cuts in the order of £146 billion that have been proposed by the Chancellor.

17:30

That package was fiscally sustainable, workable and disciplined because the deficit and the debt would have continued to fall in every year of this Parliament. It was a cogent, coherent package that would have brought in revenue yield, spent and invested wisely, and still seen the deficit and the debt fall. That was the right approach. That anti-austerity position, which we took strongly to the Scottish people, was self-evidently supported by the majority of those who voted.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Stewart Hosie]

In a moment.

If all the IFS and Treasury analyses do is project forward “Government Expenditure and Revenue Scotland” figures, they do not provide a meaningful description of the fiscal position in a fiscally autonomous Scotland. Whether Scotland’s budget deficit—or surplus—would be larger or smaller under full fiscal autonomy depends on a huge number of factors, not least the transition process that my hon. Friends referred to earlier; the negotiated fiscal framework between Scotland and the rest of the UK; Scotland’s contribution to UK-wide public services, such as defence, debt interest and international aid; the interaction with the UK macroeconomic framework; and, most importantly, the decisions made by the Scottish Government about borrowing, economic policy and public spending.

There would have to be agreement on the past contributions and tax receipts from Scottish taxpayers and corporates, and the shared liabilities that have accrued in terms of entitlements for individuals—for example, pensions that people have paid into through the national insurance system—to maintain the free movement of labour and an integrated single market. On liabilities, it is worth pointing out, in case anybody thinks I have forgotten about this, that we think there would have to be an adjustment to reflect UK-wide costs, such as the decommissioning costs in the North sea, because the UK Government have received the full benefit of all the tax revenue associated with that economic activity so far.

In short, the current economic situation is not a reason to say no to full fiscal autonomy; rather, it is vital, in tackling the deficit, to avoid further cuts by giving Scotland the economic levers that it needs to boost growth and increase revenues.

[Ian Blackford]

Does my hon. Friend agree that the key reason the UK deficit is sitting at close to £1.5 trillion is the failure to deliver sustainable economic growth over the past few years? The clear agenda behind our attempt to deliver fiscal autonomy to Scotland is that the Scottish Government are focused on innovation and skills, on driving investment into the Scottish economy, on driving productivity growth, on driving up tax receipts and on driving prosperity for the Scottish people. That is why we need these powers.

[Stewart Hosie]

That is absolutely right. Trend growth in the UK over decades has not been sufficient, and private sector investment and innovation have been lamentable. My hon. Friend is absolutely right that we need these powers for a reason.

Notwithstanding what has been said, it is important to remember that Scotland is a prosperous economy. It is about far more than oil, although to listen to some of our political opponents, one would think that that was all the Scottish economy consisted of.

[Ian Murray]

Will the hon. Gentleman enlighten the Committee about what level of economic growth he thinks Scotland would require to balance the budget?

[Stewart Hosie]

We need to get trend growth up and we need to operate within a framework that will see the deficit begin to come down. I do not remember the previous Labour Opposition ever coming up with a cast-iron figure—2.75%, 3%, 3.25%, 4% or 5%—for trend growth. No one would be so silly as to put a figure on it, when it is dependent on so many external criteria.

Our political opponents dismiss the Scottish economy, saying that it is all about oil. They seem to forget that in two of the past four years our deficit was smaller than that of the UK. In the past 34 years, tax revenue per person has been higher than in the UK. Indeed, in the last full year, including our geographic share of the North sea, it was more than £10,000 per head compared with £9,700 in the UK. Even without North sea oil, output per head is almost identical to the UK. We remain the third most prosperous and productive of the 12 so-called regions of the UK, and, including a geographic share of oil and gas, our output per head is higher than the UK average, even today.

[Andrew Gwynne]

I am listening carefully to the hon. Gentleman’s argument. It is clear that amendment 89, which is in his name and the names of his colleagues, would enable the Scottish Parliament, at some stage, to legislate to allow for those powers to be drawn down, either in part or whole. What timescale does he envisage for the Scottish Parliament to move to full fiscal autonomy, rather than, perhaps, partial fiscal autonomy? What does he envisage being the interim arrangements were it to draw down only some of those powers?

[Stewart Hosie]

I would like the Scottish Government to be in a position to draw down the powers as quickly as possible. Obviously, to draw them all down and use them would require transitional arrangements to be in place.

[Mr Kevan Jones]

Subsidies.

[Stewart Hosie]

I will come back to that in a moment.

It would require the tax system to be fully functioning and for there to be an agreed macroeconomic fiscal framework across the whole of the UK. That would require agreement between the Scottish Government and the UK Government—that is to say, there would be other people at the table who had to say yes to things—so it is not possible to put a hard and fast timetable on the powers. If, however, we can agree on full fiscal autonomy tonight, and the Scottish Government’s ability to draw down the powers at the right time, then with good will we can get agreement on the fiscal agreement and the overarching framework, and we can all get to work.

[Ian Murray]

The hon. Gentleman is being incredibly generous with his time. Will he tell the Committee why, if full fiscal autonomy is so good for the Scottish budget, he will not support new clause 3, tabled by the hon. Member for Gainsborough (Sir Edward Leigh)?

[Stewart Hosie]

I want maximum power for Scotland. I want it as quickly as possible. I am not like the British Labour party, which keeps saying no and, in the absence of no, says delay with yet another commission. If the hon. Member for Gainsborough (Sir Edward Leigh) presses new clause 3 to a vote, we will support it. Here is the thing: I hope the hon. Member for Edinburgh South (Ian Murray), who is grinning like a Cheshire cat, will now get to his feet and tell us whether he intends to back the Government tonight in opposing powers for Scotland. The silence is deafening.

Let me continue with more of the arguments our opponents deploy against full fiscal autonomy. When they argue against more powers they say that they would require further cuts, but that argument is completely flawed. It would suggest that the Scottish Government are protected from Westminster cuts at present, which simply is not true. Cuts in the previous Parliament actually took place at a time of rising North sea revenues.

[Alberto Costa]

I thank the hon. Gentleman for his generosity in giving way to me a second time. In the lead-up to the Scottish referendum, he very articulately and eloquently put all those points to the Scottish electorate, yet the Scottish electorate resoundingly rejected them. Had the referendum gone his way and there was a yes vote, he would have had to have been in a position today to set a timescale for everything he is arguing for.

[Stewart Hosie]

The hon. Gentleman is right about one thing: we did not win the referendum. There was, however, an election that we did win, so we are not bringing forward another mandate for independence; we are bringing forward provisions for full fiscal autonomy. I hear Tories pontificate right, left and centre about responsibility, but when it comes to full fiscal responsibility for Scotland, all of a sudden there is silence. They just sit on their hands and say no.

[David Mundell]

Why then did the SNP not table the new clause in the name of my hon. Friend the Member for Gainsborough (Sir Edward Leigh)? If the hon. Gentleman wants that full-blooded proposal, why did he leave it to the Tory Benches to propose what he claims is an SNP policy?

[Stewart Hosie]

I can almost hear Professor Adam Tomkins, the Tory adviser to this Tory Minister, coming up with that daft question. I say this to the Minister: our amendment 89 would deliver full fiscal autonomy in a way that makes sense.

Our opponents argue that full fiscal autonomy would lead to more cuts to the Scottish budget, which is ridiculous when one considers that between 2009-10 and 2013-14, at a time when the North sea was generating £32 billion in oil revenues, the Scottish Government’s budget was cut by about 9%. According to the Institute for Fiscal Studies, prayed in aid by Tories and Labour alike, the cuts of more than 5% implied in 2016-17 and 2017-18—in this Parliament—will be twice the size of any cuts over the last Parliament. The UK Budget showed that implied cumulative cuts to day-to-day spending on public services in Scotland over this Parliament could amount to £12 billion in real terms compared with 2014-15. In the absence of full fiscal autonomy, therefore, we are not protected from cuts. Rather, we suffer a double blow: continued austerity and an inability to grow the economy and increase tax yields in the way that Scotland requires.

[Chris Philp (Croydon South) (Con)]

The hon. Gentleman mentioned that tax receipts in Scotland are on average 3% higher per head than in the rest of the UK. Public spending in Scotland, however, is more than 10% higher. The reason, of course, is the Barnett formula. Will he confirm that under his proposals the Barnett formula would be done away with, and will he explain where the extra money would be found? Would it be tax increases or spending cuts? If so, where from?

[Stewart Hosie]

It is extraordinary! UK debt is £1.5 trillion and the Government are borrowing £75 billion more this year than UK tax revenue would allow, and they have the audacity to question whether the Scottish Government, who have balanced the books every year, could do so in the future. If we have the right tools and levers, of course we can do the job. The hon. Gentleman’s argument is fundamentally that there would be a cost to Scotland of full fiscal autonomy. As we have seen, our opponents tend to quote figures for this financial year, whereas we would move to full fiscal autonomy only over the medium term.

The second key issue, as the IFS has said on many occasions, is that our opponents fail to take account of the potential positive impact on Scotland’s economy of full fiscal responsibility. The entire point of FFA is to empower our Parliament to take decisions for the benefit of Scotland’s economy to deliver full tax and investment powers and to enable Holyrood to make better spending decisions.

[Wayne David]

This is an important point. The hon. Gentleman says he is in favour of moving towards fiscal autonomy, but only in the medium term. How long is the medium term?

[Stewart Hosie]

I support moving to full fiscal autonomy because, as the N-56 think-tank said, it produces an opportunity, not a threat. There was a time when there were 40 Scottish Labour MPs sitting behind the Opposition Front Bench shouting their heads off, but now there is barely a whimper, barely a squeak—not a cogent, credible argument from a party about to get into bed with the Tories to say no to Scotland.

17:45

The N-56 report said that full fiscal autonomy was an opportunity and not a threat. It also said that Scottish GDP could increase by 86% from a baseline of £153 billion in 2012 to £282 billion over 25 years, elevating Scotland to become one of the top five wealthiest countries in the world. [Interruption.] The four Labour Front Benchers are having a wee quiet giggle while SNP Members want Scotland to be one of the top five wealthiest countries in the world.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

The hon. Gentleman said that he will increase the deficit to spend to invest—where have I heard that phrase before?—but while Scotland is a member of the sterling area, would he expect the Bank of England to guarantee whatever sterling debt his party incurs?

[Stewart Hosie]

First things first: the central bank does not guarantee debt. It sets the base rate, but the gilts are issued by the UK Government. It would be UK debt, which is precisely why we need an agreed fiscal framework within which we operate. I would have thought that that is just common sense.

[Mr Rees-Mogg]

Will the hon. Gentleman give way?

[Stewart Hosie]

No. I have been very generous. I think I will stop being generous now.

In order to deliver full fiscal autonomy, amendment 89 would allow the Scottish Government to remove the reserved status of certain key areas, and allow that Government to have legislative competence over them. It would do so at an appropriate time, ensuring that the systems and the framework under which full fiscal autonomy would operate are fully in place.

We know we need full fiscal autonomy. We know how full fiscal autonomy will work. The Scottish people have voted for maximum powers, and we are here representing that view. Amendment 89 is the way forward to deliver the fairness, the justice and the economic levers that the Scottish Government need. I hope there will be huge support for it tonight. I commend the amendment to the Committee.

[Mr Kevan Jones]

It is a privilege to serve under your chairmanship, Sir David.

We have seen a remarkable event tonight—I never thought I would see such an event. The Scottish National party is having a love-in with the hon. Member for Gainsborough (Sir Edward Leigh) and the right hon. Member for Wokingham (John Redwood). Love does not come to mind very often when we think of the right hon. Gentleman, but tonight he is the darling of the SNP. The hon. Member for Dundee East (Stewart Hosie) has just lectured the Labour party about voting with the Conservatives. If he supports new clause 3, tabled by the hon. Member for Gainsborough, he will vote with them.

The hon. Member for Dundee East should cut the general election rhetoric and get down to the details. The debate is a serious one, as my hon. Friend the Member for Nottingham North (Mr Allen) has said. It is not just about Scotland, but about the devolution of powers and how we settle them for the rest of the United Kingdom. The hon. Member for Gainsborough put the SNP behind the eight ball. His is a clear proposal for moving to full fiscal autonomy or responsibility. I notice that the hon. Member for Dundee East changes things—he goes from “autonomy” to “responsibility” whenever he wants—but the hon. Member for Gainsborough is very clear that he is proposing full fiscal autonomy.

The argument being put forward is that that is what the Scottish people said at the general election. I do not accept that. In the referendum, the Scottish people said that they wanted to be part of the United Kingdom. A responsibility of being part of the United Kingdom is that certain things will be done across the four nations of this great nation of ours.

It is difficult for Scottish National party Members. If something is said by Scottish nationalists, it has to be true, and no one dare ever say that something they are saying is not true. The hon. Member for Dundee East argues that amendment 89 is a movement to full fiscal autonomy or responsibility, but it is not. It would give the power to the Scottish Government to draw down those powers. Why is amendment 89 not framed as clearly as the proposal of the hon. Member for Gainsborough? His proposal would give the powers straight away, with the consequences for the Barnett formula and the support that that gives to the Scottish Government.

It is nothing new for the Scottish nationalists to want to have their cake and eat it, but many of my constituents—and, I am sure, those of other Members—will not accept an arrangement that would allow the Scottish Government to legislate for full fiscal autonomy for which they were expected to pay. That would be not only wrong, but totally unfair on the rest of the United Kingdom.

[Dr Whitford]

We await the granting, in 2016, of the powers that were recommended by the Calman commission in 2009. The devolution of small amounts of power will have taken seven years. It is not as if, having voted for full fiscal autonomy, we would get it next week—it is simply a matter of common sense that the process takes time—but we want it as quickly as possible. The delay following the Calman report happened here.

[Mr Jones]

What the hon. Lady has said is not unusual. It is part of the blame culture. Apparently, if things do not happen in Scotland, it is because wicked Westminster—meaning parliamentarians, among others—is somehow preventing them from happening. At the time of the independence referendum, the SNP stood on its platform arguing that Scotland could be a separate, independent nation in 18 months. What has changed?

Amendment 89 is rather mealy-mouthed. As I have said, the Scottish Government will draw down the powers when they want them. There will be what the hon. Member for Dundee East described as a transitional period, and we all know what that means. It means a period during which the Scottish Government could draw down powers that would enable them to make changes in Scotland, while retaining elements such as the Barnett formula. Well, I am sorry, but that will not happen—and the hon. Member for Dundee East, and the rest of the SNP, will blame big bad Westminster because it has prevented them, or the Scottish people, from being given those powers. The proposal from the hon. Member for Gainsborough is very simple. It means full fiscal autonomy along with all its consequences, rather than a “drip, drip, drip” process over a period during which the rest of the United Kingdom would be expected to fill any gap resulting from the Bill.

[Andrew Gwynne]

I suspect that my hon. Friend is right in his analysis of where amendment 89 would lead us. To be fair to the hon. Member for Dundee East (Stewart Hosie), he was very candid about the transitional arrangements that he envisaged, which would involve the Westminster Government, the Scottish Government and, perhaps, others sitting around a table with the aim of agreeing on a framework for the drawing down of partial powers. But would we not expect the framework to be specified in the Bill, so that people in all four parts of the United Kingdom could be certain about what those transitional arrangements would be?

[Mr Jones]

I entirely agree. If we are to give the Scottish Government more powers over entire areas of taxation, including the raising of money that they will actually spend, we cannot do that twice. They cannot have the ability to raise revenue and, in addition, a top-up power allowing them to make some of the difficult decisions that they will have to make. The hon. Member for Dundee East seems to think that, overnight, Scotland will be turned into some beautiful paradise on a par with Switzerland—[Hon. Members: “Hear, hear.”] I must say that, in terms of beauty, it already is.

[George Kerevan]

The SNP won the majority of the vote on 7 May on the basis of a clear commitment to go beyond the proposals of the Smith commission. What we are trying to decide now is how far beyond Smith we should go. The hon. Gentleman seems to be rejecting that, while not coming up with a positive argument about what we should be doing.

[Mr Jones]

I am not, actually. I agree with the hon. Gentleman. I doubt that most people were thinking about the Smith proposals when they voted. That is not the way in which the debate in Scotland has been portrayed over the last few years. Romanticism has taken over, obscuring the practical issues that will face the Scottish economy whether we like it or not.

The hon. Gentleman cannot have it both ways. He cannot argue that he wants Smith-plus without making clear what that means. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) pointed out, what the hon. Member for Dundee East has proposed in his “trickle-down” amendment cannot be done in a vacuum by people who have no idea what the transitional framework is.

Whether we like it or not, the Scottish economy faces issues that have nothing to do with who is in either Holyrood or in this place. Those issues are an ageing population and the decline in the working population, which is expected to drop by 3% over the next 15 years in Scotland while rising by 5% in the rest of the United Kingdom. If that does happen, the tax base in Scotland will contract when it has full fiscal autonomy, and if there is no backdrop of Barnett money, or some other pool of money on which to draw, hard decisions will have to be made. When working people in Scotland wake up to the fact that what is being proposed is not Barnett plus full fiscal autonomy, but full fiscal autonomy or independence on its own without the existing safety net, and when they become aware of some of the tough decisions that the Scottish Government will have to start making, they may think differently about what is being recommended tonight by the Scottish nationalist party. [Hon. Members: “Scottish National party.”] I am sorry. I am not known for my delicacy when it comes to not wanting to offend people, but the over-victimised mentality that some Members bring to the Chamber, and to this debate in particular, is irritating, to say the least.

[Andrew Gwynne]

My hon. Friend is making an important point. We must focus on the nature of the transitional arrangements that would lead to full fiscal autonomy, and I am none the wiser about what the SNP is proposing. Is it proposing a proportionate change in the Barnett formula, aligned with the amount of tax that they will draw down in their move to full fiscal autonomy?

[Mr Jones]

I agree with my hon. Friend that the position is not clear, but I think that the SNP wants to move to full fiscal autonomy while retaining the majority of Barnett, and I am afraid that that is not going to happen. Of course, when a United Kingdom Government say no to it, we will hear what we usually hear from the Scottish nationalists: wicked Westminster is preventing Scotland from getting what it needs. That is the nub of the problem. That, I think, is why the SNP has retreated from its 18-month target for full independence, and now wants a fudge that will get them through the next few years.

The real issue, for me, is this. I support the people of Scotland in their wish for more devolution, but I do not support a system that is not good for individual members of the Scottish public, and is also unfair on my constituents and others.

My hon. Friend the Member for Nottingham North raised the broader issue of whether we need to have a debate about devolution in this country. I think that we do. I do not take his dewy-eyed approach; I think that there are times when, in any type of organisation, responsibility must stop at a certain level. If we did not take that approach, we would be devolving power to something like a French commune, and creating a system of street-level decision-making. However, it could be argued that in a country such as ours, which has a very centralised system, there is a need for a movement towards the devolution of powers.

What we saw in the north-east in 2005 was a clear decision by the people that they did not want another tier of government when they rejected the regional assembly approach, and I have to say I think most places do not want more politicians. The Chancellor’s proposal is to devolve certain things to the north-east of England only if it has an elected mayor whose jurisdiction stretches from Berwick all the way down to the Tees. Again, that is looking at the structure of things, rather than asking people. The Conservative party machine in the north-east has gone into overdrive this weekend with Mr Jeremy Middleton, a failed Conservative parliamentary candidate who cannot get elected anywhere in the north-east under the Conservative banner, now leading 60 business leaders saying the north-east’s elected councillors and others need to sit up and listen to the Chancellor and get on with having an elected mayor for that huge region. Well, I am sorry but we in the region need to have a debate about how we devolve those powers and I gently say to business, “Do not be used by someone like Mr Jeremy Middleton who clearly has a political agenda of his own. Get involved and work with local councillors and others to determine and support the future.” [Interruption.] There is a cynical side to the Government’s approach to the devolution debate, which is—[Interruption.]

18:00

[The Temporary Chair (Sir David Amess)]

Order. A mobile phone is going off. I hope the hon. Member responsible will adjust it. I call Mr Graham Allen. [Interruption.] No, Mr Kevan Jones.

[Mr Jones]

I would not want to insult my hon. Friend the Member for Nottingham North in that way.

There is a cynical side to the Government’s approach to devolution and it goes like this: “You devolve powers because you devolve responsibilities, but you don’t devolve the funds to actually undertake them.” The Government want to contract Whitehall but they are not going to devolve the money to the English regions; they are going to devolve the responsibilities and then say to the various local bodies concerned that they are responsible for the failure to deliver at the local level.

[Andrew Gwynne]

We are here today primarily to debate the Scotland Bill, which we support, but my hon. Friend is right to point out that it has far-reaching consequences for every part of the UK, including his constituency and, indeed, mine as the Government are proposing quite extensive devolution powers to Greater Manchester. Is that not precisely why we need to have a proper debate within the framework of the constitutional convention to decide what the English answer to the English question is, as well as deciding what this place is going to do on the UK-wide question?

[Mr Jones]

I agree, and we need to get away from the cynical approach of this Government who talk about devolution and about devolving decision making but with no funds attached to that.

[Ian Paisley]

Getting back to the Scotland Bill, I agree with the thrust of what the hon. Gentleman is saying in that we should know what this costs. We have a proposal tonight to devolve all these fiscal powers, but we do not know what the cost will be for the ordinary Scot or indeed for the rest of us. When corporation tax powers were devolved to Northern Ireland, we were shown the bill of fare, and it is going to cost us £250 million a year to do that. What is it going to cost the ordinary Scot if there is devolution of all these fiscal powers?

[Mr Jones]

The hon. Gentleman raises an interesting point, which illustrates why the later amendment seeking to quantify the cost is needed. If we are going to take these decisions in the long-term interests of the Scottish economy and its people, they need to know that. I am a former trade union official and I never went into negotiations without knowing what the costs of the outcome would be. The problem with the Scottish nationalists’ proposals is that they do not know what the ultimate costs will be.

Amendment 58 in the name of the hon. Member for Moray (Angus Robertson) proposes that the phrase that the Scottish Parliament is recognised as

“a permanent part of the United Kingdom’s constitution”

replace the current wording in clause 1, which states:

“A Scottish Parliament is recognised as a permanent part of the United Kingdom’s constitutional arrangements.”

We have a problem with that, as I tried to tease out in my interventions on the hon. Gentleman: what is the definition of the United Kingdom’s constitution, because we do not have anything called that? If that amendment passes, there would be a feast day for lawyers in trying to identify what the constitution is. If we had a written constitution, the Scottish Parliament could be a permanent part of it, but we do not have a written constitution and I am at a loss to know how this would be interpreted as things currently stand. The amendment has been tabled so it is in order, but I am not sure of its practicality and uses, and I am not sure that the hon. Gentleman understands how this would be interpreted and whether it will be left to a court to decide how the UK constitution is to be defined.

[Patricia Gibson]

Does the hon. Gentleman agree that the best time to raise any concerns and questions about costs and the definition of the word “constitution” would have been when Gordon Brown was going around Scotland making a vow about creating a powerhouse Parliament?

[Mr Jones]

I am not sure what the point of that intervention was. I am talking about an amendment proposed by the hon. Lady’s party, and I think it is deficient. The onus is on the hon. Gentleman who moved it to explain to the Committee what its reference to the United Kingdom’s constitution actually means. He clearly does not have a clue what that means, and the danger is that there could be a challenge and that would lead to lots of work for lawyers—and as Members know from me of old in this place, I am not one for feeding lawyers.

This Bill is a major move forward.

[Andrew Gwynne]

Will my hon. Friend give way?

[Mr Jones]

No, as I am about to finish.

My hon. Friend made the point about the rest of the United Kingdom and there is a need for that convention. If we do not get that, we will have this patchwork quilt of so-called devolution which will not be in the interests not only of all of our constituents but of the UK as a whole.

[Mr Christopher Chope (Christchurch) (Con)]

The last two and a half hours have been fascinating, and show what this Chamber should be about. The Government and the Opposition Front Benches have come in with their own ideas and during the course of the debate it has become apparent that the new clause of my hon. Friend the Member for Gainsborough (Sir Edward Leigh) has captured the imagination of the Committee and has superseded amendment 89 proposed by the Scottish nationalist party, and I say to the hon. Member for Dundee East (Stewart Hosie)—[Interruption.] I say to the hon. Member for Dundee East that I think he has made a very wise decision in saying he is going to bring the full weight of his party in Parliament behind my hon. Friend’s new clause. It is much clearer than his party’s amendment. The hon. Gentleman should get credit for that. Governments and official Oppositions are often reluctant to change the line they have taken when faced with strong arguments against it.

In the course of this debate, my hon. Friend has shown that new clause 3 finds favour with a large number of Members across this Committee. I support it because it would do what is stated in the explanatory statement:

“entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.”

So, by giving full fiscal autonomy to the Scottish Parliament, we would also be giving it full fiscal responsibility. As my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), the former Chancellor of the Exchequer, said in an intervention, that is an important and worthwhile matter.

My constituents are worried about the mix and match approach, however. When I had the privilege of being a member of the Political and Constitutional Reform Committee, we took evidence in Scotland. One of the most telling pieces of evidence came from an academic—I cannot remember which university he came from—who said that shared responsibility would be a recipe for conflict. That has been the problem: for too long, we have been sharing these responsibilities between one part of the United Kingdom and another, with one part being played off against the other. That has meant that those wanting to promote a particular agenda have been given ammunition, because they have been able to argue that the sharing of the responsibility has been ill defined. It is almost invariably ill defined and open to interpretation. Indeed, some of the evidence we heard suggested that such disputes would ultimately have to be determined by the courts. It was suggested that the courts in the United Kingdom would determine what Parliament had decided on a particular split or shared responsibility. What a recipe for conflict and division!

The new clause tabled by my hon. Friend the Member for Gainsborough has great clarity and takes the debate forward by leapfrogging other proposals. Obviously it could not be implemented instantly, but it would not leave the matter of when to introduce full fiscal autonomy to the discretion of the Scottish Parliament, as amendment 89 proposes. Instead, new clause 3 would ensure that this Parliament would agree now on full fiscal autonomy for the Scottish Parliament. That would be a good way for this Parliament to say to the Scottish people that we respect their decision in the recent general election and that we respect the decision of their elected representatives, as enunciated by the hon. Member for Dundee East, to support this new clause.

I hope that new clause 3 will also find favour with the Secretary of State for Scotland, whom I am delighted to see sitting on the Front Bench preparing to respond to the debate. He gave evidence to the Political and Constitutional Reform Committee on several occasions during the last Parliament. At that stage, only some members of the Committee—I included myself among the optimists—thought that it would not be long before he became a fully fledged Secretary of State for Scotland. It is wonderful that that has come to pass.

This is an important debate, not least because it will sort out the problem of the Barnett formula by effectively abolishing the need for it. The formula is very unpopular with my constituents because, whenever they argue for free prescriptions, free long-term care for the elderly or free university tuition, they are told that these things cannot be afforded in England, yet they somehow can be afforded in Scotland. At the same time, however, they point out that they are paying £1,600 a head to Scotland, so it cannot be a matter of those things being unaffordable in England; rather, it is something to do with the Barnett formula. The new clause would resolve that issue and help to bring the United Kingdom back together with less conflict than there would be if we allowed the “too little, too late” agenda to be perpetuated.

18:15

It has been some time since I had the privilege of being an undergraduate at a Scottish university, but even then there were early stirrings of dissatisfaction among the Scottish people about the constitutional arrangements affecting them and the rest of the United Kingdom. Since then, this Parliament and the majority of my English colleagues have embarked on a process of continuous appeasement, which has not provided a satisfactory solution. My hon. Friend the Member for Gainsborough’s new clause gives us the opportunity to do away with all that little-by-little continuous appeasement, whereby we feel forced to do this or that. The new clause allows us to take the initiative and to give the Scottish people what they want. It also allows us to give them the responsibility that will go with that power. That is why I am an enthusiast for new clause 3.

[Pete Wishart (Perth and North Perthshire) (SNP)]

rose—

[Hon. Members]

Hear, hear!

[Pete Wishart]

I thank you, Sir David, for calling me to speak, and I thank my Back-Bench colleagues. Have not we been blessed on this first Committee day of the Scotland Bill? We have had contributions from the hon. Member for Christchurch (Mr Chope), from the hon. Member for Nottingham North (Mr Allen)—who unfortunately is no longer in his place—and from the hon. Member for North Durham (Mr Jones). What have we done to deserve such good fortune today? We have all very much enjoyed their speeches. This just goes to show how different these debates are now. My hon. Friend the Member for Moray (Angus Robertson) and I are veterans of Committee debates on Scotland Bills, and we remember the braying, the aggressive shouting down and the interventions by 40 Scottish Labour Members of Parliament. They are no longer here. This is the salutary lesson of today’s Committee debate. We are now in the new Scotland, which has made certain critical decisions about how it wants to be governed and how it wants to progress with its constitutional agenda. The challenge for this Government, and for those on the Labour Front Bench, is to respond to that. They can ignore my hon. Friends who are sitting on these Benches in such great numbers—we represent 56 of the 59 seats in Scotland—and they can ignore the fact that the SNP secured more than 50% of the vote. They can pretend that we do not exist and hope that we go away, but we are going nowhere. We are going to be here on Committee days, demanding that the Scottish people secure what they voted for in overwhelming numbers.

I support my hon. Friend the Member for Moray in setting out the three key principles that we are advocating. The critical one—the one that we have to secure—is that the Scottish people get what they voted for and what they expect from this House, which is to have the Smith commission proposals delivered in full, alongside everything that was promised to the Scottish people in what Gordon Brown, the former right hon. Member for Kirkcaldy and Cowdenbeath, called the “vow plus”, including federalism and home rule.

[Mr MacNeil]

My hon. Friend mentions the vow plus and the promises made to the Scottish people. In reality, these powers are wanted not only by the yes voters but by the no voters as well. The fact is that 100% of the people of Scotland voted for these powers. Whether they voted yes or no, they voted for this.

[Pete Wishart]

My hon. Friend always gets right to the heart of the matter. We know that everything in this Bill that we have been trying to secure is supported by the Scottish people. It is also supported by the massed ranks of SNP Members here, and by the 60% of the Scottish people who want everything devolved to the Scottish Parliament other than foreign affairs, defence and treason. The hon. Member for Gainsborough (Sir Edward Leigh) forgot to mention treason in his list of powers that would remain reserved. An opinion poll last week showed not only that we won more than 50% of the vote but that we are now on course to win 60% of the Holyrood vote next year. It showed that there is a clear desire to ensure that we move forward progressively.

I shall turn to the central issues in the Bill, starting with the permanence of the Scottish Parliament. That was about the most useful thing to emerge from the Smith commission’s report. It followed the vow that was reported in the Daily Record as stating that the permanence of the Parliament should be a predominant issue. We were disappointed that the draft Scotland Bill could not find an appropriate form of words to encapsulate that proposal. The thing that has struck me is the Scottish people’s surprise that this House could actually do away with the Scottish Parliament. I do not think that people really believed that that was the case. We have to resolve this issue.

The Scottish Parliament is now the key focus of the national debate on our nation and our political culture in Scotland. As we have continued to secure more and new powers for the Scottish Parliament, it has become an intrinsic feature of what we are about as a nation. The fact that this House can simply decide, perhaps on a whim, to abolish the Scottish Parliament is totally unacceptable to the Scottish people and has now to be put right. We have this one opportunity to address it by getting our amendment through this evening—we could sort this out.

I pay tribute to the right hon. Member for Orkney and Shetland (Mr Carmichael) because he recognised that situation when he was Secretary of State for Scotland. He said—I paraphrase him and I will let him intervene if I have this wrong—that something must be done about it. It was then thrown over to the new Secretary of State to pick up; it now falls in his lap, and he has to address it and ensure that we get what we want, which is the permanence—

[Mr Alistair Carmichael]

Does the hon. Gentleman accept, however, that by doing this through primary legislation any solution—any form of words—is always going to be imperfect, and that the only way we will genuinely recognise the political reality that is the permanence of the Scottish Parliament is through a written constitution, and for that we need a constitutional convention?

[Pete Wishart]

There is very little I would disagree with the right hon. Gentleman about on these things, and I agree that there is a real requirement for a written constitution in this country. But let me suggest another way we can get the permanence for the Scottish Parliament, as set out in our amendment 59: by putting this to the Scottish people in a referendum. The only way then that the Scottish Parliament would ever be abolished or done away with would be on the say-so of the Scottish people, as a directly expressed desire through a referendum. I hope the right hon. Gentleman supports us in that amendment this evening, because it is the way to go forward.

That deals with the permanence issue. We have not heard much about another matter, despite several of my friends from south of the border having spoken in this debate. I refer to new clause 2 on the constitutional convention, which I believe the hon. Member for Edinburgh South (Ian Murray) is still to speak to. That has been a long-standing policy of the Labour party and it was central to its manifesto at the last election—I have to say that Labour did not have a great deal of success when it was put to the people of England. My problem with this idea that Scottish devolution and our constitutional journey should be mashed together with a UK-wide look at the constitution is that it would slow down our very clear progress and our clear statement of where we want to go. The cause of English devolution moves at an almost glacial pace, and any suggestion that we have to be slowed down, as England rightly works out what it wants to do, has to be rejected this evening. Just piggy-backing Labour’s concerns about a constitutional convention and about English devolution on to a Bill about Scotland, and the things we were promised in the vow and that were progressed with the Smith commission is totally unacceptable. I say to the Labour party: do the work yourselves. There is no need to bring it to a Scotland Bill in order to progress this agenda. Bring in your own piece of legislation. Bring it in however you like and we will play a part in that. There are interesting things to be discussed on the further progress of constitutional change all over the UK.

[Stewart McDonald]

The hon. Member for Nottingham North (Mr Allen) earlier described the Bill as the property of the Union. Is not part of the problem that this is viewed through the prism of the Union? What is needed is a radical vision, which was once the territory of the Labour party but which we are now offering tonight.

[Pete Wishart]

My hon. Friend is, again, spot on. We always seem to get here in Scotland Bills: there is a debate in Scotland where we think we have managed to reach some sort of agreement about a way forward, but when it comes to this House all of a sudden we get caught up in “English votes for English laws” and with English devolution. Those are important things that have to be debated, but somehow they find their way into a debate we are having in Scotland about what we think we are entitled to and what the Scottish people have decided they want by sending so many of my hon. Friends here.

[Ian Paisley]

I have some sympathy with what the hon. Gentleman is saying but surely he accepts that this is a debate for all of the peoples of all of the United Kingdom and that all these issues counterbalance each other? That is why these other issues get brought into the debate. Surely the hon. Gentleman recognises that—have some generosity on that point.

[Pete Wishart]

I am not disagreeing with the hon. Gentleman; he probably heard me say that these issues are important and have to be looked at and considered, because they are the things that make all the rest of it work. What we are debating tonight is a Scotland Bill that is the end part of a proposal by the former Prime Minister, the previous leader of the Labour party, the previous leader of the Liberal Democrats and the leader of the Conservatives—it was promised in the vow.

[Ian Paisley]

rose—

[Pete Wishart]

I am not going to give way again, because I know a lot of people want to get in and I want to make some progress. These issues are all important, but tonight is Scotland Bill night and these are the sorts of things we are considering.

Unfortunately, the hon. Member for Nottingham North is not in his place—[Interruption.] He is here—well, perhaps he wants to take his place. We are always very grateful for the concise way in which he puts his wide range of views. He is always interesting to listen to and is always innovative and creative. Again, we give him a lot of congratulation on the way he so rapidly went through his constitutional tour de force. The hon. Gentleman talked about his new clause 8, and I was particularly attracted when he invited the Scottish Parliament to take a proportional share of Members of the House of Lords as part of his long-term constitutional reform. With a deal of candour may I say to him that the House of Lords is perhaps the most absurd, ridiculous legislature in the world? It is bloated beyond redemption and the last thing that place needs is more Members. What it needs is total abolition, and that cannot come soon enough.

The hon. Member for Gainsborough has put forward his helpful new clause 3. As the hon. Member for Christchurch rightly identified, it has got quite a bit of attention, and not only today—we have done nothing other than debate this for the past few weeks and months. If we swapped the three words “full fiscal autonomy” with the word “independence”, we would see that we have been having this debate for the past four, eight, 15 or 20 years. The same themes seem to be revisited when we talk about full fiscal autonomy or independence, and it is the same adversaries: the Scottish National party, and the old amigos of Labour and Conservatives getting together to tell us once again how we are too poor, too wee, too unimaginative, not just to have independence, but to run ourselves fiscally within the United Kingdom. What next? Where do we go to? Can we not run local authorities properly without being too wee, too poor or too unimaginative? [Interruption.] I see that the hon. Member for Edinburgh South does not want to intervene but I give way to the hon. Member for Gainsborough.

[Sir Edward Leigh]

I am not saying that.

[Pete Wishart]

Sorry, I was expecting a bit more of a substantial contribution from the hon. Gentleman, and I am almost disappointed we did not get some more fulsome prose from him. I thought he made quite a good case for his new clause, but I say ever so gently to him that we favour our amendment, because it is the way we should be doing this. It seeks to give time for the Scottish Parliament to progress towards full fiscal autonomy. If we suppose Government Members are right that there is this huge deficit that we keep hearing about again and again, surely they should be working with us, through a fiscal framework, to work towards full fiscal autonomy. Surely what should happen is a process that starts by giving us the important early new powers—powers over the minimum wage, national insurance contributions and welfare. There is a process of moving towards this. If they are right about that, what is wrong with working with us to try to achieve and secure it? Surely that is how we should be doing this. As I have said, the themes are the same; oil and gas is a burden and a curse with independence, as it is with full fiscal autonomy. It is as though they have learned absolutely nothing, because these were the very themes put to the Scottish people during the general election campaign. I am not trying to speak for the Scottish people, but on the doorstep I was hearing that there is a tiredness and a deep despondency among the Scottish people at being told that they cannot do something, that they are in such a diminished position that we cannot take responsibility. That argument does not work any more. We have been through a process of national self-definition, of finding ourselves and of ensuring that we try to do something different.

[Mr MacNeil]

That despondency and disbelief among the Scottish people becomes even stronger when we look at those islands close to Scotland. The Faroe Islands, for example, have 50,000 people and full control of their taxes. The Isle of Man has 80,000 people and full control of its taxes. Scotland, which is the size of Denmark, cannot have full control of its taxes, because the Government say so. That time is now over.

[Pete Wishart]

I am grateful to my hon. Friend for his intervention. He is a great champion and passionate advocate of the island nations. This evening, we invite this Committee to support us in the next stage of Scotland’s constitutional journey, which is about securing more powers, making our Parliament permanent, and granting full fiscal autonomy to our nation so that decisions about how we run our country are made in Scotland by the elected Members who represent the people of Scotland. Tonight, I invite the Committee to support us in that effort.

18:29

[Tommy Sheppard (Edinburgh East) (SNP)]

We are talking here about the government of Scotland, so I hope it is not contentious to say that what should be uppermost in all our minds are the views of the people who live there. I am very much in favour of evidence-based policy, by which I mean that we should try to make things right according to the facts of the situation. We are in a fortunate position in this debate because we do not have to guess what the people of Scotland think, as they have been consulted quite extensively over the past year.

We are having this debate today because of the referendum that took place on 18 September, when the people of Scotland voted on whether they wanted to be an independent country. They decided by 55% to 45% that they did not want to be an independent country and leave the United Kingdom, and I respect that result and that opinion. But no one can deny that one thing that swung that vote in favour of the no campaign was the intervention by the leaders of all three Unionist parties who promised substantial new powers for Scotland should it decide to stay within the United Kingdom. The vow that was published and signed in The Daily Record and promoted the length and breadth of the country was definitely a major factor on which the outcome of that result depended.

The response was to set up the Smith commission, and Lord Smith has now reported and given his view. We took part in that commission and we signed up to it, but we made it very clear that the Smith commission is a floor, not a ceiling, on the ambition of Scotland for additional powers. We made that clear from the word go. We argued for that in the run-up to the election. There was a raging debate during the election campaign about whether the Smith commission was an adequate response to the wishes expressed by the people of Scotland in the referendum. We said that it was not, but that it was a start and that we needed to go further to satisfy the aspirations and hopes that were given to us by the Prime Minister, by Gordon Brown and by others who said that we would get substantial new powers. They said that we would have home rule and that it would be as near to federalism as possible. That is what the people of Scotland were promised, and the Smith commission does not add up to that. We took that argument and put it before the Scottish people in a general election, and we asked them to say whether they agreed with our analysis that we should go beyond the current Smith commission. What happened? They voted for us. They voted for us not just by a little bit but by a lot. More than 50% of the people who turned out at that election voted for members of the Scottish National party—I ask Members to try to get the name of our party right.

The question now is: does the Bill before us respond to what happened at the general election. I must say—the Secretary of State can correct me if I am wrong—that the Bill looks as though it was drafted before the election; its clauses are very similar to those that were published in January. The speed with which the Bill was published makes me think that there has been very little reflection over what happened at the election, and over the views of the Scottish people. Very little has been included in the Bill in response to those things.

I ask the Secretary of State and the Government to consider making changes to the Bill so that it reflects the views of the people of Scotland, delivers the promises of the Smith commission and, where possible, goes beyond the commission to do things on which Smith is silent—I am talking about the administrative changes that the third sector and specialist organisations in Scotland are asking for and that could easily be granted—and responds to our argument for granting substantial new powers that would be tantamount to the vow that was made.

One thing the Secretary of State could do quite easily is say, “We will accept the amendments about the permanence of the Scottish Parliament, albeit within our flawed and unwritten constitution.” The Government could make a statement that “This Chamber agrees that the Scottish Parliament will never ever be taken away without a referendum of the people who live in Scotland.” It would cost the Government nothing to accede to that amendment, so why do they not do it? They would be demonstrating some respect towards the people who have sent us to this Chamber to argue these points.

Let me turn now to the issue of full financial autonomy. Last week, I was in the strange position of finding myself misquoted by the Prime Minister, the Secretary of State, shadow Ministers and—just to complete the pack—the leader of the Scottish Liberal Democrats in the Scottish Parliament. I did not know whether to feel victimised or honoured. I am delighted, both in recent press articles and in this Chamber today, to be able to put the record straight. I am absolutely committed to the idea that the Scottish Government should be responsible for raising the revenues that they spend. To be honest, that should be a non-contentious point. In any structure in the world where there is a federal relationship and a federal-type Government, or even a devolved Assembly, those arrangements are commonplace. I have yet to hear the argument against that view.

[Ian Paisley]

I thank the hon. Gentleman for giving way. Indeed, he is my hon. Friend, as he is both a canny Ulster man and a County Antrim man. Of course he will know in his heart—the heart of a County Antrim man—that before a person can say that they want to spend money on something, they should know the price. Does he agree that, before we vote on his party’s amendments tonight, it is important that we know the price, especially for corporation tax? What will it mean for the ordinary Scot?

[Tommy Sheppard]

I am a Derry man as it happens. If the hon. Gentleman wants to make a point of such substance, perhaps he should indicate to the Chair and take part in the debate. What we are talking about is a matter of political principle. It is about the direction in which we want to go forward. It is entirely possible, with good will, to put in place proper fiscal arrangements.

I wish to turn to the amendment of the hon. Member for Gainsborough (Sir Edward Leigh). I have not been in this job long—

[Ian Murray]

rose—

[Tommy Sheppard]

May I deal with this point, and then take an intervention? I have not been in this job long, but I am surprised—I expect I will be surprised by various things over the next five years—to find such a passionate and eloquent exposition from the Conservative Back Benches of a position with which I agree. I suspect that there is little else on which the hon. Gentleman and I would agree. On this point, he makes his case very well. However, I wonder whether there is an element of mischief at the back of his mind. Perhaps he believed the propaganda from his own Front Bench several weeks ago that we were weakening in our commitment to full financial autonomy, and he thought that he might embarrass us in this debate today. I must reassure him that we are not lukewarm and our commitment is not weakening. In fact, we like the idea so much we have brought our own amendment before the Committee. I am intrigued at the suggestion that all we need to do is vote for it—

[Sir Edward Leigh]

I am completely sincere. I believe that the case for full fiscal autonomy is unanswerable in logic.

[Tommy Sheppard]

I am pleased to hear it. I therefore expect the hon. Gentleman to vote for our amendment later.

[Sir Edward Leigh]

Vote for mine.

[Tommy Sheppard]

Why do we not do a deal? I will try to ensure that all my colleagues vote for the hon. Gentleman’s amendment, if he makes sure that all of his party do as well. Perhaps we can have it sewn up by 10 o’clock this evening. The strange thing about this debate so far—

[Sir Edward Leigh]

This is very important. The hon. Member for Dundee East (Stewart Hosie) made an absolute commitment that he would vote for my new clause. I will press it to a Division and at 10 o’clock I expect to see the hon. Member for Edinburgh East (Tommy Sheppard) in the Lobby.

[Tommy Sheppard]

If the new clause is moved, the hon. Gentleman will see me there, for sure. I hope that I will see him in the Lobby to vote on our amendment.

The interesting thing about the debate so far is that the case has not been made against full fiscal—

[Ian Murray]

rose—

[Tommy Sheppard]

Is this perhaps on the subject of the hon. Gentleman’s misrepresentation of my views?

[Ian Murray]

I am grateful to the hon. Gentleman, who has just confirmed that he will walk through the Lobby with the hon. Member for Gainsborough (Sir Edward Leigh). He said on the radio—I was on with him—that the delivery of full fiscal autonomy for Scotland would be utterly devastating. Does he stand by those comments?

[Tommy Sheppard]

The hon. Gentleman must apologise for misquoting me. I said—[Interruption.] Yes, I have the transcript as well as the hon. Gentleman. I said in the context of a debate that if this was done wrongly it would be possible to get it wrong. To my mind, that is a tautology: if we do not do something right, we get it wrong. The hon. Gentleman then decided that that somehow meant that I was against the whole principle of full financial autonomy and took to the Twittersphere to promote that. It does not, I am not and the fact that he had to do that shows the paucity of the arguments against our proposals.

We have yet to hear the argument against full financial autonomy for the Scottish Government, and I hope that we shall before the debate concludes. We have heard talk of a black hole, which other people will regard as a deficit when in fact it pertains to all economies at this point in time. We have heard that a policy of principle should be based on a snapshot from one point of time in an academic survey of what might happen in a year that will not even be covered by the process. That has somehow been extrapolated into an argument of principle against the proposal. It is not. If it was, would that mean that if there was not a deficit but a surplus in the Scottish budget, as there has been on many occasions, the policy would be flipped again and autonomy would suddenly become okay? We need to hear the arguments of principle against the proposal.

The difference between us is that, although there is a deficit in the Scottish budget, the SNP believes that it is possible for Scotland to prosper if it has control of its own resources, if it can manage its own economy, if it can grow its own revenue base and if it can steward its own budgets properly. Full financial autonomy would mean that the people of Scotland could get the benefits of that economic growth. That seems a laudable objective.

[Mr Kenneth Clarke]

rose—

[Tommy Sheppard]

I am sorry, but I am just coming to the end of my speech.

My hon. Friend the Member for Dundee East (Stewart Hosie) has given some clear examples of how economic powers could be deployed. If Members, many of whom are on the Labour Benches although some might be on the Government Benches, are against that in principle, they need to tell us. If they are against it just because of the economics that might pertain to it, it is entirely possible to make an argument about equalisation measures and other mechanisms that could be introduced if we wanted it to happen. They need to tell us why on principle they do not want it to happen. I hope that we will hear that before the night is out, but in the meantime I commend the amendments to the Committee.

[Ian Murray]

May I personally congratulate the hon. Member for Edinburgh East (Tommy Sheppard) on his stunning victory at the general election? I miss my colleague, Sheila Gilmore, whom I wish well, but I congratulate him.

It is a great pleasure to speak in support of our amendments. I could not help noticing that Lionel Richie was in the Gallery earlier, and I hope he enjoyed the first part of our debate as much as we enjoy his music.

These days in Committee are important in ensuring that the Smith agreement is delivered in full in both spirit and substance, as we said consistently on Second Reading. It is also essential to ensure that we go further than the Smith agreement, as Labour has said time after time, and we have set out a number of clear improvements.

Scotland has had an in-depth and passionate debate about its future and concluded that a fair and more prosperous Scotland is best delivered by shared tax and spending across the UK, with Scotland taking more control over the levels of tax and spending alongside greater accountability. I agree with the hon. Member for Perth and North Perthshire (Pete Wishart) that if anyone is under any illusion that the centre of political gravity in Scotland is not at Holyrood, they have not grasped the modern political landscape in Scotland. That is why the clauses and amendments recognise the Scottish Parliament as the seat of political power and the catalyst for change in Scotland. Our amendments attempt to deliver that change. This is a great responsibility on us all, but in the end it is much more important that we debate how powers are used than where they lie. We have tried to tease out some of those issues in interventions today, but without much success.

18:44

Clause 1 conveys the permanency of the Scottish Parliament as an institution. We agree that that is a critical part of ensuring its permanence as an integral part of Scottish life, but our amendments would improve the Bill beyond the proposals of the Smith commission. As I said last week on Second Reading, this Bill is the latest staging post in a long and sometimes arduous, but always exciting, devolution journey. As a passionate believer in the principle of devolution in delivering a strong and vibrant Scottish Parliament, I hope that this staging post delivers the most powerful devolved Parliament in the world.

Our journey began with the Scotland Act 1998, drafted and delivered by a Labour Government and crowned by Donald Dewar’s now infamous pronouncement:

“There shall be a Scottish Parliament.”

Further steps that we have taken along our devolution journey have served only to enhance the Scottish Parliament’s potential. The Calman commission on further devolution, the recommendations of which were codified in the Scotland Act 2012, transferred further powers and placed the Parliament on a firmer footing. Then came last year’s referendum, in which the people of Scotland voted decisively to remain part of the United Kingdom.

[Mr MacNeil]

At the time of the referendum, the yes side included full fiscal autonomy in its proposals. After the vow, the no side also included full fiscal autonomy. What has changed since the referendum that has made the no side resile from that? The vow was as near to federalism as possible, and it would have included full fiscal autonomy. Why does the hon. Gentleman now want to leave those powers in the hands of the Tories at Westminster rather than with the Parliament of the Scots in Edinburgh?

[Ian Murray]

There is a very simple answer to that question. We all want what is best for Scotland. The latter part of my speech sets out how full fiscal autonomy would be bad for Scotland according to all the information we have. We can either have a sensible debate in this Chamber about our fundamental principles on people’s lives and livelihoods in Scotland, or we can have a political knockabout on who will vote with who, who prefers who and who said what to whom during the referendum debate. The Bill is critical to future livelihoods in Scotland, and if all we can get from those on the SNP Benches is simple party point scoring we will get no further forward in improving the Bill.

To answer the question asked by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), we are here today because the vow put together the Smith agreement. The five political parties, including the SNP, which was represented on the commission, have come forward with proposals that are now in the Bill. Labour wants to take the Bill a little further. I keep emphasising that and I emphasised it consistently on Second Reading.

[Ian Blackford]

rose—

[Ian Murray]

I am going to make a little progress, but I will come back to the hon. Gentleman if he wants to intervene a little later.

As Labour said at the time of the referendum, and as we have said many times since, the no vote was not a vote for no change. Labour played an active part in the Smith commission, the recommendations of which bring us to where we stand today, considering the Bill. It was a compromise position and with all good compromises there will be some gains and some losses. I hope and believe that the Bill will strike the right balance, affording the Scottish Parliament the power to make a real difference to people’s lives while ensuring that Scotland remains part of and secure in the United Kingdom.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way to the hon. Member for Ross, Skye and Lochaber (Ian Blackford), who got in before the hon. Member for Na h-Eileanan an Iar.

[Ian Blackford]

Will the hon. Gentleman not accept that the Scottish people voted overwhelmingly for the Scottish National party in the general election on 7 May? Fifty-six Members of Parliament were sent to this Chamber with the express view of the Scottish people that we want home rule—the home rule that Gordon Brown talked about before the referendum. Why does the hon. Gentleman not accept that Labour lost the general election in Scotland because it was out of tune with the Scottish people? It is about time it started to listen to what the people of Scotland want and to deliver it.

[Ian Murray]

It seems to me that the SNP, in its fantastic victory, on which I have congratulated and complimented its Members on a number of occasions from this Dispatch Box, does not want any scrutiny at all. Just because the SNP has made a proposal for full fiscal autonomy does not mean that we should not scrutinise that proposal. In fact, if it was not for the hon. Member for Gainsborough (Sir Edward Leigh), we probably would not even be discussing full fiscal autonomy today. He forced the hand of the Scottish National party so that it brought forward its manifesto commitment, which it was rowing back on incredibly quickly.

[Stewart Hosie]

Will the hon. Gentleman give way?

[Ian Murray]

Let me make a little progress and then I will give way, as the hon. Gentleman was generous in giving way to me.

In the past couple of years it has become increasingly apparent that devolution is a matter not just for Scotland, Wales and Northern Ireland, but for England and the United Kingdom as a whole. The Labour movement has always been an engine of reform and the party of devolution. People want to see power devolved and exercised at local level, affording greater decision making and enhanced accountability.

[Patricia Gibson]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way, but let me make a little progress first as people want to speak on other amendments.

If those ambitions are to be realised, we need to depart from the divisive rhetoric employed during the general election campaign, which set Scots against the English and against one another and risks tearing the UK apart at the seams. Labour believes in the historic Union of the UK nations working together for the common good. However, it is clear that the Union now needs to evolve, and that evolution means dispersing power from the centre, from Whitehall and from this Parliament. With devolution to Scotland, Wales and Northern Ireland continuing apace, this evolutionary process is in danger of becoming lopsided.

That is why, had Labour won in May, we would immediately have started to devolve power away from Whitehall not just to Scotland, Wales and Northern Ireland, but to the regions and localities across the United Kingdom. That is because we recognise that regions can and must be given more of a voice in our political process, and that we must find new ways to give further voice to regional and national culture and identity, and crucially without the strings that this Government have attached.

[Stewart McDonald]

I am grateful to the hon. Gentleman for giving way and I apologise to my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) for intervening first. The hon. Gentleman makes an important point about taking power out of the hands of this place and of the Scottish Parliament and giving it to local communities. Others on the Labour Benches have made the same point. Why then did Labour-controlled Glasgow city council continue to act as a roadblock against our legislation in the Scottish Parliament? I see him rolling his eyes and chuntering to his mate beside him. Why is Labour against our Bill in the Scottish Parliament to give power to local communities through the Scottish Parliament? Why is Labour such a roadblock in Glasgow?

[Ian Murray]

I am not sure of the entire detail of the proposal that the hon. Gentleman refers to, but there is a general consensus across Scotland that the Scottish Parliament has been one of the most centralist Parliaments in the world by grappling power away from local government. What we are trying to do as part of this Bill, which I think is a major positive, and I hope the Government—

[Stewart Hosie]

Will the hon. Gentleman give way?

[Ian Murray]

Will the hon. Gentleman allow me to answer the previous intervention first? He is a seasoned professional in this Chamber, so he should allow me to get at least halfway through the response to his hon. Friend’s intervention.

One of the key questions—I hope the Secretary of State and those on the Treasury Bench look at some of these principles in the context of the Bill—is whether those principles go further towards double devolution. There is no point in sending powers from one Parliament to another. [Hon. Members: “Give way!”] Those powers also have to be spread across Scotland from Holyrood to local authorities. Without that process, hon. Members cannot take power closer to the people they seek to represent.

I will give way to the hon. Member for Dundee East (Stewart Hosie) and then to the hon. Member for North Ayrshire and Arran (Patricia Gibson). [Interruption.] The hon. Lady can blame her boss if she likes; he wants to come in first.

[Stewart Hosie]

The hon. Gentleman suggested about 10 minutes ago that the Scottish National party was not going to table an amendment to deliver full fiscal autonomy, and he suggested that it happened only because of the amendment tabled by the hon. Member for Gainsborough (Sir Edward Leigh). That is completely false. Amendment 89 is on the amendment paper to deliver full fiscal autonomy. Will the hon. Gentleman withdraw that daft allegation from the Labour Front Bench and, more importantly, confirm that Labour Members intend to go through the Lobby with members of the Tory Front-Bench team to stop power coming to Scotland?

[Ian Murray]

It is wonderful. We are now being accused of voting not with the Tories, but with the Tory Front Bench, while SNP Members troop through the Lobby with the most right-wing Conservatives. It is incredible. The hon. Gentleman is not listening to the answer, although he insisted on the intervention. If he was so keen on full fiscal autonomy before he tabled amendment 89, he could have just signed new clause 3, tabled by the hon. Member for Gainsborough.

[Sir Edward Leigh]

My amendment gives what SNP Members say they want straight away, whereas their amendment is a bit of a fudge and slightly kicks the matter into the long grass. It is a bit like St Augustine saying, “Let me stop sinning, but not quite yet.”

[Ian Murray]

The SNP position can be summed up with the words, “What do we want? Full fiscal autonomy. When do we want it? We’re not quite sure.”

[Patricia Gibson]

Does the hon. Gentleman agree that the powers proposed in the Smith commission report and in the Bill are utterly inadequate? By way of illustration, the powers of the Scottish Parliament are so feeble that it cannot even ban parking on pavements, such is its lack of teeth. Further, does the hon. Gentleman agree that all power should be devolved to Scotland unless there is a compelling reason to reserve that power at Westminster?

[Ian Murray]

The hon. Lady is right: there is a deficiency in respect of parking on pavements and all hon. Members have been lobbied about trying to change that in the Bill. We will table amendments, which she is welcome to sign.

[Patricia Gibson]

rose—

[Ian Murray]

Let me give this commitment: if the hon. Lady brings forward an amendment on parking on pavements, we will sign it.

Let me explain why we tabled new clause 2 in terms of the constitutional convention and the practical steps we need to take so that, where appropriate and desirable, decisions are taken as close to communities as possible. Our new clause proposes that members of the constitutional convention must include members of the public, which is the key part of any constitutional convention, elected representatives across all levels of government, including this place and local government, representatives of civic society organisations and, in an advisory role, academia. What we cannot have is a Prime Minister and Government cooking up a devolution settlement in a back room of the Cabinet Office without proper recourse to the public. As I said on Second Reading, the Prime Minister’s cack-handed approach to the way he dealt with the post-Scottish referendum landscape has in itself threatened the very viability of the UK that Scots voted to maintain.

Let us have a wide-ranging discussion on the constitutional settlement of the whole of the UK. The recommendations by the constitutional committee would include, but not be restricted to, matters that we have already discussed today—the role and voting rights of Members in this Chamber, democratic reform of the House of Lords, further sub-national devolution to England, Wales, Northern Ireland and Scotland, votes at 16 and codification of the constitution, the absence of a proper written constitution being one of the problems we have when discussing the Bill.

Our amendment 37 and 38 are very similar in substance to those tabled by the right hon. Member for Orkney and Shetland (Mr Carmichael). The opening lines of the vow declared that

“The Scottish parliament is permanent and extensive new powers of the Parliament will be delivered”.

Equally, the Smith commission agreement said that

“UK legislation will state that the Scottish Parliament and the Scottish Government are permanent institutions”.

As I have said, the centre of political power in Scotland is the Scottish Parliament. It has powers over most things that affect the day-to-day lives of most Scots, but as things stand and as was noted by the Political and Constitutional Reform Committee, the Scotland Act 1998 stated:

“There shall be a Scottish Parliament”,

but did not provide that it be permanent, nor does it set out any special procedures or grounds on which it could be dissolved. Would there be a simple repeal of the Scotland Act?

There has been agreement among legal experts that the clause could be made clearer, more concise and more in keeping with the overall spirit and tenor of the Smith recommendations. For example, the Law Society of Scotland—I thank it and particularly Michael Clancy for all his advice on the legalities of these clauses—stated:

“The phrasing in the draft clause does not literally implement the terms of Paragraph 21 of the Smith Report. The use of the phrase ‘recognised as’ permanent has a different nuance from a statement that the Scottish Parliament and the Scottish Government are permanent institutions.”

[Patrick Grady (Glasgow North) (SNP)]

Given that the Scottish Parliament, at the insistence of the Labour party, was founded through the process of a referendum, will the hon. Gentleman support our clause to ensure that it cannot be abolished without a referendum?

[Ian Murray]

I am delighted that the hon. Gentleman has raised that point. That is exactly what our amendment does as well. We are very happy for SNP Members to sign our amendment, given that ours was tabled before theirs. We agree on this; there is no division on this. We need a robust devolution architecture. That means making sure that the legal restrictions in the Bill are removed so that we have a permanent Scottish Parliament in statute as well as in spirit.

Amendment 16 would alter clause 1 by exchanging the indefinite article for the definite article in reference to the Scottish Parliament. There is only one Scottish Parliament, after all, so there is no need for a double reference. Amendment 38 would add to clause 1 the stipulation that the Scottish Parliament and the Act on which it is predicated can be abrogated only with the consent of the Scottish people given effect by an Act of the Scottish Parliament. That is the referendum section of our amendment. I believe that amounts to what is known in constitutional law as contingent entrenchment. Given the limited time available, I will not go through the other issues relating to contingent entrenchment, but I am sure that the Secretary of State realises the desire of all three opposition parties to strengthen clause 1 and include a referendum requirement so that permanency is determined by the Scottish people. Amendments 58 and 59 make similar proposals.

19:00

Let me touch on some of the other amendments we have debated in this group. My hon. Friend the Member for Nottingham North (Mr Allen), who brings great knowledge to constitutional debates, promoted his amendment expertly, as he always does. We have also considered new clause 3, tabled by the hon. Member for Gainsborough, and amendment 89, tabled by SNP Members. As the hon. Member for Gainsborough has said time and again, new clause 3 would effectively deliver full fiscal autonomy now, not later. Amendment 89 effectively says, “Perhaps we should have full fiscal autonomy, but we are not sure and we don’t know when, so we reserve the right to do so at some unidentified point in the future.”

Let me be clear that we will support neither amendment, because they are not in the interests of the Scottish people. New clause 3 does what it says on the tin; it would deliver the key SNP manifesto promise of full fiscal autonomy at the commencement of this Bill. The Labour party and others have always said that the worst-case scenario for Scotland’s future would be an SNP group here in Westminster that pushes that promise of full fiscal autonomy and a Conservative majority Government who deliver it for them.

[Ian Paisley]

At the end of this debate, has the shadow Secretary of State any inkling whatsoever of when the Barnett formula calculations for Scotland would cease and what impact that would have on the rest of the United Kingdom?

[Ian Murray]

The Barnett formula would cease as soon as the powers for full fiscal autonomy were transferred. That is something everyone should be aware of. The hon. Gentleman has consistently challenged SNP Members to say what the cost of full fiscal autonomy would be for the ordinary Scottish person in the street, and we are yet to have an answer. We have been told, “Let’s get the principle of full fiscal autonomy together and then work out the consequences later.”

[Several hon. Members]

rose—

[Ian Murray]

I will give way again, but first let me make some progress.

It is simple: the pooling and sharing of resources across the UK, and the maintenance of the Barnett formula, benefits Scotland. The much-quoted Institute for Fiscal Studies, which the SNP continually rubbishes, has demonstrated beyond argument that full fiscal autonomy would result in Scotland having a deficit of some £7.6 billion. Before SNP Members jump up to challenge those expert figures, I want to put it on the record that that is over and above any current UK deficit and UK spending projections.

[Joanna Cherry (Edinburgh South West) (SNP)]

Does the hon. Gentleman agree that all this talk of black holes with full fiscal autonomy fails to recognise that a black hole exists already as a result of the policies of successive Westminster Governments, both Tory and Labour, and for which the Tories are now making the poorest and most vulnerable in our society pay? [Hon. Members: “Speech.”] The case that Labour is making in attacking full fiscal autonomy is that things are so bad that letting the Tories fix the deficit their way is better—[Interruption.] I am going to keep going—[Interruption.]

[The Temporary Chair (Mr David Crausby)]

Order. Interventions should be short, and the Committee should be tolerant of that.

[Joanna Cherry]

Does the hon. Gentleman agree that his party should have more ambition for Scotland?

[Ian Murray]

This is the nub of the matter: if we try to scrutinise what would be a devastating policy for Scotland, we are accused of not being ambitious for Scotland. For the avoidance of doubt, that £7.6 billion is over and above the UK deficit. I agree with the hon. Lady that the Conservative Government made a complete shambles of getting rid of the deficit in the previous Parliament, breaking all their promises and only halving it. But the actual deficit—I have the IFS paper here—is not just £7.6 billion, but £7.6 billion over and above the current UK deficit, which is £14.2 billion. That is not a lack of ambition for Scotland, but a warning against a fiscal policy that would be folly for families up and down Scotland.

[Mr MacNeil]

rose—

[Ian Murray]

I will give way to the hon. Gentleman, before he bursts a blood vessel.

[Mr MacNeil]

It is now clear that the policy of Labour’s Front Benchers is to leave Scotland’s tax powers in the hands of this Tory Government. The vow did not say that; the vow included full fiscal autonomy. Will the hon. Gentleman tell us when he changed his mind?

[Ian Murray]

The Bill before us will transfer nearly 50% of tax and 60% of spending to the Scottish Parliament. We promised to make it the most powerful devolved Parliament in the world, and that is a promise we will keep. As I have always said, we will ensure that the Bill is delivered in full, both in spirit and in substance. We will go further, as we will debate in Committee in due course.

Let me return to the £7.6 billion deficit—[Interruption.] I know that SNP Members do not like to talk about the £7.6 billion deficit, but it is important to get it on the record. It is unfortunate that they have consistently misquoted the figures from the Institute for Fiscal Studies, and indeed it has had to ask them to retract what they have said about its figures.

We have also heard no mention of the Office for Budget Responsibility’s oil report, which was published last week. It showed that the reliance on oil as an underpinning of the Scottish economy is no longer a viable projection. The collapse of revenues from oil will see the tax take from that source drop from £37 billion to just £2 billion over the 20-year period to 2040. That would be catastrophic for Scottish public finances. The question, then, is this: will SNP Members vote with the Tories to deliver what they want, as they have said they will do, or will they finally admit that their flagship policy of full fiscal autonomy is economically illiterate?

[Stewart Hosie]

rose—

[Ian Murray]

And there is no better time to go to the hon. Member for Dundee East.

[Stewart Hosie]

The hon. Gentleman is extremely generous. He mentioned the OBR. He will want to confirm, for the sake of completeness, that the OBR itself has said that the forecasts were very uncertain, even over the short term. It implies 8 billion barrels of oil extracted, rather than the normal industry 14 billion to 24 billion, and of course the figures it uses are contradicted by other expert groups that have higher prices and higher forecast extraction figures.

[Ian Murray]

Well, the hon. Gentleman is wasted in this House; he should be in the City, buying and selling futures in oil price shares. I think that is the best way for him to go. The three points that fall from the OBR report are the unpredictability of the oil price, the difficulty of extraction in the North sea and the fact that, whatever way we look at it, oil revenues will be declining sharply over the next 20-year period. It would appear that the hon. Gentleman—[Interruption.] I am happy to take other interventions, but it is quite clear that SNP Members cannot defend their policy for full fiscal autonomy. Indeed, they should listen to their hon. Friend, the hon. Member for East Lothian (George Kerevan), who said that it would be economic suicide. He is an experienced journalist and economist, so they would do well to listen to him.

In conclusion, we will push amendment 38 to the vote because we feel that the permanency of the Scottish Parliament should have the underpinning of the Scottish people by any means that would be appropriate, including a referendum. We will push to a vote new clause 2, which proposes a constitutional convention to resolve some of the larger issues on a constitutional settlement across the country. We will oppose full fiscal autonomy in all its forms, because it would be bad for the Scottish people, bad for the Scottish economy and bad for the future of Scotland.

[David Mundell]

Today is the first of four days in Committee on the Scotland Bill. I assure the hon. Member for Edinburgh East (Tommy Sheppard), whose contribution I enjoyed, that I will be listening and reflecting. Contrary to the suggestion made by the hon. Member for Perth and North Perthshire (Pete Wishart), this is not the only opportunity for changes to be made to the Bill. I will be meeting the Devolution (Further Powers) Committee of the Scottish Parliament next week to discuss points that it has raised in its report.

I would not normally begin a contribution by suggesting that anyone read one of Gordon Brown’s books, but tonight I will do so. Gordon Brown has been misquoted a number of times in the Chamber today, and it is important to put on the record the fact that in his book “My Scotland, Our Britain: A Future Worth Sharing”, he states that neither his proposals nor those of any of the pro-UK parties involved a federal solution. Although they came close to the idea of home rule, they were not home rule. Therefore, it is a myth, which has been perpetuated this evening, that Gordon Brown has called for either federalism or home rule.

[Mr MacNeil]

rose—

[David Mundell]

The hon. Gentleman has already spoken a great deal on the subject this evening. I would also like to see empirical evidence to back up the suggestion made by the hon. Member for Edinburgh East that the vow and the offer of additional powers made a significant change to the referendum result, because I do not believe that such empirical evidence exists.

[Tommy Sheppard]

Is the Secretary of State suggesting that they had no effect at all? In that case, what was the point of them?

[David Mundell]

What I am suggesting is that the hon. Gentleman cannot bring forward a shred of evidence to suggest that those proposals changed the referendum result and that somehow the people of Scotland have been defrauded. The people of Scotland voted decisively no in the referendum. They voted for a strong Scottish Parliament within the United Kingdom. The vow, which was set out in the Daily Record and other outlets, was taken forward on the basis of the Smith commission, of which the Scottish National Party was a part and to which it was a signatory. I received an interesting letter today from John Swinney, the Deputy First Minister of Scotland, who was a signatory to the Smith commission recommendations. He now tells me that the Smith commission recommendations, which he signed, were incoherent. I do not understand how he came to sign those recommendations if he genuinely believed that they were incoherent. If that was the case, he should have been making some of the arguments that we have heard this evening and during the general election campaign.

[Mr MacNeil]

Will the Secretary of State give way?

[David Mundell]

Not at this stage. The result of the general election represented a call from the people of Scotland for the delivery of the powers in the Smith commission recommendations. The Scottish National party set itself up as the voice of the people of Scotland to ensure that those powers were delivered, and they will be delivered in the Scotland Bill.

[Ian Blackford]

Will the Secretary of State give way?

[David Mundell]

Not at the moment. I have heard a number of small speeches from the hon. Gentleman, and I know the point that he wants to make.

I disagree with some of my right hon. and hon. Friends on the idea that conflict and division are inevitable when Governments work together. Despite what we regularly read in the media, see on television or hear in this Chamber, the Government work very closely with the Scottish Government on a range of important matters for the benefit of the people of Scotland. The Government remain committed to working continually for the benefit of the people of Scotland.

19:15

A good example of such work last week was the very constructive meeting between the Deputy First Minister and the Chancellor of the Exchequer, at which they discussed the roll-out of the fiscal framework that will support the Bill. I assure my right hon. Friend the Member for Wokingham (John Redwood) that details of that full fiscal arrangement will be brought to the House, as that agreement must proceed in parallel with the Bill. We are keen to put that fiscal framework into place.

[Mr Kenneth Clarke]

When pressed on the possible difficulties of fiscal autonomy, the reaction of Scottish National party Members is to point to the tremendous new levels of growth that will be achieved by the Scottish economy, and the added GDP that will flow from their enlightened measures. They are not the first politicians I have heard attribute those kinds of consequences to their economic policy. If their policy fails, they imply that any deficit would be the liability of the UK Government and the British taxpayer. Will my right hon. Friend assure me that a fiscal framework, which is still to be achieved, will include some real fiscal discipline? We cannot have an unsuccessful devolved Government running up enormous additions to the United Kingdom’s debt and deficit.

[David Mundell]

I can give that assurance. If it is to meet the various spending commitments that we hear sprayed around not only in the Chamber, but across Scotland, the Scottish National party will eventually have to tell the people of Scotland how much tax will rise to pay for all its proposed measures. The hon. Member for Dundee East (Stewart Hosie) carefully avoided any detail about tax when he set out the case for full fiscal autonomy. He criticised the proposals in the Bill for the devolution of income tax bands and rates, and he criticised the provision for a 0% rate. In fact, all he argued for was to enable the Scottish Government to reduce the personal allowance. I do not quite understand how that would benefit the less well-off in Scotland or the Scottish economy. The full range of other income tax powers worth £11 billion are coming to Scotland as part of the Bill.

[John Redwood]

When will the Secretary of State be able to share with Members the proposals to adjust the grant formula? Scotland will have higher spending and it will have tax revenues of its own, and my constituents in England are very interested in what the grant formula will look like.

[David Mundell]

I made it clear earlier that we would, in early course, bring forward details of the full fiscal framework as it is being negotiated.

I was not convinced by the arguments for full fiscal autonomy advanced by the hon. Member for Edinburgh East and others. I was not convinced by the red-blooded version that my hon. Friend the Member for Gainsborough (Sir Edward Leigh) set out for delivering the Scottish National party’s manifesto commitments, and I was not convinced by the SNP full fiscal-lite proposals—sometime, somewhere, somehow.

[Ian Blackford]

The hon. Member for Gainsborough (Sir Edward Leigh) gave an eloquent speech, in which he explained how the debate in Scotland had moved on. We won the election in Scotland, and the people of Scotland have demonstrated their desire for powers, for a purpose and for a Parliament. Is it not the case, as the hon. Gentleman said, that the Government are playing with the future of their own Union, which they want to defend? It really is about time that they listened to the Scottish people and delivered what the people of this country have asked for.

[David Mundell]

I said at the start of my remarks that I was listening to the Scottish people. The only people who are playing games are those who threaten another referendum in Scotland every time they do not get what they say they want.

The principal issue raised in relation to full fiscal autonomy is that it would mean Scotland having almost £10 billion less to spend by the last year of this Parliament. That is not good for Scotland, and that is why this Government will not support it. I am afraid that the only argument we have heard in support of these proposals was that heard during the referendum campaign—basically, “It will be all right on the night: trust us.” The people of Scotland decided on 18 September last year that they did not trust that argument, and I still do not trust it. Full fiscal autonomy would mean an end to the Barnett formula. It would mean that the Scottish Government had to fund all public spending in Scotland from their own resources. The Scottish Government would therefore be fully responsible for raising all the tax from Scottish taxpayers required to fund all spending in Scotland on public services, benefits and pensions.

[Stewart Hosie]

Can the Secretary of State confirm that in terms of the principles underlying Smith, we have no detriment and no advantage simply because of devolution itself, and that there will be a negotiated financial framework between the Scottish and UK Governments for the devolution in this Bill? Of course, we already have limited borrowing consent under the Scotland Act 2012 to fill holes in revenue, notwithstanding that the repayment terms were too short. Can he confirm that under the “no detriment, no advantage” principles there will be a negotiated financial framework for this Bill, and that there are already revenue-borrowing powers in statute?

[David Mundell]

I can confirm that the Scottish National party signed up to the Smith commission agreement, this Government are committed to delivering the Smith commission agreement, and the hon. Gentleman will therefore get what he is looking for in respect of the Smith commission agreement. There is not a shadow of a doubt about that.

Full fiscal autonomy would mean the end of Scotland pooling resources and sharing risks with the rest of the United Kingdom, and an end to Scotland being part of the UK’s hugely successful single market, which generates jobs, growth and prosperity. To all intents and purposes, the fiscal union between Scotland and the United Kingdom would end entirely, and the lesson of the eurozone is that it is extremely difficult to have a successful currency union without fiscal union.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I understand the Secretary of State’s desire to protect the Scottish people, but whether or not there is a £10 billion shortfall, if this is what the people of Scotland and the bulk of their representatives want, then why do not the rest of us, in the interests of the rest of the UK that we represent, let them have it, provided that we have a guarantee that we will not have to bail them out?

[David Mundell]

I do not accept the hon. Gentleman’s argument. A £10 billion shortfall in spending in Scotland would affect every school, every hospital, and every family by £5,000. I am not going to countenance that, and I am not going to support any amendments that would promote it.

We have had a lengthy discussion on full fiscal autonomy.

[Sir Edward Leigh]

Will the Secretary of State give way?

[David Mundell]

I will. [Hon. Members: “Oh!”] I will take my hon. Friend’s intervention because he proposed an amendment.

[Sir Edward Leigh]

Let me be quite clear: those of us who propose full fiscal autonomy and the scrapping of the Barnett formula are also arguing that there should be a block grant based on Scotland’s needs and not on England’s spending, so that there is a real Parliament making real decisions, which is what the Scottish people want.

[David Mundell]

I have noted what my hon. Friend has said. At times today, I am sure that he will have been an honorary member of Team 57.

I want to make very clearly a point that echoes the evidence I gave to the Select Committee chaired by the hon. Member for Nottingham North (Mr Allen). I regard a Scottish Parliament as a prerequisite of a United Kingdom. There will not be a United Kingdom if there is not a Scottish Parliament. I can understand why there is a lot of debate about the exact wording, and I will continue to listen to it, but I am absolutely clear that without a Scottish Parliament there will not be a United Kingdom, and that it is not sustainable to argue about lots of preconditions on that basis.

[Mr Graham Allen]

I thank the Secretary of State for listening to the proposal by the Political and Constitutional Reform Committee. Will he take away the idea that what he is saying are to be in the Bill, in so many words? What those words are to be should be left to him, and perhaps he can return to that on Report.

[David Mundell]

I said that I would reflect on a number of the issues raised by the right hon. Member for Orkney and Shetland (Mr Carmichael) relating to proposals by the Law Society of Scotland. Among those is the debate on the wording currently in part 1, and we will certainly look at that.

I do not accept amendments 58 and 59 because they refer to the term “constitution” whereas clause 1 refers to the term “constitutional arrangements”. The term “constitutional arrangements” is used to reflect the fact that the United Kingdom does not have a written constitution. That is a well-established constitutional arrangement of which a Scottish Parliament is a crucial and enduring part.

In new clause 2, the hon. Member for Edinburgh South (Ian Murray) proposes a constitutional convention. I have said at this Dispatch Box previously that I, and this Government, do not support a constitutional convention for reasons that have been well rehearsed, not least because—on this one matter I am in agreement with the Scottish National party—it would slow down the progress of this Bill, which I am committed to taking through Parliament as quickly as possible.

Other matters have been raised and we have debated them fully but they do not fully relate to the Bill. On that basis, I propose that we move to vote on the amendments.

[Mr Alistair Carmichael]

I am mindful of the fact that we have spent a considerable amount of time on this group of amendments, so I will not detain the Committee for long at this stage.

We have had a very good debate; in fact, two very good debates. On the first, there is among the three Opposition parties a broad measure of consensus that the Bill is capable of improvement. I will hold the Secretary of State to his word when he says that he will take that away and look at it. I remind him that while he might win a majority quite easily in this House, the Bill will also be scrutinised in the other place. I urge on him further consideration and suggest that the proposals brought forward by me and others tonight—I do not intend to press mine to a vote, but others who choose to do so will have my support—are reasonable.

I was very disappointed by the Secretary of State’s response on the constitutional convention. Ultimately, if we are to continue with this Union, a federal structure is inevitable. That will have to be grasped sooner or later, and the way in which that will be done is through the calling of a constitutional convention.

There has not been the same level of consensus on our other debate about the proposals for full fiscal autonomy. It has not been a particularly good debate: it has been characterised more by the heat it has generated than the light. Like the hon. Member for Edinburgh East (Tommy Sheppard), I favour the idea of evidence-based policy. I am not without sympathy for those on the SNP Front Bench when they say that they could do things differently with the extra powers that would be given to them. However, to simply say that it could all be done by generating extra economic growth is not good enough.

19:30

When the deficit is of the scale outlined by the hon. Member for Edinburgh South (Ian Murray), it is incumbent on those wanting us to go down that road to say exactly what it would mean. What sort of reductions in public expenditure and what sort of increases in taxation would be necessary? What would be the new level of borrowing and how would it fit into a new fiscal framework?

Essentially, I do not think that the SNP’s proposals sufficiently respect what the people of Scotland voted for in the election. They voted for the continuation of a Union—

[Mr MacNeil]

Will the right hon. Gentleman give way?

[Mr Carmichael]

No, I am just winding up.

They voted for a family of nations whereby we all put in and all take out at different times, with different measures and in different ways, with a single market, offering a single system of regulation and of business taxation. That is what my constituents voted for, both in this election and in last year’s referendum. For that reason, I will certainly not vote with the Scottish nationalists or, indeed, with the English nationalists on the Conservative Back Benches if they are minded to press their proposals to a vote. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 58, in clause 1, page 1, leave out lines 7 and 8 and insert—

“(1A) The Scottish Parliament is a permanent part of the United Kingdom’s constitution.

(1B) Subsection (1) or (1A) may be repealed only if—

(a) the Scottish Parliament has consented to the proposed repeal, and

(b) a referendum has been held in Scotland on the proposed repeal and a majority of those voting at the referendum have consented to it.”—(Angus Robertson.)

This amendment is to ensure that the Scottish Parliament can only be abolished with the consent of the Scottish Parliament and the Scottish people after a referendum.

Question put, That the amendment be made.

19:31

Division 8

Ayes: 271

---

Labour: 208
Scottish National Party: 56
Liberal Democrat: 4
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1

Noes: 302

---

Conservative: 299
Ulster Unionist Party: 1
Democratic Unionist Party: 1

Clause 1 ordered to stand part of the Bill.

Clause 2

The Sewel convention

[Wayne David]

I beg to move amendment 39, page 2, line 2, leave out “But it is recognised” and insert “Notwithstanding subsection (7) above”.

[The Temporary Chair (Mr David Crausby)]

With this it will be convenient to discuss the following:

Amendment 56, page 2, line 2, leave out “not normally” and insert “never”.

The Amendment would require the Sewel Convention, requiring the legislative consent of the Scottish Parliament, to be observed in all legislation of the Parliament of the United Kingdom.

Amendment 4, page 2, line 3, leave out “normally”.

Amendment 19, page 2, line 3, after “legislate”, insert “(a)”.

Amendment 20, page 2, line 3, after “matters”, insert

“and (b) to alter the legislative competence of the Scottish Parliament or the executive competence of the Scottish Government”.

Amendment 41, page 2, line 4, at end add—

“(9) A Minister of the Crown in charge of a Bill in either House of Parliament must, before second reading of the bill—

(a) make a statement to the effect that in his view the provisions of the bill do not constitute legislation with regard to devolved matters; or

(b) make a statement that the consent of the Scottish Parliament to the Bill is being sought, or will be sought, and specifying the matters in respect of which consent is being sought; and that the Bill will not be presented for Royal Assent without such consent. Such a statement must be in writing and be published in such manner as the Minister making it considers appropriate”.

Amendment 45, page 2, line 4, at end add—

“(9) A Minister of the Crown in charge of a Bill in either House of Parliament which makes provision with regard to devolved matters must, before Second Reading of the Bill—

(a) make a statement to the effect that the Bill has the consent of the Scottish Parliament (“a statement of consent”); or

(b) make a statement to the effect that although he is unable to make a statement of consent the Government nevertheless wishes the House to proceed with the Bill.

(10) A statement—

(c) under subsection (9) must be in writing and be published in such manner as the Minister making it considers appropriate; and

(d) under subsection (9)(b) must also state the Government’s reasons for wishing the House to proceed with the Bill.

(12) In this section, “devolved matters” include—

(e) the legislative competence of the Parliament; and

(f) whether, and the extent to which, functions are exercisable by the Scottish Ministers.”

In paragraph 70 of its Ninth Report of Session 2014-15 (HC 1022), the House of Commons Political and Constitutional Reform Committee suggested that one approach to giving the Sewel Convention the force of statute would be the addition of a requirement for the Government to set out its reasons for legislating on a matter covered by the Sewel Convention without the consent of the Scottish Parliament where it seeks to do so.

Clause stand part.

New clause 5—Application of the Human Rights Act 1998 to Scotland—

The application of the Human Rights Act 1998 to Scotland shall not be repealed in so far as it affects Scotland without the express consent of the Scottish Parliament.”

The New Clause states the intention that the express consent of the Scottish Parliament would be required before any repeal by the Parliament of the United Kingdom of the Human Rights Act 1998 as it applies to Scotland.

New clause 10—Consent of the Scottish Parliament to certain Westminster Acts—

(1) In section 28 of the Scotland Act 1998 (Acts of the Scottish Parliament), at the end add—

“(8) But the Parliament of the United Kingdom must not pass Acts applying to Scotland that make provision about a devolved matter without the consent of the Scottish Parliament.

(9) A provision is about a devolved matter if the provision—

(a) applies to Scotland and does not relate to reserved matters,

(b) modifies the legislative competence of the Scottish Parliament, or

(c) modifies the functions of any member of the Scottish Government.

(10) In subsection (8), “Acts” includes any Act, whether a public general Act, a local and personal Act or a private Act.

(2) After section 28 of the Scotland Act 1998 insert—

“28A Duty to consult the Scottish Government on Bills applying to Scotland

(1) A Minister of the Crown shall consult Scottish Ministers before introducing any Bill into the Parliament of the United Kingdom for an Act of that Parliament that would make provision applying to Scotland.

(2) Where the Bill is for an Act making provision that would require the consent of the Scottish Parliament by virtue of section 28(8), the requirement to consult under subsection (1) includes a requirement that a Minister of the Crown give the Scottish Ministers a copy of the provisions of the Bill that apply to Scotland no later than—

(a) 21 days before the proposed date of introduction, or

(b) such later date as the Scottish Ministers may agree.

(3) The requirement in subsection (2) does not apply if—

(c) the Scottish Ministers so agree, or

(d) there are exceptional circumstances justifying failure to comply with the requirement.

(4) The reference in subsection (1) to an Act of Parliament is a reference to any Act whether a public general Act, a local and personal Act or a private Act.”

This new clause would ensure that the UK Parliament can only legislate in devolved areas with the consent of the Scottish Parliament. It puts the Sewel Convention onto a statutory footing, as agreed by the Smith Commission.

[Wayne David]

I rise to speak to amendments 39, 4 and 41 on the Sewel convention. As Members will know, the convention is quite well established. In the debate on the Scotland Bill in 1998, Lord Sewel, the Parliamentary Under-Secretary of State at the Scottish Office, said that

“we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament.”—[Official Report, House of Lords, 21 July 1998; Vol. 592, c. 791.]

That was accepted, and the Sewel convention became a reality.

As the Law Society of Scotland has said, it is true that since the enactment of that Bill there is agreement that the convention has been successful, and it has been adhered to by successive Parliaments. The Smith commission gave a firm commitment:

“The Sewel Convention will be put on a statutory footing.”

That was a clear and unambiguous statement. On the face of it, the Government’s draft legislation honoured the commitment that had been given, but I suggest that there are weaknesses in what the Government have proposed in this Bill.

I want to refer to the excellent work done by the Political and Constitutional Reform Committee. It has been pointed out that the Sewel convention has been distilled in the Government’s interpretation of it. Clause 2 refers only to the convention’s applicability in respect of devolved matters, and the convention also applies to legislation affecting the competences of the devolved institutions. We are concerned that, in some ways, what has happened in practice is not quite recognised in the Bill.

We are also concerned about the way in which the convention is to be placed on a statutory footing. Students of British constitutional history will recognise that, according to Dicey’s principle, this British Parliament has ultimate sovereignty. Such a statutory footing recognises that constitutional reality, but does not challenge it or take it forward in any way whatever. That is somewhat unfortunate and certainly worthy of debate. The statutory footing, in reality, does not count for anything because what we have is essentially a summation of the Sewel convention that is little more than a political statement. Indeed, the Political and Constitutional Reform Committee quoted academics as saying that the clause was “legally vacuous” and

“like a bowl of jelly”.

We should be concerned about that.

It is noteworthy that the House of Lords Constitution Committee, which is highly regarded by many people, said, in its rather more sedate way, that

“it can be said that the new provision will recognise the existence of the Sewel convention rather than turn it into a legally binding principle.”

That is an extremely important phrase. Although those of us who are committed firmly to the Sewel principle recognise that there is no challenge to the convention, who knows what will happen in the future? That is why it should be legally binding, not just on this Government, but on all future Governments of any political complexion. Those issues need to be aired fully in considering the Sewel convention, because they are important and fundamental to the Bill.

[Mr Graham Allen]

This is not some constitutional nicety; it is about the circumstances in which the UK Parliament is allowed to legislate on a matter that is covered by the convention, without the consent of the Scottish Parliament. I hope that my hon. Friend will press the Secretary of State very hard on this matter. The Secretary of State might want to take it away and look at the wording. As my Political and Constitutional Reform Committee said:

“The presence of the word ‘normally’ in the Convention is clearly problematic when it comes to giving it the force of a statute, and we recommend that this be addressed in any redraft of the clause.”

As well as pressing the Secretary of State on this matter now, perhaps my hon. Friend will return to it on Report so that we can all be satisfied that the Scottish Parliament’s sovereignty is not in question.

[Wayne David]

My hon. Friend has put his finger on another important issue that was considered carefully by his Committee. When the word “normally” is used, I ask, “How long is a piece of string?” It is legally imprecise, which is a cause for concern. That reinforces my earlier point.

The Secretary of State gave evidence to the Political and Constitutional Reform Committee, but I suspect that his response was not wholly acceptable to its members. I therefore hope that he has refined his response and will give more robust answers to the questions that I have put to him. We wait with interest to hear what he has to say.

Finally, new clause 5, which was tabled by my hon. Friend the Member for Nottingham North (Mr Allen), refers to the application of the Human Rights Act 1998 to Scotland. It is extremely important constitutionally that devolution has, to a large extent, been underpinned by human rights legislation, in particular the 1998 Act. That is certainly the case as far as Wales is concerned, it is extremely important as far as Northern Ireland is concerned, and it has an important bearing as far as Scotland is concerned.

In the past few years, the Scottish Parliament has taken a number of initiatives with regard to human rights. I commend those initiatives. It is easy to take them forward in Scotland because it has a different legal system from England and Wales. The Scottish Human Rights Commission has published “Scotland’s National Action Plan for Human Rights”. Whatever one’s political allegiance, those positive measures should be welcomed.

I would not like to see any piece of legislation that does not take those measures into account or that does not fully take into account how devolution in Scotland rests firmly on the principle of extensive and liberal human rights. I hope that the Committee agrees with the Opposition on that point. If any action is taken against the Human Rights Act by this Government, whatever form it takes, there should first be the express consent of the Scottish Parliament.

[Mr Graham Allen]

It is a pleasure to speak on this group of amendments. I will speak not about the Sewel convention, because that clause should be put right in a relatively straightforward way by the Secretary of State, but about the implications for the Human Rights Act 1998 of what we are considering.

New clause 5 would ensure that, were the Human Rights Act abolished, renewed, revived or changed by this place in whatever shape or form, the Scottish Parliament would be able to maintain the Act, as it would like to do. That is a principle of devolution that I would like to be applied to England, Wales and Northern Ireland within an overarching federal settlement, so that we can be sure that fundamental human rights are close to the people and cannot be dispensed with on the whim of a federal Parliament.

Whenever I talk about these things, people say, “Here we go again—dry constitutionalism”, so I want to say a little about this dry constitutionalism. This is all about defending the victims of crime, those who have disabilities, women who are facing sexual and domestic violence, and the victims of child trafficking. It is about fundamental human rights.

The rights that are listed were not written by some recent bureaucrat in the Commission in Brussels, but by an eminent group of Conservatives led by David Maxwell Fyfe, a former Conservative Home Secretary and, I think, a boss of the intelligence services, so no woolly liberal radical he. Having been affected by the appalling suffering of the second world war, he pulled together the European convention on human rights. I cannot commend him highly enough. It was drawn up not by Mr Delors or the current President of the European Commission, but in response to the plight of refugees and the torture and inhumanity of the second world war. David Maxwell Fyfe and a number of British civil servants drafted these human rights, which have been adopted across the European Union. The rights also arose out of the United Nations charter.

The rights that are listed include things that we take for granted: the right to life, liberty and security of person; the right to a fair trial; protection from torture and ill treatment; freedom of thought, conscience, religion, speech and assembly; the right to marry; the right to free elections; the right to fair access to the country’s education system; and the right not to be discriminated against.

There are many arguments about how the convention is enforced and used across the European Union, and about our interaction with the continental courts system. Is it perfect? Of course it is not. However, we should not dispense easily with something that has had a good 60 or 65 years’ service, and that has allowed people in this country who were struggling for their rights to pursue their cases, defeat the domestic courts and have things overturned in their favour. I do not want to use this just as a prelude to the arguments we will have on human rights later, but I will certainly do my best, if Mr Crausby is not listening too intently, to make sure we have a proper debate.

20:01

The sharp end of the debate on the Bill concerns the role of the Scottish Parliament. It just so happens that the guardians of human rights in Scotland are the Scottish Government and the Scottish Parliament, which is why clause 2 is a first skirmish in the battle to ensure that the Human Rights Act, in its form of maintaining the European convention on human rights, is central to what we do as Members of Parliament, regardless of party. Those rights are not important to those who are on top or in the majority. They are important to those who are losing. They are important to those who are suffering. They are important to people when arbitrary power is being used against them. This is the first little shot being fired. Perhaps it is like the part of the battle in the film “Zulu” when the first scouts encounter each other, but it is certainly really important.

I say to Scottish colleagues from all parties that the Scotland Bill is not just about Scotland. Obviously it is central, but it is not just about that. It reflects on every nation. It reflects on our values and what we stand for as a Parliament. I would therefore argue very strongly that my Scottish colleagues, even if they have some political reason not to want this as it stands, should, for the benefit of those who need the defence of the European convention on human rights, please stand up on this occasion not only for the Scottish people, vital as that is, but for the rest of the people in the Union who depend on these rights. This is an issue we will return to.

[Angus Robertson]

It is an honour to serve under your chairmanship, Mr Crausby, and to follow the hon. Member for Nottingham North (Mr Allen). I can give him the assurance that my right hon. and hon. Friends on the Scottish National party Benches will be resolute in our support of the Human Rights Act and the European convention on human rights.

I would like to speak to new clause 10. Paragraph 22 of the Smith report, entitled “Scottish Parliament consent to the UK Parliament making law in devolved areas”, recommended, simply and with no room for ambiguity, that

“The Sewel Convention will be put on a statutory footing.”

The details of clause 2 are therefore really important. The Scotland Bill, as drafted, seeks to implement this recommendation by adding a new subsection (8) to section 28 of the Scotland Act 1998. The positioning of this new provision is significant because the provision before it, section 28(7), makes an unambiguous assertion of Westminster’s parliamentary sovereignty and the legislative supremacy of the UK Parliament. Section 28(7) declares:

“This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland.”

This is therefore a clear statement that Westminster continues to have the legal power to legislate for Scotland across devolved, as well as reserved, areas of public policy. Clause 2 inserts section 28(8), which states:

“But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament.”

In paragraph 61 of its report, the Scottish Parliament Devolution (Further Powers) Committee considered that the draft clause placed

“the purpose of the Sewel Convention in statute”—

but—

“does not incorporate in legislation the process for consultation and consent where Westminster plans to legislate in a devolved area.”

In addition, the Committee recommended that the words “but it is recognised” and “normally” in the draft clause should be removed because they weaken the intention of the Smith recommendations. We agree with the all-party Committee’s analysis.

The current clause fails to implement the Smith recommendation in three respects. First, on amendments to the legislative competence of the Scottish Parliament, the Sewel convention, as set out in devolution guidance note 10, also requires the consent of the Scottish Parliament to Westminster legislation that alters the legislative competence of the Scottish Parliament or the Executive competence of Scottish Ministers. The clause does not refer to either of those categories. This is a significant omission. As the House of Commons Political and Constitutional Reform Committee noted, and as the hon. Member for Nottingham North no doubt remembers:

“We heard in oral evidence from Professor McHarg and in written evidence from Dr Adam Tucker and Dr Adam Perry that the draft clause failed to acknowledge the full scope of the Sewel Convention as it is currently applied in practice. The clause refers only to the Convention’s applicability in respect of devolved matters: it was pointed out to us that the Convention is also applied to legislation affecting the competences of the devolved institutions.”

This is reflected in the UK Government’s devolution guidance note 10, which states that a Bill requiring Scottish parliamentary consent under the Sewel convention is one which

“contains provisions applying to Scotland and which are for devolved purposes, or which alter the legislative competence of the Parliament or the executive competence of the Scottish Ministers.”

DGN 10 is referred to in the Command Paper, containing the draft clauses, as follows: “It is expected that the practice developed under Devolution Guidance Note 10 will continue.”

DGN 10 has no legal effect, but sets out how the UK Government Departments legislating in Scotland will meet the terms of the convention. This practice is not reflected in the drafting of clause 2.

Secondly, on statute as a convention, the clause puts the Sewel convention into legislation as a convention, rather than putting the convention on a statutory footing. As the Scottish Government have pointed out to the Scottish Parliament Committee, this is very different from precedents where the UK has placed other conventions on a statutory footing, such as the Ponsonby convention relating to treaty ratification. Again, as the House of Commons Political and Constitutional Reform Committee noted:

“We consider that draft clause 2 does not give the Sewel Convention the force of statute, but may strengthen the Convention politically. We believe it fails to acknowledge that the Convention extends to legislation affecting the competences of the devolved institutions. We recommend that the presence of the word ‘normally’ in the Sewel Convention, and the applicability of the Convention to legislation affecting the competences of the devolved institutions, be addressed in any redrafting of draft clause 2.”

Thirdly, on the consultation requirement, as has been widely noted and as set out in DGN 10, the effective operation of the Sewel convention depends on consultation between the Scottish and UK Governments, which the Secretary of State for Scotland made play of earlier. The clause, however, fails to include any consultation requirements.

The Scottish Government’s alternative clause, which we have tabled as a new clause, addresses those deficiencies and properly places the Sewel convention on a statutory footing. The opening subsection of the alternative adds to section 28 of the Scotland Act by providing a clear statement of the Sewel convention that the UK Parliament must not pass Acts applying to Scotland about a devolved matter without the consent of the Scottish Parliament. It then defines “about a devolved matter” to encompass all three categories covered by DGN 10: legislation in a devolved area; changing the legislative competence of the Scottish Parliament; and adjusting the Executive competence of the Scottish Government.

The alternative clause then provides for a new section 28A to be inserted into the Scotland Act. This is a straightforward consultation provision requiring the UK Government to consult the Scottish Government before introducing to Westminster Bills that apply to Scotland. Where the Westminster Bill would require the consent of the Scottish Parliament under section 28, as amended, the UK Government should share a copy of the provisions of the Bill that apply to Scotland with the Scottish Government 21 days before introduction at Westminster. However, there is an understanding that, on occasion, it is necessary to expedite the legislative process, and therefore the alternative clause is pragmatic and flexible in allowing the consultation requirement to be curtailed in certain circumstances.

The Scottish Parliament has of course looked at the clauses proposed by the Government, and its Devolution (Further Powers) Committee considered

“that the current draft clause, whilst placing the purpose of the Sewel Convention in statute, does not incorporate in legislation the process for consultation and consent where Westminster plans to legislate in a devolved area. The Committee considers that it should do so. Moreover, the Committee considers that the use of the words ‘but it is recognised’ and ‘normally’ has the potential to weaken the intention of the Smith Commission‘s recommendation in this area and recommends that these words be removed from the draft clause.

For those reasons, I urge Members on both sides of the Committee to support the measure we are promoting. In response to the published Bill, the Committee called for the specified words to be removed from the clause, but there has been no change: clause 2 is identical to the draft clause 2 we saw those many months ago.

Given everything we hear about reflecting, improvements, co-operation and the UK Government listening to the Scottish Government, the SNP and other parties, I would love to hear from the Secretary of State, whose ear I am hoping to catch, at what stage the Government intend to accept and implement these improvements. As drafted, the clause does not implement the Smith recommendation. As I have said, that critique was agreed by all parties in the Scottish Parliament, and I hope the UK Government will take that on board.

The clause puts the Sewel convention into statute, rather than putting it on a statutory footing, as required by paragraph 22 of the Smith report. In our view, the intention of the Smith recommendations was that key aspects of DGN 10 would be codified in statute. As it stands, the clause sets out the basic principle, but provides no statutory process for consultation and consent where Westminster plans to legislate for Scotland in devolved areas. As things stand, the Bill has not been drafted to take account of the shortcomings; does not put the Sewel convention on a meaningful statutory basis; does not adequately implement the Smith commission recommendations; and does not apply to changes to the legislative competence of the Scottish Parliament or Executive competence of Scottish Ministers. That is why we will be pressing for these changes.

[Mr Alistair Carmichael]

Amendments 19 and 20 have their genesis in the efforts of the Law Society of Scotland and seek to achieve much the same ends as those already outlined by the hon. Members for Caerphilly (Wayne David) and for Moray (Angus Robertson). On a very literal basis, clause 2 does implement the Sewel convention, which is why the word “normally” is in there. When Lord Sewel, during consideration of the Scotland Act 1998 in the other place, gave his undertaking, the word “normally” was used. However, as has become apparent from the comments of the hon. Member for Moray and others, the operation of the convention over the years has been very different—we now have DGN 10—and on reflection, with the benefit of pre-legislative scrutiny, it should be revisited in the terms before the House. I do not necessarily expect the Secretary of State to accept the amendments, but I hope he will acknowledge that this is a legitimate point that it would cost the Government nothing to adopt. It would be an indication that they are listening and of their good will.

New clause 5 is in the name of the hon. Member for Nottingham North (Mr Allen). I enjoyed the trailer for his Second Reading speech to the Human Rights Act abolition Bill—if we are ever to see it; it is notable, of course, that it was not in the Queen’s Speech. I hope that, having looked into the abyss and seen the myriad complications that would come from their proposal, the Government might find extensive and mature consideration necessary and that we might, in fact, never see that Second Reading.

20:15

The purpose of the Bill is to cement and protect the integrity of the UK and Scotland’s position within it as a single constitutional unit. If we were ever to have a proper, federal written constitution, the Human Rights Act would be part of it at a federal level. There is no doubt in my mind about that. To have different regimes for something as fundamental as the Human Rights Act and the European convention in different parts of the UK would put further stress on the fabric that holds us together as a constitutional unit.

[Mr Graham Allen]

Incidentally, the draft of a written constitution done by the Political and Constitutional Reform Committee included the Bill of Rights.

The abolition of the Human Rights Act—or changes to it—was in the manifesto of the governing party, so it might feel that it ought to do it. Will the right hon. Gentleman reinforce the point, however, that, as we are proving this evening, good pre-legislative scrutiny on something so technical and detailed would prove an immense bonus to the Government in getting their proposals through?

[Mr Carmichael]

Indeed, that is the case. For all sorts of reasons, pre-legislative scrutiny is not always possible, but it ought to be the default in any sensible legislature.

The Secretary of State may intervene if I am wrong, but I understand that the Government have said they will not change the integration of the Human Rights Act in the 1998 Act and that it will continue to underpin the Scottish Parliament. Inevitably, then, any such change would not apply to Scotland. It is conceivable, however, that we might be left with a messy situation in Scotland where the Human Rights Act applied to some matters and not to others. I was practising in the Scottish courts as a solicitor when the Scotland Act came into force but before the Human Rights Act came into force across the whole of the UK. It meant we had to use a device known as a “devolution note” if we wanted to raise human rights matters in court. It was messy. It was necessary to get us through the year, but I do not want to go back to those days. Having a single regime of human rights protections that applies across the whole of the UK is absolutely necessary, and we tamper with it at our peril.

[Mr Allen]

On a point of order, Mr Crausby. It might help you to know that I will be requesting a vote on new clause 5 relating to the protection of the Human Rights Act in the Scottish context in due course after 10 o’clock.

[The Temporary Chair (Mr David Crausby)]

The hon. Gentleman’s point of order is noted.

[David Mundell]

I am happy to respond to the points made and to restate, as I did on the previous group, that I will be meeting the Scottish Parliament’s Devolution (Further Powers) Committee next week, which will be an opportunity to explore some of the issues it raised in its report.

The Government’s starting point is that the Smith commission’s intention was not that the current constitutional position should be changed. Instead, the commission’s intention was that legislation should accurately reflect the political understanding of the convention, and that is exactly what I see the clause as doing.

Currently, the Government do not normally legislate in devolved areas without the consent of the Scottish Parliament. Clause 2 sets out that practice. In doing so, it puts on a statutory footing a convention that has been consistently adhered to by successive United Kingdom Governments. I understand the desire to put beyond doubt that we will seek the consent of the Scottish Parliament when legislating on devolved matters. However, in effect, amendment 56 seeks to limit the sovereignty of this Parliament by removing the word “normally” to state that the Parliament of the United Kingdom cannot legislate with regard to devolved matters without the consent of the Scottish Parliament.

In reality, the amendment would directly contradict section 28(7) of the Scotland Act 1998, which states that the section, which relates to Acts of the Scottish Parliament,

“does not affect the power of the Parliament of the United Kingdom to make laws for Scotland.”

The amendment would radically alter the way in which the practice was intended to operate as envisaged by Lord Sewel.

[Mr Alistair Carmichael]

The Secretary of State is making a compelling case for codification. On a number of occasions and in different ways, the House has limited its sovereignty, particularly in relation to the European Communities Act 1972. As I recall, there is judicial authority on that from the Factortame case. Surely he accepts that the mere act of putting a convention on a statutory footing is a change. For that reason, the adherence to the word “normally” is not appropriate.

[David Mundell]

It is not a change to how things are normally done, but a change to how they are set out on the face of legislation. As part of the Smith process, it was clear that people wanted the convention set out in the Bill, but I do not accept that they want a change to the convention as envisaged by Lord Sewel.

[Mark Durkan (Foyle) (SDLP)]

Surely not even the Smith commission wanted mere commentary to be dressed up as a clause. That is all clause 2 is—mere commentary. There is no binding or cogent constitutional governance in it.

[David Mundell]

I answered the hon. Gentleman’s questions when he was part of the Constitutional and Political Reform Committee, and I understand the strength of his views, but it was the view of the Smith commission that the convention should be set out in such a Bill, which is what the UK Government are doing. It is a fundamental principle of United Kingdom constitutional law that the United Kingdom Parliament is a sovereign legislature. The people of Scotland voted last September to remain part of that United Kingdom. Therefore, it is right that this Parliament, while respecting the Scottish Parliament and its right to legislate, continues to be able to legislate for all matters without restriction on its sovereignty.

Furthermore, I believe amendment 56 is unnecessary. The Bill adopts the language that formed the basis of the Sewel convention. When Lord Sewel said that he would

“expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament”,

he did not intend his words to carry a technical meaning. The same expectation exists in clause 2. The wording used will take the convention’s ordinary English language meaning.

The Smith commission recommended that the Sewel convention be put on a statutory footing—no more, no less. That is what the Bill seeks to achieve. Accepting amendment 56 would be to go further than was recommended, radically alter how the convention was intended to operate, and attempt to limit the authority of the UK Parliament. For those reasons, I urge hon. Members to resist it.

Amendments 41 and 45 seek to make additional stipulations to the Sewel convention. I reiterate that the Bill already establishes that the UK Parliament will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. That convention operates effectively at present. The amendments would add unnecessary bureaucracy to the procedure. I do not believe that the statutory requirements that would be placed on Members of the UK Parliament by the amendments would add any value to a process that operates well, and that is being placed on a statutory footing by the Bill.

On amendments 19 and 20, and new clause 10, as I have said, the Bill adopts the language that formed the basis of the Sewel convention. As I said in previous remarks, when Lord Sewel said that he would

“expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament”,

he did not intend those words to carry a technical meaning. We have established that the Bill clearly states that the UK Parliament

“will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament.”

That is what the well-established Sewel convention does, and it has been consistently adhered to by successive UK Governments. We have had more than 15 years of good practice of the convention. It has not been breached. In the context of my earlier remarks, I do not accept that it could be. I believe that that current good practice will continue.

The hon. Member for Nottingham North (Mr Allen) referred to the Government’s plan to reform the Human Rights Act and its incompatibility with the devolution settlements. Amendment 5, which he tabled, would make it more difficult for the UK Parliament to repeal the Act. Let me be clear about the Government’s intentions: we are committed to human rights and have pledged to bring forward proposals for a Bill of Rights. The protection of human rights is vital in a modern and democratic society. This Government will be as committed as any to upholding those human rights. The purpose of a Bill of Rights is not the diminution of rights, but to reform and modernise our system, and to restore credibility to the human rights legal framework.

The Government know that our proposals for reform are likely to be significant. As such, we will consult widely on the reforms. We are aware of the potential devolution implications of reform and will engage with the devolved Administrations as we develop proposals. We are currently developing our proposals and it would not be sensible to prejudge that process at this stage through the amendment. I hope the hon. Gentleman reconsiders his statement that he wishes to press it to a Division.

I believe I have addressed all the proposals. The Government are not persuaded by them at this stage but, as I have indicated, I will discuss the report of the Scottish Parliament Devolution (Further Powers) Committee when we meet next week.

[Wayne David]

We shall not be pressing any of our amendments to a vote. I note that the Secretary of State has said that he is not convinced “at this stage”, and I take that to mean that he is open to persuasion and willing to listen. I hope he will be persuaded by arguments that will be put to him in the other place, and, indeed, by Members of the Scottish Parliament, which he will visit shortly.

There is something of a mismatch between theory and practice here. Theory has it that this Parliament is absolutely sovereign, but, in practice, the very existence of devolution puts constraints on that sovereignty, as does the very fact that we are members of the European Union. I think that we have reached a point at which that needs to be legally recognised. There is no doubt that the word “normally” is legally imprecise, and if it ever arose in a court of law, enormous difficulties would result because of that conflict between theory and practice.

I take on board what the Secretary of State has said, and I hope that we shall see some movement. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3

Elections

[Angus Robertson]

I beg to move amendment 60, page 2, line 7, leave out “Section B3 of”

[The Temporary Chair (Mr David Crausby)]

With this it will be convenient to discuss the following:

Amendment 61, page 2, line 9, leave out from “Under the heading” to end of line 29 on page 3 and insert—

‘(2) In Part 2 of Schedule 5 to the Scotland Act 1998, for Section B3 (elections) substitute—

“B3 Elections

Elections for membership of the House of Commons and the European Parliament, including the subject matter of —

(a) the European Parliamentary Elections Act 2002,

(b) the Representation of the People Act 1983 and the Representation of the People Act 1985, and

(c) the Parliamentary Constituencies Act 1986,

so far as those enactments apply, or may apply, in respect of such membership.

Paragraph 5(1) of Part 3 of this Schedule does not apply to the subject matter of the European Parliamentary Elections Act 2002; and the reference to the subject matter of that Act is to be construed as a reference to it as at 24 July 2002 (the date that Act received Royal Assent).

(B) Elections for membership of the Parliament and local government elections

The holding of the poll at an ordinary general election for membership of the Parliament on the same day as the poll at—

(d) a parliamentary general election (other than an early such election),

(e) a European parliamentary general election, or

(f) an ordinary local government election in Scotland.

The combination of polls at—

(a) elections for membership of the Parliament, or

(h) local government elections,

with polls at elections or referendums that are outside the legislative competence of the Parliament.

Modifying the digital service for the purposes of applications for registration or for verifying information contained in such applications.

The subject matter of Parts 5 and 6 of the Political Parties, Elections and Referendums Act 2000 in relation to polls at elections that are within the legislative competence of the Parliament where they are combined with polls at elections for membership of the House of Commons and the European Parliament.

“Digital service” has the meaning given by regulation 3(1) of the Representation of the People (Scotland) Regulations 2001 as at the day on which the Scotland Act 2015 received Royal Assent.

Paragraph 5(1) of Part 3 of this Schedule does not apply to the subject matter of Parts 5 and 6 of the Political Parties, Elections and Referendums Act 2000; and the reference to the subject-matter of those Parts of that Act is to be read as at the day on which the Scotland Act 2015 received Royal Assent.””

This amendment provides substitute text for the Section B3 Elections reservation in Schedule 5 to the Scotland Act 1998 which makes the effects clearer. Part (A) reserves elections for membership of the House of Commons and the European Parliament. Part (B) refers to Scottish Parliament elections and local government elections in Scotland.

Amendment 42, page 2, leave out lines 24 to 26.

Government amendments 92 to 98.

Clause 3 stand part.

Amendment 44, in clause 4, page 3, line 42, at end insert

“including provisions about the impact of the ending of the transition to Individual Electoral Registration on the completeness of the register.”

Amendment 46, in clause 4, page 3, line 42, at end insert

“including the automatic registration of eligible electors,”.

The Amendment would give Scottish Ministers power to make provision for automatic registration for Scottish Parliament and Scottish local elections. In its Fourth Report of Session 2014-15 (HC 232), the House of Commons Political and Constitutional Reform Committee reaffirmed its view that voters should ideally be registered to vote automatically.

Amendment 47, in clause 4, page 3, line 42, at end insert—

“(b) about online voting in elections,”

The Amendment would give Scottish Ministers power to make provision for online voting for Scottish Parliament and Scottish local elections. According to the House of Commons Political and Constitutional Reform Committee in its Fourth Report of Session 2014-15 (HC 232), online voting could lead to a substantial increase in the level of participation.

Government amendments 99 and 100.

Clause 4 stand part.

Government amendment 101.

Amendment 43, in clause 5, page 6, line 8, at end insert—

“(c) A referendum called under reserved powers”.

Clause 5 stand part.

Government amendments 102 to 105.

Clauses 6 to 8 stand part.

Government amendments 106 and 107.

Clause 9 stand part.

New clause 11—Electoral registration: requirement to produce report—

‘(1) The Electoral Commission shall prepare and publish guidance setting out, in relation to Scotland, how to further improve the electoral registration process and how to ensure the completeness of the electoral registers.

(2) Guidance under subsection (1) must in particular include—

(a) workable proposals for prompting people to register to vote or update their registration details when using other public services;

(b) whether to allow schools, universities and colleges to block-register students;

(c) whether to pilot election day registration; and

(d) other proposals to ensure that greater numbers of attainers join the electoral register.”

The New Clause would require the Electoral Commission to produce a report into ways of further improving the electoral registration process and of ensuring the completeness of the electoral registers in Scotland.

20:30

[Angus Robertson]

It is a pleasure to speak about this string of amendments and new clauses relating to elections to the Scottish Parliament and local authorities.

As Members will know, paragraph 23 of the cross-party Smith commission report recommended that the Scottish Parliament should have

“all powers in relation to elections to the Scottish Parliament and local government elections in Scotland (but not in relation to Westminster or European elections). This will include powers in relation to campaign spending limits and periods and party political broadcasts.”

Additional detail was set out in paragraph 24 of the agreement.

Clauses 3 to 9, which are the focus of this group of amendments, seek to address that recommendation. While the clauses have some merit, we believe that there are still a number of issues to be worked on with the United Kingdom Government. In particular, some parts of the clauses limit the Scottish Parliament’s powers beyond those proposed in Smith. As the Scottish Government said in their response to the report of the Scottish Parliament’s Devolution (Further Powers) Committee, clause 3 does not fully implement the Smith commission’s recommendation. That is why the Scottish Government have proposed an alternative to the clause, which forms the basis of our amendments.

Our proposal would replace, rather than amend, the section B3 Elections reservation in schedule 5 to the Scotland Act 1998. That is designed to make the effects of the clause clearer. We propose that part (A) should reserve elections for membership of the House of Commons and the European Parliament, while part (B) should refer to Scottish Parliament elections and local government elections in Scotland. Our amendments reserve the holding of a Scottish election vote on the same day as a UK parliamentary general election, a European parliamentary election, or an ordinary local government election in Scotland. That would implement paragraph 24(4) of the Smith report.

In their response to the Devolution (Further Powers) Committee, the Scottish Government said:

“We have removed paragraph (b) of the combination of polls provision in Part (B), which would have had the effect of reserving the combination of devolved polls. Should the timing rules be varied to allow ordinary Scottish Parliament and ordinary Scottish local government polls to coincide, then the Secretary of State would have had competence over the devolved conduct rules, which would otherwise both be the responsibility of the Scottish Parliament. This is clearly undesirable and goes beyond the Smith recommendation.”

The Scottish Government suggested alternative drafting in relation to the digital service, which they, and we, think is clearer about the actual effect of the reservation. The reference to the reservation of parts 5 and 6 of the Political Parties, Elections and Referendums Act 2000 is the same as that in the Scotland Bill.

The Scottish Government have said that they are generally content with clauses 4 to 9, subject to the changes that they are proposing to the United Kingdom Government. The Secretary of State is no longer present, but no doubt his colleagues will be avidly taking notes about the Scottish Government’s suggestions. We have heard, in good faith, that they will be taken on board and considered in full, and hopefully they will be.

The Committee will excuse me if I rely heavily on the points of detail set out by the Scottish Government and shared with the UK Government and the devolution Committee of the Scottish Parliament. The first of those, in relation to clause 4, the part which enables Scottish Ministers to make provision by order for the combination of polls for a specified list of polls that currently may coincide, could be simplified. The reservation of the power to make combination rules could be removed from section B3, and the list of coinciding polls at section l2(2)(d) could be replaced with a provision that gives Scottish Ministers power to provide for the combination of polls and referendums that are within the legislative competence of the Scottish Parliament.

The references to use of the digital service could be seen to conflict with clause 6. This currently gives Scottish Ministers some powers to make provision, with the agreement of the Secretary of State. This could be read as restricting the use of the digital service beyond what is actually needed or intended.

Clause 5(3) goes beyond what was recommended by the Smith commission. The Smith agreement clearly sought only to prevent the polls from being held on the same day. The Scottish Government would wish to adhere to that narrow limitation. Their preference would be for the words

“or within two months before”

to be omitted from clause 5(3).

In clause 6, the Scottish Government view is that the definition of

“use of the digital service”

is overcomplicated. They also believe that the inserted section 6(3) may be out of step with existing provision in this area, as it appears to suggest that a person cannot use the digital service unless they are eligible to register, when there is nothing to suggest any current restriction on those who may use the service. If the purpose of the digital service is to determine whether an applicant is eligible to register, this provision could be omitted.

Also in clause 6, and in common with the approach to the vetoes throughout the Bill, we believe that the provision at subsection 11—

“Regulations made by the Scottish Ministers by virtue of subsection (9) may not be made without the agreement of the Secretary of State”—

should be removed. We will, of course, return to vetoes at a later stage of our consideration.

On clause 7, the Scottish Government have noted that this power does not apply where any other poll is combined with a Scottish Parliament election. They accept this in principle as a practical approach, but they suggest that it should be limited to the combination of a Scottish Parliament election with any other poll that is outwith the Parliament’s competence. The provision as drafted would have the effect that, should the timing provisions be varied to permit Scottish Parliament elections to be combined with local government elections in Scotland, the combination rules would be reserved, which would be undesirable.

On clause 9, the Scottish Government argue that subsection (6) can be omitted as the Scottish Parliament (Elections etc.) Order 2010 is already devolved under the Scotland Act 2012. The Smith commission recommended that the Scottish Parliament should have all powers in relation to Scottish Parliament elections and elections to local government in Scotland. In doing so, the commission specifically stated that this would include party political broadcasts. There does not appear to be any provision to this effect in the draft clauses. We hope the Government will address this point in particular.

The Smith commission also recommended that

“the Electoral Commission will continue to operate on a UK-wide basis. The Scottish Parliament will have competence over the functions of the Electoral Commission in relation to Scottish Parliament elections and local government elections in Scotland. The Electoral Commission will report to the UK Parliament in relation to UK and European elections and to the Scottish Parliament in relation to Scottish Parliament and local government elections in Scotland.”

We believe that clause 3 does not fully deliver the second part of this recommendation. An alternative approach should be considered, to give greater clarity and to ensure that the Scottish Parliament will have competence over the commission’s functions in relation to Scottish Parliament elections and local government elections in Scotland.

These may seem very technical areas, but they are important. I note that those on the Treasury Front Bench have been listening with interest and they no doubt will look at the record. We hope they can be persuaded to accept amendment 60 later. If they do not, I trust they will be consulting colleagues about how to take on the technical improvements that we have outlined and that I have spoken in support of this evening.

[Mr Graham Allen]

I should like to speak to amendments 46 and 47, if I may. I am sure that colleagues will know that the largest amount of public consultation ever achieved by a Select Committee was on the “Voter engagement in the UK” report that the Political and Constitutional Reform Committee produced just before the last general election. The report covered a raft of ways in which we as a House and as politicians—and politics in general—could re-engage with people out there.

The Committee did some technical stuff, and I want to talk this evening about the amendments relating to automatic registration and online voting. Anyone who believes in devolution will know that it is not possible to mandate the nations of the Union to conduct themselves and their democracy in a specified way from the centre, or even from the federal Parliaments. There has to be a degree of discretion and a degree of trust, particularly when there is an institution with the status of a Parliament within one of our nations. I would argue that that should also apply to an Assembly and an Executive and that, when we get devolution in England, it should apply to the means of devolution here as well. I would argue strongly that that should take the form of constitutionally separate local government, which is commonplace in every western democracy apart from our own.

Anyone who believes in that, and who believes that there can be a rich diversity of approaches to our democracy to suit national and local characteristics, will understand that it is key to ensure that our colleagues in the Scottish Parliament and the Scottish Government maintain and extend their discretion on matters such as automatic registration and on the suggestion in my Committee’s report for online voting. It would be out of order to suggest that that happens overnight in other nations, but we are in the middle of discussing the Scotland Bill and it is highly pertinent to say that if the representatives in the Scottish Parliament wish it, they could take forward a proposal on automatic registration, just as they did so innovatively in relation to votes for 16 and 17-year-olds before the referendum.

Such a measure would be important because it would allow everyone to participate, and because we have a false dichotomy about how boundaries could change unless registered electors met a certain number. I will explain this to the Committee—I am getting there slowly. If a small number of people are registered, that does not mean that there is a small number of constituents. In fact, some colleagues argue strongly that the people who give us the highest number of casework items are those who are not on the register. Should we say to them, “Sorry, you’re not on the register so I’m not going to help you”? Of course not.

Automatic registration can be achieved using a number of devices. I am going to ask the hon. Member for Meon Valley (George Hollingbery) some questions about this afterwards, so I hope he is paying attention. I hope that it could be achieved through registration with the Department for Work and Pensions, for example, or through credit ratings or council tax forms. It is entirely possible to make registration almost automatic. I see the distinguished members of the Political and Constitutional Reform Committee nodding eagerly in approval of what I am saying.

The Committee also looked at online voting, and 16,000 people responded to our consultation on this. Lots of organisations also put out online information and questionnaires for us. The Committee found that the most popular option was online voting. It obviously appeals to particular groups of people at the moment, but it is clearly something whose time will come very soon. Sometimes the other place is innovative. On this occasion, there is so much we can learn from the way our devolved friends in the Scottish Parliament conduct their business. Why should they not be the first to trial online voting in certain well-prescribed circumstances, which they would keep an eye on and feel responsible for, and which I am sure they would make a success. I will not detain the Committee any further on this, other than to say that diversity, experimentation and creativity are the hallmarks of proper devolution and these are just two small ways in which we could encourage our friends in the Scottish Parliament to take devolution that little bit further in their own nation.

20:45

[Wayne David]

I wish to focus on two issues, the first of which is individual electoral registration. We know full well that IER is imminent. There is some debate with the Electoral Commission, which is conducting its assessment, as to the completeness of the registers and whether or not IER will be introduced at the end of 2016 or 2015. Labour Members think it is essential that we have a complete register as far as is humanly practicable. We urge the Government and all other bodies to ensure that every effort is made to get as many people on to the register as possible. What is essential in any democracy is that people who are entitled to vote are on the register and able to choose whether to cast their vote.

That is why we think it is important that this be not only a responsibility of central Government, but a devolved matter. As we have heard, the Scottish Parliament has some responsibilities already on the conduct of elections. I am sure it shares our view of wanting to make sure that as many people as possible who are able to vote are on the electoral register. Our amendments provide practical means of providing that assessment, but we also urge that every consideration be given by the Scottish Parliament to ensuring that we do have people on that register.

As things stand, the Electoral Commission has indicated that as many as 7.5 million eligible voters are not registered. Multiple elections are coming up next year, including the Scottish Parliament elections, and the Government need to take action, as does everybody else, to ensure that a boost is given to electoral registration. We think that lessons can be learned from Scotland’s extension of the franchise in the referendum to 16 and 17-year-olds and the effort made to ensure that a special procedure was in place to ensure the maximum registration of young people. Those lessons need to be learned, acted upon and taken much further.

Labour Members are particularly concerned about the need to ensure that as many young people as possible register and that procedures are in place to ensure that college and university students are able to do so. We would like registration to be carried out en bloc by the student authorities, as it used to be. Given the increase in the private rented sector, there is a particular need for its involvement. The Government should be working much more closely with letting agencies so as to include reminders to register for all new tenants. Those issues are very important and I hope they will be given due consideration.

We would also like to press our amendment 43, on the European Union referendum. We are fully aware that that Bill is passing through this House, but the great concern out there in the country is to ensure that we have a proper, reasonable, rational and focused debate on Britain’s membership of the European Union. For that debate to take place, it is imperative that there are no other elections that will take people’s attention away from the central direction on which they must focus. We are mindful that the Electoral Commission, which has studied this matter in a great deal of depth, has said unequivocally that there should be a separation between the European Union referendum and other elections. It takes an emphatic stance. It says:

“It is important that voters and campaigners are able to engage fully with the issues which are relevant at these elections. It is also important that any debate about the UK’s membership of the European Union takes place at a time that allows the full participation of voters and campaigners, uncomplicated by competing messages and activity from elections which might be held on the same day.”

That is a pretty emphatic message by the non-political objective observers—people who have the responsibility to ensure that elections and referendums are conducted fairly and honestly. I strongly urge the Government to accept that amendment. If they are not minded to do so, we give notice that we will be pressing it to a vote.

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

I thank the hon. Members for Moray (Angus Robertson), for Nottingham North (Mr Allen), and for Caerphilly (Wayne David) for their contributions to the debate on this group of amendments on the significant electoral powers that will be transferred to the Scottish Parliament and Scottish Government. I hope to respond to as many points as I can, but first let me deal with a number of minor and technical Government amendments before I get on to the meat of the points that have been made during the debate.

Government amendments 93, 94 and 97 amend and clarify the reserved undevolved powers in clause 3 in respect of enforcement provisions within the Political Parties, Elections and Referendums Act 2000 where they apply to other provisions that are also reserved. Government amendments 95 and 96 remove sections that do not need to be reserved in the 2000 Act as well. Amendments 106 and 107 are minor and technical amendments. Amendment 106 repeals the subsections inserted into the Scotland Act 1998 by section 13 of the Scotland Act 2012. Clause 11 brings the function of making an Order in Council under sections 15(1) and (2) of the 1998 Act within devolved competence and those subsections are therefore no longer required. Amendment 107 repeals section 13 of the Scotland Act 2012 entirely.

Amendment 101 relates to clause 5, which concerns the timing of Scottish parliamentary elections and local government elections in Scotland. It will ensure that general elections for the Scottish Parliament cannot be held on the same day as general elections to the UK Parliament or to the European Parliament or a local government election in Scotland. That is in line with the Smith commission agreement, as we heard from the hon. Member for Moray.

I hope that the hon. Gentleman will be pleased to hear that the purpose of amendment 101 is to remove the provision from the clause that says that a general election to the Scottish Parliament cannot be held in the two months preceding a general election to the UK Parliament or a general election to the European Parliament. That brings us more closely in line with the Smith commission, and is, I hope, an example of cross-party working.

Amendments 92 and 98 are also minor and technical. The purpose of amendment 92 is to protect the individual electoral registration digital service from future technical changes, such as the transfer of functions between UK Ministers. Effectively, it is nothing more than a future-proofing move. If amendment 92 were not made, the effect may be to place an unintentional constraint on the future actions of both the UK and Scottish Governments. The amendment should protect against the potential need to amend the Act as the registration of electors and verification of applications to register via a digital service evolves.

Amendment 92 means that the definition of “digital service” and of “elections in Scotland” in clause 3 is no longer required. Amendment 98 therefore removes those definitions. It does not make the reservation any wider but gives additional clarity over what is to remain reserved—I am talking about the digital service itself but not the powers that have been devolved to the Scottish Parliament.

Amendments 99 and 100 are again minor and technical. Their purpose is to reflect the changes made to the reservation of the IER digital service in clause 3 by amendment 92. Amendment 99 ensures that subsection (4) of new section 12 of the Scotland Act 1998 refers to the amended reservation of the digital service in clause 3—I trust that everybody is taking notes and following closely. Amendment 100 removes the now unnecessary definition of the digital service in clause 4, again as a result of the amended reservation of the digital service in clause 3.

Amendments 102 to 105 are technical amendments that reflect the changes made to the reservation of the IER digital service in clause 3 by amendment 92. Amendment 102 ensures that the regulation-making power of Scottish Ministers in this provision refers to the amended reservation of the digital service in clause 3. Amendment 103 removes the definitions of “the digital service” and “the use of the digital service” from the clause, as they are no longer technically required. Amendment 104 ensures that clause 6 refers to the amended reservation of the digital service, as made by the amendment to clause 3. Finally, amendment 105 removes the definitions of “the digital service” and “elections in Scotland” that are also no longer required as a result of that further amendment.

Let me turn to the other amendments that are part of this wider group. I will start with amendment 42 and the elements of amendments 60 and 61 that relate to clauses 3 and 5 and the continued reservation of certain combinations of polls. The clauses fulfil the Smith commission agreement devolving significant electoral powers to the Scottish Parliament while ensuring that polls for Scottish parliamentary general elections will not be held on the same day as UK parliamentary general elections, European parliamentary general elections or ordinary local government elections in Scotland, which have already been devolved.

[Ian Murray]

Will the Minister explain why the entirety of the administration of Scottish parliamentary and local government elections is devolved to the Scottish Parliament while the UK Parliament reserves the right not to have Scottish parliamentary and local government elections on the same day? Why not devolve them all to allow the Scottish Parliament to make that decision?

[John Penrose]

That is a question I asked myself a short while ago. The reason is very straightforward. Although the two powers are devolved, as the hon. Gentleman rightly points out, changing the rules surrounding them and on whether or not they can happen on the same day is a reserved power. As that is a reserved power, it makes sense to keep any potential combination of elections as a reserved power for the time being, as the two powers match up. Were it to be within the competence of the Scottish Parliament to vary that, it would make sense for the Scottish Government to have the power to adjust the combination rules. As it is, the two match up closely.

[Pete Wishart]

I am grateful for that explanation. The key issue we face in the next year is the prospect of an EU referendum being held on the same day as the Scottish parliamentary elections. Would he like to take the opportunity to say what he thinks about that and to rule it out? We cannot have 16 and 17-year-olds coming into the polling booth to vote in the Scottish Parliament election, possibly being ID-ed, and then being turned out as they cannot vote in the EU referendum.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. We need to watch out so that we do not go outside the scope of what we are discussing. That is the danger. As much as the hon. Gentleman wants to tempt the Minister, I want him to try to stay within the scope of the Bill and to try to answer along those lines.

[John Penrose]

I shall endeavour to be as helpful as I can when I reach amendment 43, which is closely adjacent to the points made by the hon. Member for Perth and North Perthshire (Pete Wishart), without, I hope, trying your patience in the process, Mr Hoyle.

Clauses 3 and 5 fulfil the Smith commission agreement devolving significant electoral powers to the Scottish Parliament while ensuring that polls for Scottish parliamentary ordinary general elections will not be held on the same day as UK parliamentary general elections, European general elections or ordinary government elections, as we just discussed. The UK Government consider the timing and combination of polls to be intrinsically linked. I think that we might have covered that point, but I want to make sure that it is clear. That is why the combination of polls involving a reserved poll with a poll at a Scottish parliamentary election or local government election in Scotland continues to be reserved, as does the combination of a poll at a Scottish parliamentary ordinary general election with a poll at an ordinary local government election in Scotland. I urge Members to withdraw their amendments for the reasons that I have just given.

Amendment 43 seeks to ensure that it would not be possible for a Scottish parliamentary general election to be held on the same day as a referendum called under reserved powers. The hon. Member for Caerphilly gets top marks for ingenuity for trying to shoehorn into the Bill before us today a measure which affects tomorrow’s business. I understand that there are strong views on the issue and I promise him that we are considering them carefully. He will know that an amendment has been tabled for the business tomorrow which is very similar to this one and will allow the issue to be debated in some depth. I therefore encourage my right hon. and hon. Friends to resist the opportunity to support the amendment, if only because it would not be fair to Members of other devolved Parliaments and Assemblies, which may have elections on the same day as the Scottish elections next year, for such a measure to be dealt with in a Scottish Bill when we have the opportunity to deal with it properly tomorrow.

21:00

The hon. Member for Caerphilly was right to point out the Electoral Commission’s view on the combination of polls. The commission is very cautious and extremely concerned about excessive combination of polls because of the potential for confusion in electors’ minds. I hope we would all agree that this is a statement which is true within boundaries. We are all familiar with occasions— 7 May was a good example in many parts of the country—where there are general election polls on the same day as local election polls, so it is possible to combine some polls without any ill effects and electors are used to that. But if too many polls are combined on the same day, perhaps with combined ballot papers, the potential for confusion exists, which is why the Electoral Commission is so concerned.

Amendments 46 and 47 on electoral registration and voting were tabled by the hon. Member for Nottingham North. Members will be aware that the hon. Gentleman was Chair of the Political and Constitutional Reform Committee in the previous Parliament—indeed, he was waving around one of the Committee’s reports earlier. I thank him for his Committee’s work on the important issue of registration. His amendments relate to automatic registration and online voting. The Bill transfers order-making powers in clause 4—the new section 12—that provide Scottish Ministers with powers regarding the conduct of Scottish Parliament elections and the registration of electors at those elections. The Government consider that these will be sufficient for Scottish Ministers to provide, should they wish, for both automatic registration and electronic voting at Scottish parliamentary elections. The Government therefore consider the amendments unnecessary and beyond the remit of the Bill.

The hon. Members for Edinburgh South (Ian Murray) and for Caerphilly tabled new clause 11, which seeks to require the Electoral Commission to produce guidance on ways of further improving the electoral registration process in Scotland, and of ensuring the completeness of electoral registers in Scotland. Under the Smith commission agreement, the Bill devolves functions of the Electoral Commission to the Scottish Parliament in relation to Scottish Parliament elections. The provisions in the Bill will already allow the Scottish Parliament to make provisions for the Electoral Commission to produce such guidance in relation to Scottish parliamentary and local government elections in Scotland. The new clause is therefore not necessary and I hope the hon. Gentlemen will not press it when the moment arrives.

On individual electoral registration, I agree with the hon. Member for Caerphilly. Speaking from the Opposition Front Bench, he said it was essential that registers were as complete and as accurate as possible. I am sure that democrats in all parts of the House would applaud that sentiment. We want to ensure that that is happening wherever we can. A report from the Electoral Commission is due shortly which is designed to assess the effect of individual electoral registration, where it has gone well and where it has progressed more slowly, and to assess what benefits have resulted from it. It would therefore be premature to prejudge that report, but I am sure that the hon. Gentleman and I and pretty much everybody in the Chamber will examine it in detail when it comes out. I am sure it will contain some useful recommendations and some important facts for us all to consider.

Non-IER registered electors are those who were not among the 87% of the electorate who were data-matched and automatically transferred to the new registers and who are yet to make a fresh application under the new system. That means 13% of electors on the original electoral rolls were initially unmatched, and we have been whittling down that number. Unless their electoral registration officers have evidence to suggest that those people are no longer eligible, they have been retained on the electoral register as carry-forward electors. The end of the transition to IER will be the point at which any of those remaining non-IER registered electors are automatically removed from the electoral registers in Great Britain.

The amendment would allow the Scottish Government to make regulations about the impact of the end of transition to IER on the completeness of the registers for Scottish parliamentary and local government elections. However, clause 4 already gives Scottish Ministers a broad power to make provision on matters relating to the conduct of Scottish parliamentary and local government elections, particularly on the registration of electors. The intention behind the amendment is to make provision to keep non-IER registered electors on the Scottish electoral registers beyond the end of the transition, but Scottish Ministers could do so already under clause 4 as currently drafted. The amendment would therefore add nothing and is unnecessary. I hope that it will be withdrawn so that we can proceed.

[Angus Robertson]

I know that we are running out of time, so I will not detain the Committee. I have listened to what the Minister has said and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 92, page 2, leave out lines 30 to 32 and insert—

“Any digital service provided by a Minister of the Crown for the registration of electors.”.

This amends the reservation of the Digital Service to allow for future changes, such as to the operational mechanisms of the Service, subsequent amendments to the Representation of the People (Scotland) Regulations 2001 (SI 2001/497) and for transfers of functions between Ministers.

Amendment 93, page 2, leave out lines 33 to 37 and insert—

(a) Parts 5 and 6 of the Political Parties, Elections and Referendums Act 2000 (expenditure in connection with elections) in relation to an election within the legislative competence of the Parliament, where the poll at the election is combined with the poll at an election for membership of the House of Commons or the European Parliament, and

(b) sections 145 to 148 and 150 to 154 of that Act (enforcement) as they apply for the purposes of Part 5 or 6, so far as the subject-matter of that Part is reserved by paragraph (a).”.

This amendment amends the reservation relating to Parts 5 and 6 of the Political Parties, Elections and Referendums Act 2000 to make clear that sections 145 to 148 and 150 to 154 are also reserved to the extent that those Parts are reserved.

Amendment 94, page 3, line 1, leave out from “Act” to end of line 2 and insert

“as they apply for the purposes of section 155 or 156, so far as the subject-matter of that section”.

This amendment makes drafting changes to the reservation of sections 145 to 148 and 150 to 154 of the Political Parties, Elections and Referendums Act 2000 in line with amendment 93.

Amendment 95, page 3 , leave out line 12 and insert—

“(c) sections 12, 21 to 33, 35 to 37, 39 to 57, 58 to 67, 69, 71, 71F, 71G, 71H to 71Y and 140A,”.

This amendment amends the reservation of the Political Parties, Elections and Referendums Act 2000 so that sections of that Act which have been repealed, make amendments to other legislation or do not relate to elections to the Scottish Parliament are not included in the reservation.

Amendment 96, page 3, line 15, after “157”, insert “and 159”.

This amendment amends the reservation of the Political Parties, Elections and Referendums Act 2000 in B3(B) so that section 158 is not reserved. Section 158 provides for amendments and repeals of other legislation and therefore there is no subject-matter within this section that needs to be reserved.

Amendment 97, page 3, line 16, leave out from “154” to end of line 18 and insert

“as they apply for the purposes of a provision mentioned in paragraphs (a) to (e), so far as the subject matter of that provision is reserved by those paragraphs.”

This amendment makes drafting changes to the reservation of sections 145 to 148 and 150 to 154 of the Political Parties, Elections and Referendums Act 2000 in line with amendment 93.

Amendment 98, page 3, leave out lines 20 to 25.—(Stephen Barclay.)

Due to amendment 92, definitions of the “digital service” and “elections in Scotland” are no longer required.

Clause 3, as amended, ordered to stand part of the Bill.

Clause 4

Power to make provision about elections

Amendments made: 99, page 4, line 30, leave out from “of” to end of line 32 and insert

“any digital service provided by a Minister of the Crown for the registration of electors”.

This amendment ensures that subsection (4) of new section 12 of the Scotland Act 1998 refers to the amended reservation of the Digital Service (see amendment 92).

Amendment 100, , page 5, leave out lines 1 to 3. —(Stephen Barclay.)

Due to amendment 92, a definition of the “digital service” is no longer required.

Clause 4, as amended, ordered to stand part of the Bill.

Clause 5

Timing of elections

Amendment made: 101, page 6, line 4, leave out “, or within two months before,”.—(Stephen Barclay.)

This amendment removes the provision preventing a Scottish parliamentary ordinary general election from being held in the two months before a UK or European parliamentary general election, but such an election to the Scottish Parliament could not be held on the same day as such elections to the UK or European Parliaments.

Amendment proposed: 43, page 6, line 8, at end insert—

“(c) A referendum called under reserved powers”.—(Wayne David.)

Question put, That the amendment be made.

21:07

Division 9

Ayes: 269

---

Labour: 205
Scottish National Party: 56
Liberal Democrat: 4
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1
Plaid Cymru: 1

Noes: 305

---

Conservative: 302
Democratic Unionist Party: 1
Ulster Unionist Party: 1

Clause 5, as amended, ordered to stand part of the Bill.

Clause 6

Electoral registration: the digital service

Amendments made: 102, page 6, leave out lines 38 to 40 and insert

“is exercisable by the Scottish Ministers concurrently with the Secretary of State for the purposes of making provision about the use, in relation to elections in Scotland, of any digital service provided by a Minister of the Crown for the registration of electors.”

This amendment ensures that the regulation-making power of the Scottish Ministers refers to the amended reservation of the Digital Service (see amendment 92).

Amendment 103, page 6, line 41, leave out from “(9)” to end of line 7 on page 7 and insert “‘elections in Scotland’ means—”.

Due to amendment 102, definitions of the “digital service” and “use of the digital service” are no longer required.

Amendment 104, page 7, line 21, leave out “the digital service” and insert

“a digital service provided by a Minister of the Crown for the registration of electors”.

This amendment ensures that the provision refers to the amended reservation of the Digital Service (see amendment 92).

Amendment 105, page 7, leave out lines 34 to 36 —(Stephen Barclay.)

Due to amendment 104, definitions of the “digital service” and “election in Scotland” are no longer required.

Clause 6, as amended, ordered to stand part of the Bill.

Clauses 7 and 8 ordered to stand part of the Bill.

Clause 9

Minor and consequential amendments: elections etc

Amendments made: 106, in clause 9, page 11 , line 4, at end insert—

“( ) Omit sections 92(4A), 104(3) and 112(6) and paragraph 11(4) of Schedule 4 (functions under section 15 to be regarded as exercisable within devolved competence).”

This amendment repeals the subsections inserted into the Scotland Act 1998 by section 13 of the Scotland Act 2012. Clause 11 brings the function of making an Order in Council under sections 15(1) and (2) of the 1998 Act within devolved competence and these subsections are therefore no longer required.

Amendment 107, page 11, line 7, leave out “and 2” and insert “, 2 and 13”—(Stephen Barclay.)

This amendment repeals section 13 of the Scotland Act 2012. Amendment 106 repeals the amendments section 13 made to the Scotland Act 1998 and therefore this section is no longer required.

Clause 9, as amended, ordered to stand part of the Bill.

Clause 10

Super-majority requirement for certain legislation

[Joanna Cherry]

I beg to move amendment 62, page 11, line 19, leave out

“the decision whether to pass or reject it”

and insert

“the motion that the Bill be passed is debated”.

Amendments 62 to 66 to Clause 10 aim to clarify matters around references to the Supreme Court, in particular where the Scottish Parliament resolve to reconsider the Bill.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 21, page 11, line 27, at end add—

“(aa) the period between general elections specified in section 2(2)”.

Amendment 22, page 11, line 30, at end add—

“(ba) the alteration of boundaries of constituencies, regions, or any equivalent electoral area”.

Amendment 63, page 11, line 39, after “unless”, insert

“it is passed without division, or”.

Amendment 64, page 12, line 18, at end insert—

“(2A) He shall not make a reference by virtue of paragraph (a) of subsection (2) if the Parliament resolves that it wishes to reconsider the Bill.

(2B) He shall not make a reference by virtue of paragraph (b) of subsection (2) if—

(a) the Bill was passed without a division, or

(b) the Bill was passed on a division and the number of members voting in favour of it was at least two thirds of the total number of seats for members of the Parliament.”

This amendment establishes that a Bill passed by consensus in the Scottish Parliament (i.e. without a division) automatically meets the super-majority requirement and ensures that a Presiding Officer’s statement is not required if the super-majority requirements are not triggered.

Amendment 65, page 12, line 23, at end insert—

“(3A) Subsection (3B) applies where—

(a) a reference has been made in relation to a Bill under this section, and

(b) the reference has not been decided or otherwise disposed of.

(3B) If the Parliament resolves that it wishes to reconsider the Bill—

(a) the Presiding Officer shall notify the Advocate General, the Lord Advocate and the Attorney General of that fact, and

(b) the person who made the reference in relation to the Bill shall request the withdrawal of the reference.”

Amendment 66, page 12, line 27, leave out subsections (11) and (12) and insert—

“(10A) In subsection (4) after paragraph (a) insert—

“(aa) where section 32A(2)(b) applies—

(i) the Supreme Court decides that the Bill or any provision of the Bill relates to a protected subject matter, or

(ii) a reference has been made in relation to the Bill under section 32A and the Parliament subsequently resolves that it wishes to reconsider the Bill.”

(10B) After that subsection insert—

“(4A) Standing orders shall provide for an opportunity for the reconsideration of a Bill after its rejection if (and only if), where section 32A(2)(a) applies—

(a) the Supreme Court decides that the Bill or any provision of the Bill does not relate to a protected subject matter, or

(b) the Parliament resolves that it wishes to reconsider the Bill.””

Clause 10 stand part.

Amendment 67, in clause 11, page 13, line 4, at end insert—

“(1A) In paragraph 1 of Schedule 4 (protection of Scotland Act 1998 from modification), delete ‘(2)(f) the Human Rights Act 1998’”

This amendment would remove the Human Rights Act 1998 from the list of protected provisions in Schedule 4 of the Scotland Act 1998.

Amendment 68, page 13, line 10, paragraph (a)(ii), leave out “(3)” and insert “(2B)”.

Amendments 68 to 88 to Clause 11 would grant the Scottish Parliament powers to make decisions about all matters relating to the arrangements and operations of the Scottish Parliament and Scottish Government as agreed in the Smith Commission.

Amendment 69, page 13, line 11, paragraph (a)(iii), leave out “11” and insert “12”.

Amendment 70, page 13, line 12, paragraph (a)(iv), leave out from “section” to the end and insert “sections 13 to 27,”.

Amendment 71, page 13, line 13, paragraph (a)(v), leave out from “(v)” to the end and insert “section 28(1) to (6),”.

Amendment 72, page 13, line 14, paragraph (a)(vi), leave out from “(vi)” to the end and insert “sections 29(2)(e)”.

Amendment 73, page 13, line 15, paragraph (a)(vii), leave out “27(1) and (2)” and insert “31”.

Amendment 74, page 13, line 16, paragraph (a)(viii), leave out “28(5)” and insert “32(1) to (3),”.

Amendment 75, page 13, line 17, paragraph (a)(ix), leave out “(1)(a) and (b) and (2) and (3)”.

Amendment 76, page 13, line 18, paragraph (a)(x), leave out “39” and insert “38”.

Amendment 77, page 13, line 21, paragraph (b)(i), leave out “44(1B)(a) and (b), and (2)” and insert “44(1C), (2) and (4),”.

Amendment 78, page 13, line 22, paragraph (b)(ii), leave out “(3) to (7)” and insert “to 50”.

Amendment 79, page 13, line 23, paragraph (b)(iii), leave out “46(1) to (3)” and insert “51(1), (2) and (5) to (8)”.

Amendment 80, page 13, line 24, paragraph (b)(iv), leave out “47(3)(b) to (e)” and insert “52”.

Amendment 81, page 13, line 25, paragraph (b)(v), leave out “48(2) to (4)” and insert “59”.

Amendment 82, page 13, line 26, paragraph (b)(vi), leave out “49(2) and (4)(b) to (e)” and insert “61”.

Amendment 83, page 13, line 27, leave out paragraph (b)(vii).

Amendment 84, page 13, line 28, paragraph (c), leave out “(3)”.

Amendment 85, page 13, line 29, paragraph (d), leave out from “general,” to the end of the paragraph, and insert—

“(i) sections 81 to 85,

(ii) sections 91 to 95, and

(iii) section 97,”.

Amendment 86, page 13, line 31, paragraph (e), leave out from “supplementary,” to the end of the paragraph in line 37, and insert—

“(i) sections 112, 113 and 115, and Schedule 7 (insofar as those sections and that Schedule apply to any power in this Act of the Scottish Ministers to make subordinate legislation),

(ii) sections 118, 120 and 121,

(iii) section 124 (insofar as that section applies to any power in this Act of the Scottish Ministers to make subordinate legislation),

(iv) section 126(1) and (6) to (8), and

(v) section 127,”.

Government amendments 108 to 110.

Amendment 87, page 13, line 39, paragraph (g), leave out “6” and insert “7”.

Amendment 88, page 13, line 41, paragraph (h), leave out

“paragraphs 1 to 6 of”.

Clause stand part.

[Joanna Cherry]

I rise to speak in favour of amendments 62 and 67. Amendment 67 would introduce to clause 11 a subsection that would remove the Human Rights Act from the list of protected provisions in schedule 4 to the Scotland Act 1998.

In the debate on the Gracious Speech, the Home Secretary confirmed that a Bill will be brought forward during this Parliament to introduce a Bill of Rights and to repeal the Human Rights Act. The Scottish National party has consistently opposed repeal of the Human Rights Act. We won the election in Scotland and therefore there is no mandate from the Scottish people for repeal of the Act. None the less, the Secretary of State for Scotland has confirmed, albeit on Radio Scotland, that repeal of the Human Rights Act will apply equally in Scotland as in England. At present, the Human Rights Act is listed as a protected provision in schedule 4 to the Scotland Act, which means that the Scottish Parliament cannot modify the Human Rights Act. Amendment 67 would change that.

The UK Government have not been clear on how potential changes to the United Kingdom’s relationship with the European convention on human rights and the abolition of the Human Rights Act could impact on the place of the ECHR in Scotland’s constitutional settlement. That is important because the ECHR is entrenched in the Scotland Act. For example, section 29(2)(d) provides that a provision that is incompatible with the ECHR is outwith the legislative competence of the Scottish Parliament, and section 57(2) provides that a member of the Scottish Government has no power to make any subordinate legislation or to do any act in so far as that would be incompatible with the ECHR.

Neither of those sections would be changed by simple repeal of the Human Rights Act alone. It is clear, therefore, that human rights are not specifically a reserved matter; they are partially devolved. Scottish National party Members therefore argue that any repeal of the Human Rights Act without first consulting the Scottish Parliament would violate the Sewel convention, whereby the Westminster Government will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament.

Matters are further complicated by the fact that the Smith commission and the draft clauses proposed putting the Sewel convention on a legislative footing. There is therefore the prospect of a very real clash between the United Kingdom Government commitment to revise and reduce the role of the ECHR in United Kingdom law and their commitment to the Scottish electorate to implement the vow. There is a real possibility of a clash between the Scottish and Westminster Parliaments.

It is worth pausing to look at the realities of human rights in the United Kingdom and why they matter. As I said in my maiden speech, the United Kingdom in fact loses very few of the cases brought against it in Strasbourg. The United Kingdom once had a proud tradition of leading in Europe on human rights. It was elected to membership of the United Nations Human Rights Council in 2014 on a prospectus claiming that it was

“a passionate, committed and effective defender of human rights”.

Repealing the Human Rights Act would not really live up to that claim and would send out all the wrong signals. The right hon. and learned Member for Beaconsfield (Mr Grieve) said in 2014 that the proposal to repeal the Human Rights Act represented a

“failure of ambition…on the global promotion of human rights”.

Human rights matter to ordinary people in this country. Those who have benefited from the Human Rights Act include victims of domestic violence, who have been able to get better protection, and victims of rape, who have used the Act to ensure that the police properly investigate offences. Lesbian, gay, bisexual, transgender and intersex people have used human rights to overcome discrimination in this country. The families of military personnel killed on active service because the Ministry of Defence supplied them with outdated equipment have also benefited under the Human Rights Act. These rights are very real for ordinary United Kingdom citizens.

In Scotland, we have a national action plan for human rights, which has been co-produced in partnership with wider civil society. We have a United Nations- accredited Scottish Human Rights Commission, which is internationally acknowledged as one of the world’s best. As I said in my maiden speech, our commitment to human rights in Scotland extends not just to the ECHR, but beyond that to social and economic rights. Through our work on social justice and challenges such as that on fair work, we are intent on ensuring that people in Scotland can enjoy their economic, social and cultural human rights. Scotland is also a world leader in its work to give full effect to the rights of children. We are very proud of that record in Scotland and we wish to protect it—hence amendment 67.

As I have said, the amendment would have the effect of removing the Human Rights Act from the list of enactments that cannot be modified by the Scottish Parliament. If the Scottish Parliament was able to modify the Human Rights Act, that would allow the Scottish Government and the Scottish Parliament to establish a human rights regime in Scotland regardless of whether the Act was repealed by the UK Parliament.

I hasten to add that, as our First Minister has said, the SNP is committed to opposing the repeal of the Human Rights Act for the whole of the UK, not just for Scotland. However, in the unfortunate event that it is repealed for the whole of the UK, amendment 67 would enable us to do something about it, at least in Scotland. That position has the overwhelming support of the Scottish electorate, as evidenced by the 56 out of 59 MPs sitting beside and behind me.

[Mr Alistair Carmichael]

I will not detain the Committee because time is pressing.

I tabled amendments 21 and 22, which were authored by the Law Society of Scotland. The two issues that they deal with are fairly short in their compass and I do not intend to press them to a Division. However, I will be interested to hear the Minister’s response to them and to have it on the record.

Amendment 21 would include the parliamentary term of the Scottish Parliament within the provisions that can be altered only by way of a super-majority. Under amendment 22, the same would be true of boundaries. It is the wish of the Law Society of Scotland that it should not be possible to influence those matters by a simple majority merely for political advantage.

21:30

The more substantive amendment is amendment 62, which was moved by the hon. and learned Member for Edinburgh South West (Joanna Cherry). There was virtually nothing in her speech with which I disagreed on the role of the Human Rights Act 1998 in Scotland and the integral nature of it to the constitutional furniture that created and maintains the Scottish Parliament. It is a matter of significant importance.

I say to the Government that the way to avoid the difficulties that they will create in respect of the Scottish Parliament and the Northern Ireland Assembly by going ahead with the abolition of the Human Rights Act in the rest of the United Kingdom is simply not to do it in the first place. They risk creating a constitutional mess and leaving a situation in which in one United Kingdom there are different standards of human rights, different practices and different bodies of jurisprudence. I see no advantage to the people of Scotland or the people of the rest of the United Kingdom of meddling in that way. I hope that the Government will listen to the wise words of the hon. and learned Lady.

[The Deputy Leader of the House of Commons (Dr Thérèse Coffey)]

I thank the hon. and learned Member for Edinburgh South West (Joanna Cherry) and the right hon. Member for Orkney and Shetland (Mr Carmichael) for their contributions. A number of significant points have been raised and, in responding to them, I will set out the Government’s approach.

I will start by speaking to a number of minor and technical Government amendments. Government amendments 108 to 110 will give Scottish Ministers the power to modify additional sections of the Scotland Act 1998 within their devolved competence and will clarify the extent to which those and other sections can be modified.

Amendment 108 will allow the Scottish Parliament to modify subsections (1) and (3) to (5) of section 112 of the 1998 Act to the extent that they apply to any power exercisable within devolved competence to make subordinate legislation. Amendment 109 will ensure that the Scottish Parliament can modify subsections (1) and (3) to (5) of section 112, section 113, section 115 and schedule 7 to the 1998 Act so far as those provisions apply to making subordinate legislation, including Orders in Council made by Her Majesty in areas of devolved competence. Amendment 110 will give the Scottish Parliament the power to modify section 124 of the 1998 Act, in so far as it applies to making subordinate legislation in areas of devolved competence. Those amendments will ensure that the Scottish Parliament can modify how the relevant sections apply to subordinate legislation made by Scottish Ministers and to Orders in Council made by Her Majesty that fall within devolved competence.

Amendments 62 to 66 and amendments 21 and 22 seek to amend clause 10, which fulfils the Smith commission agreement to require certain types of electoral legislation to be passed by a two-thirds majority of the Scottish Parliament. I thank the hon. and learned Lady and the right hon. Gentleman for those amendments. The Government believe that our approach to clause 10 delivers on paragraph 27 of the Smith commission agreement, which identified that there are certain types of electoral legislation on which a broad consensus is important. The commission agreed that such a procedure should apply to legislation that changes the franchise, the electoral system or the number of constituencies and regional Members of the Scottish Parliament.

Although the Government will reflect on the points that were made, we do not support those amendments, because we believe that at least two thirds of the Members of the Scottish Parliament should vote in favour of legislation that comes under clause 10 at the final stage. We recognise that that means there will have to be a vote, rather than a Bill passed by consensus, but we believe that the clause implements the intention behind the Smith commission agreement. As the Smith commission recognised, the super-majority requirement is an important safeguard of legislative powers. It is for this reason that I urge hon. Members not to press the amendments.

Amendments 21 and 22, in the name of the right hon. Gentleman, go beyond the Smith commission agreement, which did not propose that legislation relating to the term length of the Scottish Parliament, or the date of any Scottish Parliament ordinary general election, should be subject to that two thirds majority; neither did the agreement state that the Bills concerning the alteration of boundaries of constituencies, regions or any other equivalent electoral area for the Scottish Parliament should be covered by this requirement. For that reason, I ask the right hon. Gentleman not to press his amendments.

[Mr Alistair Carmichael]

In principle, why would the parliamentary term length be different from the other functions the Minister listed?

[Dr Coffey]

To be clear, that is what was agreed in the Smith commission. The right hon. Gentleman’s party agreed to it and we are not planning to go beyond the Smith commission on this particular arrangement.

[Ian Murray]

I did not want the moment to pass without congratulating the hon. Lady on her first time at the Dispatch Box and saying that we are delighted to see her.

[Dr Coffey]

Well, that is very sweet. The hon. Gentleman and I, in our very first summer here together as Members of Parliament, had the joy of going to the United States of America to participate in the British-American parliamentary group. We have been firm friends since. [Hon. Members: “Ooh!”] Exactly—what goes on in Vegas, stays in Vegas.

Clause 10 implements paragraph 27 of the Smith commission agreement, which identified that it is important to have an adequate check on certain types of Scottish Parliament electoral legislation. The Smith commission recommended that UK legislation should provide that such legislation is passed by a two-thirds majority of the Scottish Parliament. The Government agree that this provides an important safeguard. It is possible, of course, that there may be discussions on whether a particular Bill is in fact this type of legislation.

Clause 10 also allows the Advocate General, the Lord Advocate or the Attorney General to refer to the Supreme Court the question of whether a certain piece of legislation requires a two-thirds majority of the Scottish Parliament. The Supreme Court already provides a similar role on whether a particular matter is within the legislative competence of the Scottish Parliament, so I will move that clause 10 stand part of the Bill.

Amendments 67 to 88 concern clause 11, which delivers on the Smith commission recommendation to give the Scottish Parliament greater powers in relation to the arrangements and operation of the Scottish Parliament and the Scottish Government. It does this by enabling the Scottish Parliament to modify relevant sections of the Scotland Act 1998. I am sure that the Secretary of State will wish to reflect on this to ensure that the agreed powers work correctly, but the Government are clear that the substantial new powers devolved under clause 11 are the right ones.

A number of the amendments to clause 11 would allow further modification of the 1998 Act beyond the scope of the transfer of powers envisaged by the Smith commission. The Bill already transfers substantial powers to modify the Act, consistent with the commission, and the Government do not believe it is right to go beyond that.

The hon. and learned Member for Edinburgh South West referred in particular to amendment 67. Indeed, the right hon. Member for Orkney and Shetland said that this matter should be consistent across the UK, reinforcing that this is a reserved for the UK Parliament and not a devolved matter. The hon. and learned Lady said that the UK Government had not been clear on some aspects of this matter. I believe that the Prime Minister has been clear at this Dispatch Box. Amendment 67 would amend the Bill such that paragraph 1 of schedule 4 to the 1998 Act would be modified to remove the Human Rights Act 1998 from the list of legislation the Scottish Parliament cannot modify, otherwise known as the “protected enactments”.

The Committee will be aware that the Government outlined their proposal to reform and modernise our human rights framework by replacing the Human Rights Act with a Bill of Rights. That was reinforced today by my right hon. Friend the Prime Minister at the celebration of the 800th anniversary of Magna Carta. Of course, we are aware of the possible devolution implications of reform and we can engage with the devolved Administrations as we develop the proposals. As the Secretary of State said, the Sewel convention, as intended by Lord Sewel, has been placed in the Bill, but this Parliament remains sovereign. The Government are certainly committed to human rights and, as I indicated earlier, we will consider the devolution implications.

[Pete Wishart]

That is just not good enough. These are fundamental and profound issues for the Scottish Parliament. We are dependent on the Human Rights Act for the competence of the Parliament. Will the Minister vow to go forward, make sure this is looked at properly, and come back with a more suitable and substantial response?

[Dr Coffey]

The hon. Gentleman is right that these are important matters, and I can assure him that my right hon. Friend the Secretary of State is engaging with the devolved Administration as we develop the proposals. It has to be said, however, that the amendment is squarely outwith the Smith commission agreement, which contained no proposals in this respect. The hon. and learned Member for Edinburgh South West herself said it was not directly a matter for the Scottish Parliament.

Clause 11 contains important provisions that transfer substantial new powers to ensure that the Scottish Parliament has a greater role and greater powers to make decisions about the operation and administration of itself and the Scottish Government. By doing so, the clause delivers a critical element of the Smith commission package. Among other matters, the clause transfers greater powers to the Scottish Parliament over its membership and proceedings and over the composition and powers of the Scottish Government. I hope that the Committee will agree to the clause.

[Joanna Cherry]

We are also grateful to see the hon. Lady in her place, and she is always welcome to make a contribution to Scottish debates, but I regret that her contribution today does not give us the comfort we seek on the protection of human rights in Scotland. We do not wish to press our amendment to a vote tonight, but we reserve the right to return to these matters later in the Bill’s proceedings. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 ordered to stand part of the Bill.

Clause 11

Scope to modify the Scotland Act 1998

Amendments made: 108, page 13, line 32, before “section” insert

“section 112(1) and (3) to (5),”.

This amendment would allow the Scottish Parliament to modify subsections (1) and (3) to (5) of section 112 of the Scotland Act 1998 to the extent that those subsections apply to any power exercisable within devolved competence to make subordinate legislation.

Amendment 109, page 13, line 34, leave out from “power” to end of line 36 and insert

“exercisable within devolved competence to make subordinate legislation),”.

This amendment would allow the Scottish Parliament to modify the sections of the Scotland Act 1998 to be listed at sub-paragraph 4(2)(e)(i) of Schedule 4 so far as those sections apply to any powers exercisable within devolved competence to make subordinate legislation (including Orders in Council).

Amendment 110, page 13, line 37, at end insert

“, and

(iii) section 124 (so far as that section applies to any power exercisable within devolved competence to make subordinate legislation),”—(Stephen Barclay.)

This amendment would allow the Scottish Parliament to modify section 124 of the Scotland Act 1998 to the extent that the section applies to any power exercisable within devolved competence to make subordinate legislation.

Amendment proposed: 89, page 13, line 42, at end insert—

‘(2A) In paragraph 4 of Schedule 4 (protection of Scotland Act 1998 from modification), insert new sub-paragraph—

“(5A) This paragraph does not apply to amendments to Schedule 5, Part II, Head A, Section A1 insofar as they relate to:

(a) taxes and excise in Scotland,

(b) government borrowing and lending in Scotland, and

(c) control over public expenditure in Scotland.” —(Joanna Cherry.)

This amendment would enable the Scottish Parliament to amend the Scotland Act 1998 to remove the reservation on taxation, borrowing and public expenditure in Scotland, with the effect that the Scottish Parliament could then legislate in these areas to provide for full fiscal autonomy in Scotland.

Question put, That the amendment be made.

21:42

Division 10

Ayes: 60

---

Scottish National Party: 56
Labour: 4
Social Democratic & Labour Party: 2

Noes: 309

---

Conservative: 304
Democratic Unionist Party: 2
Independent: 1
Ulster Unionist Party: 1

Clause 11, as amended, ordered to stand part of the Bill.

New Clause 2

Constitutional Convention

‘(1) The Prime Minister shall establish a Constitutional Convention within one month of the day on which this act is passed.

(2) The Chair and Members of the Constitutional Convention shall be appointed in accordance with a process to be laid before, and approved by, resolution in each House of Parliament.

(3) The Chair of the Constitutional Convention is not permitted to be a Member of Parliament or a member of a political party.

(4) Members of the Constitutional must include, but not be limited to, the following—

(a) members of the public, chosen by lot through the jury system, who shall comprise the majority of those participating in the convention;

(b) elected representatives at all levels;

(c) representatives of civil society organisations and, in an advisory role, academia.

(5) The Constitutional Convention shall review and make recommendations in relation to future governance arrangements for the United Kingdom, including but not limited to the following—

(a) the role and voting rights of Members of the House of Commons;

(b) democratic reform of the House of Lords;

(c) further sub-national devolution within England;

(d) codification of the constitution.

(6) The Constitutional Convention shall engage in widespread consultation across the nations and regions of the UK, and must provide a report to both Houses of Parliament by 31 March 2016.

(7) The Secretary of State must lay before both Houses of Parliament a formal response to each recommendation of the Constitutional Convention within four months of the publication of the final report from the Constitutional Convention.” —(Ian Murray.)

This New Clause provides an outline for a Constitutional Convention selected from the widest possible number of groups in society to analyse and design future governance arrangements for the United Kingdom, and to report by 31 March 2016.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

21:55

Division 11

Ayes: 218

---

Labour: 206
Liberal Democrat: 4
Democratic Unionist Party: 2
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Ulster Unionist Party: 1
Green Party: 1

Noes: 306

---

Conservative: 305

22:05

Proceedings interrupted (Programme Order, 8 June).

The Chair put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

New Clause 3

Transfer of reserved matters

‘(1) Schedule 5 (which defines reserved matters) to the Scotland Act 1998, has effect with the following modifications.

(2) In Part I (general reservations) omit paragraph 6 (political parties).

(3) Part II (specific reservations) is omitted.

(4) Insert Part IIA (UK pensions liability) as follows—

Part IIA

UK Pensions liability

The consent of the Treasury is required before the enactment of any provision passed by the Scottish Parliament which would affect the liabilities of the National Insurance Fund in respect of old age pensions.”

(5) In Part III (general provisions) the following provisions referring to Part II of the Schedule are omitted—

(a) paragraph 3(2);

(b) paragraph 4(2)(c).”—(Sir Edward Leigh.)

This Amendment would allow the Scottish Parliament to make provision for the registration and funding of political parties, but would otherwise retain the Part I reserved matters covering the constitution, foreign affairs, public service, defence and treason. It would entirely remove the remaining reservations over financial and economic matters, home affairs, trade and industry, energy, transport, social security, regulation of the professions, employment, health and medicines, media and culture and other miscellaneous matters. The consent of the Treasury would be needed for any changes in old age pensions which would affect the liabilities of the National Insurance Fund.

Brought up.

Question put, That the clause be added to the Bill.

22:09

Division 12

Ayes: 68

---

Scottish National Party: 56
Conservative: 8
Plaid Cymru: 2
Green Party: 1
Labour: 1

Noes: 298

---

Conservative: 293
Democratic Unionist Party: 2
Independent: 1
Ulster Unionist Party: 1

New Clause 5

Application of the Human Rights Act 1998 to Scotland

‘The application of the Human Rights Act 1998 to Scotland shall not be repealed in so far as it affects Scotland without the express consent of the Scottish Parliament.’—(Mr Allen.)

The new clause states the intention that the express consent of the Scottish Parliament would be required before any repeal by the Parliament of the United Kingdom of the Human Rights Act 1998 as it applies to Scotland.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

22:22

Division 13

Ayes: 274

---

Labour: 207
Scottish National Party: 56
Liberal Democrat: 6
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Green Party: 1

Noes: 309

---

Conservative: 305
Democratic Unionist Party: 2
Ulster Unionist Party: 1

New Clause 10

Consent of the Scottish Parliament to certain Westminster Acts

‘(1) In section 28 of the Scotland Act 1998 (Acts of the Scottish Parliament), at the end add—

“(8) But the Parliament of the United Kingdom must not pass Acts applying to Scotland that make provision about a devolved matter without the consent of the Scottish Parliament.

“(9) A provision is about a devolved matter if the provision—

(a) applies to Scotland and does not relate to reserved matters,

(b) modifies the legislative competence of the Scottish Parliament, or

(c) modifies the functions of any member of the Scottish Government.

(1) In subsection (8), “Acts” includes any Act, whether a public general Act, a local and personal Act or a private Act.

(2) After section 28 of the Scotland Act 1998 insert—

“28A Duty to consult the Scottish Government on Bills applying to Scotland

(1) A Minister of the Crown shall consult Scottish Ministers before introducing any Bill into the Parliament of the United Kingdom for an Act of that Parliament that would make provision applying to Scotland.

(2) Where the Bill is for an Act making provision that would require the consent of the Scottish Parliament by virtue of section 28(8), the requirement to consult under subsection (1) includes a requirement that a Minister of the Crown give the Scottish Ministers a copy of the provisions of the Bill that apply to Scotland no later than—

(a) 21 days before the proposed date of introduction, or

(b) such later date as the Scottish Ministers may agree.

(3) The requirement in subsection (2) does not apply if—

(c) the Scottish Ministers so agree, or

(d) there are exceptional circumstances justifying failure to comply with the requirement.

(4) The reference in subsection (1) to an Act of Parliament is a reference to any Act whether a public general Act, a local and personal Act or a private Act.’—(Angus Robertson.)

This new clause would ensure that the UK Parliament can only legislate in devolved areas with the consent of the Scottish Parliament. It puts the Sewel Convention onto a statutory footing, as agreed by the Smith Commission.

Brought up, and read the First time.

Question put, That the clause be read a Second time:—

22:35

Division 14

Ayes: 63

---

Scottish National Party: 56
Liberal Democrat: 5
Social Democratic & Labour Party: 2

Noes: 309

---

Conservative: 305
Democratic Unionist Party: 1
Independent: 1
Ulster Unionist Party: 1

The occupant of the Chair left the Chair (Programme Order, 8 June).

The Deputy Speaker resumed the Chair.

Progress reported; Committee to sit again tomorrow.

Car insurance costs

Monday 15th June 2015 Commons Chamber

22:44

[Andrew Stephenson (Pendle) (Con)]

I would like to present to the House a petition signed by a large number of Pendle residents about the high cost of car insurance.

The petition states:

The Petition of residents of Brierfield and Nelson,

Declares that the Petitioners believe that the price of car insurance has risen rapidly within the BB9 post code area making it unaffordable for many, as a result of a minority of drivers making fraudulent insurance claims.

The Petitioners therefore request that the House of Commons urges the Government and the insurance industry to work together to reduce insurance costs for car drivers living in the BB9 post code area so that owning a car can be made more affordable.

And the Petitioners remain, etc.

[P001528]

Navitus Bay Wind Farm

Monday 15th June 2015 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

22:48

[Richard Drax (South Dorset) (Con)]

What a pleasure it is to be in the Chamber with you in the Chair, Madam Deputy Speaker. It is the first time I have spoken while you are in the Chair, so it is a double pleasure.

Before I begin, I want to thank several important contributors to today’s debate. Dr Andrew Langley, founder of the Challenge Navitus campaign, has provided me with information, updates, analysis and photographs over a number of years. Bournemouth Borough Council has made its extensive, commissioned research available. Mike Unsworth, the wind farm’s project director, has been most accommodating. Of course, there are also my fellow Dorset MPs, several of whom are in the Chamber.

We are faced with the daunting prospect of a giant wind farm off Dorset’s coast. Navitus Bay is a joint venture between two foreign energy companies: EDF and Eneco. Together, they formed Navitus Bay Development Ltd, which will hereafter be known as the developer. As with every infrastructure project of national significance, the proposals have been examined in depth by the Government’s Planning Inspectorate. Its recommendations have been passed to the Secretary of State for Energy and Climate Change and a decision is due by 11 September.

The purpose of tonight’s debate is to impress on the Government the contentious nature of the wind farm and how many people are opposed to it. I am most grateful that the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), is in her place and I welcome her to her role.

The plan is to erect 121 giant wind turbines, each 193 metres tall. The nearest will lie a mere 9 miles off the resort of Swanage in my constituency. The wind farm will generate power for 700,000 homes. It will occupy 153 sq km, which is an area the size of Bournemouth, Poole and Christchurch combined. A second, smaller so-called mitigation option for 78 turbines was submitted very late—I want to underline that—in the process.

Both proposals are hugely unpopular. The Planning Inspectorate received more than 2,000 interested representations during the examination period. That is more than twice the number received in respect of the Brighton Rampion project and the highest number for any proposed offshore wind farm the inspectorate has handled. In a test sample over nine days in February, 97% of emailed submissions to the inspectorate were found to be against Navitus Bay.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does the hon. Gentleman agree with me and many people in the highlands of Scotland that locational price modelling causes distortions in the market? I can hear from what he is saying that the idea of these things being built is not very popular in south Dorset. Such things might be more popular in other areas, such as the Tiree Array, but locational price modelling makes it expensive to connect to the grid from some parts of the coast, whereas other parts of the coast are almost given a subsidy. That is distorting the market, seemingly to the detriment of his constituents.

[Richard Drax]

I hear the hon. Gentleman, but I will not go down that road because I have only a short amount of time. I am grateful to him for intervening.

Before I move on to the unprecedented opposition to the Navitus Bay proposal, it is important to point out that most of the objections to it are due to its size and its proximity to Dorset’s Jurassic coast. Offshore wind generation is accepted as part of our renewables commitment and is already established in places such as the North sea. The problem with Navitus bay is that it is too big and too close.

The development will desecrate one of the most beautiful parts of our country. The Jurassic coast is made up of about 60 miles of the most highly designated coastline in England, including its only UNESCO natural world heritage site, a national park, two areas of outstanding natural beauty and two heritage coasts. A more sensitive site is hard to imagine, yet at its nearest points the wind farm will sit only 9 miles off Swanage, 10.9 miles from the Isle of Wight and 13.3 miles from Bournemouth. Those distances are all inside the 13.8 miles that was recommended by the offshore energy strategic environmental assessment in 2009. Furthermore, 70% of the pylons in the primary allocation will fall within that limit. The so-called mitigation option is little better, with the nearest turbine located 11.5 miles off Swanage.

Why on earth would anyone choose this site? Cost is surely the answer. As it is close to shore and in shallow water, the potential savings must run into millions of pounds when compared with a site further out to sea. However, the area is popular with the sailing, boating and diving communities, and is home to an array of wildlife from migratory birds to harbour porpoises, bottlenose dolphins and, of course, fish. On land, a 40 metre swathe will be carved through the New Forest to enable the wind farm to plug into the national grid.

In addition, studies have pointed to negative environmental impacts, such as rain and radar shadows, and light flicker and sound, including an ultra-low-frequency hum. Project director Mike Unsworth admits that, under the right atmospheric conditions, the rotating blades could be heard onshore. Most significantly, in 2001, UNESCO designated the Jurassic coast as England’s sole natural world heritage site of outstanding universal value.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

I am very grateful to my hon. Friend for securing this debate. It is good to see so many hon. Friends from across Dorset here in support of my hon. Friend. Does he agree that this issue affects the whole of Dorset, including the local authority areas of East Dorset, Poole and Purbeck, which fall in my constituency? The tourism industry across the whole of our county will be affected if this goes ahead.

[Richard Drax]

I entirely concur with my hon. Friend. I will flesh out the very point he raises shortly.

The UNESCO designation inscription states that world heritage sites should be

“transmitted, intact and unchanged, to future generations.”

UNESCO’s director of the world heritage centre, Kishore Rao, on advice from a UN advisory body, has warned of the wind farm’s impact, saying:

“from being located in a natural setting that is largely free from man-made structures to one where its setting is dominated by man-made structures”,

this, he added,

“could affect the long term viability”

of the site and therefore, ultimately, its designation.

[Mr Robert Syms (Poole) (Con)]

I congratulate my hon. Friend on securing the debate. It was clear from the general election the strength of opposition in my constituency. This is a very real threat to yachting, birds, the community and the view.

[Richard Drax]

I entirely concur with my hon. Friend. The wildlife is important, and millions of people travel to enjoy our beautiful wild coastline because of the unspoilt view. It is one of the reasons for the world heritage designation.

[Mr Christopher Chope (Christchurch) (Con)]

The Government have said that they wish to give a say to local people in relation to onshore wind farms. Does my hon. Friend agree that it would be ironic if they were not giving a say to local people in relation to offshore wind farms, which can have an equally dramatic impact on local communities—as will the 26 mile corridor of cables across my constituency?

[Richard Drax]

I entirely concur. I am very glad that the Minister is sitting in her place. I know she will be listening intently to every single word that we utter and take our concerns back to her Department to ensure that the right decision is made. My only concern is that, because the Government have put less emphasis on onshore, it might mean there is more likelihood of something happening offshore. I hope the Minister does not think that and that that is not the situation.

Although the risk of losing the designation has been played down, the threat is clearly there. Objectors include the National Trust, the New Forest national park, English Heritage, the Jurassic coast world heritage site steering group, numerous environmental groups, recreational and commercial sea users, Dorset County Council, Christchurch, Purbeck, and Bournemouth Councils, Poole Conservative councillors, local MPs and, of course, thousands of residents—an impressive list.

Natural England has concluded that there would be

“significant effects on designated landscapes”

and the Campaign to Protect Rural England agrees. Both organisations say they are unable to undertake a thorough review of the second submission because it was submitted so late in the process. The National Trust has also complained of the “lack of transparency” in allowing both applications to run in tandem, describing it as “contrary to the spirit” of the process.

For most local councils, the effect on tourism is the greatest concern. John Beesley, leader of Bournemouth Borough Council, wrote in a recent letter to the Prime Minister:

“Navitus Bay offshore wind farm would be highly visible from land and dramatically alter and damage the intrinsic appeal and beauty of what is currently a natural and untouched seascape…The industrial-scale turbines would be classed as permanent structures and fall into the highest category of harm in terms of visual assessment.”

A report commissioned by the council found that nearly 7 million visitors to Dorset raised £1 billion in revenue and supported 24,000 jobs, and visitor and business surveys, commissioned by Navitus Bay itself—interestingly —predict a drop in tourism of between 32% and 20% during the construction phase alone. Using the lower figure of 20%, the wind farm, over its 30-year lifespan, could cost Bournemouth, Poole, Christchurch and Purbeck up to £6.3 billion and almost 5,000 jobs. The developer does not accept these findings.

Meanwhile, UNESCO has criticised the in-house environmental impact assessment used by the developer, saying that a more genuinely independent report should have been commissioned. Certainly schemes to mitigate this eyesore are on occasions ridiculous. For example, local residents are described in the report as “principal visual receptors”—I am not making this up—and what effect the wind farm has on these so-called receptors depends on whether they are sailing, walking or cycling, which is a very strange way of judging it. Interestingly, environmental concerns were assessed and graded, while, suspiciously, the visual impact was downplayed.

To be fair—it is only right because the developers are not here—I will say what is potentially good about the project. The developer says it would create up to 1,700 jobs during the construction phase; one of three ports—Poole, Yarmouth or Portland—would be chosen as a base for operations and maintenance; the preferred supplier for the turbine blades would secure 200 jobs on the Isle of Wight; and if the foundations are concrete rather than steel, hundreds of jobs would be created on Portland. Some £15 million has been promised to negate the impact on tourism, and a further £8.6 million would be spent in schools and colleges and developing a supply chain with regional businesses.

That is the sweetie shop, and of course I welcome the potential benefits, but they are dependent on the green light, which we hope the Government, whom I know are listening tonight, will not give. However, the longer-term risk to the tourism industry and the desecration of this unique part of the country’s coastline would far outweigh the advantages. The crux is that there are plenty of other places where this wind farm could and should be sited.

[Simon Hoare (North Dorset) (Con)]

My hon. Friend is deploying his arguments with his usual fluency and cogency. Tourism is an integral part of my constituency’s local economy, but the tourist economy is often very fragile, as we can see from lots of our seaside towns around the country. People have plenty of choice, and our county cannot take the risk of seeing even a temporary downturn in tourist numbers. Those numbers might never return, and that would hammer lots of local businesses in my constituency.

[Richard Drax]

It would, and while we are all trying to get long-term secure jobs into our constituencies, there is no doubt that in a beautiful part of the country such as ours, tourism still has a major role to play and must continue to do so. More importantly, we must protect it.

Navitus Bay has been controversial, flawed and deeply unpopular from the start. If the public are to continue supporting such projects, surely it would be wise to site them with greater sympathy, judgment and balance. Ironically, this Government created an organisation in 2012 with the intention of protecting our precious natural environment from uninformed and destructive decisions. A decision to refuse both of the two options put forward by Navitus Bay would be a very good start.

23:05

[Conor Burns (Bournemouth West) (Con)]

It is a pleasure to speak for the first time with you in the Chair, Madam Deputy Speaker. I congratulate you on your elevation. I also congratulate my hon. Friend the Member for South Dorset (Richard Drax) on securing the debate.

For those Dorset Members who were here in the previous Parliament, the issue dominated our lives. I looked this afternoon at the number of times I have raised the issue. I did so first on 12 July 2011, when the former Member for Eastleigh, Chris Huhne, was the Secretary of State for Energy and Climate Change. I spoke again on 4 July 2012, 19 November 2013 and 5 December 2013. I posed written questions on 11 June 2014. I raised it at the Culture, Media and Sport Committee with the then Secretary of State on 19 January this year, and mentioned it as recently as 11 June 2015.

It is the biggest issue that confronts our constituents across Dorset. The point my hon. Friend the Member for South Dorset made needs to be emphasised: every single one of us present tonight made it a major feature of our election campaigns. Opposition to Navitus and fighting its detrimental impact on my constituents in Bournemouth West was the No. 1 promise I made to my electorate in my personal election address. I am delighted to see new Members joining the fight—my hon. Friends the Members for North Dorset (Simon Hoare) and for Mid Dorset and North Poole (Michael Tomlinson).

I place on record the gratitude we all feel to Bournemouth Borough Council, and in particular to its leader, John Beesley, who has put the full resources of the council and its officers behind the opposition to the proposal.

My hon. Friend the Member for South Dorset made an important point that is worth emphasising: more people registered as interested parties in this proposed development than in any other offshore development. I hope the Minister understands, but it should not be thought that opposition to the proposal is confined to those who live on the coastline or adjacent to it. When campaigning in my constituency, I was struck by the opposition of people in the north of Bournemouth—in Kinson and Redhill—and by the opposition in Alderney and Branksome East in the borough of Poole. I was struck by the opposition, too, when I campaigned with my hon. Friend the Member for Mid Dorset and North Poole.

Right from the beginning of the proposal, we said to the company and to Mike Unsworth that, if we could not see the development, and if the visual impact was minimal, we would be prepared to work with the company to bring it to fruition, but in the development zone that the Crown Estate provided to the company, it is strange that the only area it deemed capable of development was the area that is closest to the shore and that has the greatest visual impact.

I understand that the Government have listened intently to other colleagues and their concerns about onshore wind, and I understand the Government’s resolve to put the brakes on it, but I hope it is not the case that on is off and off is on. I hope the application will be determined on its merits. That is all any of us ask. We believe that the arguments against the proposal are absolutely compelling.

I hope the Minister also notes that, in everything all of us who have spoken about the proposal over the last Parliament and in the beginning of this one, we have not sought to take issue with the Government’s energy policy, and we have not sought to discuss the merits or demerits of renewables. We accept the Government’s energy policy to be exactly that. We contend that the application is potentially deeply damaging to our communities.

My hon. Friend the Member for South Dorset quoted from the advisory body to UNESCO, which said that, if the development goes ahead, it will take the Jurassic coast from being largely in a natural setting to being largely in a man-made setting. We should be under no illusion about the fact that UNESCO will revoke the coast’s natural world heritage designation. It has done it in Germany, and threatened to do it to Mont Saint Michel.

The Minister will rise to speak in a moment, and I have great sympathy for her. She will be able to say almost nothing about this matter, because the application is under consideration, and must be considered quasi-judicially. I can see that you want me to wind up my speech, Madam Deputy Speaker, but the Minister would probably like me to continue a little longer.

Our constituents cannot understand why the Planning Inspectorate’s recommendation—which followed a lengthy public inquiry that took place throughout last year and during the early part of this year, and which has now been put to Ministers in the Department—is secret. We think that that is quite wrong. In our view, the matter should now be out in the open, and debate on it should be welcomed.

Some people will naturally accuse us of being nimbys, but the backyard of Dorset Members of Parliament is a world heritage site. I plead with the Minister to implore her colleagues to reject this case on its merits. Were the project to go ahead, that would be the beginning of the next phase of the fight, because we are united in our determination that it shall not proceed.

23:10

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

It is a great pleasure to see you in the Chair, Madam Deputy Speaker.

I congratulate my hon. Friend the Member for South Dorset (Richard Drax) on securing the debate. I know that this matter is of great interest to his constituents, and that he has been assiduous in pursuing opportunities to discuss the proposed wind farm in the House on their behalf. I also know that the matter is of great interest to the constituents of my hon. Friends the Members for Poole (Mr Syms), for Christchurch (Mr Chope), for Bournemouth West (Conor Burns), for Bournemouth East (Mr Ellwood), for Mid Dorset and North Poole (Michael Tomlinson), and for North Dorset (Simon Hoare). Along with my hon. Friend the Member for South Dorset, they are long-standing advocates in this matter, and have been diligent in representing the views of their constituents. They should all be commended for their efforts.

As Members will appreciate, I am relatively new to the energy portfolio, but my short time in the Department has reinforced my awareness of the huge importance that the energy sector has, and will continue to have, to the country’s economy. I am also very aware of the importance to local communities of proper consideration of the potential local impacts of energy projects.

My right hon. Friend the Secretary of State has set out the key aims of her Department: keeping the lights on, powering the economy, and keeping bills low for families and businesses. The achievement of those aims will require a robust energy strategy, and will, in turn, depend on a broad energy mix for electricity generation, including new nuclear, gas, carbon capture and storage, renewables, and other relevant technologies. We will approach the United Nations climate change conference in Paris with both ambition and pragmatism. I know that energy infrastructure projects of all sorts can have real impacts on local communities, but such projects can also bring real benefits. Finding the right balance between impacts and benefits is a key issue for the Department when it makes its decisions.

As was pointed out by my hon. Friend the Member for Bournemouth West, I cannot comment on the specific merits or otherwise of the Navitus Bay proposal this evening, as doing so could be considered prejudicial to the planning process.

As my hon. Friends will know, the Planning Inspectorate completed its examination of the development consent application for the proposed wind farm, and its associated onshore and offshore infrastructure, in March this year. During a debate that took place in November 2013, before the Navitus Bay application was submitted to the Planning Inspectorate, my right hon. Friend the Member for Sevenoaks (Michael Fallon), who was Energy Minister at the time, encouraged individuals and organisations with an interest in the proposal to engage with any public consultation that was launched. I know that a number of the Members who are present tonight noted that encouragement, and were among the many hundreds, if not thousands, of people who made representations to the Planning Inspectorate during the examination of the Navitus Bay application.

Prior to examining the application, the Planning Inspectorate indicated that it would cover a broad range of topics it considered to be of importance in assessing the potential impacts of the proposed wind farm. The topics on which views were to be sought included biodiversity, fishing, navigational safety, onshore and offshore heritage—including the Jurassic coast world heritage site—and visual and socioeconomic impacts.

The Planning Inspectorate’s report was submitted to the Secretary of State on 11 June along with its recommendation on whether consent should be granted or refused. It will now be for the Secretary of State to consider her decision in the light of that report and all relevant information.

[Simon Hoare]

Can my hon. Friend give any indication of the Secretary of State’s timeframe for coming to a decision on the report?

[Andrea Leadsom]

I was just coming to that. My very next comment is that it is now for the Secretary of State to consider her decision and she must announce it no later than 11 September 2015, to meet the statutory requirements for planning Act cases. My hon. Friend will forgive me for not being more precise, but he will appreciate that we have only had that report for a couple of days

In taking decisions on planning applications, it is important that all parties are given a fair crack of the whip and that issues are analysed on their merits with an open mind. The consideration of all such applications has to be robust and thorough—this is a fairness point for all interested parties and the applicant.

Large energy infrastructure projects inevitably attract considerable interest from people who may be directly affected by the proposals and also from people who have views on energy projects in a more generic way.

[Richard Drax]

Yes, big energy projects do draw huge attention, but the only reason this one is drawing a lot of attention is that it is so near the shore. If it was miles out, we would not give it any attention at all.

[Andrea Leadsom]

I thank my hon. Friend for that remark. He should certainly feel reassured that my officials and I are very much listening to his and other hon. Friends’ concerns.

In planning Act applications of this sort, it is for the Secretary of State, as decision maker, to consider all the arguments that are made for and against these projects and that are set out in the Planning Inspectorate’s report. I can assure all hon. Friends that the Secretary of State’s consideration of the Navitus Bay application will be rigorous and fair.

In conclusion, I hope that all hon. Members are reassured that the concerns raised by interested parties about the potential impacts of this project are being properly considered through the planning process. I am grateful to my hon. Friend the Member for South Dorset for raising this constructive and thoughtful debate and to all other hon. Friends for attending and for their contributions. I can assure them that I will note the views expressed tonight and will relay them to Lord Bourne, who will be taking the decision on the consent application.

Question put and agreed to.

23:18

House adjourned.

Ministerial Correction

Monday 15th June 2015 Ministerial Corrections

Monday 15 June 2015

Environment, Food and Rural Affairs

Monday 15th June 2015 Ministerial Corrections

Food Waste

The following is an extract from the speech made by the Under-Secretary of State for Environment, Food and Rural Affairs in the Westminster Hall debate on food waste on 11 June 2015:

[Rory Stewart]

Food to the value of £108 billion and the one in eight jobs connected to food and farming in the UK are connected to what every hon. Member in this Chamber deeply believes in, whether it be poverty alleviation, mentioned by my hon. Friend the Member for Blackpool North and Cleveleys; the legislative programmes advocated by the hon. Member for Bristol East; the important arguments on the environment and resource depletion advanced by the hon. Member for Brighton, Pavilion; or the civil society examples from Zero Waste Scotland produced by the hon. Member for Rutherglen and Hamilton West.

[Official Report, 11 June 2015, Vol. 596, c. 204WH.]

Letter from Rory Stewart:

An error has been identified in the speech I made in the Westminster Hall debate on food waste.

The correct response should have been:

[Rory Stewart]

Food to the value of £103 billion and the one in eight jobs connected to food and farming in the UK are connected to what every hon. Member in this Chamber deeply believes in, whether it be poverty alleviation, mentioned by my hon. Friend the Member for Blackpool North and Cleveleys; the legislative programmes advocated by the hon. Member for Bristol East; the important arguments on the environment and resource depletion advanced by the hon. Member for Brighton, Pavilion; or the civil society examples from Zero Waste Scotland produced by the hon. Member for Rutherglen and Hamilton West.

Petition

Monday 15th June 2015 Petitions

Monday 15 June 2015

Stance of the Foreign and Commonwealth Office on Hamas

Monday 15th June 2015 Petitions

The Petition of residents in the Southend West constituency,

Declares that the Petitioners believe that the Foreign Office view Hamas as a plausible negotiating partner for creating a peace agreement with Israel; further that the Petitioners believe that such a view is incorrect as Hamas’s own political charter clearly states that it seeks nothing less than the destruction of Israel; further that the Petitioners believe that the Foreign Office is unwilling to clearly declare that it deplores the use of civilians and civilian buildings by Hamas as part of Hamas’s warfare strategy; Hamas’s consequential abuse of civilian properties as places from which to launch attacks on Israel, and its abuse of civilians as human shields resulting in a disproportionate loss of life; further that the Petitioners believe that Israel is the only democracy in the Middle East, and is the only place in the Middle East where Christianity and other faiths can co-exist peacefully and thrive; further that a lack of clarity in support of Israel contributes to anti-Jewish sentiment; further that the Petitioners recognise the need for, and the rights of, the civilians of Gaza and other Arabs who live within and around Israel for a peaceable existence; and further that the Petitioners believe that the lack of demonstrable public clarity by the Foreign Office to support Israel and to deplore Hamas is deeply concerning.

The Petitioners therefore urges the House of Commons to request that the Foreign Office explains its actions and views on Israel, and clarifies its view of and position on Hamas.

And the Petitioners remain, etc.—[Presented by Sir David Amess, Official Report, 12 February 2015; Vol. 592, c. 1049.]

[P001436]

Observations from the Secretary of State for Foreign and Commonwealth Affairs:

The UK is a firm friend of Israel and we enjoy an excellent bilateral relationship, built on decades of co-operation between our two countries across a range of fields including education, hi-tech research, business, arts and culture. The Government have made significant progress in building the UK-Israel partnership. On almost every front, we have taken the relationship to new levels.

The Prime Minister, who visited Israel in 2014, has made clear the importance he attaches to this relationship, most recently during a call with Israeli Prime Minister, Benjamin Netanyahu, following his re-election. The FCO Ministers have also repeatedly expressed their support for working closely with Israel on issues that matter to us both. And we continue to support Israel’s right to self-defence; our commitment to Israel’s security is unwavering. UK Government policy on Hamas have not changed and is clear: Hamas must renounce violence, recognise Israel and accept previously signed agreements. These conditions remain the benchmark against which Hamas’ intentions should be judged.

Throughout the hostilities in Gaza of summer 2014, the UK condemned Hamas’ illegal and indiscriminate rocket attacks against Israel and stressed the need for Hamas and other militant groups to stop them. We condemned any use of human shields as violations of international humanitarian law, and we called on all sides to ensure that civilians were not put in danger. The UK was also clear that Israel had a right to take action to defend itself but needed to act proportionately and to minimise the risk of civilian casualties.

We also made clear our serious concern regarding human rights abuses in Gaza by Hamas. We are deeply concerned by incitement in the Hamas-run media and leadership, which is both anti-Israel and anti-Semitic; we are concerned about the deteriorating freedoms of religion and belief; and we are concerned about the continued use of extrajudicial executions of alleged collaborators.

Hamas’ military wing (Izz al-Din al-Qassem Brigades) is proscribed by the UK Government and have been since March 2001. Proscription makes it a criminal offence to invite support for a proscribed organisation which includes, but is not restricted to, the provision of funds.

The entirety of Hamas (including its political and military wings) has been listed by the European Union since 2003. The UK enforces the EU asset freeze on Hamas through the Terrorist Asset Freezing Act 2010 which makes it a criminal offence for individuals or entities to supply funding to any part of Hamas. In December 2014, the listing of Hamas was annulled on procedural grounds by the European Court. This does not mean that the EU no longer considers Hamas a terrorist organisation and the European Commission is challenging the European Court’s decision. The asset freeze remains in place while the legal challenge is ongoing.

The UK has a longstanding policy of no direct contact with Hamas. No UK aid money goes to Hamas. Safeguards ensure compliance with UK and EU legislation on terror financing.

Anti-Semitism is a separate issue, but the following should be noted to address the remark made in the petition. The United Kingdom remains firmly committed to fighting all forms of anti-Semitism, wherever it is found, both domestically and globally. The FCO plays an active part in the cross-Government working group on anti-Semitism. We encourage our embassies and high commissions across the world to remain vigilant to resurgent anti-Semitism and report to London on developing issues of concern. We work actively through multilateral organisations and bilaterally to tackle anti-Semitism wherever it is found.

Written Statements

Monday 15th June 2015 Written Statements

Monday 15 June 2015

Bilateral Loan: Ireland

Monday 15th June 2015 Written Statements

[The Financial Secretary to the Treasury (Mr David Gauke)]

HM Treasury has today provided a further report to Parliament in relation to the bilateral loan to Ireland as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2014 to 31 March 2015.

A written ministerial statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 13 October 2014, Official Report, column 1WS.

[HCWS34]

Prudential Regulation Authority

Monday 15th June 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The annual report and accounts 2014-15 of the Prudential Regulation Authority has today been laid before Parliament.

The report forms a key part of the accountability mechanism for the Prudential Regulation Authority under the Financial Services and Markets Act 2000, and assesses the performance of the Prudential Regulation Authority over the past 12 months against its statutory objectives.

Copies are available in the Vote Office and the Printed Paper Office.

[HCWS35]

HGV Levy

Monday 15th June 2015 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

Since 1 April 2014 all HGVs at or above 12 tonnes gross weight using UK roads have been required to pay the HGV road user levy. The levy ensures all such HGVs contribute to the costs of UK road maintenance and removes some of the inequality UK hauliers feel when paying to use many roads abroad. The levy costs up to £10 per day or £1,000 per year.

I am pleased to announce that the HGV levy has proved to be a great success in its first year of operation. It has raised a total £192.5million in receipts, with £46.5million from foreign-registered vehicles and £146million from UK-registered vehicles. Receipts from foreign vehicles are significantly ahead of the projected £21 million.

For most UK-registered HGVs, vehicle excise duty (VED) was reduced by the same amount as the levy, and is conveniently paid alongside VED to keep administrative costs to a minimum.

Over 160,200 foreign vehicles have been registered on the levy payment system. In total 1.9 million levies were purchased for foreign HGVs, 91% were ‘daily’, i.e. covering only one or a few days, 3% were weekly, 5% monthly and just 1 % annual, despite the discounts available on long duration purchases. This predominance of more expensive daily levies is a major factor in our original estimate being exceeded. Even so, in terms of revenue raised, 18% (£8.5 million) came from annual levies and 48% (£22.3 million) from daily levies. The number of levies purchased was greatest for Polish registered vehicles (27%), followed by Romania (12%), Spain (9%) and Hungary (7%).

The levy has also been a success in terms of efficient digital delivery and customer service. The vast majority of transactions—97%––are made through an on-line portal using registered accounts. The remaining 3% of sales have been through assisted digital point of sale terminals on ferries, at truckstops and through agents. This has all been supported by a multi-lingual customer service call centre.

Effective roadside enforcement has been provided by the Driver and Vehicle Standards Agency (DVSA), Driver and Vehicle Agency (DVA) in Northern Ireland, and the police. This has contributed to a levy compliance level for foreign vehicles inspected by DVSA at roadside check sites in Great Britain of 95%. Officers in Great Britain and Northern Ireland have issued over 3,000 fixed penalties for levy offences during its first year raising more than £900,000 in fines. DVLA has enforced the levy alongside VED for UK registered vehicles, and over 99% compliance has been achieved.

[HCWS33]

House of Lords

Monday 15th June 2015 Lords Chamber

Monday, 15 June 2015.

14:30

Prayers—read by the Lord Bishop of Birmingham.

Oaths and Affirmations

Monday 15th June 2015 Lords Chamber

14:36

Lord Walker of Gestingthorpe took the oath, and signed an undertaking to abide by the Code of Conduct.

Electricity Supply: Decarbonisation

Monday 15th June 2015 Lords Chamber

Question

14:36

Asked by

[Lord Whitty]

To ask Her Majesty’s Government what steps they are taking to decarbonise the electricity supply system in the United Kingdom, with which targets and over what timetable.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, we are committed to doing our part to tackle climate change in line with the Climate Change Act. We want to do this as cost-effectively as possible to ensure that our energy is secure and affordable as well as lower-carbon.

[Lord Whitty (Lab)]

My Lords, I thank the Minister for that reply. I am pleased to have my first encounter with him in his new position. However, I hope that he will ask his officials to give him slightly more detailed Answers. The Question refers to a timetable, and we need action on a number of fronts. By what date does he expect the coal-fired power stations to be phased out—that was a commitment of all three parties before the election—and when does he expect the Hinkley Point B power station to come on-stream to provide us with a new source of nuclear power?

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for that welcome; I am sure it will be the start of a beautiful friendship, to revisit “Casablanca”. We anticipate that by 2025, unabated coal will account for only 1% of total generation. In relation to Hinkley B, which he also mentioned, the answer is 2023.

[Lord Lawson of Blaby (Con)]

My Lords, I echo the welcome from the noble Lord, Lord Whitty, from this side of the House. In his reply the Minister referred to the Climate Change Act, which unilaterally imposes limits on carbon emissions for the United Kingdom. I am well aware that the Government wish to secure a legally binding global agreement on emission limitations at the United Nations Paris conference at the end of this year but, should that not prove possible, will he undertake to look seriously at abandoning or at least suspending our commitments? Unilateral masochism can make no sense whatever.

[Lord Bourne of Aberystwyth]

My Lords, there is no question of unilateral masochism on this issue. We are anticipating agreement in Paris; all the signs are very favourable. It is not just Paris, of course; we have to ensure that there is monitoring thereafter. There is no plan B for the United Kingdom or the rest of the world.

[Lord Cunningham of Felling (Lab)]

My Lords, is it not obvious to everyone who has been engaged in these debates for many years that we have no hope of meeting the onerous impositions regarding climate change—including commitments from previous Labour Governments—without significant development of civil nuclear power? Why are there such repeated delays in the development of civil nuclear power in our country? Is the Minister not also concerned about recent reports that the French themselves, who are involved in our recent project, have found manifest failings in their own latest civil nuclear reactor at Flamanville?

[Lord Bourne of Aberystwyth]

My Lords, civil nuclear is certainly an essential part of our energy mix—I welcome what the noble Lord said about the Labour Party—and that continues to be the case. We are confident that Hinkley C will be delivered by 2023, and there are several other nuclear power stations in the line after that. Obviously, we learn from the French and the Finnish experience with regard to delivery.

[Lord Purvis of Tweed (LD)]

My Lords, from these Benches I welcome the Minister to his portfolio. Will he ensure that the momentum established by the previous Administration in this field continues, and indeed goes further? Will he commit that if energy proposals are brought forward, Parliament will consider them—they could include the de-coaling of our electricity supply by 2025 as part of an ambitious target to halve energy demand by 50% by 2030, so that we can meet the aim of a zero-carbon Britain by 2050—in order to maintain the momentum that has already been established?

[Lord Bourne of Aberystwyth]

I thank the noble Lord for his kind comments. The ambitions for, and commitment of the Secretary of State and the Prime Minister to, this agenda are undoubted, and we will continue the work of the last Government in that regard. The targets and aims are ambitious, and we will share those with both Houses so that we can gain the consensus and achieve the momentum to take this agenda forward.

[Baroness Worthington (Lab)]

My Lords, I, too, take this opportunity to welcome the noble Lord to his new post; I look forward to a fruitful relationship. I also take this opportunity to wish my noble friend Whitty a happy birthday. Can the Minister confirm whether the department has assessed the price implications of adopting a decarbonisation target for the electricity sector? That might well be a cheaper way of proceeding than the carbon price support mechanism we are currently using to try to phase out coal and make good on that pre-election pledge.

[Lord Bourne of Aberystwyth]

I thank the noble Baroness for her comments and belatedly offer birthday congratulations to the noble Lord, Lord Whitty; I have not had an invitation to drinks as yet, but no doubt that is in the post. On the noble Baroness’s comments on decarbonisation of the electricity sector, we are convinced that the best way forward is the path we are currently set on. We are delivering through a combination of environmental policies, the ageing coal fleet and support mechanisms for renewables, and that remains the case.

[Lord Flight (Con)]

My Lords, what are the Minister’s views about the commercial viability of Hinkley Point? The increases in costs since the project was first envisaged have been very large indeed; might there not conceivably be cheaper ways of producing nuclear power on a smaller scale?

[Lord Bourne of Aberystwyth]

My Lords, as I have already said, it is vital that we deliver on the nuclear agenda, and Hinkley C is part of that agenda. We are convinced that the price mechanisms will deliver that, and thereafter the other reactors that are queued up, such as Sizewell. Obviously, we remain open to looking at other nuclear technology, but at the moment the aim is to ensure that we, together with EDF, deliver on Hinkley Point C.

[Baroness Howarth of Breckland (CB)]

My Lords, does the Minister agree that efficiency is equally important in order to meet the targets? What is happening with the European electricity grid and developing a strategy right across Europe to share electricity at a better price?

[Lord Bourne of Aberystwyth]

I thank the noble Baroness for that question. I had the opportunity to visit the national grid and see how the interconnectors work; in fact, they proved vital when we were there, as we noticed, so that is an important part of it. Further interconnectors are coming online to Norway and to France, and they are certainly part of the Government’s energy supply mix.

Public Service Broadcasting

Monday 15th June 2015 Lords Chamber

Question

14:43

Asked by

[Lord Roberts of Llandudno]

To ask Her Majesty’s Government what proposals they have for funding public service broadcasting.

[The Parliamentary Under-Secretary of State, Departments for Business, Innovation and Skills and for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)]

My Lords, Ofcom is conducting a wide-ranging review of public service broadcasting. It will be published later this year and enable the Government to consider next steps for public service broadcasting. The review will be a key input into the BBC charter review. It will be comprehensive, open and a proper consultative process, and funding will be one of the issues on the agenda.

[Lord Roberts of Llandudno (LD)]

Does the Minister understand the tremendous damage that the ending of funding via the BBC licence fee would entail? Twenty-seven World Service channels would be lost, and we could lose the Welsh S4C television channel because that depends on £76 million a year of funding from the BBC licence fee. When the Government consider this issue, I hope that those points will be borne in mind. What mandate do the Government have to introduce such far-reaching proposals when they received only 24% of the votes at the last general election?

[Baroness Neville-Rolfe]

My Lords, to give a constructive reply, we are keenly aware of the importance of S4C to the Welsh language and culture and to the creative economy, with programmes such as “Hinterland” going wider than Wales. We also support the World Service. The excellence of their programmes and the creative content will be considered as part of the charter review, which is getting under way and will be subject to a wide measure of consultation, covering all aspects and bringing in all groups around the country.

[Lord West of Spithead (Lab)]

My Lords, BBC Monitoring has proved crucial over the years in advising our foreign policy and military operations. Is the Minister content that there will be sufficient funding to ensure that this key capability is maintained, not least because it is part of the special relationship with the Open Source Center in the United States?

[Baroness Neville-Rolfe]

The noble Lord is right: these areas are very important. The interests concerned will be taken into account in the wide-ranging charter review once it gets under way.

[Viscount Colville of Culross (CB)]

I declare an interest as a producer at the BBC. During the period of the present BBC charter, more than £1 billion has been top-sliced for spending on purposes other than content provision. Does the Minister agree with the Culture Select Committee’s suggestion regarding the next charter that income from the licence fee or the broadcasting levy be used only for the purpose of the broadcasting or production of public service content?

[Baroness Neville-Rolfe]

My Lords, as we know from discussion in this House, there are different views about what the money from the licence fee should be used for. That is why we are planning a wide-ranging review of the charter. These interests, along with others, will of course be taken into account and we will no doubt have many opportunities to debate the results.

[Lord Naseby (Con)]

Will the review that my noble friend referred to cover the wider aspects of broadcasting and the Government’s interests in, for instance, Channel 4? Is she aware that a great number of us feel quite strongly that the Government’s investment in Channel 4 should be sold off?

[Baroness Neville-Rolfe]

My Lords, there are no current plans to privatise Channel 4 but we want to see it strengthened to compete successfully and to support the delivery of its public service obligations. Ofcom is examining Channel 4’s current and future position as part of its review, which I mentioned in my first reply.

[Baroness Benjamin (LD)]

My Lords, investment in children’s public service content is dwindling. A crisis is looming because the main broadcasters are now showing just two hours of new children’s programmes, down from 12 hours, and most of that is shown on the BBC. Given the threat to the BBC’s budget and licence fee, will the Minister encourage Ofcom to report on this issue in its next PSB review and encourage commercial broadcasters to improve investment in children’s public service content before it is too late? I declare an interest as a children’s television practitioner.

[Baroness Neville-Rolfe]

My Lords, I share the noble Baroness’s passion for children’s TV, including that on the BBC—“Teletubbies” was a totemic part of my life. I assure her that we will be looking at these issues both during the Ofcom review and during the review of the BBC charter.

[Baroness King of Bow (Lab)]

My Lords, I draw the attention of the House to the fact that I am a diversity executive at Channel 4. As such, I am well acquainted with some of the possible perils of government decisions in these areas. But on S4C funding, is not the anxiety well placed? Last time, the Government took decisions behind entirely closed doors and locked out not just the Welsh broadcaster but the Welsh people. Can the Minister assure us categorically that that will not happen again?

[Baroness Neville-Rolfe]

My Lords, as I have made clear, we are committed to a full and proper consultation. I actually think that S4C is fortunate in having funding from both the Exchequer, of £7 million per year, and the licence fee, of £75 million. The Government will certainly consider positively the funding for minority language broadcasting as part of the charter review.

[Lord Grade of Yarmouth (Con)]

My Lords, in common with the rest of the nation, I am counting down the days to the publication of Ofcom’s next review of public service broadcasting. Inevitably, the emphasis in a year of charter review is going to be on the BBC, but there is a whole wealth of what I would call heritage regulation in the private sector of broadcasting, in which I include Channel 4, that needs seriously looking at. That would release a lot of money for investment in British programming, not just at Channel 4 but at ITV and in the rest of the commercial sector, which is so overregulated, owing more to its past as a monopoly advertising broadcaster. It is time that we looked at the private sector just as much.

[Baroness Neville-Rolfe]

My noble friend makes a good and interesting point and I look forward to hearing the detail of his ideas in the coming weeks and months.

[Lord Sherbourne of Didsbury (Con)]

Does my noble friend agree that, now that the World Service is financed by the BBC, it is in a much more secure position than when it was in the home of the Foreign Office?

[Baroness Neville-Rolfe]

My Lords, I cannot but agree with my noble friend. I was pleased to see that the audience figures actually increased by 10% to 210 million worldwide in 2015—an awesome bit of public diplomacy, in my opinion.

Schools: Health and Well-being

Monday 15th June 2015 Lords Chamber

Question

14:51

Asked by

[Baroness Benjamin]

To ask Her Majesty’s Government what plans they have to implement a whole-school approach to nutrition and the health and well-being of children.

[Baroness Benjamin (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I declare an interest as the chair of the All-Party Group on a Fit and Healthy Childhood.

[The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)]

My Lords, the Government already support a whole-school approach to nutrition and the health and well-being of children. Following the publication of the School Food Plan, we have brought in new school-food standards. Cooking is in the national curriculum for the first time and we have brought in universal free school meals for infants. Together with the other actions from the plan, including guidance for head teachers on a whole-school approach, we are helping to transform nutrition and food culture in our schools.

[Baroness Benjamin]

My Lords, to help tackle the UK’s child obesity epidemic, we must have a national nutrition strategy, starting with school meals and the teaching of nutrition in all schools. This is the finding in the latest report of the All-Party Group on a Fit and Healthy Childhood, which is published today. To give children that long-term vitality, will the Government adopt a universal free-school-meals policy to ensure that the quality of food consumed tackles obesity and the rising cost to the NHS? Will they also consider a radical new approach to the teaching of nutrition in schools to empower children to learn about a healthy diet? Finally, will the Minister meet me to discuss further findings in the report, which is entitled Food in School and the Teaching of Food?

[Lord Nash]

My Lords, I welcome today’s report by the All-Party Group on a Fit and Healthy Childhood. I commend the noble Baroness’s work in championing these issues and would be delighted to meet her on this.

Following the successful introduction of universal free school meals for infants last September, all school children have the opportunity to eat a healthy, nutritious lunch. This Government’s manifesto supported the continuation of this policy. However, we are in a tight fiscal position and have no plans to extend it. Throughout primary schooling and until the end of key stage 3, food and nutrition education is already a curriculum requirement and, as part of Ofsted’s new common assessment framework, inspectors will consider how schools and school leaders are promoting healthy eating across the school. The Government’s manifesto committed to taking action on child obesity, and I know that this is a key focus for both the Prime Minister and the Secretary of State for Health. The Government will put forward their plans to address the challenge of obesity in due course, and plan to publish a national obesity framework before the end of the year.

[Lord Campbell-Savours (Lab)]

My Lords, cigarettes damage health, so we introduced taxes to put the price up and save lives. Why can we not target certain types of food and drink in exactly the same way?

[Lord Nash]

We certainly do target certain types of food in schools, such as crisps, as being unhealthy. That is what the school food standards are all about. As for taxing sugar et cetera, that, I am afraid, is rather out of my ken.

[Baroness Finlay of Llandaff (CB)]

What are the Government doing about vitamin deficiency among children, given that the CMO’s report recommended the Healthy Start vitamin programme and that 40% of young children are thought to be vitamin D deficient, particularly as the deficiency may be linked to the metabolic syndrome and high blood pressure? It has even been suggested that a vitamin D supplement may improve some of the core symptoms of autism, which can create major behavioural issues in a classroom.

[Lord Nash]

The noble Baroness raises an extremely important point. I shall discuss this issue with the Department of Health and ensure that she receives a full written reply.

[Baroness Hollins (CB)]

Does the Minister agree that it is time for a ban on the marketing of unhealthy food and drink to children and young people?

[Lord Nash]

I am not sure that I would go that far, frankly. The best way is to educate children in school as to what is healthy food and allow them to make those choices for themselves. We are making strong movements in this regard.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I am sure that most Members of this House and many other people would accept that providing healthy food in schools, particularly to very young children, is an entirely laudable aim. What information does the Minister have about schools that are struggling to deliver this, both practically and financially, and what help is being offered to those that are having those problems?

[Lord Nash]

We have provided £185 million for cooking facilities for schools and we are training cooks in this area. More schoolchildren have this opportunity. It is reaching 85% of schoolchildren. Not all take it up—not all have been in school on the day in question—but it is receiving comprehensive coverage.

[Baroness Brinton (LD)]

My Lords, much of the focus has been on mainstream schools and children’s nutrition. The pupils at Critchill special school in Frome grow their own vegetables, have chickens and manage their own eggs. On the day I visited they were making a tasty soup from their own vegetables and using maths, English and other skills. Is this excellent example of whole-school nutrition in special schools being disseminated elsewhere in the country?

[Lord Nash]

The noble Baroness raises an excellent point, particularly in relation to schools for special educational needs. I know that caring for animals and growing plants can be very helpful. The School Food Plan refers to all schools being encouraged to have plant-growing programmes. I can assure her that across the country there are many other examples of what she has talked about.

[Lord Touhig (Lab)]

My Lords, I am sure that the Minister will have heard the wake-up call from the head of NHS England, Simon Stevens, last week when he told us that one in 10 children are obese when they begin primary school, and that that rises to one in five when they leave. Currently we spend more on obesity-related healthcare than we do on the police, the Prison Service, the fire service and the criminal justice system. Does he agree that child obesity cannot be tackled in isolation? What do the Government propose to do across all departments so that we have a proper strategy to respond to what Mr Stevens now calls the new smoking?

[Lord Nash]

I agree entirely with the noble Lord about the seriousness of this issue. We are doing what we can in schools. As I said, this is a key focus for the Prime Minister and the Secretary of State for Health. Many of my department’s priorities are designed around the need to reduce childhood obesity. However, despite our programmes, it still seems to be an issue. We will be publishing our plan on this shortly.

[Lord Elton (Con)]

My Lords, when my noble friend receives the copious briefing on sugar that he would expect after this debate, could he make sure that he also pays close attention to the substitutes that may replace it when it is reduced in consumption and what the effect of those is on the health of the people who consume them?

[Lord Nash]

I assure my noble friend that I shall make sure that that happens.

Scotland: Block Grant

Monday 15th June 2015 Lords Chamber

Question

14:59

Asked by

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what changes they propose to the calculation of the block grant to Scotland, in the light of the recent and proposed increased tax-raising powers of the Scottish Parliament.

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, as set out in the cross-party Smith agreement, the Scottish Government’s block grant will be reduced to reflect their increased tax powers. The UK and Scottish Governments have agreed to work to finalise the new fiscal framework by the autumn, alongside the passage of the Scotland Bill. The Barnett formula will continue as part of these arrangements, but as the Scottish Government will become more than 50% self-funded, changes in their funding will increasingly reflect changes in Scottish tax.

[Lord Foulkes of Cumnock (Lab)]

My Lords, it is good to see a Scotland Office Minister answering on behalf of the Treasury. Will he agree with me that, as long as any part of the expenditure of the Scottish Government is covered by a block grant, they will find a way of blaming Westminster either for cuts in expenditure or increases in taxes? Therefore, is it not time that the Government thought seriously about setting up a constitutional convention—or commission or convocation, whatever they would like to call it—which would look at all aspects of the governance of the United Kingdom, including full fiscal responsibility for every Parliament within the United Kingdom?

[Lord Dunlop]

My Lords, the noble Lord may well be right that the SNP Government will seek to continue to blame the United Kingdom Government, but the people of Scotland would certainly blame the UK Government more if we landed them with a £10 billion funding gap, costing every family in Scotland £5,000 in higher taxes or spending cuts. That would be the price of full fiscal autonomy. The Government cannot support such a plan because we do not believe that it would be good for Scotland. We want a balanced settlement fair to all parts of the UK and our priority is to deliver the Scotland Bill, which will make Holyrood one of the most powerful and accountable devolved Parliaments in the world.

[Lord Lang of Monkton (Con)]

My Lords, I congratulate my noble friend on the way in which he managed to imply fairness to a block grant calculation system that bears no relation to, or has any connection with, any needs assessment relating to the other parts of the United Kingdom. Can he tell the House how he expects the no-detriment principle enshrined in the new Scotland Bill to apply in a way that does not inhibit the viability of individual parts of the United Kingdom from pursuing policies and expenditure that depart from the UK norm?

[Lord Dunlop]

I thank my noble friend for that question. The simple overarching principle is that neither Scotland nor the rest of the United Kingdom should gain or lose financially as a direct consequence of implementing the Smith agreement. There are two aspects to this. First, at the point of devolution, the tax and spending block grant adjustments made to reflect the transfer of powers should of themselves leave funding for Scotland and the rest of the UK unchanged. Secondly, post devolution, both the UK Government and the Scottish Government should bear the risks and reap the rewards of their own policy choices. That will strengthen fiscal responsibility and accountability. How these principles work in practice must be discussed and agreed by the UK Government and the Scottish Government, but the fact that the principles are agreed by all five of Scotland’s political parties is a helpful starting point.

[Lord Richard (Lab)]

My Lords, the noble Lord said that he is anxious to get a settlement that is fair to all parts of the United Kingdom. Will he please remember Wales when he is talking about keeping block grants and being fair? The Barnett formula has proved detrimental to the economy of Wales ever since it started. Is he also aware—and if he is not, he should be by now—that a committee of this House recommended very strongly not too many years ago that the Barnett formula should be looked at again because, as the noble Lord, Lord Lang, just said, it is totally unrelated to need? It is perfectly possible to produce a fair formula that is based on need and it is high time that the Government did that.

[Lord Dunlop]

My Lords, we are very mindful of the funding needs of Wales. Obviously, Welsh funding was the subject of the Holtham review and, according to the criteria set out by Holtham, Wales is not currently underfunded. For the foreseeable future, per-head funding is unlikely to converge with that of England in the near term. The UK Government have committed to introduce a funding for Wales that will ensure fair funding for Wales.

[Lord Stephen (LD)]

My Lords, is there not now a clear opportunity to create a new cross-party consensus for a constitutional convention to look at the whole of the United Kingdom on these issues? We have seen concern from Wales, and today the SNP lodged amendments that back away from full fiscal responsibility and simply want to give power to the Scottish Parliament to implement it at some point in the future. Doubtless, that is due to the fact that it involves the scrapping of the Barnett formula and £7 billion per year of cuts to public services in Scotland or increased taxes in Scotland. Is it not now time, building on the Smith commission and reflecting the outcome of the election in Scotland, for there to be at least an attempt at a cross-party consensus that would involve the nationalist parties to try to work together for a fairer settlement for the whole of the United Kingdom?

[Lord Dunlop]

My Lords, the Smith agreement was, of course, an all-party consensus. We have an extensive package of constitutional reform for all parts of the United Kingdom and our priority is to deliver on the constitutional commitments that we have made. We want a balanced and fair settlement across the United Kingdom. I am sure that there will be a lively debate on what more can be done, which the Government welcome wholeheartedly.

[Lord Davies of Oldham (Lab)]

My Lords, has the Minister not been convinced by the contributions in the House today that it is clear, to take into account the implications for all parts of the United Kingdom, in particular as far as Scotland is concerned, which would start off with a very significant deficit if it went for full fiscal responsibility—it also has to come to terms with the very significant drop indeed in oil revenues that are now predicated—that we need a United Kingdom-wide convention on these issues?

[Lord Dunlop]

I thank the noble Lord. As I have said, our priority is to deliver the commitments that we have made. Of course we will listen to other ideas. As I have said, there will be a lively debate, including in this House. We will listen very carefully to what noble Lords and others have to say on this matter.

International Development (Population Dynamics) Bill [HL]

Monday 15th June 2015 Lords Chamber

First Reading

15:06

A Bill to require the Secretary of State to consider, before providing development assistance, its likely impact on population dynamics.

The Bill was introduced by Baroness Tonge, read a first time and ordered to be printed.

Trade and Investment

Monday 15th June 2015 Lords Chamber

Motion to Take Note

15:06

Moved by

[Lord Maude of Horsham]

To move that this House takes note of Her Majesty’s Government’s support for trade and investment and the contribution such support makes to economic growth.

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Maude of Horsham) (Con) (Maiden Speech)]

My Lords, this short debate covers the range of my new ministerial responsibilities, but also affords me the occasion for my maiden speech in your Lordships’ House. I was going to say, “in this unfamiliar Chamber”, but as I look around it, the less unfamiliar it seems. It is full of familiar and, I hope, friendly faces. I hope that by the time I sit down they will be no less friendly than they are now.

It is a huge responsibility to be a member of the legislature of a great nation. I was privileged to serve for 27 years in the other place. My late father served a similar period in the House of Commons. Like me he left it twice, although in his case both departures were voluntary; in my case, the first was not—I was liberated by the electors. In my father’s first departure from the House of Commons he did not just leave Parliament, he left the country as well, with the result that my first school was in Sydney, Australia.

I have been through a number of careers on my journey to your Lordships’ House. I have been a barrister and an investment banker as well as a politician, but public service has always held a very strong allure. Twenty-two of the 27 years I spent in the House of Commons were on the Front Bench, for the last five years as Minister for the Cabinet Office, where I led the Government’s efficiency and cost-saving programme. In the last financial year we saved some £20 billion compared with 2009, and the Civil Service was like-for-like 21% smaller. It was essential for the success of Civil Service reform—which is, and always will be, a work in progress—that it commanded strong support right across the political parties. It would not have been possible to make even the progress that we did, in the face of significant institutional resistance, without such cross-party support. I shall endeavour to secure the same wide-ranging support in my new role.

I thank noble Lords for the warm welcome that I have received since arriving in this House, especially my noble friends Lord Hurd and Lord Forsyth, who supported me on my introduction. I also very sincerely thank all the staff and officers of the House for their unstinting assistance and welcome.

I am an unreconstructed free trader. As a trade Minister in the late 1980s, under the leadership of my noble friend Lord Young of Graffham, I negotiated the arrangements for the 1992 deadline for creating the European single market. Britain was then the doughtiest proponent of the most open and liberal approach—I would say the approach closest to that of the founding fathers of the Common Market. More than 20 years later, there is still much to do to complete that single market.

The point we made then was that the world was becoming ever more competitive. It was true then and is doubly or trebly true today. Today’s world is increasingly globalised and digital. Time zones and borders no longer present the same barriers to overseas trade, so we need to press ahead with removing state-imposed barriers to trade. The world, and especially Europe, is hungry for growth and jobs. We know that trade creates jobs. Some 31 million jobs in the European Union—more than 14% of EU employment, up by two-thirds since 1995—are linked to sales to the rest of the world. These jobs are in general more productive and better paid than those in the rest of the economy.

Of course, we know that the ideal is a multilateral agreement within the WTO framework. We will continue to work with our partners for a successful outcome to the Doha round at the ministerial meeting in Nairobi in December, but we should not hide from ourselves how challenging such an outcome will be. In the mean time, the European Union can, and should, press ahead with bilateral free trade agreements. It is clear that these can work for Britain. For example, since the provisional application of the EU-Korea free trade agreement in 2010, British exports to Korea, excluding oil, have increased by 54%, including an 87% increase in car exports and a tenfold increase in sales of jet engines. We believe that current and potential trade agreements could over time benefit Britain by more than £20 billion a year.

The contribution of international trade to growth and jobs in Britain is likely only to increase in the years ahead—90% of global economic growth in the next 10 to 15 years is expected to be generated from outside Europe, one-third of it in China alone. We have to turbo-charge the EU’s trade agenda to bring about the economic benefits of these trade deals as quickly as possible.

We have to complete the live negotiations, get moving on stalled negotiations, and launch new negotiations with key economic partners. That means implementing the EU’s free trade agreements with Canada and Singapore, concluding negotiations with the United States, Japan and Vietnam, revitalising talks with India and Mercosur, which in both cases have run on for far too long, launching new negotiations with Australia and New Zealand on new free trade agreements; and negotiations with Mexico and Chile on modernising our existing free trade agreements. Moreover, we need now to move towards negotiations on a free trade agreement with China. This matters, of course, for the developed world, but opening up international trade is central to development and poverty reduction across the world, and should play a key role in the post-2015 development agenda. Britain’s strong position on overseas aid, as one of the very few Governments to deliver the UN target of 0.7% of GDP, gives us real moral authority in promoting this.

Britain at its best has always had a very open economy. Major British companies have been ready to invest overseas, and have been successful by and large in doing so. We are, of course, very open to investment from overseas. We are today the No. 1 location for foreign direct investment in Europe and second only to the United States in the global rankings. Britain is seen to be a great place to do business. The World Bank reports that it is easier to do business in the UK than in any other major European economy.

Of course, there is more that we can and should do. We want to make the UK the most open, welcoming and business-friendly country in the world—the place where people and companies want to put their ideas, energies, money and talents to work. That means: continuing to cut red tape and regulation for businesses; supporting London as the world’s leading international financial centre; continuing to build world-class infrastructure; 21st-century skills and knowledge; and a tax system that supports growth and innovation and rewards hard work and success.

In 2014 we secured more manufacturing projects than Germany, which was a significant achievement for our manufacturing industries. The UK hosts more Chinese investment than Germany, France and Italy combined. Britain created more jobs through foreign direct investment than any other country in Europe. It is a good story but there is much more that we can and will do.

Exports account for 30% of Britain’s economy. One in four UK jobs is linked to exports. Companies that export tend to perform better; they tend to be more productive, more innovative and more likely to stay in business than non-exporters. But if performance on inward investment is good, our export performance lags behind. Exports stand at an annual value of around £500 billion, generated by 223,000 companies. While the proportion of British companies exporting is comparable with Germany and France, our performance on exporting goods lags well behind the services sectors. In particular, the average export value of goods is lower, significantly so among medium and larger companies. Almost half of companies exporting goods and services have done business in fewer than five countries. A recent study suggests that, based on past experience, around half of those exporting today might be expected to quit exporting within six years.

We can do better than that. It cannot be for UKTI and UK Export Finance, admirable though these organisations are in many ways, to carry the sole burden of supporting exports. The whole of government needs to be mobilised behind our exports drive. In recent years the Foreign and Commonwealth Office has strengthened its support for exporters but can do more. We need all our overseas posts to show the same relentless focus on Britain’s commercial and economic interests that the best already show. All home departments that engage with business sectors should be responsible for ensuring that government is helping and encouraging businesses to explore overseas markets. We need to make the most of all those willing to fly the flag for British business abroad, and I especially thank all those Members of both Houses who act as unpaid trade envoys. Our business ambassadors also play an important role.

We have doubled our exports to China in recent years but, in truth, we are only scratching the surface of that gigantic market. We are spending £20 million to support first-time exporters. But there is much more that we can and will do. We need to use digital channels to get information to companies in a simpler and faster way. I am looking forward to launching a national campaign this autumn to encourage more British companies to internationalise their business.

Investment and exports are vital but they do not represent the entirety of the ways in which British businesses and our economy benefit from international engagement. The UK-Israel Tech Hub is an innovative approach that focuses on helping to bring together potential partners, which may not directly result in substantial investment or immediate formal exports but none the less builds strength through synergies. There is already one UK-China tech hub, and we need to be quick to build similar new ways of extending the reach of British business.

Your Lordships’ House contains a wealth of experience and knowledge on all these matters, and I look forward to the comments and suggestions of noble Lords during the debate. I beg to move.

15:20

[Lord Stoneham of Droxford (LD)]

My Lords, it is my pleasure and role this afternoon to welcome the noble Lord, Lord Maude of Horsham, and to congratulate him on his wide-ranging and very informative maiden speech on international trade. As the noble Lord has told us, he is part of a remarkable political dynasty, his father having been a Member of this House between 1983 and 1992. As he also told us, he spent 27 years as an MP in two places, North Warwickshire and Horsham. I think he was very unlucky to miss promotion to the Cabinet after the 1992 election, when he lost that marginal seat of North Warwickshire. However, patience finally had its reward; 18 years later, he played a major role in the coalition Government. Again, he was probably slightly disappointed that it was Liberal Democrats who blocked him from full membership of the Cabinet, but he did attend the Cabinet and of course played a key role as Paymaster-General and Minister for the Cabinet Office.

The noble Lord, Lord Maude, was at the heart of the Government’s modernisation plans. Whether you think that he achieved £10 billion or £20 billion of savings through the government service, it was a remarkable achievement. He also oversaw the Government’s transparency agenda and created the Government Digital Service. I notice that a number of very senior Members of this House were somewhat stirred up by his remarks on Cabinet reform, and I should warn him that whenever we discuss change in this House it arouses very strong feelings. His experience in Parliament, government and business will be very valuable to us in this House, and I am sure that, with those experiences, his contribution in his current post as Minister of State for Trade and Investment will be of great interest to us in the coming months.

In the week celebrating the national historic events of Magna Carta and Waterloo, it may seem odd to link those events to this debate on international trade and investment. Magna Carta dabbled in matters of trade as well as in its more well-known subjects of taxation and curbing absolute power. Lord Howe of Aberavon, who is sadly no longer a Member of this House, often reminded us that Magna Carta called for one system of weights and measures to ensure fair trade and that we have never actually achieved it. There is little point now in considering legislation on trade, or even on industry, unless it has an international dimension and takes full account of what is happening in the global marketplace.

Waterloo is often seen these days not simply as a defeat of the French but as an event underlining the importance of co-operation with the Germans. Angela Merkel is often portrayed as the Marshal Blücher of her age, coming to rescue our Prime Minister in the EU negotiations, inevitably at the last moment. In fact, the origins of the Napoleonic Wars were in the trade blockade imposed by Napoleon on the UK: the famous, or infamous, continental system. Nelson’s Navy had to gain control of the seas so that Wellington could conduct the land war and free up our trade. These days, we have to play our full part as a member of the EU to make sure that we achieve free trade.

Today, my proposition is that national law alone, or national initiatives on their own, cannot begin to influence international trade. We cannot raise our taxation without having regard to international competitiveness, and still as a major trading nation we have a major interest in free trade and the elimination of all forms of trade protection. We might have once sent the gunboats to free up our trade, but today, with not enough naval ships to defend in a flotilla even our one aircraft carrier—let alone the two that we are going to have—we have to find other ways of wielding the big stick in international trade negotiations.

We have to rely on our competitive advantage in the Diplomatic Service and in entrepreneurialism. The growth of jobs that has been achieved in the last few years in the UK says much for that entrepreneurial talent, the expertise of our inventors, the expertise of our universities and the skills therein. These are all forms of our competitive advantage in international trade going forward. As a small country, we have to fight above our weight, which internationally and historically we always have. We have to use that influence today, particularly in the EU.

Among the items in the government agenda, the first thing that the Government rightly have to achieve, having made the commitment, is to see through the European referendum as quickly and speedily as we can. Personally, I think complex decisions like that should be made by Parliament, but the electorate has decided. The referendum will not resolve matters. Referendums rarely do, as Scotland showed last year, and indeed as the referendum showed in 1975. Nor will it help the government party, as it did not in the 1970s. They do not resolve difficulties but often exacerbate divisions within political parties. However, while this is not resolved, it will deter investment by our industry in trading markets throughout the world.

Of course Europe needs reform, but it has to make sure that it makes its own industries and countries more competitive and that they work better in international markets. Not least, we have to complete the single market, particularly in digital and service trades, which could benefit the competitive advantage of those sectors in this country. Could the Minister tell us in his closing remarks the sort of timetable he now thinks we will be pursuing in the EU to achieve these important reforms and developments?

We have to use our influence in the EU to enact the Transatlantic Trade and Investment Partnership, which will set global standards for products and regulations. I cannot see the American Congress responding simply to the UK on its own, and I think that many join me in that. Other successful trade negotiations will require our membership of the EU; that is where the clout is. The alternatives to the EU do not stack up: outside Europe we would have little influence and we would follow the rules of trade that were being imposed from within the EU but without having any influence on them. We would still, like Norway and Switzerland, have to foot the bill for the EU, but with no say.

Our ultimate objective at this time, as well as negotiating the referendum proposals, is to achieve a greater balance in our economy and complete the work of the five years of the coalition Government. The trade deficit has to become as much a concern as the overall spending deficit, so that trade and investment contribute more to growth than consumer demand fed by credit and encouraged by high house prices. We know where that route leads, which is why we have to have greater balance in our economy. Our world position has to be enhanced by economic strength, building on the job creation and the entrepreneurial talent displayed in the past few years. As the UK understood in 1815, our future economic prosperity and security lie at the heart of Europe.

[Lord Pearson of Rannoch (UKIP)]

My Lords, could the noble Lord tell your Lordships, in view of his peroration, how countries that are not in the European Union—the USA, China, Japan, South Korea and others—manage to trade very successfully with the European Union without actually being in it?

[Lord Stoneham of Droxford]

They trade successfully because they started almost from scratch. We have had to deal with an economy that was not completely destroyed in the war. They have had the competitive advantage. For many years we stayed outside Europe when we could have had it as a major market on our doorstep, and we did not make the most of it by joining in the first place.

15:29

[Lord Davies of Stamford (Lab)]

My Lords, I agree very much with what the noble Lord has just said about the European Union. It is a great pleasure to be the first from the Labour Benches to be able to congratulate the noble Lord, Lord Maude, on his maiden speech, which was characteristically informative and—perhaps not characteristically but certainly quite notably for anybody who knows the noble Lord as I have for many years—unpartisan. We very much look forward to his contributions to this House. I do not want to be hypocritical. The noble Lord and I have known each other for a long time, we have not always agreed and we certainly did not always agree when we were members of the same party. We did not agree about matters such as Europe and economic policy even when we were members of the same Front-Bench Opposition team in the other place. That was a bit awkward because the noble Lord was shadow Chancellor at the time and I was shadow Paymaster-General. Nevertheless, I have always respected the noble Lord because he is a politician who believes in something. That is not always the case, as we know. He has always had an agenda. It might not have been mine, but there always was an agenda and I always had high personal regard for him on those grounds. In that respect—as well as the many other talents he has—he is very much in the tradition of his father, whom I met in 1977 when he was kind enough to come and support me in my first election, the Ladywood by-election. I have the fondest memories of his father, and many people in the House who were good friends of Angus Maude will have been delighted to have heard his name mentioned again today in his son’s maiden speech.

The noble Lord takes over his very important brief at a time when our trade in not in a very healthy state at all. We have a current account deficit of 4.2% and rising—that was the figure for 2013; I have not seen the figure for 2014—and it has actually doubled since 2010. That is a very worrying, chronic balance of payments deficit. Why is it a problem? Clearly, it means that we are consuming more than we are producing. We are building up international liabilities. We certainly do not have any problem financing those at present. There are a lot of portfolio flows into this country. People are buying apartments in Mayfair and so forth. Foreigners are buying gilts because there is a considerable yield premium on gilts in relation to other prime European sovereign credits. All that is fine, but we know that these flows are very volatile over the long term. They can go backwards as well as forwards, and it is not good to be in a chronic and permanent major current account deficit. Indeed, it simply cannot go on. What do we do about it? That is a matter which the House should focus on and the noble Lord has given us a good opportunity to do exactly that.

Some people would say that the obvious answer if you have a current account deficit is to increase the savings ratio. But you cannot increase the savings ratio just like that, and if you could the solution would involve substantial reduction in consumption, which is hardly welcome news to the people of this country and hardly a policy the Government would want to propose. What one needs to do is to turn it round the other way and to make sure that we are increasing output per person—in other words, increasing productivity. I put it to the noble Lord that that is the most important task at present facing anybody with any responsibility whatever for the economic governance of this country. I am extremely worried that the Government do not seem to appreciate that. We heard nothing about productivity before the election campaign from the Government, and we have heard a few things about it since but they are extraordinarily misinformed. I was absolutely horrified—I must put it very frankly; there is no hyperbole in using that term—this time last week in this House to hear the noble Lord’s colleague, the noble Lord, Lord O’Neill of Gatley, say,

“Germany, which is generally regarded as successful and whose measured productivity has been even weaker than ours in the past few years”.—[Official Report, 8/6/15; col. 628.]

I repeat,

“weaker than ours in the past few years”.

That is what the government colleague of the noble Lord, Lord Maude, said in this House last Monday. How can he possibly have been so ill-informed?

Of course, productivity is measured by professional statisticians, be they in the OECD, the IMF, the European Commission or indeed our own national statistical service. I have before me the latest statistical bulletin dealing with these matters, issued by the Office for National Statistics on 20 February 2015. I will quote from the paragraph headed “Current price productivity” on page 3, which states that,

“UK productivity in 2013 was … Lower than that of France, Germany and the United States by 27-31 percentage points … Lower than that of the rest of the G7 by 17 percentage points”.

It is a deeply worrying and shameful record—and what is even more worrying and shameful is that the Government do not seem to realise it. I have to say that the comment in this House of the noble Lord, Lord O’Neill, shows either the most colossal ignorance, the most colossal complacency or the most colossal cynicism. I hope that, before the end of this debate, we will hear from the government side some explanation of this extraordinary state of affairs, because they are denying reality.

We must do something about productivity. How do we do that? The classic answer is that you increase investment per employee. How do we do that? That is the question to which we should address our minds this afternoon. The popular view of investment is that it consists of purchasing plant and equipment and applies only to manufacturing industry. That is doubly wrong. It does not consist just of purchasing plant and equipment; it could consist of purchasing buildings, software or licences, or investing in human capital by setting up training programmes for employees. All this is investment, which is defined simply as money that you spend in the current period not for some gain in that period, nor to be able to consume it or generate profits in that period, but for the opportunity to make profits and enjoy consumption in the future. That is the simple definition of investment that I think the whole House will agree with.

The question is how you go about enhancing those things. All of them are very important. Let us take the service sector. A restaurant that invests in a new digital ordering system increases productivity by purchasing equipment. A garage that invests in a new electronic diagnostic system for dealing with cars is in the service sector but is making a capital investment that will increase productivity. Employees will have to be trained to use these things. These businesses are investing in human capital and increasing productivity as a result. I remember well that in my business days my shareholders paid quite a lot of money for me to spend a month on an intensive course to improve my German. It turned out to be a very good thing for my subsequent productivity. They spent another large amount of money sending me on the advanced financial programme at INSEAD, and I have not the slightest doubt that that, too, increased my productivity. Investment in human capital is extremely important and we need to make sure that we have in place incentives that drive all these forms of investment. The last Labour Government introduced, at the behest of Gordon Brown, special tax credits for research and development. They have proved to be a very good incentive and have made a very useful contribution.

There is a strange tax anomaly in the area of investment. Tax follows the rather artificial conventions of the accounting profession; certain forms of investment are regarded as investment and certain forms are regarded as current spending. If you invest in software, you can write it off as an expense in the current period, but if you invest in hardware, you cannot: you have to depreciate it over its useful life, or over a maximum of four years. So there are many anomalies in these matters, and my first suggestion for the noble Lord is that he discusses with his Treasury colleagues the possibility of introducing a system of 100% write-offs for capital equipment by investing businesses, irrespective of whether they are in the manufacturing sector or the service sector. That would be a useful incentive to increase investment. It should be done not just as a gimmick or for a short period, which would distort investment flows; but over the long term. This would be logical, because it would be treating investment of that kind as a current expense, which is how other forms of investment are treated.

The second thing the noble Lord could do is something he has already touched on. It is enormously important for investor confidence in this country that it becomes clear as soon as possible that we shall remain part of the European Union. The noble Lord talked about all the trade agreements which the European Union has around the world and how important they have been in enabling us to increase our exports, and he is absolutely right. I think I am right in saying—the noble Lord will correct me if I am wrong—that the European Commission has so far negotiated, or is in the process of negotiating, about 45 trade agreements with other countries or trading groups around the world. That is a very considerable achievement. It takes many years, as he knows very well, to negotiate any of these agreements. An enormous amount of effort is required, even when you have the whole weight of the European Union behind you with an enormous incentive to any counterparty to come to some arrangement.

If we left the European Union we would lose overnight the opportunity to benefit from all those trade agreements. What an absolute nightmare that would be. We would have to set up, start again and persuade all those countries to negotiate some separate deal with us, which many would not have the time or patience to do. They would have other, greater bureaucratic priorities, and if they did so at all they would demand a sort of payment—some concessions which they would not have expected to receive from the European Union as a whole. It would be a very bad day’s work for us, and it is very important that the uncertainty that now exists is remedied, so the second thing the noble Lord could do for investment is to talk to his colleagues and make sure that, now that we are going to have this referendum, we have it as soon as possible to limit to the minimum amount of time the economically damaging uncertainty which we now face.

Thirdly, if the noble Lord wants to do something about productivity, he should speak to those of his colleagues who are responsible for infrastructure. We are taking far too long to build necessary infrastructure, such as the new high-speed train. It should have been built years ago. What is absolutely appalling is the uncertainty about the future of the London airports system. Airports are extremely important for investment decisions, for the location of investment, management and important organisations within firms, particularly R&D and marketing companies and so forth, and these are people who need to travel a lot; if you do not have a good airline hub close to where you intend to locate them, you will not locate them there. In many cases, these people are extremely highly paid and are therefore extremely productive, and that is very important for trying to increase output per man or woman and productivity in the economy. The uncertainty about the new runway at Heathrow—which is quite disgraceful and had we had a Labour victory in 2010 it would have been built by now—must not be allowed to run on any longer. I hope that the noble Lord will have a very positive influence with his colleagues on these important matters in the months and years to come. I am sure that we will enjoy many debates with him on these important issues.

15:42

[The Earl of Caithness (Con)]

My Lords, it is a great pleasure to welcome my noble friend Lord Maude of Horsham and congratulate him on that fine maiden speech. It is also a pleasure to have another member of the former Paymaster-Generals club in this House. We are a small band, but I am glad that we are all here.

In the past five years, the coalition did well, but this Government need to do better and have the opportunity to do so. I welcomed the overseas business network initiative launched by the Prime Minister late in 2012. Will my noble friend tell the House what progress there has been towards doubling UK annual exports and increasing the number of UK exporters, and if and when the Government are going to implement some or all of the Cole commission report, which is an important step in the subject we are discussing?

Our Government can do only a little to support trade and investment by themselves. The rest is setting the scene. The noble Lord, Lord Davies, mentioned infrastructure. When the Government have set the scene, it is up to businesses themselves and, importantly, other countries in the rest of the world and their attitudes.

My noble friend covered trade with the rest of the world fairly extensively. I want to focus on trade with the EU, which accounts for about half our trade. We are part of a market of some 500 million consumers. Peace and stability is fundamental to trade, and there is no doubt that the EU has helped to keep Europe pretty well free of war for nearly 60 years, in marked contrast to the previous 60. The peace that we take for granted is not something that our parents or grandparents or earlier generations could. As for stability, I, too, would say how concerned I am about the referendum last year in Scotland and the upcoming referendum on the EU. That is destabilising—it is bad for trade and for investment.

Having said that, I think that we are incredibly lucky, but not everything is rosy in the garden. In the negotiations that the Prime Minister is carrying out with other countries, it seems that the red line for them is the free movement of people. That was one of the objectives of the treaty of Rome and the EU treaty. Another objective was to create an internal market where competition is free and undistorted. If we want to play the game of red lines, that should be a red line for us. Of course, we will not in our lifetime see an internal market in Europe like the US, with its smaller population and lack of language problems compared with the EU. However, we have been badly let down by protectionism by other member states and by a weak Commission. Add that to the limited growth worldwide, and these are strong headwinds for any Government to overcome.

Although the internal market has increased trade with the EU by about 15% per annum over 10 years, there is still a transposition deficit of single market legislation at national level by member states. What is the current percentage of legislation not implemented, and what action is being taken against those recalcitrant states? As an example, I give the second Single Market Act. By the end of 2013, the Council was supposed to have adopted legislation on all items, but I understand that today five of those 12 key items have not been implemented.

There are four key markets in the EU that can be improved to help trade, investment and growth. I would class them as services, capital, digital and energy. The single market is one of the EU’s best achievements; it goes beyond a free trade agreement and reduces those pernicious non-tariff barriers, such as different regulatory regimes. It has been remarkably resilient through the financial crisis, but it is far from complete. We need to close the productivity gap with the US, which continues to grow faster than us, thanks mostly to the development and take-up of information and communication technology. Some member states, such as Slovakia and Slovenia, have cut a number of barriers, but the likes of France, Germany, Italy and Austria retain highly protected service industries. Yet services make up the great majority of economic activity in most developed countries. The original services directive provoked hostility, so does my noble friend agree that a more cautious step-by-step approach, although irritatingly slow, is likely to produce better results in the long term? What is the Government’s view on increasing mutual recognition in tourism, business services, construction and retail? In particular, what progress is being made on those fronts?

I turn to the capital markets union, where progress is starting, thanks to my noble friend Lord Hill, as EU Commissioner. I hope that we will debate in the near future the report of the EU Economic and Financial Affairs Sub-Committee on the proposed CMU. I will reserve my remarks for that debate and turn to the digital market, another area in which the Commission is overanxious and muddled. New technology increases income when it raises productivity, something that the EU is pretty bad at. It is not about creating a rival to those big American beasts. It is also not about creating jobs per se. The combined workforce of Facebook, Google, Amazon and Apple, excluding the supply chain, is considerably less than that of German companies already operating in the UK.

The EU must embrace this opportunity to provide growth, and one way to do that is the direct responsibility of government: changing the tax rules. Does the Minister agree that it would be hugely beneficial if corporate tax and VAT were to be payable in proportion to companies’ revenues in that country? How much longer can we allow Luxembourg and Ireland to be free riders on consumer demand in other member states? Bringing down barriers within Europe could contribute in excess of €400 billion to Europe’s GDP.

The EU’s aim must be to put more emphasis on growth at the heart of its long-term plan. To achieve that, it needs to open up its markets more fully so that the more productive firms in one country can move into another and take market share. Mutual recognition is a key ingredient of that policy. In that way, the 28 countries that currently form the aged and increasingly geriatric aunt of the world, the EU, will rejuvenate themselves, and trade, investment and growth will flow naturally from that.

15:49

[Lord Kakkar (CB)]

My Lords, from these Benches I join in welcoming the noble Lord, Lord Maude of Horsham, to his new ministerial position, and congratulate him on a marvellous maiden speech. In so doing, I declare my own interest as one of the UK’s business ambassadors for healthcare and life sciences and as chairman of University College London Partners Academic Health Science Partnership.

I shall confine my remarks to the sectors of healthcare and life sciences. The provision of effective healthcare plays a vital role in our economy, because a healthy workforce can potentially deliver much more in terms of efficiency and productivity to the economy. Since the National Health Service’s inception, it has played an increasingly vital role in social cohesion in our country, and has stimulated the creation of a remarkable ecosystem around itself. Some four out of the top 10 biomedical universities in the world are here in the UK, as are two of the top 10 leading pharmaceutical companies in the world. We have some 3,500 small and medium-sized enterprises in the med-tech and biotech sectors, 500 of which are actively exporting.

The contribution to exports by the pharmaceutical industry is some £21 billion a year. Over the past 15 years that sector has consistently contributed surpluses to our balance of trade position, with some £1.1 billion contributed by the pharmaceutical industry in the last year for which records are available. It is an important sector in terms of the employment that it provides, with some 150,000 people employed in 100 countries around the world, and the contribution that it makes to research and development—some 25% of all R&D expenditure provided by the private sector is in the fields of healthcare and life sciences.

With regard to the med-tech and biotech industries, in the period between 2009 and 2014, when economic growth was difficult in our country, on an annual basis the med-tech sector saw a 5.8% increase in revenue growth and the biotechnology sector some 4% increase in revenue growth. In terms of employment, some 300,000 people are employed in the science and technology sector, which consistently since the turn of the century has seen a 3.7% increase in employment, frequently in very high-skilled and high-technology jobs.

It is important as we look to the future to recognise that healthcare expenditure globally is set to increase by some 5.6% per annum between 2014 and 2027. Some of the most important markets that we have strong trading relationships with will see even greater rates of growth in healthcare expenditure: for instance, in India some 15% per annum is expected over that period, China some 12% and the Middle East some 8%, so there is a huge opportunity for our nation, and for the healthcare and life sciences sectors, to contribute to meeting those important demands across the world.

The opportunities have been addressed to some extent through the work of government agencies. I declare a further interest in my role as a UK business ambassador, sitting on the board of Healthcare UK. Healthcare UK was set targets in the last financial year to achieve business wins of some half a billion pounds a year, principally focusing on those important markets of India, China and the Middle East, but was able to surpass that assistance to industry in that area, achieving business wins of £749 million in that year.

The All-Party Parliamentary Group on Global Health, of which I am treasurer, is about to publish a report that looks at the global footprint for healthcare for our country. That is an important point, because it demonstrates opportunities for the standing of our nation beyond the straightforward question of trade and investment. For instance, if one looks at contribution through overseas aid, the United Kingdom is the second-largest contributor to bilateral investment in, or contribution to, development in health around the world. If we look at our charities, there are some 6,500 charities in the healthcare, life sciences and medical research sectors, which invest some £7 billion abroad in projects, driving improvement of health but also promoting important research programmes and projects.

Then we have our university and academic sectors. As I mentioned, four of the top 10 biomedical universities in the world are based here in our country, and some 46,000 overseas students study medicine and dentistry in our 33 medical and dental schools, contributing substantially to the economy and providing opportunities for future growth as those institutions start to look abroad to deliver training and education in other countries. I declare a further interest as professor of surgery at University College London, which is actively involved in that kind of activity.

On research, in biomedical research our nation represents 1% of the world’s population, but we are responsible for 12% of all cited outputs in biomedical research around the world, and 62% of the top publications from UK institutions and authors are done in collaboration with institutions and colleagues abroad. That demonstrates the very global nature of our contribution to biomedical research and how our nation sits at the heart of many important medical research programmes and projects in healthcare around the world.

As regards the future, one of the important opportunities that might be explored is the potential for further trade and investment with regard to healthcare and life sciences with Commonwealth nations. One-third of the world’s population live in Commonwealth countries, and a recent report published by the trade policy division of the Commonwealth Secretariat has looked at the broader question of trade within the Commonwealth. It has identified that trade among Commonwealth nations at the moment accounts for some $680 billion a year, but by 2020 that will have grown to $1 trillion. There must be substantial opportunities to focus on trade with regard to healthcare and life sciences. That same analysis has demonstrated that the cost of doing trade if both partners are from Commonwealth nations is 19% less than it otherwise would have been if parties were not Commonwealth members, based on the fact that we have many common legal systems, share a language and frequently have a similar way of doing business.

All that has been achieved through the support of successive Governments; the last Government had a number of important initiatives. The Treasury report The Plan for Growth in 2011 identified healthcare and life sciences as a sector that could benefit from a more streamlined approach to regulation to open up opportunities for potential trade and investment. The Department for Business, Innovation and Skills report into life sciences, its Strategy for UK Life Sciences, and the support through the announcement by the Prime Minister in December 2011 of a joined-up life sciences strategy for our country, identified that the areas of healthcare and life sciences were particularly attractive for future investment and future government attention, because they generate very frequently high-tech, highly skilled jobs and disproportionately were in a position to contribute to growth in the economy.

Then we have the Innovation, Health and Wealth report from NHS England and the subsequent NHS Five Year Forward View, which have identified partnership between universities, the NHS and pharmaceutical, med-tech and life sciences sectors in driving growth opportunities more broadly for our economy, while ensuring that our country remains the most favoured nation in the world for inward investment in healthcare and life sciences, and bringing innovation rapidly to our population and potentially improving outcomes in the NHS.

What approach will this Government take towards the many different strands of activity and initiatives that have now been initiated by government to bring them to a single, co-ordinated place so that the real benefits that could be achieved through effective targeting of investment by Her Majesty’s Government to promote trade and investment in healthcare and life sciences can be achieved during the lifetime of this Parliament? What view do Her Majesty’s Government have on focusing, particularly in the Commonwealth, on opportunities in trade and investment in healthcare and life sciences?

16:00

[Baroness Mobarik (Con)]

My Lords, I join my fellow Peers in welcoming my noble friend the Minister to his new position and in congratulating him on a most accomplished maiden speech. He has made an auspicious start. I had the pleasure of meeting him recently and his positivity and keenness to engage really impressed me. I have no doubt that he will perform superbly in this new role and I very much look forward to working with him.

One of the great considerations for trade and investment currently is our relationship with the European Union and our potentially key and central role as part of the EU in negotiating the Transatlantic Trade and Investment Partnership, or free trade agreement, with the United States. While this, along with our trade and investment relationship with India and China, is a priority—and rightly so—there are other opportunities that we cannot ignore or overlook. There is great scope for British companies in a number of emerging markets, and I would like to comment on one that I believe is in danger of being overlooked, particularly by our business community.

Last month, I visited Islamabad and Lahore in my capacity as the chairman of the Pakistan Britain Trade and Investment Forum and as the Prime Minister’s UK-Pakistan Trade Champion. Those who know me will be aware that I have been championing the cause of UK/Pakistan bilateral trade and investment for many years, well before being given the honour of the official title in April 2014.

In the past I have argued that, while the annual UKTI budget to facilitate trade with China and India has been substantial, the figure for Pakistan has been a dismal zero, or a nominal amount in support of a conference. Although I am keenly aware that issues such as security have been an impediment to this potential trade, the arguments for engaging with this market are many: a significant population of 185 million—of predominately young people—vast natural resources, a growing middle class, the relative ease of doing business and English as the language of business, to name a few.

Recent developments mean that we can no longer ignore this market. I cannot say this emphatically enough: we, the United Kingdom, cannot afford to ignore this market. The most significant of these recent developments is the visit by the Chinese President, Xi Jinping, to Islamabad in April this year and his commitment to provide $46 billion towards building an economic corridor through the length of Pakistan. That is the biggest overseas investment announced by China to date. It will link Kashgar in China’s western region of Xinjiang, down through the lush, agricultural expanses and bustling cities and towns of all four provinces of Pakistan, to the new deep sea port at Gwadar on the Arabian Sea. This economic corridor—a network of roads, railways and pipelines to transport oil and gas—enables China to develop a cheaper and shorter route to trade and investment with the Middle East, Africa and Europe. According to analysts, it will place Pakistan at the heart of four out of the five fastest trade flows in the world.

When I met the Petroleum Minister Shahid Abbasi in Islamabad, he could not say more clearly that Pakistan wants, above all, UK companies to come and operate in the country because of the trust and admiration for British expertise and the historic ties and special relationship with Britain. The same sentiments were expressed by the various ministers at the Office of the Chief Minister of Punjab in Lahore. The general view held by the business community at the Lahore chamber of commerce was that the Chinese investment or loan is greatly appreciated and welcome but it allows China to bring in its equipment, its companies and its labour to build this economic corridor and then to leave. The alternative of UK companies, through the many contracts, would mean the delivery not just of excellent projects and products but of expertise and knowledge and the legacy of a highly trained workforce.

Incidentally, the chief executive of the UK company with me on that visit, Lagan Construction, which built the runways at the new Islamabad International Airport, had this to say: “We have worked in over 30 countries around the world and the workforce in Pakistan is second to none. The workers are conscientious, they pick up skills very quickly and they work extremely hard”. I saw for myself the scale and quality of what Lagan had delivered, and it was truly impressive. The excellent workforce available should be another incentive for UK companies to operate in Pakistan. Of course, the UK companies that are already operating there—there are over 100 companies, some of which have been there for many years—benefit from huge profits. That includes companies such as GlaxoSmithKline, which has a 28% share of the market, Standard Chartered, Unilever, Reckitt Benckiser and the Ashmore Group plc, not to mention the many retailers, such as Debenhams and Mothercare.

Business opportunities will only accelerate over the next decade but it is important that we take this market seriously now. The British Chambers of Commerce and their overseas business networks initiative—a partnership between UKTI, the Foreign and Commonwealth Office and the British Chambers of Commerce—has a crucial role to play in increasing the number of UK exporters of goods and services.

The energy requirements of Pakistan are severe, and the UK has much to offer in that regard. We have expertise in solar, biomass, hydro and wind. Scotland particularly has much to offer. In the oil and gas sector, Aberdeen is full of excellent companies that currently need export markets, and Pakistan has yet untapped, but certain, oil and gas deposits. Pakistan’s Petroleum Minister expressed his interest in visiting Aberdeen to personally invite companies to come and explore the opportunities open to them. The potential is there, not just in energy but in infrastructure, agriculture and dairy.

From a poverty alleviation point of view, we should consider how some of the money that is channelled through DfID could be channelled as technical assistance or as seed or anchor funding towards some of these energy projects. It would bring benefit to the deprived communities in Pakistan through economic development and bring a commercial return to the UK in helping to boost our exports and our trade and investment figures. I request that the Minister consider this suggestion and prioritise this particular emerging market economy.

16:09

[Viscount Hanworth (Lab)]

Over the past quarter of a century there has been a continuing deterioration in Britain’s balance of payments. The current account, which represents the balance of trade in goods and services, has shown an ever widening deficit. The deficit on the current account in the three months to September 2014 reached a value that was equal to 6% of GDP. This is the biggest deficit that has been recorded since modern records began in 1955. Within the current account there has been an increasing deficit in the trade in goods, which has been only partly offset by an increased surplus in the trade in services.

Britain has, in effect, ceased to be a major manufacturing nation. In 1979, manufacturing in the United Kingdom contributed 25% to the gross domestic product and contributed largely to our export earnings. In 2010, manufacturing accounted for only 12% of the country’s national output. Its decline has been greater than in any comparable western country.

When a country runs a current account deficit, it is building up liabilities to the rest of the world that must be financed by flows in the capital account. The inward flows tend to be described, somewhat felicitously, as inward investment. However, in the case of the UK, they have been tied primarily to the sale of existing capital assets to overseas purchasers. A House of Commons Library note from March 2013 shows that the stock of inward investment that has accumulated in the UK over the period from 1970 to 2011 is equivalent to about a half of our gross domestic product. A report of the same year from the Department of Trade and Industry shows that the flows of investments into the UK greatly exceed those into any other country of the European Union.

It is both startling and instructive to explore the implications of this inward investment by taking stock of the current ownership of Britain’s capital assets. Of course, to construct a detailed inventory is next to impossible on account of the complexities of the financial arrangements, which entail joint and partial ownership. However, a good impression can be gathered by taking a few leading examples.

One might start with Britain’s ports, through which most of our trade in goods passes. This month a sale has been finalised that will see 30% of the ownership of Associated British Ports, which is the UK’s largest port operator, pass out of the hands of Goldman Sachs Infrastructure Partners and Infracapital, which is a Prudential subsidiary. The new joint owners will be the Canada Pension Plan Investment Board and the international financial conglomerate Hermes. These partners saw off competition from Malaysia’s sovereign wealth fund, from the Dutch pensions investor APG and from Korea’s national pension service. A third consortium, consisting of Abu Dhabi Investment Authority and 3i Infrastructure, was also vying to take control of the ports in an auction that began last year.

Within the last decade, Ferrovial of Spain has bought British Airports Authority, which is the operator of Heathrow and Stansted airports. The majority of Britain’s energy suppliers have fallen into foreign ownership, as has the supply of our water. The Australian bank Macquarie has recently taken control of our car parks by buying NPC. It would be tedious to continue in this way. Indeed, so complicated and opaque are the majority of such deals that most of us have ceased to pay much attention to them.

It is notable that those deals continue to provide the Government with funds that can be used to defray part of their budget deficit. However, there is an ever diminishing stock of assets for sale that remains in the public portfolio. As the Office for National Statistics informs us, the UK now has a large negative investment position. This means that foreigners own a greater value of British assets than British investors own of foreign assets—indeed, a much greater proportion. At the end of 2012, the balance was £544 billion in favour of foreign owners.

The foreign ownership of our capital assets implies an outward flow of profits, investment payments and dividends. In the past, Britain has been favoured by the fact that its overseas assets have generated a greater rate of return than have the foreign-owned assets in the UK. This favourable circumstance no longer prevails. Indeed, a deficit on the financial account has contributed to our record current account deficit. This deficit has necessitated even greater adjustments of the capital account, entailing a further sale of our capital assets. A vicious cycle is under way, which will end in our eventual impoverishment and in our inability to pay our way.

It is remarkable that, in the face of these circumstances, the Chancellor of the Exchequer, George Osborne, was capable of declaring in his pre-election Budget speech:

“Out of the red and into the black – Britain is back paying its way in the world”.

This ignorant optimism and insouciance contrasts markedly with the anxieties concerning our balance of payments that afflicted his predecessors, both Conservative and Labour, from the early post-war years until 1992 and, probably, beyond that date. In 1992, a Conservative Government were forced to withdraw from the European exchange rate mechanism after it had been unable to keep the pound above its agreed lower limit.

It is difficult to explain how this radical change in perception has come about, but undoubtedly it owes much to the fact that a regime of fixed or controlled exchange rates has been replaced by one that allows exchange rates to float freely. The change in the international arrangements for currency exchanges has been accompanied by a process of economic deregulation and globalisation that has given free rein to the currency markets and asset markets. These developments have been accompanied by a belief in the ability of the markets to achieve favourable economic outcomes in the absence of regulatory interventions.

Perhaps the Chancellor has been unduly influenced by the dogmas of the free-market economists. However, there is real cause for anxiety. On all previous occasions since the Second World War, when the current account deficit has been a high proportion of GDP, there has been a booming economy that has sucked in imports. At present, the economy is in recession, yet there is a very substantial deficit. Unless steps can be taken to stimulate the export of manufactured goods from the UK, we will be permanently constrained to maintain the economy in a state of recession, in order to staunch our demand for imports in an attempt to avoid a balance of payments crisis.

A balance of payments crisis will involve a flight of capital from the UK accompanied by a radical loss of the value of sterling vis-à-vis other currencies. Such a loss of value would raise the cost of imports, which, in addition to necessitating a reduction in demand, would give an impetus to domestic inflation. The reduction in the value of sterling might favour a degree of import substitution and it might encourage exports, but the conditions of recession and inflation would not be favourable to either of these tendencies.

The failure over many years of our industries to export their products has been a consequence, in part, of the overvaluation of the pound. It is startling to compare the upward trajectory of the pound to the downward trajectories of the currencies of the countries that have been providing us with cheap imports, namely the currencies of China and of the east Asian countries. In 2007 and 2008, there was a rapid reduction in the value of the pound in consequence of our financial crisis; but, since then, it has been gradually regaining its former heights. Our industries did not respond with alacrity to the enhanced opportunities to sell their goods abroad. For a significant response to have time to get under way, there would have to be a prolonged reduction in the value of sterling. It is clear that export markets can be lost far more easily than they can be regained.

One has to explain why the overvaluation of the pound has persisted for so long and how it might be overcome. The overvaluation owes much to the activities of our inflated financial sector. The sale of our capital assets to foreigners that has been mediated by the financial sector has stimulated a demand for the pound that has sustained its value. These sales have averted a balance of payments crisis, but they have also created the conditions that will exacerbate the eventual crisis. It will take time to amend these conditions. In the process, the financial sector will need to be diminished and its freedom to sell our assets overseas will have to be curtailed.

Our manufacturing industries, which will be required to grow in size and strength, will need to be fostered by a broad range of policies aimed at stimulating investment. The reduction of the value of the pound will need to proceed in a gradual and an orderly manner. This could be achieved with the help of the central bank, which should be instructed to purchase foreign currencies whenever the value of the pound shows signs of increasing. The central bank’s programme of quantitative easing has pumped a large quantity of money into our economy, which is threatening a further inflation of the values of financial assets and of commercial and residential properties. This is liable to stimulate the activities of foreign speculators, which may lead to an even further elevation in the value of the pound.

Quantitative easing has failed to stimulate investment in our native industries. This has to change; the banks have to be encouraged—if not instructed—to lend to businesses. The money that has been pumped into our domestic banks would have been more profitably employed in lowering the value of the pound by purchasing foreign currencies.

16:20

[Lord Risby (Con)]

My Lords, it is a great personal pleasure for me to see my noble friend Lord Maude on the Front Bench and to congratulate him on a truly excellent speech. Perhaps my noble friend thought that when he came to your Lordships’ House he might be escaping me. The simple reason for that is that I was his deputy not once, not twice, not three times, but now four times—he is technically my boss since I am a trade envoy of the Prime Minister. I am absolutely delighted that that should be the case. I believe that my noble friend has now made three maiden parliamentary speeches, which is excellent too. I have worked with him in many roles over the years; he combines a stellar intellect with an extraordinary commitment to get things done with a clear sense of focus and direction. It is exactly for that reason that he will be enormously valuable in discussions and debates in your Lordships’ House, and in the crucial role that he now enjoys in government.

We have a brilliant service industry in this country—the best in the world, in many respects. This certainly is not the moment to discuss the whys and wherefores of the calamity that struck this country in 2008 and beyond, but it told us something—that we needed a different regulation of our financial services industry, but also a rebalancing of our economy. In common with other industrial countries, we have seen a decline in manufacturing in the United Kingdom. In our case, we have seen an overdependence on the financial services industry, much of it concentrated in London. Indeed, as many noble Lords have already indicated, our export performance has not matched that of others. One problem has been that accessibility of our banking and insurance services has been very difficult in some key markets.

Over the years all British Prime Ministers have tried to promote exports and inward investment, but by any objective standards, the time and energy that has been committed by this Prime Minister and this Chancellor of the Exchequer to that end has been widely and enormously appreciated by the business community, as I have heard so often. UKTI has been refashioned to develop new market opportunities and to encourage inward investment. However, the culture of export promotion remains a work in progress, as our home market has always been somewhat consumer oriented and, for many businesses, enough for their business purposes.

Let me deal first with inward investment. Our openness and attractiveness to external investment sources is simply unique in Europe. We remain the top European destination for foreign direct investment and second in the whole world, but until recently some 90% of FDI came from either America or Europe. Clearly this is now beginning to change, which is to be welcomed, as we see the new world economic order unfolding, with huge and recent investments by the Chinese, Gulf Arabs and others. We can recall with gratitude the huge investment made by the Japanese in this country in the 1980s, particularly in our car industry. It is estimated that the wave of FDI has created more than 200,000 jobs and safeguarded 260,000. It is crucial that we continue on this process, but we must do so by continuing to have low business taxes, a pro-business sentiment and flexible employment structures that continue to be attractive to people.

We, of course, as a country also benefit enormously from the English language, and our reputation as a very open and welcoming society. We can also be proud of a big change in business start-up culture, and the dynamism of our high-tech sector. An extraordinary statistic on the rate of start-ups in this country compared with France was published recently. We have much to learn from France as regards the co-operation between government and the private sector in assertively pushing the interests of France in export markets. That is to be admired in many respects. I read an extraordinary statistic which I hardly believe to be true, but it is part of our success story and must be encouraged—namely, apparently, 9,000 British people now live in Paris and 400,000 French people live in London, many of whom are the most enterprising and dynamic young French citizens who have been attracted here. In that context, the Chancellor of the Exchequer has removed or modified burdens on smaller businesses and has overseen the establishment of new enterprise zones and digital entrepreneur hubs. He has improved R&D tax credits and given extra support to exporters with the expansion of fast broadband, which is certainly much needed.

In March, the Government hit our target of signing up 3,000 medium-sized businesses to a support programme designed to help them break into new global markets. However, we still have work to do. Only one in six such businesses currently exports outside the European Union compared with one in four in Germany and one in three in Italy, so progress needs to be made. I am sure your Lordships will want to support this and perhaps my noble friend will comment further on it.

I was particularly interested in the very interesting and informed comments of my noble friend Lady Mobarik in respect of Pakistan and the opportunities there. Wearing my hat as the Prime Minister’s envoy to Algeria, I know that it is very interested in the start-up culture and high-tech sector which have developed in this country. Of course, in a country such as this there is an argument to be had about how you encourage this by cutting red tape and amending tax policy. However, a country such as Algeria is relatively new business territory for us and we have seen a substantial growth in business activity with it. In December last year, as part of the trade envoy programme, 1,000 potential investors wanted to attend a conference in London labelled “Algeria Open for Business”. Recently, we secured our first Rolls-Royce engine order there. We have had a remarkable success story with a Northern Ireland dairy company supplying farm products there, further energy construction and servicing deals and, very soon, we hope, a major hospital contract.

I pay tribute to my noble friend Lord Marland, who encouraged this whole process and drove this programme forward. However, the Prime Minister’s visit just over two years ago made a dramatic breakthrough. UKTI is now supporting trade and credit finance at a level unseen before. All this is very welcome. It is also particularly welcome that 89% of its customers are SMEs. Additionally, funding has been put in place to give support and advice to possible new SME entrants. Surely this is an area which offers the greatest promise.

I also express my gratitude for the change of attitude which evolved in our Foreign Office. Ambassadors now give considerable support and energy to export and inward investment promotion, as I have seen and admired in Algeria and elsewhere. There is simply no alternative to pursuing business-friendly policies if we are to secure the economic growth which gives businesses confidence that they are supported in their export ambitions. Business organisations are playing their part with UKTI, BIS and the FCO in encouraging this culture, and it is working. The latest British Chambers of Commerce international trade survey found that businesses that export reap better performance but there is more still to be done, and the BCC is there to assist. Its Overseas Business Networks programme links accredited British chambers with those abroad under the banner of Export Britain, offering advice on export readiness, planning, making connections and getting goods to market. I dwell on this because these activities supplement the work of government through UKTI and provide an international link that is hugely welcome.

As the relative importance of the European economy continues to shrink, identifying and targeting new markets remains a critical objective. I hope and believe that those of us who are privileged to be part of the Prime Minister’s trade envoy programme can in some measure contribute to this in markets that have been relatively unexploited historically. The Chancellor of the Exchequer said recently, I think with real candour:

“We have to tackle the endemic weaknesses in the British economy that no Government have been able to solve in the past: we are not productive enough and we do not export enough, save enough, train enough or build enough”.—[Official Report, Commons, 4/6/15; col. 798.]

In once again welcoming my noble friend to his role, I say in conclusion that he brings great experience of the private sector to this undertaking and I know that his contribution in driving forward our export promotion and continuing to attract inward investment will be greatly valued by this country.

16:31

[Lord Clement-Jones (LD)]

My Lords, I declare an interest as London managing partner of DLA Piper and a member and City ambassador of the Law Society. I, too, very warmly welcome the Minister to his membership here and his new role, and congratulate him on his excellent free-trader maiden speech. I was tempted to talk about our trade with China and other overseas destinations, as well as the potential in our tech and creative industries, particularly in the light of the very apposite remarks made by the noble Lord, Lord Risby. But I am going to follow some thoughts that were introduced by my noble friend Lord Stoneham, given that today we are celebrating the 800th anniversary of Magna Carta.

The rule of law in the English legal system is not only a major source of British influence abroad but a key reason for choosing the UK as a place to do business. English law is the most commonly used system in dispute resolution and in international business more generally. A key factor is the integrity and independence of the judiciary. We have a long and well-respected tradition of excellent legal services based on trust and performance. Legal services are a cornerstone of the broader financial and related services cluster which makes the UK the leading international finance and business hub. Major global businesses come to the UK to access this unrivalled breadth of services, seek advice from world-class legal and advisory firms, raise finance, and insure their businesses. The rule of law is now one of Britain’s great exports, with a surplus on legal services of more than £3 billion in 2013, now forecast to have risen to £3.6 billion this year. Our professional and legal services are critical to our success in attracting trade and investment.

The noble Lord, Lord Livingston of Parkhead, our previous Trade Minister, in response to a question from me in the previous Parliament, confirmed his view that,

“the legal services sector is one of the most important sectors for the UK … not just as an export in its own right but as a reason for FDI into the UK”.—[Official Report, 11/12/13; col. 782.]

The sector employs almost 314,000 people in the UK and the wider professional services sector employs more than 2 million people, with growth particularly strong this year outside London. Like all other sectors, however, we need to remain competitive.

An important reason for the UK’s position as a leading legal services hub rests upon its participation in the EU. TheCityUK’s competitiveness report found:

“Decision makers specifically cited access to markets in the EU as a core reason for choosing the UK over other financial centres”.

Another benefit from the EU for the legal sector is the freedom of establishment, under the establishment directive. No wonder that, according to a CBI survey last year, two-thirds of law firms think that leaving the EU will have serious negative consequences.

Part of maintaining the UK’s competitiveness is ensuring that it has a properly skilled workforce, with immigration policies that support business needs. Last week, we heard that demand for visas under the tier 2 cap outstripped supply for the very first time since 2011— and in huge number, too. The Home Office has confirmed that the monthly allocation of tier 2 visas has been filled for June already. Businesses looking for certificates of sponsorship for graduate programmes and managerial posts were refused them, I understand, at a salary level of £46,000 or less. Last Thursday, the Prime Minister announced plans to make it harder to bring in skilled staff from outside the EU but non-European skilled migrants account for 0.066% of the British labour market. This is a crucial issue for trade and investment. The Home Office, as ever, seems to be working counter to the interests of our economy. I hope that the Minister can say something about this.

Then there are the TTIP negotiations between the EU and the US. I am in principle strongly in favour of TTIP, provided that we have the ability under the investor state dispute settlement provisions to make exceptions for public policy reasons—for example, to deliver our public services in the way that we want. There is no doubt that a great deal of the confusion and misunderstanding surrounding TTIP has been generated by very untransparent negotiating processes. Even now, we seem to have the EU position published on only two-thirds of the draft treaty.

I hope in particular that regulatory co-operation under TTIP will deliver improved trade in financial services, with common regulatory standards, and in legal services between the EU and the US so that there is improved market access and practice rights for solicitors and UK law firms in the US, including mutual recognition of qualifications. The UK is the world’s most international market for legal services. It is very open in allowing virtually unrestricted access for foreign firms but this is not the case in the US. Even a US attorney does not have freedom of establishment; it very much varies on a state-by-state basis. Legal services regulation is not a federal matter in the US, in contrast to the EU regime. It is actually illegal for an English solicitor to fly to most US states to give advice on English law, so I hope that we will see US states remove the minimum practice requirements for eligibility. Solicitors should be eligible for the Bar exam in all 50 states, regardless of their route to qualification. I also hope that TTIP negotiators will be ambitious in seeking liberalisation on all modes of practice, on all types of legal work and in all US states.

Then there is UKTI, whose role is crucial. I very much endorse everything that the noble Lord, Lord Risby, said about it in a positive way. In the past few years it has collaborated with the MoJ, the Law Society, the Bar Council and TheCityUK, among others, in promoting the legal services sector, with the original Plan for Growth in 2011 followed by UK Legal Services on the International Stage in 2013. In the sudden and unexpected cuts to this year’s public expenditure, however, UKTI seems to be a major potential victim. How much will the cuts or savings amount to, and how will they affect UKTI? Does it intend to produce a progress report and updated plan for the legal services sector? Indeed, will it have the resource to do so?

The challenges we face to ensure that the UK remains the world leader in the rule of law, in our standards of justice, in the provision of legal services and in the opportunities that exist in international jurisdictions are significant. However, we can meet them only if the issues that I have raised today are addressed. I have a straightforward question to the Minister. Does he recognise the importance of our legal services to trade and investment and will he, as the noble Lord, Lord Livingston, did, pledge to champion the legal sector? I very much look forward to the Minister’s reply.

16:39

[Lord Popat (Con)]

My Lords, it is a pleasure to welcome my noble friend to his new role. It will require a tremendous national effort to tackle Britain’s long-standing trade deficit, but doing so offers us the best possible route out of our nation’s budget deficit. I am pleased that, following his two distinguished predecessors, we have such a capable Minister leading the charge.

It is important to set our trade situation in context. There can be no argument: the past five years have been good for Britain’s economy. We have an employment rate of 73.4%, the highest since comparable records began in 1971; an unemployment rate of 5.5%, which continues to shrink every month; GDP growth of 2.8% in 2014; and average weekly earnings were up 2.2% between January and March 2015. We have also benefited from low inflation and low interest rates. Given the challenges faced in 2010, it is indeed impressive that the majority of headline figures compare favourably to any Government’s record—what a success.

However, there are two blemishes on that record. Public sector net borrowing, although down 11% on the previous year, remains high at £88 billion, or 4.8% of our GDP. Linked to that, our trade deficit is still £33.7 billion and our current account deficit £97.9 billion, some 5.5% of GDP. This has, with some minor exceptions, been a trend for four decades—a trend that successive Governments, despite good intentions, have failed to come to terms with. Put plainly, we do not have enough exports to pay for our imports; in other words, we are consuming more than we are producing.

I will turn in a moment to what actions I would like to see from the Government to help tackle our exporting issues, but it is worth drawing attention to the work of the House of Lords Select Committee on Small and Medium Sized Enterprises that I proposed in 2012. The committee was very ably chaired by my noble friend Lord Cope, and looked at how the Government support SMEs when it comes to exporting. It produced an extensive report, full of sensible ideas. Since its publication, there have been two debates in this House on the committee’s report, on 26 June 2013 and 6 May 2014. For the latter, the Government produced an update on their progress.

It is vital that we maintain, as the committee did, a clear focus on SME exporting, rather than combining all trade figures together. The challenges faced in the SME sector are very different from those in the larger corporations, but the rewards are potentially much greater. Will the Minister ensure that we continue our trend of the past couple of years and arrange for another debate—in government time—to ensure that progress is being continued?

I move on now to some of the obstacles preventing a trade balance surplus. I spoke at some length in the debate on the gracious Speech about our nation’s obsession with Europe to the great detriment of emerging markets and, in particular, Africa. I will do my best to avoid repetition, but the EU accounts for 45% of our exports and 53% of our imports. In other words, there is a difference of eight percentage points between what we import and what we export, which amounts, roughly, to a £30 billion to £40 billion trade deficit with the European Union.

Viewed through the forthcoming EU referendum, these figures prompt two different responses. Those wanting to stay in Europe see them as a clear justification of our overall relationship, an economic bonus for our membership. Those wishing to leave the EU use them to say that, even if we were not members of the EU, it would still be in Europe’s interest to trade with us as it gets a net benefit. My take on these figures is rather different. I believe they prompt a sort of paralysis among our political and business leaders. We fret over what we have, rather than envisage what we could have. As a nation we lack the courage to conquer new trading frontiers. The eurozone’s economy has barely grown in recent years and with the ongoing situation in Greece and the resulting uncertainty it is hard to see that changing. We simply must roll up our sleeves and focus our efforts on the markets of the future. The opportunities in Asia, Latin America and, in particular, Africa are numerous and lucrative. The Government’s role, through trade missions, EU free trade agreements and UKTI, must be to open these opportunities up to British firms and to navigate the private sector towards them. In turn, our business community must seize these opportunities with both hands. Can the Minister comment on his plans to expand UKTI’s presence in the emerging markets of Africa?

Our Government must also tackle our long-standing infrastructure deficit. The runway situation in London is painful; we must get on, implement the Davies commission recommendation and place our nation’s economic and trading future above the inevitable objections. Likewise we must press on with HS2 and HS3 and improving our roads. We cannot sell our goods if we cannot get them to the market in the first place.

Finally, we must also make sure that our goods and services are more affordable than those of our competitors. A lot has been made of our seven-year productivity stagnation—as the ONS said, it is unprecedented in post-war Britain. It certainly does not help our exports if workers here are producing the same amount per hour as they were in 2007 while our competitors are producing more. The Economist recently disaggregated the productivity data, finding huge differences between sectors. Our transport manufacturing industry, once again a great British export industry, has seen productivity improve by 56% from 2009. In contrast, our finance and insurance industries are producing 10% less per hour in the same period. While it is helpful to understand that our productivity slump is being skewed by certain sectors, it does not hide the fact that overall our economy is not as efficient as it should be. This trend cannot continue, or we will fall further behind our competitors. We need businesses and the Government to work together to identify and address whatever issues are holding us back.

This Government should be aiming to eradicate our trading deficit in the next five years. We have the expertise and the products; the emerging markets have the customers. Let us now see the commitment.

16:48

[Lord Bilimoria (CB)]

My Lords, I congratulate the noble Lord, Lord Maude, on his excellent maiden speech. It was a very balanced and frank speech and we look forward to much more of the same. I was privileged to interact with him in his role as Paymaster-General when I was a commissioner for six years at the Royal Hospital Chelsea—the Chelsea Pensioners—where he used to come regularly. Other interactions included going round the Rolls-Royce factory in Goodwood, where he showed a huge interest in British manufacturing.

When I came to this country from India in the 1980s, entrepreneurship was struggling to shake off a very negative image. The word used to conjure up images of dodgy second-hand car salesmen and people wanting to cut and run. There certainly were people wanting to break through the glass ceiling then but they were held back by attitudes including excessive regulation. Our business climate did not help. We made cars that no one wanted to drive, we mined coal that no one wanted to burn and we owned businesses that no international company wanted anything to do with. In this environment, when I decided to set up Cobra Beer, my father, who was commander-in-chief of the central army in India from the Gurkha regiment—last week I was privileged to lead a debate on the 200th anniversary of the Gurkhas—and had 350,000 troops under his command, said, “What are you doing with all this education? You’re becoming an import/export wallah”.

His words would have been echoed by the parents of many other prospective entrepreneurs—but just look at how present-day Britain is and how the world has changed. Entrepreneurship is cool and we have a society where anyone can get anywhere, regardless of race, religion or background. More importantly, we have a society in which we can encourage people to come to the United Kingdom to make their way in the world, and in which we enjoy a huge level of entrepreneurial talent. In fact, London leads New York and Hong Kong in terms of highly skilled, knowledge-based jobs—there are 1.5 million of them—and a recent report showed that London is one of the top two cities in Europe for entrepreneurship.

The Minister and the noble Lord, Lord Popat, mentioned infrastructure. We have some great infrastructure projects. Crossrail is being built beneath our feet. It is a £15 billion project and the estimated economic benefit is almost £50 billion. We will see huge effects, with thousands of jobs and world-class infrastructure.

Our universities have not been spoken about enough in this debate. In the QS university rankings, London had more top-rated universities than any other city in the world. The success is not confined to London. I am proud to have been installed recently as the seventh chancellor of the University of Birmingham. We, too, were in the top 100. Along with America, we have the finest universities in the world—and, talking about Americans, in 1758 American statesman Benjamin Franklin wrote:

“An investment in knowledge pays the best interest”.

That is a statement that I hope more countries will emulate.

Of course, education is an export that this country should be proud of. We have amazing strengths. The Minister spoke of inward investment. We are number two in the world in inward investment after the United States—a country that is more than six times bigger than we are. For such a tiny island, we really do, as noble Lords have said before, punch above our weight. We have 1% of the world’s population.

Since coming to England as a 19 year-old in the early 1980s, I have seen Britain transformed from the sick man of Europe to a country that is now the number five economy in the world. We enjoy one of the most open and free business climates in the world and we are a country where entrepreneurship is admired and celebrated. In spite of our tininess, we are right at the top table: a member of the G8, the G20 and NATO, and with a permanent seat on the UN Security Council. Our tourism industry alone brings in nearly £100 billion and we have the most respected royal family in the world.

We have world-class capabilities in every field, including advanced engineering, aerospace, automobiles, beer, architecture, design, fashion, literature, music, film, sciences, universities, museums, theatre, opera, ballet, law, accountancy, advertising—and sport. Britain came third in the Olympics and the Paralympics, with 1% of the world’s population.

This is brilliant. This is absolutely amazing. In our automobile industry, Tata Motors, run by a fellow Zoroastrian Parsee, took over Jaguar Land Rover in 2008. I spent a whole day there in 2008, soon after the takeover. I believe that I am due another visit, because my visit is completely outdated. Jaguar Land Rover is now making more profits than the Tata group paid for the company that it took over in 2008—a company that nobody wanted to buy. The automotive industry is a great British success story. Last year, Bentley announced that it was moving the manufacture of its 12-cylinder engines from the Volkswagen plant in Germany to Crewe in the UK.

It is often said that Mrs Thatcher destroyed manufacturing in the United Kingdom. The reality is that we produced more in 1990 when she left office than in 1979. The car manufacturing industry is, if anything, riding higher than ever. These are companies with British workers and British premises and British sales exported throughout the world. With a little help from India, we have the best-quality cars in the world—I am proud to drive one—being manufactured here in Britain. What a contrast with the bad old days of Rover and Morris Minor.

I could go on. Automobiles are just one example. Hitachi recently announced that it planned to move its rail business headquarters from Japan to the UK. Companies from Japan, India, Germany—pinnacles of high-tech manufacturing—are moving to the UK. This is fantastic and brings more jobs over here.

Not enough has been said about partnering. Last year, we were told the amazing news about India’s “Mangalyaan”, which successfully entered Martian orbit for just over a tenth of the price of the latest NASA voyage to the red planet. Indeed, for less than the cost of the film “Gravity” the Indian space programme was able to do something that very few nations in the world have managed. Last year the Chancellor announced that £80 million would go towards funding joint space missions with India, and the UK Space Agency is doing so much to promote foreign investment in scientific research. If India can reach Mars, just imagine what we can do if we work together.

The pace of change of foreign investment in the UK is accelerating. The talent that we are attracting continues to grow. My joint venture partner Molson Coors owns the largest brewery in the world in Colorado, but it also owns the largest brewery in Britain, in Burton-on-Trent in the Midlands, where Cobra beer is brewed. The Prime Minister visited the brewery last year. It is an American-Canadian firm that is increasing inward investment over here. It plans to invest £75 million in its brewing operations in Burton-on-Trent over the next five years. Once again, high-tech manufacturing and chemical engineering are just the sorts of things we need.

UKTI’s Sirius programme, which I was proud to champion and launch, is a brilliant programme encouraging young entrepreneurs from across the globe to set up business in the UK via its 12-month support programme. It is amazing. UKTI calls it,

“the richest package of its kind in Europe”.

In its first 12 months, thousands of young graduates from around the world, from almost 100 countries, applied to join the Sirius programme to start up their businesses right here.

On the other hand, I have been very outspoken in my belief that the coalition Government’s immigration policy—which, unfortunately, the current Government seem to be continuing—was very damaging for business and sent out the wrong signals to our universities and academics and in terms of attracting investment and business. We should change our immigration rhetoric and, for a start, stop including international students in the immigration figures.

Inward investment in the UK is one of the genuine success stories to have emerged from the financial crisis. In every way, foreign investment is helping to transform Britain and the world for the better. On the other hand, the Minister, in his very frank speech, said that our exports are lagging. In the three months to April 2015, the UK’s deficit on trade in goods and services was estimated to be £7.2 billion, widening by £1.6 billion from the three months to January 2015. Our GDP growth is good, but our GDP per capita could and should be much higher. Our inflation is zero, which is brilliant, and our employment rate is fantastic—at 73.4% in December 2014 to February 2105, it was the highest rate since comparable records began in 1971. This is marvellous. At the close of trade on 8 May, the FTSE was 2.3% higher and the pound experienced the largest one-day rise against the dollar since the previous general election in 2010.

Noble Lords, including the noble Lord, Lord Davies, have spoken about productivity. It is one of the most important factors in the success of a country. The more efficient an economy is, the more that can be produced in a sustainable fashion. High productivity growth leads to a higher growth rate in the economy. The reality is that in 2013, based on GDP per hour, the UK came sixth of the G7 countries and productivity was 16 percentage points lower than the G7 average, which is the widest productivity gap since 1991. Does the Minister agree that this is a huge challenge that we have to address?

We have heard about a balanced economy. Manufacturing industry used to be much bigger than it is today. Today it employs 2.6 million people and accounts for 10% of our GDP. Almost 70% of our R&D investment goes into the manufacturing sector and, as we have heard, goods produced in the sector account for 45% of all exports. As a percentage, however, we underinvest by miles in R&D and innovation compared with the OECD, EU and American average. Will the Minister acknowledge that?

When it comes to all the great coalition Government initiatives for manufacturing—the catapult centres, the advanced manufacturing supply initiatives and so on—the Government still have not set a specific target of increasing manufacturing as a percentage of GDP. The Indian Government on the other hand have said that they want manufacturing as a percentage of GDP to reach 25%. Will the Minister agree that we should set a target for manufacturing as a percentage of GDP? It has dropped from 30% to 10% of GDP since the early 1970s, and we must arrest this decline. Investment in manufacturing was £26.2 billion—23% of total investment in business—and that has fallen once again.

Before I conclude, I emphasise that the Government have the right intentions. The Chancellor of the Exchequer said:

“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward”.—[Official Report, Commons, 23/3/2011; col. 966.]

Well, let us now walk the talk.

Not much mention is made of UK Trade and Investment. I have been privileged as a founding chairman of the UK India Business Council to work with that body, and I think that it does a great job. Could the Minister reassure us about support for UKTI going forward? The high commission of India has been amazing. What are we going to do to encourage businesses to use its services more? In India, they have been fantastic. Now an Indian beer, Cobra, is being brewed in Burton-on-Trent, where IPA was brewed to send out to the troops in India. The Indian high commission helped us to launch Carling beer, a British joint-venture product of ours, in India. This is marvellous. The Minister said that the EU-India free trade agreement should be vitalised. Will the Minister tell us when that will be concluded? As for Europe, I was privileged to speak at the annual meeting of the Council of British Chambers of Commerce in Europe. What support has been given to these excellent initiatives around Europe and around the world, including the British Business Group in India?

The noble Lord, Lord Stoneham, said that we should really be committing more to defence. I have asked the Government many times whether we will commit to spending 2% of GDP, the NATO target. Our hard power and soft power is what makes us strong.

The noble Lord, Lord Clement-Jones, spoke about a Magna Carta. What an auspicious day on which to make a maiden speech, on 15 June 2015, 800 years after Magna Carta. Let us think of Britain’s influence, reputation and respect from that one document 800 years ago, and how it has influenced the whole world. This is what we underestimate.

I conclude by saying what a brilliant campaign is the GREAT campaign, again not mentioned so far in this debate. I urge the Government to get even more behind it. When I spoke at the Milan Expo, along with Dominic Jermey, the head of UKTI, I visited our British pavilion, the “beehive”, which was the most innovative, creative and different by miles. We stole the show, and we are going to do that until December. In Germany, which people talk about being the most powerful economy in Europe, who built the German Parliament, the Reichstag, but our own Lord Foster? In design, we are the best in the world. The UK is the epicentre of trading—we have been a trading centre for ever—and the epicentre of truth, justice, fairness and openness.

The Minister and I visited the Rolls-Royce factory, where you see this acronym everywhere: PRIDE. We should have pride in our abilities as the best trading nation and inward investment nation in the world.

17:03

[Lord Sheikh (Con)]

My Lords, I begin by welcoming my noble friend Lord Maude to your Lordships’ House and congratulate him on his appointment as Minister of State for Trade and Investment and on the excellence of his maiden speech. He did great work in the other place, and I am sure that he will continue to play a key role in his new capacity.

I am glad to have the opportunity to speak on the subjects being discussed here today. Trade and investment is an area in which I take great interest. I have stated several times in your Lordships’ House that I am very keen to promote more business between the United Kingdom and overseas countries. I believe that this will be one of the driving forces of our continued recovery. Ultimately, it will help us to balance our budget and reduce our national debt.

I would like to focus on the importance of the United Kingdom building its bilateral trade with the African continent. I have a personal affinity with Africa, as I was born in Kenya and spent my formative years in Uganda.

I have travelled across the continent, spoken at various meetings and met African businessmen. I have first-hand knowledge of what Africa has to offer. The continent's GDP is expected to grow by 4.5% this year and 5% next year. Furthermore, many African states have been members of the much-admired “7% club” in recent years. A number of economists have predicted that Africa could account for 7% of the global economy by 2040. Africa has a huge land area and an abundance of untapped natural resources. These include substantial reserves of oil, minerals, food and natural resources, and will undoubtedly serve much of the world’s demands in the future.

Africa offers so much but, like any other economy, it has its challenges and vulnerabilities. Africa has realised these challenges and is already working hard to address them. At the moment a conference is being held in South Africa where one of the subjects being discussed is the growth of the continent’s economy and achieving prosperity.

Last week I hosted and spoke at an event for the Economic Community of West African States, a body of 15 west African countries with a vision of collective self-sufficiency for their member states. They are creating an integrated region with mutual access to resources and investment opportunities. A few days ago I met African businessmen who are very keen to promote trade between the UK and Ghana. It is worth while our accelerating our trade with Ghana, as it is a stable country with good governance. Similarly, last year I was asked to speak at an event for the Southern African Development Community. It is a great example of fluid multilateral co-operation to encourage economic growth. It is investing in projects aimed at improving infrastructure in the region. At a recent dinner held by the Association for African Owned Enterprises, I was awarded the lifetime achievement award for my involvement in trade with Africa.

African countries are also moving quickly to improve their investment climate and conditions for doing business. Last year a World Bank report found that Africa comprises five of the top 10 places in the world with the most reforms making it easier to do business. The same report found that since 2005, all African countries have improved the business regulatory environment for small and medium-sized businesses. Foreign direct investment is gradually moving away from mineral resources into consumer goods and services. This is in response to the needs of a growing middle class. Manufactured goods now constitute nearly 40% of intra- African exports. These changes present an unprecedented opportunity for overseas businesses to get involved. We must capitalise now before it is too late.

The UK’s current engagement with Africa is based too heavily on aid and long-established commodity-based businesses. We need to see new British companies entering the African market. We must seek to help the continent to grow rather than simply supporting it with aid contributions. This in turn will help us to grow further here at home. Does the Minister agree that trade and aid must go hand in hand? I would appreciate his comments.

We already have a natural advantage with the significant African diaspora settled in the UK. Businesses should look to engage with these people in seeking to connect with Africa for the first time. There is of course a young and hungry new workforce in Africa, ready for foreign investors to utilise. Indeed, it is estimated that Africa’s share of the global workforce will increase from 12% to 23% by 2050. The United Kingdom must do more to help unlock this potential. As someone who has a business as well as an academic background, I would like to see more partnerships between British and African universities. We must help to build practical vocational programmes and increase access to secondary and further education. Young Africans need to develop new skills in order to properly navigate what is a rapidly changing career landscape for them. Does my noble friend feel the same as I do about the education and training of Africans?

I am a fervent supporter of trade through our Commonwealth. It is in Britain’s economic interests to utilise what is essentially a ready-made trading bloc that covers a third of the world’s population. Many African countries are part of the Commonwealth, including Ghana, Kenya, South Africa, Uganda, and Africa’s largest economy, Nigeria. On that note, I am pleased to note the Government’s recent enthusiasm for working with the new Commonwealth Enterprise and Investment Council. I would be grateful if my noble friend updated your Lordships’ House on how the Government are supporting and engaging with that council.

I also commend the economic partnership agreements brokered between Europe and the African regions in recent years. However, the United Kingdom must do more in its own right. We must surge ahead of the rest of Europe, and indeed the rest of the world. It is also crucial that the relevant people and bodies work together in order to maximise our trade efforts. We must pool our talents as much as possible. The expertise from the Foreign Office, the Department for International Development, UK Trade & Investment and the private sector must all be combined and work in tandem to accelerate the trade activities. Is my noble friend satisfied that there is adequate co-ordination between the parties I have referred to?

Our high commissions and embassies in African countries can take an active role in notifying relevant companies in the UK of the opportunities and tenders available for bidding in the countries where they serve. We should also arrange trade exhibitions and visits of delegations to suitable African countries. Can the Minister say whether the Government recognise the importance of such delegations, and will he undertake to ensure that we see more of these visits to the African continent in the future?

The embassies and high commissions of African countries should prepare details of the opportunities available in their countries and provide them to interested parties in the UK. They could also prepare periodic press releases with the information. The embassies and high commissions of African countries, together with private organisations that are trying to facilitate strengthening of trade links, can arrange for trade exhibitions and delegations, which can meet relevant government departments and interested companies.

Africa is made up of 54 countries and each does business in a slightly different way. Local knowledge will help us shape investment models that present African ventures to reflect their true commercial value. The UK will be left behind if we do not address our international trade engagement strategies with Africa. For future growth, and to see new UK companies enter the African markets, we need to look at individual sectors and have more of a business approach to engagement with Africa.

Particular areas that UK companies can look at are construction, infrastructure, manufacturing, minerals, IT, agriculture, the financial services sector and export of goods from the UK. We must act now and connect our businesses at home with the overseas markets of the future. From more overseas trade will come growth, and from growth will come prosperity and stability. We have unique services and products which we can offer to Africa. No other continent offers such a unique mix of opportunities and challenges. Indeed, I believe that the opportunities far outweigh the challenges.

17:15

[Lord Pearson of Rannoch]

My Lords, it is an honour for me to speak in this debate because it was opened by the noble Lord, Lord Maude, with his maiden speech. I have had a nodding acquaintance with the noble Lord for many years, which from my side has always been respectful, although I suspect that the noble Lord may have sometimes regarded my views on the EU as coming from a rather unruly lower boy at the bottom of the lower fourth. So it is a privilege to be allowed to join the grown-ups today and I promise to be on best behaviour in his honour.

Even so, I must pick on one central tenet of the Government’s position on trade and investment in this country, and that is the Government’s support for the idea that our free trade with the EU and the rest of the world is best secured from within the single market and that that trade and the jobs which depend upon it would be in danger if we left the EU. I suspect that this question—what I call the “3 million jobs” question—will be one of the key battlegrounds in the forthcoming national debate about our EU membership. I have wearied your Lordships several times over many years as to why, given political will, jobs will be created if we leave the EU, if we get rid of the unnecessary EU regulation in our domestic market which comes with that membership, if we keep our trade with the single market and if we expand it in the growing markets of the future. So I will not repeat all the facts and arguments of us “come-outers” as to why we would indeed be better off out of the EU; I suspect that there will be time for that in our coming debates on the referendum and other matters.

However, I would like to take this opportunity to refer the Minister to the briefing notes on the globalbritain.co.uk website. I have recommended these to your Lordships before but I am not sure that Ministers or their officials in the Department for Business, Innovation and Skills have yet concentrated on them with the enthusiasm which they deserve. They have the advantage of being very brief, as they are designed for businesspeople, who do not have time for lengthy papers and, using official statistics, they constitute most of the economic case for the UK to leave the EU.

To make the noble Lord’s task easier, I shall pick out just a few of those briefing notes now. For instance, there is No. 82, entitled “Post-withdrawal, agreement on free UK-EU trade is inevitable”. This deals with the central fallacy of those who wish to stay in the EU because they fear that jobs might be lost if we left. These Europhiles, if I may refer to them as such, often give our car industry as a key example of one in which we would face new tariff barriers and so on, and thus lose trade and jobs.

If the Minister reads only one Global Britain briefing note, I recommend that he reads No. 96, entitled, “Post-Brexit, tariff-free UK-EU trade in cars will continue”. It is only one page long, well-spaced out, and most of the print is quite large. Its facts speak for themselves. We import twice as many cars from the EU as we export to it—1.4 million cars are imported and 0.6 million are exported. Of the 1.7 million cars imported into the UK in 2011, 83% were from the EU. EU manufacturers own 53% of the domestic UK car market, the Germans having 32%, with Volkswagen alone having 19%. The Renault Nissan Sunderland plant is the UK’s biggest car exporter, with 37% of all UK car exports. Our case—us Eurosceptics—is that these EU manufacturers will ensure that EU-UK free trade in cars will continue tariff-free in both directions, whatever politicians now pretend.

The EU is of course a customs union, not a free trade area. Briefing note No. 101 shows how customs unions have become an expensive and redundant relic from the 1950s, which is why there are now no significant customs unions left anywhere else in the world. The Minister and his officials might care to absorb, together with briefing note No. 101, briefing note No. 98, which reveals “The Hidden Cost of Exporting to the EU Single Market”—costs borne by an EU member state, such as ourselves, but not by countries outside the EU, such as the USA, China, Japan, South Korea and many others. This note sums up the 10 more respectable cost-benefit analyses over recent years, including one from the French Government’s leading think tank, one from the Swiss Government and even one from our own Treasury in 2005, which between them all put the costs of our EU membership at anything between 4% and 10% of GDP.

For those noble Lords who want to go more deeply into the subject, there is briefing note No. 92, which deals with global supply chains, through which much of modern international trade now passes, which take time to set up between suppliers and clients all over the world and which cannot be replicated overnight. We say that existing world trade arrangements will continue under the World Trade Organization, whatever we do about our EU membership. It is in the EU’s interest to continue existing arrangements with us because we are its largest client.

A number of your Lordships have suggested that we benefit from the weight of the EU’s account when it makes free-trade agreements on our behalf. We Eurorealists reply that, as the world’s fifth or sixth-largest economy, we would do better on our own in this area. We mention in passing that Singapore has had free-trade agreements with Japan, Russia and India for over 10 years, which we, as EU members, do not enjoy. We point out that Switzerland has an FTA with China, which we do not, as indeed does Iceland—not exactly a vast economy.

In conclusion, I would be most grateful for some assurance from the Minister that he will look at the Global Britain briefing note No. 96—the one-pager—and encourage his officials to look at those that I have mentioned and the others on the Global Britain website. Their author, Mr Ian Milne, and I will be happy to meet the Minister or, if we are not grand enough for him, perhaps his officials, for any elucidation that they may require. I trust that we could thus inform the forthcoming national debate in this vital area.

In the mean time, I wish the noble Lord well in his new appointment.

17:24

[Lord Leigh of Hurley (Con)]

My Lords, I welcome the chance to speak in this debate today and, in doing so, refer your Lordships to my registered business interests, which include advising companies on direct investment from overseas.

I join the congratulations to my noble friend Lord Maude of Horsham. He and I first worked together in 1995, when I served on the tax group sub-committee of the DTI Deregulation Task Force. Sadly the Deregulation Task Force was abolished by Labour in 1997. We then worked together when he was chairman of the Conservative Party—a post it has not abolished—and thereafter I watched in admiration his work in the Cabinet Office, where he saved the taxpayer not just millions or billions but tens of billions of pounds. The country is lucky that he has chosen to dedicate the next stage of his career to public service, following, as has been said, in his father’s footsteps. He will be a great asset to the House.

I want to talk about how we should be building on our legacy and to answer the oft asked question: what should Britain’s place be in this world? At least one part of the answer is: as an open trading nation, exporting the world over and attracting investors into the UK. We have history. In 1596, when Captain Benjamin Wood set sail, it was the first attempt by Britain to find trade routes to China, a land thought to contain untold riches and wonder. He was, I am sorry to report, never heard from again. Fortunately, his successors fared better and, in 1637, a Captain Weddell landed in Canton and our trade relationship with China began in earnest. As many will know, we enjoyed similar successes elsewhere in the globe and became the world’s pre-eminent trading nation, a capital of a newly globalised world.

Coming to the present day, we should start by showcasing the incredible story unfolding in foreign direct investment. While much emphasis is often placed on the importance of exports, we also need to encourage FDI. This should not be criticised as “selling off the family silver” but rather the reverse. In FDI we have consolidated our leading position and, once again, remain the number one country in Europe, as the Minister told us. This is a position we have held for four years in a row and we are second in the world to the United States.

The UKTI 2013-14 report shows there were 1,773 individual projects with UKTI involvement, and the majority of these took place. We look forward to the Minister’s report next month on the years 2014 to 2015. These projects have helped to create and safeguard 111,000 jobs. These are not just any old jobs but future-facing jobs, with 37,000 of them coming from an advanced manufacturing base.

The investment is coming from all over the world, too, and not only the obvious places. As the noble Lord, Lord Bilimoria, has pointed out, it is coming from growing markets such as India. We all continue to hope that the rest of the European economy will soon be as fast growing as ours.

There are many reasons why our economy is growing like it is and these reasons resonate with overseas investors. Chinese investment into the UK is growing at an astonishing 85% per annum. I was privileged to be part of the largest trade mission to China, assembled during the previous Parliament, in which the Prime Minister conceived the programme Partnership for Growth. That trade mission was full of SME businessmen and women seeking to do business in China. So, while the EU will always be a key trading market for the UK, we are leaving nothing to chance in the rest of the world—hence the mission to China, which is already bearing fruit. Exports to China have doubled in the past five years.

Whereas generally exports are improving, there is still more to do. The trade deficit has been mentioned. This is significantly down as an average of GDP to less than 2%, as opposed to 2.5% under the last Labour Government. However, I am sure the Minister will agree that there is often too much focus on the headline number. The latest figures for the most recent month, April, which have just been published, show that the UK deficit was £1.2 billion. In fact, looking behind those numbers, it comprises an £8.6 billion deficit on goods and a surplus of £7.4 billion on services, which is a dramatic difference—well done the services sector, including of course, the legal services championed by the noble Lord, Lord Clement-Jones.

Turning to my industry, the financial services industry, I note that in his 2013 Budget, the Chancellor announced the establishment of the Financial Services Trade and Investment Board, now headed by Sue Langley, and this and other UKTI initiatives are clearly having an effect. But perhaps my noble friend can explain how much of UKTI’s resources will, hereon in under his watch, go directly to exporters rather than to internal initiatives. I am aware of the medium-sized initiative, the MSI, but remain concerned that in the UK only one in seven medium-sized businesses export outside the EU, whereas in Italy one in three medium-sized businesses export outside the EU. We are behind the curve in respect of SMEs.

The UK’s reputation as an economic powerhouse has been steadily restored over the last five years. Businesses are investing here, helping to create more jobs and in turn opening up new markets for export. Brand Britain is as strong as it has ever been, respected by consumers and businesses the world over. As my noble friend Lord Risby has pointed out, one reason for this is the transformation of the Foreign Office, mainly under William Hague, which has become a pro-business, helpful resource to the UK economy, dramatically better than its previous indifferent approach to something that it regarded as mere trade. In the last Parliament, we also saw much-needed stability in the corporation tax road map—a clear sign to businesses and investors of the direction in which the Government want to take the economy.

I would, though, make just one point, and that is on the role of the FCA, which is relevant to trade and exports. Sometimes, through its overzealous enforcement of its own rules, and sometimes its opacity and inefficiency when it comes to approval, firms that want to find overseas investors, even where FCA-regulated business is only a tiny part of their revenues, require FCA approval. I have seen with my own eyes businesses with turnovers of £30 million or £40 million, which happen through their websites to offer customers consumer credit—or opportunities to buy goods under a consumer credit licence, which may be for as little as £10,000—have to apply to the FCA for approval, which can take at least a month and frequently six weeks. It is, of course, important that firms operating here are properly regulated, but we need to consider a more streamlined approach and perhaps a de minimis level to better enable more foreign direct investment, not just in financial services but in trading companies.

On the core subject of this debate, I am worried that the idea that trade deals are somehow bad for the countries involved is gaining credence. This is of course pure economic illiteracy, but look at President Obama in the US being potentially denied his trade promotion authority, which would allow him to fast-track agreements, or the trade unions here in the UK criticising the Transatlantic Trade and Investment Partnership. This would in fact boost growth and create jobs, not just here but right across Europe—and heaven knows the eurozone needs all the help it can get as our biggest single export market continues to flail, hurting our exports. Trade deals ultimately make the world a richer place by breaking down artificial barriers that only increase inefficiency and waste. It is incumbent on us who understand the benefits for the UK to do a better job of explaining how this is the case, because I certainly believe that the more agreements we can make with key trading partners, the better off the whole of the UK will be.

I will point to just one example, South Korea. Since the agreement was signed, exports to South Korea have doubled—up 50% excluding oil—and we now have a substantial trade surplus with South Korea. We need more trade deals and I am sure that we will learn of some soon from my noble friend. Those who oppose such deals are hurting the UK and we need to drown them out with the simple truth that they are good for the whole of Britain. I am sure that my noble friend, with his huge experience of government, will want to ensure that the proper message is delivered to the public about the importance of trade.

I commend the last Government, in particular my noble friend Lord Livingston and UKTI, for continuing to bang the drum for the UK to bring in that inward investment we need and boost our exports to reduce the trade deficit still further. That, combined with more trade promotion and agreements with key partners across the globe, will ensure that the UK continues to lead the world out of crisis and into more prosperous times. The world is very keen to do business with us. It likes our products and services, our rule of law, our quality of product and our efficiencies, and it likes our business-like approach.

The new business-friendly Government, whether in or out of the EU, will give confidence to many that this is the time to come here to the UK for business. Our future is enshrined in our past. Just as we sent ships into uncharted waters in search of new markets 400 years ago, I look forward to hearing how my noble friend will chart the course for us. I am delighted that we are proverbially doing so again.

17:34

[Lord Empey (UUP)]

My Lords, I want to make a brief contribution in the gap. It is encouraging that the Minister is in his current post. Having someone who has been at the centre of government in the past five years come into this post I hope illustrates that the Government are taking the issue much more seriously and putting our exports and trade further up the agenda. I wish him well in his new task.

Like other noble Lords, I was privileged to be a member of the Select Committee on SMEs and exports in 2012, to which the noble Lord, Lord Popat, referred. I commend our report to the Minister for consideration because there are important lessons to be learned there.

The principal reason why I wanted to speak is that I have the honour of being a vice-president at the Institute of Export. The Minister will know that the institute is an educational charity that has existed since 1935. It is an Ofqual-regulated body, which allows it to give qualifications up to degree standard to students, both young and old, with various levels of experience in exports. Listening to the debate and the very significant contributions—some very encouraging, others more worrisome—there is one thing missing. As a nation we no longer value to the same extent as many of our competitors people in business, in trade or who are exporting. We do not give it the same amount of priority.

All of us can come here and ask for more money for this service, for health, for transport or for infrastructure —we are all good at it. Indeed, if we did, we could pump up expenditure with very little difficulty. But the fact is we are less good at telling Governments how this money is to be provided and where it is coming from. We have not had a trade surplus since 1983, if my memory serves me correctly. Obviously that cannot go on. I ask a simple question: would you allow someone to perform dental work on you if that person did not have a qualification in dentistry? Would you allow somebody to fix your car if they had not been trained in fixing cars? I suspect not, but we are quite happy to have people come into exporting who are not trained in exports. We are quite happy not to train people, to give them qualifications, or even to give them tax incentives to be trained in exports. The basic knowledge that qualifications in exports can give is a very simple thing. If we prioritise that, such as through providing a tax incentive for people who are trained in export qualifications, that would be one small step to help businesses move forward.

The far bigger issue is the attitude of our country. We just do not put the same value on other skills as some of our major competitors, such as the Germans. The title “Herr Engineer” is really big among our German colleagues; here, it is a person with an oily rag in their back pocket. That is the core issue that is wrong with our approach. I hope, with the Minister in his new role and with the profile and contacts that he has, that perhaps we will be able to break through this barrier. Many people talk about glass ceilings; we have a concrete ceiling in this country that we need to break through to get people to realise that we have to do trade to pay for the public services that we all want.

17:39

[Baroness Kramer (LD)]

My Lords, on the night of the general election, the noble Lord, Lord Maude of Horsham, and I sat for a time on the same panel for the BBC—of course, he did not yet have his title. I cried; he smiled. However, it gave me the opportunity to welcome him to this House, even though, very discreetly, he said absolutely nothing. It is a delight now properly and formally to welcome him to this House. I listened with enthusiasm to his opening speech in which he talked abut cross-party working. Many aspects of export and investment are commonly supported around this House and are areas on which we can work constructively together.

Many noble Lords talked about the importance of the WTO and bilateral free trade agreements, as did the noble Lord, Lord Maude. There has been much discussion of the EU. The noble Lord, Lord Maude, will have heard my noble friends Lord Stoneham and Lord Clement-Jones, the noble Lord, Lord Davies of Stamford, and other noble Lords talk about the importance of having an early resolution of the uncertainty that hangs over our role in the EU, given the inhibiting effect of that uncertainty on investment. However, I suspect that the noble Lord, Lord Pearson of Rannoch, does not agree with their views.

The noble Earl, Lord Caithness, spoke in support of the potential that the EU offers the UK. In my role as a Transport Minister, which is sadly over, I had the opportunity to go to Asia and meet a number of companies that have made very substantial investments in the UK, and which promised future investment. However, they are hanging back on making that decision until they are certain what role we will play. It was very clear to me that they considered it crucial that we remain in the EU. Many of these major investors have plants and operations right across continental Europe and are constantly deciding where they will invest next. We cannot be certain that it will be the UK if we decide to exclude ourselves from one of the largest and wealthiest markets on the planet.

We have heard today of many success stories. The noble Lord, Lord Kakkar, talked about extraordinary success stories in healthcare and life sciences, and urged further support. No one can match the enthusiasm of the noble Lord, Lord Bilimoria, but he underscored an issue often raised in this House—namely, the importance of allowing immigration. Home Office policy is constantly to restrict and restrain immigration to the “tens of thousands”. However, we know that such a policy starves the key industries that we require to enable our economy to grow. We look to the noble Lord, Lord Maude, to fight the corner for UK business and the economy around the issue of immigration.

I wish to take a few minutes to pick up on the issues of SMEs and exports. Like the noble Lords, Lord Empey and Lord Popat, I had the privilege of serving on the Select Committee. Indeed, the noble Lord, Lord Popat, had the idea of setting up the committee, which was brilliantly chaired by the noble Lord, Lord Cope of Berkeley. Given the work we did on the committee, it was a shock to me to recognise how crucial to UK exports the SME sector continues to be. The report states:

“Our great companies are already highly successful worldwide, but many are wholly or partly foreign owned and for a step increase in exports we must look to our SMEs”.

However, in the transport field that I know well, which I think is not dissimilar to other fields, over the last couple of decades we have lost most of our British-owned tier 1 companies. Although our SMEs are still successful in the domestic supply chain, they find it very hard to participate in projects overseas because they are not part of the natural global supply chain for companies that now own what were once UK tier 1 companies. I am sorry not to be quite clear in saying that but it is an ongoing problem that our small SMEs manage to operate in the UK supply chain but find it very difficult to then follow a company as it exports overseas and to participate in the supply chain elsewhere. The noble Lord, Lord Green of Hurstpierpoint, gave excellent evidence to the committee. He pointed out that 5 million SMEs in the UK export something like £100 billion a year and that an increase of a mere one-third would eliminate our trade deficit. So the potential with SMEs is huge.

I join others in recommending the report to the noble Lord, Lord Maude. It identifies a number of barriers and contains some important recommendations, some around skills—the noble Lord, Lord Empey, talked about the importance of skills and the lack thereof, particularly at SME level, when it comes to exports. The noble Lord, Lord Davies, talked about the importance of productivity, which, again, ties very much into the skills agenda. The noble Earl, Lord Caithness, too, addressed the lack of relevant skills to provide the basis for our SMEs to drive forward the export sector.

Some issues were not addressed at all in the debate. The lack of export finance on reasonable terms was raised over and over again by almost every SME. Our UK banks are extremely poor at providing finance to SMEs generally but when it comes to providing export finance—and dealing with foreign currency exchange rates, which small companies face; big companies rarely do—their weaknesses become even more evident. Much of the advice we heard was that a company looking for export finance should ignore British banks altogether and try to find a European bank with an outlet in the City of London because it might provide support in a way that no native bank would.

I raise this issue particularly at this point in time because we are about to divest ourselves of RBS. I have raised it before and it is one of my eternal frustrations that we have not restructured that bank in a way that meets the gaps within our own domestic banking sector, whether it is community banking, regional banking or a capacity to really deliver hard on export finance for the SME sector. I wish the Government would take the opportunity to look at that set of issues again before an opportunity is lost for ever.

The committee also looked at the UK Export Finance programme. In 2012 it was just starting to have some programmes potentially targeted at the SME sector. Perhaps the Minister can fill us in on how successful that programme has been because, quite frankly, the take-up when we looked in 2012 was virtually negligible. This area is critical if we are going to get the growth in exports that we seek.

Many people, including the noble Lords, Lord Bilimoria and Lord Risby, praised UKTI, and I join in that praise. After neglect for generations, frankly, the coalition turned it into a really effective body with some superb people, but it remained small and its reach remained exceedingly limited. The Select Committee report recommended a fund for LEPs to work with UKTI and introduce it to the relevant SMEs within their territories. I do not know if anyone has taken up that idea but it struck me as exceptionally important.

Of course, in places such as Germany, the Government can reach and talk to small companies, make them aware of opportunities, help them and support them, because they know about them because of their membership of the chambers of commerce. We have a purely voluntary system for membership of chambers of commerce, the result of which is that barely a single company joins. The example that the noble Lord, Lord Heseltine, often quotes is that a chamber of commerce of standard size in Germany will have 30,000 members; a similar one in the UK will have 400. Surely we can use the vast reach of government to try to identify SMEs so that we can at least communicate with them and make them aware of potential opportunities. Government seems to constantly operate in silos, and other government departments could assist us in trying to compile that list and making sure that we have access. Even a simple tick-box, frankly, on a tax form ought to let us know which companies are out there and give us the opportunity to get to them.

I also want to raise what I fear is the constant exhortation for small companies to focus on exporting to the rapidly growing emerging markets. I am delighted if we can help SMEs get to China. The noble Lord, Lord Sheikh, talked about the potential in Africa and the noble Baroness, Lady Mobarik, about the potential in Pakistan. It is crazy that so many companies fail to recognise that we have people with ethnic roots here who could help them to access those markets, because they have the cultural understanding, contacts and specialised knowledge to make that possible. However, it is extraordinarily hard for many SMEs to get into these more distant markets. There is everything from regulation to—let us be honest—corruption, which can be an issue. Frequently, you have to know certain families or be tied to key decision-makers. There is also the whole area of intellectual property. That is surely the reason why one in five SMEs exports to the EU but only one in 20 goes beyond it.

I have talked to a number of SME companies within the transport sector. A highly respected company engaged in accreditation told me with excitement of the sale of one of its products to China. I congratulated it on what would be a growing business but it said, “No, you don’t understand. With China, you make one sale; after that, they have the intellectual property and make the future sales. It is one product only”. I have heard that over and over. We have to tackle these issues and provide appropriate and proper support for SMEs, even when going into the US market. People at one of the companies that we spoke to during the work of the Select Committee sounded very positive about the American market but I happened, by chance, to have a follow-up meeting with them. They had decided that their only way to access their market was in a joint venture because only in that way could they afford to defend their patent. The consequence is that all future exports anywhere outside Europe will now go through that joint venture, not the UK company. We repeat those problems again and again.

Could the noble Lord, Lord Maude, talk to us about how he is reorienting the work that his department does to support SMEs? The large companies will tell him what they need, and they frequently need no help. But we depend for our growth and exports on small and medium-sized companies, which desperately need appropriate support and vigorous resource from the UK Government.

17:52

[Lord Mendelsohn (Lab)]

My Lords, I draw attention to my registered business interests in roles connected to being an inward investor and an exporter who is involved with government agencies. It was a real pleasure to witness the maiden speech of the Minister, the noble Lord, Lord Maude of Horsham. He is an excellent addition to the Government’s Front Bench and I wish him well in his duties. He has certainly shown that he is an effective and canny operator, and many achievements are to his credit. The rise of David Cameron to lead the Conservative Party was hugely guided by the noble Lord’s careful management of the leadership process. He guided his party to the candidate who embraced the “No change, no chance” lessons of an election defeat. I think there is a demand for such a role in a number of other places at the moment, but I am sure the Minister is very pleased that he has chosen this duty.

I am also pleased to be able to acknowledge the Minister’s work in reforming the Civil Service and upgrading the capability of the UK Administration by tapping into a pool of talent, including his excellent decision to involve individuals of the calibre of Dr Martin Read and others. As someone who has been involved in business turnarounds and restructurings, I can only admire anyone who is able to change the direction of the Civil Service. Looking at what the noble Lord has done and how it operates, there is a real sense of accomplishment in achieving such great results. His exhortation to make sure that we keep attentive—that more can always be done—is also a very modest way to look at his achievements. He takes on a hugely important brief and I hope that in this task, he can show some of the skills he has shown in other areas. In a very impressive maiden speech, as one would have expected, he covered many areas—including the broadest possible effort to support trade and investment, which I think this whole House responds to. I hope the Minister enjoys this House as I have. Debate and discussion in your Lordships’ House provides sometimes critical but usually constructive and useful perspectives that can serve to clarify one’s thinking.

We on these Benches are firmly committed to open, competitive and dynamic markets and to a very strong approach to exports and encouraging inward investment. We have had a very interesting and wide-ranging debate, with a great deal of honesty from all sides. I will make a number of points that I hope highlight some of the current key concerns on this side of the House.

First, we are also committed to finding ways to establish a firm recovery and to ensure growth and the conditions for our long-term competitiveness, as well as the right sort of capability and adaptability to ensure that we are ready to capitalise on the future shape of business technology, markets and trade. In this regard, we hope that the Minister uses his considerable reputation and ability to fashion a new strategy for the Government to follow.

Our future is at risk, and trade and investment are at the heart of many of the challenges we face. Growth is better than austerity as a policy for bringing debt under control. In business, we cut hard so that we can grow, but government can certainly adopt different approaches, not least through their ability to reform markets and make interventions. I agree with the view that the recovery is too weak to allow for a normalisation of monetary policy. Focusing on the latter would leave us weak and unprepared for any downturn, whether here or in Europe, and very exposed if the growing emergence of highly leveraged instruments were to cause even a small shock. We need to add lustre and sustainability to our economic recovery.

Britain’s widening trade deficit dragged down growth for the first three months of the year. The data show that net trade took a chunk out of the economic position. Imports surged by 2.3% and exports fell by 0.3%. The performance reflected a rise in imports of oil, machinery and transport equipment which knocked almost 1% off growth. Recent published data identified that the UK ranks almost at the bottom of the OECD countries in respect of export growth since 2010. I note the comments from all sides of the House, including the very thoughtful ones from the noble Lord, Lord Popat, and the noble Viscount, Lord Hanworth. The data from the Office for National Statistics show that the deficit is still strong and now in its 18th year.

The 2011 government paper, Trade and Investment for Growth, was a useful attempt to synthesise an effective operating strategy, but it urgently requires renewal—in fact, it requires change. The Government have grasped one very important nettle, but the UK regions will not become the powerhouses of growth and trade unless they are powered up by investment in skills and growth, which is a hoped-for benefit of the northern powerhouse. From that point, they can help to encourage exports, imports, investment and growth.

I hope the Minister takes the support he has received in this debate as licence to think more broadly, deeper and harder about what we can do. In this context, his comments about the UK-Israel tech hub being a new pioneering method are warmly welcomed. I hope that when he responds, he will further set out his thoughts on how he can make some changes.

Secondly, an effective trade and industry strategy is critical given the need to deal with our productivity crisis. A profound area of concern and one very relevant to the trade and investment debate is the huge problem with our foreign direct investment. I have previously clearly stated that our foreign direct investment is a great source of pride to us, but in recent years we have started to see some significant challenges, which the noble Lord, Lord Davies of Stamford, spoke about. Foreign direct investment may well have reached a tipping point where, as an aggregated measure, it does not provide us with greater productive capacity for the economy.

There is a long-standing concern that the size and scale of financial and asset purchases make our FDI numbers look more flattering for the UK economy. We have long trailed the levels of actual job-generating investment by other companies, including in the UK. Recently, there has been not just the idea that deals and high-end property are not hugely significant, but a growing concern that levels of foreign ownership have started to affect the productivity of investment itself. If the general and standard investment in public utilities is done by foreign companies, is it really the same measure of foreign direct investment as a similar investment in France and Germany? If we strip out this type of investment, do we really have more manufacturing projects than Germany? Do we have more jobs created or preserved?

We also believed and always said that much of the benefit of the asset sales was that the jobs could not go overseas. Can we now properly distinguish between business and corporate development locked into the UK and the investment we use to generate new growth in new areas? It is perhaps time for some revision of the measure of FDI. I am sure that the Government agree too that the long-term approach to earn and grow our way to higher living standards is through a high-productivity, high-skilled, innovation-led economy. To get there we need more British-based businesses creating good jobs, investing, innovating and, of course, exporting. Does the Minister support evolving our approach to reporting and monitoring FDI to ensure that we support this aim? In the next few years, might we develop a plan to help increase not just the quantum size of FDI but its quality? Not all investment is the same and not all of it will help growth and our productivity challenge.

Thirdly, we are firm believers in the principle that if you do what you have always done you should expect the results that you always have had. We embrace change, experimentation and innovation. Undoubtedly having a branding campaign, such as the GREAT campaign, is a useful and modern approach. It has many advantages and I thought that the National Audit Office report provided a useful series of suggestions for its future work. However, the National Audit Office was very sceptical of the methods used to suggest the return. The Cabinet Office’s numbers suggested a £1.2 billion return on £113 million layout. I, too, am sceptical of the return. I believe that there are a variety of data deficiencies, not least that much of it was the expectation of what overseas students would be able to bring in, when we have before us the proposal to require our overseas students to go home as soon as they graduate. I urge the Minister to look at this carefully. If direct economic impact of investment can be 10:1 then we should expect the Budget to raise the amount we are spending on this into the many billions. I suspect it will not. However, it is important that we report these things openly and sensibly so that we can all really help to start looking at how we can do things better. I urge the Minister to consider a new evaluation of our strategy and to provide a greater degree of reporting and scrutiny of the performance of the whole of the Government’s approach to the trade and investment framework for action, and especially the country and region-specific actions. Many noble Lords across this House have raised a number of very good initiatives, ideas and suggestions of where we should focus and it would be very helpful to emphasise those.

Fourthly, we are broadly supportive of the Transatlantic Trade and Investment Partnership, provided that the benefits flow to consumers and to employees of the companies involved. Our position has always been that these are the benefits of open and competitive markets. It will be the biggest trade agreement of its kind and the negotiations to cut tariffs and lower regulatory barriers to make trade easier between the two markets can lead to great benefits. However, the negotiations must make sure that those things that require preservation are preserved. We have already made clear our views on the NHS and the objectives of the United States negotiators. A recent peer-reviewed research paper from Tufts University made tough predictions about the impact of TTIP on Britain and, tellingly, it predicts a shift in GDP of 7% from labour to capital with all the likely consequences for inequality, wages and jobs. This would be hugely challenging for us but it is not a reason to stop our support for open markets and free trade, more a reason to improve discussions to a speedy conclusion. We need progress on this but not at any cost. I would be very grateful if the Minister could outline how he sees the development of the negotiations, where he feels the key issues are and what the Government’s current predictions are for its opportunity or impact.

Finally, the Minister honestly addressed our weaknesses in our export performance. There is considerable concern that we are not where we need to be on this. Major exporters do not report a universal story of support and frequently point to the better service they perceive international competitors to get from their Governments. I am not sure that all these issues are justified and we have heard a number of very powerful stories from noble Lords of where our agencies have been highly supportive. It is very important that we get business as a whole engaged in this mission and that we approach this as a very strong pro-business mission. It was good to hear the noble Lord, Lord Risby, again championing the cause of taking this strong, business-focused approach.

I was encouraged to hear that the Minister had taken an interest in the Cole commission—an independent commission established under the leadership of Graham Cole to galvanise industry to develop ideas about how we can improve exports. Its interim report was a very useful addition to the debate and had some good ideas. The report showed that we had a lot to celebrate—cars, planes and pharmaceuticals. As the noble Baroness, Lady Kramer, said, it identified that many firms do not always make the most of the supply-chain opportunities that our major exporters present. Submissions to the report made clear that riding on the coat-tails of major exporters can be a road to exports for smaller firms, and we need to find ways to add to that and support it.

In addition, the report suggested that we should look at whether public authorities could set a lead in developing local supply chains by making an export plan mandatory—including for SMEs—in all public procurement bids that have export potential.

I urge the Minister also to champion the existing potential of our education and health areas, and our services sector, including of course our legal services sector, which was raised by the noble Lord, Lord Clement-Jones, and to champion and redouble the work of our creative industries.

The Government’s commitment to reach a target of £1 trillion in trade now falls on the Minister’s shoulders. It is a big task which I suspect no amount of journeys, air miles, calories or dinners will make it possible for him to achieve alone. I look forward to hearing of his future progress in developing strategies to reform and galvanise all parts of government in this crucial mission. As he said, this is a cross-party effort. I can assure him that we will respond positively and work with him if he continues in the manner in which he has started.

18:06

[Lord Maude of Horsham]

My Lords, I am very grateful to your Lordships for the warm welcome and the very bipartisan spirit in which this debate has been conducted. I said at the outset that I knew that your Lordships’ House contained a wealth of knowledge and experience on all matters pertaining to trade and investment, and the debate has amply borne that out, with a majestic and historic sweep going at least back to Magna Carta—very appropriately on this day—and a positively cosmic geographic sweep embracing joint space initiatives. It has been hugely impressive and I am enormously grateful for the breadth and depth of the contributions to the debate. I am afraid that time will not permit me to do full justice to all the points that have been raised, but I will deal with as many as I can.

The noble Lord, Lord Stoneham, began with issues around the commitment in Magna Carta to free trade. It is good that we remember that today. He and a number of other noble Lords talked about the proposed EU referendum, and the desire that this should be conducted as quickly as possible. I was rather sorry to hear the noble Lord, Lord Pearson of Rannoch, say that he was going to be well behaved; that was rather disappointing. He and I have not always been on opposite sides of the argument. When I was shadow Chancellor in the last part of the 1990s, we were joined in our opposition to Britain joining the single European currency, the euro. How right we were, and how glad we should all be that we avoided that trap and snare. Many thought that it would be a disaster—that was the word that often crossed people’s lips—if we stayed out, but we were right then, and it was a pleasure to collaborate with him on that occasion.

The noble Lord, Lord Davies, talked principally about productivity, which of course is a huge issue. A number of noble Lords talked about the puzzle over why our productivity, as measured, falls below that of our competitor countries. Of course, in 2010 Britain was just emerging from a major recession—a recession that, if I may be slightly partisan, happened to start around the time that the noble Lord left the Conservative Benches to join Labour. I am sure that that was just a coincidence. The challenge, obviously, was to stabilise the economy and to create jobs. There is a productivity puzzle, but there is also an employment puzzle. Economists have scratched their heads for the past five years about how an economy which, certainly in the early period, did not have a strong level of economic growth was none the less creating jobs. It was extraordinarily successful at creating jobs. Of course, these are two sides of the same coin, but none the less we take the productivity challenge very seriously indeed. The Government will be publishing a productivity plan. The Government cannot create greater productivity. We can remove barriers to greater productivity, and we will do our best to do that. This is hugely important, and it will be a key challenge for this Administration.

My noble friend Lord Caithness, a member of the club of former Paymasters-General—which includes my father, if we are going to go back into the depths of history—talked about the progress towards doubling exports. He asked about progress with implementing the recommendations of the Cole commission. It has not yet published its final report. I met the members of the commission last week, and very productive that was, and I am looking forward to their full report. I think there will be some interesting ideas which we will certainly want to take forward.

My noble friend asked about progress on the implementation of EU single-market directives. He is quite right to focus on that. Our record is not always quite as stellar and perfect as we like to maintain, but none the less if single-market measures are to create the economic upside that we all hope for, they need to be implemented properly and rigorously. The European Commission will be publishing a single market strategy in the autumn. I know that the new Commission, particularly the vice-president of the Commission who has responsibility for the digital economy and the digital single market, is deeply committed to making rapid progress on that front.

The noble Lord, Lord Kakkar, spoke with great expertise about healthcare and life sciences, in which he has enormous knowledge. He is completely right to emphasise that these are areas of great strength and that with the growth in healthcare markets, particularly in China, India and the Middle East, this is a huge opportunity for Britain. I am delighted that my friend the Minister for Life Sciences, George Freeman, is hugely committed. He sees it as a key part of his role to support British businesses in making the most of those opportunities. Of course, public procurement can support our export initiatives. The noble Lord on the opposition Front Bench and the noble Baroness, Lady Kramer, also talked about the potential for using procurement to support exports. They are right about that. This is a big opportunity.

The noble Lord also spoke about the role of trade within the Commonwealth. He gave an interesting and, I am sure, completely accurate statistic that the cost of trade between Commonwealth countries is nearly 20% less than outside. I did not know that, but that is powerful. We do underplay. I sometimes think that the “C” in “FCO” is a little underemphasised. I pay great tribute to the role of my noble friend Lord Marland in promoting trade and business activity within the Commonwealth. It is an underexploited opportunity for British business, and we will be looking to take all of that forward. I know there is a programme of activity in the margins of the Heads of Government meeting in Malta in November, which I am hoping to take part in, that will support this initiative.

On the same theme were the remarks of my noble friend Lady Mobarik, whom, as she said, I met earlier this month. Of course, she is completely right to talk about the potential in emerging markets. The seduction is always to try to target down and limit the number of places in which we give government support for exports. It is absurd that we should not take seriously this market of nearly 200 million people in Pakistan, with all the affinity that there is and the connection with the Pakistani diaspora in Britain. I am sceptical of the overtures sometimes made to me that we should narrow down our focus, either by way of sectors or by way of geographies. The truth is that we have a very well-developed network of overseas missions, and every single one of those overseas posts—not just the UKTI people—should be really focused on looking for business opportunities. It is not just for UKTI; it is for everyone concerned with government to look on behalf of British businesses for opportunities.

I completely take the point that my noble friend makes that Pakistan is too big an opportunity to be ignored. It is a hugely strong relationship. I visited Islamabad just before the election, and I was struck by the fact that too much of our relationship and the Government’s interaction with the Government of Pakistan has, understandably, been around issues with security, counterterrorism, Afghanistan and so on. Far too little of it has been about developing the economic and commercial relationships that can create huge benefits for Pakistan and Britain.

My noble friend Lord Risby mentioned that we had worked together on four different occasions. When he decided to leave the House of Commons five years before I did, he must have thought that at last he was getting away from me—but foiled again. I pay huge tribute to the work that he has done in opening up on behalf of Britain, and with the support of the Prime Minister, this important market in Algeria. Again, that makes the point—if you were going to draw up your list of the 20 most important markets for British business, it would not necessarily include Algeria. Yet there is an opportunity that we can exploit and open up if we do it in different ways.

The role that my noble friend takes as the Prime Minister’s trade envoy in Algeria is one example of doing things differently. With the commitment that he shows and the knowledge and expertise that he brings, we can open up opportunities for British business. The initiative of trade envoys is completely bipartisan—Members of both Houses, from all parties and no parties, are involved in it—and I am happy to restate my commitment to it and that of the Prime Minister. We will build on this; it has worked for the most part extremely well, and we think that we can go much further.

My noble friend talked about the commitment of ambassadors. That is not, I would say, completely universal, but it needs to be. It is really important that the official leadership of the Foreign and Commonwealth Office makes it clear that it is a primary duty of the heads of mission overseas to give enormous support to British business and Britain’s commercial interests.

The noble Lord, Lord Clement-Jones, talked very knowledgably about the importance of professional and particularly legal services. He and other noble Lords talked about the tensions that can exist between a concern that immigration should be properly controlled and the constraints that that can be seen to impose on economic and commercial development. He is completely right to draw attention to that. Frankly, any Government will have to grapple with those tensions and manage them in a grown-up and mature way.

The noble Lord also asked about savings in the UKTI budget, which is relatively small in the context of overall government spending. We will be expected to make efficiency savings—that was my day job for the last five years, and I can see scope for that. However, to pick up the point that my noble friend Lord Leigh raised about the balance between what UKTI spends on its own resources, as it were, and giving financial support to businesses to enable them to develop their exporting, I see scope for rebalancing within that budget.

My noble friend Lord Popat talked about SMEs, as have many noble Lords. SMEs are very dear to my heart; part of the work that I led in the last Parliament was on increasing the amount of government procurement spend that was spent with SMEs. We said that our ambition was that it should rise above 25%, and in 2013-14 it went up to 26%. There is a relationship between procurement and exports. He and other noble Lords are right to say that there is huge scope for building on SMEs’ propensity to export, and for understanding properly why too many SMEs start exporting and then stop. That is something that we need to understand better than we do at the moment and to address.

Regarding my noble friend’s focus on Africa, I again make the point about targeting. We know that, while this will not be at all uniform, parts of Africa are growing and will continue to grow very fast, and we need to ensure that our presence in those markets is equipped well to ensure that British businesses can take advantage of that.

The noble Lord, Lord Bilimoria, spoke with huge passion and knowledge about the progress that has been made in the British economy in the past 30 years. I was impressed that, in his long list of sectors where Britain has strengths, beer came in only half way through; he slipped it very elegantly into the middle of his list. He referred to the tour that we both had of the Rolls-Royce facility at Goodwood. He asked about JLR and said that he had last been there a couple of years ago. Yes, he will find next time he goes that that is out of date. I recently visited the new line producing the new XE car. It is amazing in terms of productivity: you will see very few people on that line and a lot of robots. It is gleaming and smart—there is not an oily rag on site—and hugely impressive.

With the success of sectors like automotive, we need to ensure that we build more of a supply chain as well. When a vehicle gets built in this country, typically 45% of its content is imported. That compares with America or Germany, where typically 25% will be imported. We have strengths in this area but we need to build on them and go further.

The noble Lord referred, as did other noble Lords, to the “Great” campaign. It is an unusual example of consistency, where we built a brand and have continued to invest in it. One of my jobs in the last Parliament was to prevent government departments spending money on advertising and marketing, and we managed to cut out spending that did not continue to focus on that channel. It is very powerful and, although the methodology may not be perfect, as the noble Lord, Lord Mendelsohn, mentioned, that it works and succeeds and we should stick to it is beyond doubt.

My noble friend Lord Sheikh talked very knowledgeably about Africa. He knows it extremely well and is deeply committed. He asked whether the co-ordination between departments is sufficient. The answer to that is that it is never completely sufficient but it is better than it was, and I will continue to work hard to make it yet better. On his suggestion that our overseas posts should be tasked with preparing really good plans based on an assessment of opportunities, frankly, whether or not there is a big UKTI presence there, that is absolutely what our posts should be doing. I take that extremely seriously.

I enjoyed the contribution of the noble Lord, Lord Pearson; I can assure him that I am capable of reading more than one page at a sitting, but I am grateful to him for his pointers towards the short versions, and will add that to my reading list.

My noble friend Lord Leigh talked about China and its importance. China is very big; we have doubled our exports, but we are only at the very beginning of this. British businesses are not yet getting into the tertiary let alone deeper cities that are there, so that should be a huge focus for us. We have overtaken France to become the second-biggest European exporter to China, but we can do much more. He talked about financial services, which is a huge strength for us, and we need to build on what can be done there.

The noble Lord and others talked about the EU-US free trade agreement. Noble Lords will have noticed that the Obama Administration has had one or two difficulties with Congress in recent weeks—that is not unusual. However, there is a huge commitment from that Administration to use their remaining time in office to achieve a complete negotiation.

On the concerns raised about the NHS, on which I had a meeting with some representatives of trade unions this morning, I am confident that the issues are not well founded. However, I understand the concerns and will ensure that they are properly addressed.

I am enormously grateful to all noble Lords who took part in this important debate and I hugely appreciate the warm words and good wishes expressed to me as I take on these responsibilities. Making a success of this endeavour is hugely important to the success of our country, and I take great heart from the support given in the course of this debate.

Motion agreed.

United Kingdom: Election Law

Monday 15th June 2015 Lords Chamber

Question for Short Debate

18:27

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to review the law governing elections in the United Kingdom.

[Lord Kennedy of Southwark (Lab)]

My Lords, in opening this debate on what plans the Government have to review the law governing elections in the United Kingdom I should first say that for many years of my working life I have been involved in elections at all levels, and until 2014 I was a member of the Electoral Commission.

The law governing elections is spread across 25 major statutes. It is complex, fragmented, and not easy to understand. For a mature democracy such as ours to find itself in such a position is not good enough. Today we can be asked to vote for a variety of positions at the same election, including local councillors, mayors and police and crime commissioners, along with voting for an MP—although not your Lordships—and if you live in Scotland an MSP, in Wales an AM, in Northern Ireland an MLA, in London an AM, and on top of that we can all vote for MEPs. In addition, there are different methods of electing people to these positions, often with their own set of rules governing each election. This is not a good place for us to be, and the law needs urgent review and reform to bring it up to date and to make it fit for purpose to regulate elections in 2015 and beyond. All this legislation and regulation needs to be simplified, clear, easy to understand, modernised and easier to enforce; and, where infringements take place, it needs to be easier for action to be taken.

I am fully aware that the Law Commission issued a consultation paper, which could be seen as a precursor to legislation coming forward at some point in this Parliament. I very much hope that that will happen, but that legislation must deal with the points I outlined previously, it must also come forward embedded in the principle of seeking robust and fair laws governing elections, and no attempt must be made to seek party advantage out of that process. I hope that the noble Baroness can confirm that this is the only way in which the Government would consider bringing legislation forward to update this area of law in this Parliament.

I move on to outlining what I would like to see in a number of areas in any future legislation. I would like the see the laws governing elections placed into a single Act of Parliament to give us consistent and clear rules about how to conduct elections with a minimum amount of differentiation. Any such differentiation would then be due only to the voting system used or some other very important point of principle or policy that needed to be taken account of. We need clear powers for returning officers, and clear powers for the Electoral Commission to give directions to returning officers, in specific areas with no ambiguity.

The procedures in areas such as the review of boundaries in local authority wards need to be looked at carefully. I invite the noble Baroness to look at the actions of Northampton Borough Council in the recent review. I am not convinced that the action taken was necessarily in the best interests of all voters in all parts of the borough.

On registering voters, we need clear and consistent rules, and we need the franchises for all elections to be set out in primary legislation, along with placing a clear and unambiguous duty on returning officers to maintain an accurate, comprehensive and up-to-date register of electors. Nothing in the legislation that brought in individual electoral registration was intended, or should be used or be hidden behind, to allow the number of people registered to vote in the UK to decline even further. We always have had and continue to have a serious under-registration problem here in the UK.

Clear duties should also be set out for a number of organisations and individuals, such as university vice-chancellors, head teachers in secondary schools and other institutions where young people attend, to assist the ERO in maintaining an accurate and up-to-date register of electors. The same can be said for other organisations where data-matching has been, or could be, undertaken. We must also make it clear that nothing in the Data Protection Act prevents this sort of co-operation taking place. By working together in a co-operative manner, we can enable the ERO to identify more people who could possibly be registered to vote. There are other groups of voters, such as the elderly, who may need specific help in getting registered to vote. Academic research has suggested that anything between 6 million and 9 million people who are eligible are not registered to vote in the UK.

I think it is time for the Government to review the whole operation and set out clearly what can and cannot be done in the days running up to polling day and the day itself. In my opinion, too much seems to be left to local returning officers, and different practices which appear to be acceptable in one place but not in another have sprung up. One example of this is the attaching of posters to lamp-posts. That is perfectively acceptable in Birmingham but outlawed in Coventry. Personally, I think that it is a complete waste of time and money but I can see that if one party puts posters on lamp-posts, all the other parties will do the same. A poster in a resident’s window or on a stake in a garden demonstrates support from voters and is much more important and effective for the campaigners.

There also needs to be a proper review around the whole question of absentee voting and the effectiveness of the code of conduct that has been in operation in recent years. The nomination process could be made much simpler for candidates and agents alike. Getting everything you need in order to be nominated on to one form that the candidates, agents and nominators could sign could be a way of making progress.

Nor am I convinced that the legislation surrounding emblems and party descriptions has been as effective as it should be, although it has created quite a bureaucracy. Why cannot one form be used, to be submitted to the returning officer in a local government area saying that all the people listed are authorised to use the party logo and description as detailed below?

I hope that we can have a proper debate on issues such as which is the best day on which to vote, whether we should move to a weekend or whether we should have early voting in a couple of places in a local area so that people can vote in person before the Thursday or whichever is the normal polling day.

I have no fixed views on those points, other than to say that we need to improve the way in which we conduct our democracy at present. Nothing in the conduct of elections in any part takes account of the transformation in communications in recent years through things such as blogs, Facebook and Twitter. That is a major omission and, frankly, it is ridiculous in 2015.

I am also clear that in any review of electoral law we should include the Electoral Commission—its workings, its areas of responsibility and its governance. The legislation that brought the commission into being has been on the statute book for 15 years, and I contend that not to review it when conducting a major review of electoral law would be a major error. The creation of the commission has been a good thing but, from my time as a member of the Parliamentary Parties Panel and then as an Electoral Commissioner, I am clear that a review needs to take place so that we are agreed that it is focused on the right areas and in the correct proportions, and that the governance arrangements are commensurate with the important work we ask it to do.

I would like the Electoral Commission to have a much more hands-on role in the electoral registration process and in respect of EROs and returning officers, to ensure consistency of approach at a local level. The performance standards compiled by the commission are not effective enough. There is no independent audit of the return that an ERO submits, so we cannot be confident that everything is as good as it is said to be.

I also think that the Electoral Commission reporting to Parliament should be reviewed. I am not convinced that the Speaker’s Committee gives the organisation the required level of challenge. I would like consideration to be given to the Electoral Commission reporting to the House of Commons’ Public Accounts Committee in respect of its annual budget and how it spends public money, and to the Constitutional Affairs Committee in respect of more policy-based and general activities.

I could go into many other areas, and I am delighted that a number of experts on elections have decided to speak in this debate at such short notice. There is much we can be proud of in how we conduct elections in the UK. My purpose in putting the Question for Short Debate was to ensure that, at the start of this Parliament, the Government can hear from Members across the House just how important it is that we always strive to have the best possible electoral systems, best methods and best regulations to ensure that elections in the United Kingdom are always conducted to the highest standards. This is an area where, on a cross-party basis, we can work together to constantly improve the conduct of elections in the UK.

18:36

[Lord Tyler (LD)]

My Lords, on the 800th anniversary of the signing of Magna Carta, it is somehow ironic that it is left to just six of us to debate some of these fundamental issues. However, I warmly welcome the fact that the noble Lord, Lord Kennedy, has secured and opened this debate. He does so, of course, with considerable expertise and experience as a former commissioner of the Electoral Commission. I also very warmly welcome the Minister, as she is a neighbour from Gloucestershire.

I wish to touch with speed on six elements of current electoral law. The first, naturally, is the electoral system for the House of Commons. I need only refer very briefly to the results of last month’s general election, because so many others, less partisan than me, have already declared the first past the post system no longer fit for purpose.

Last December, at a British Election Study seminar, I forecast that there would be wide discrepancy between votes and the seats gained by different parties. As we now know, UKIP supporters have been cheated by the system and SNP supporters over-rewarded by it. The excellent report by ERS, A Voting System in Crisis, demonstrates the scale of this distortion. I also forecast that the inhabitant of No. 10 would get there with the support of less than 25%, or a quarter, of the eligible electorate—and sure enough he has. If equality before the law includes an attempt to ensure that every citizen has rough equality of electoral influence, we are a long way from that right.

That brings me to my second issue. It is now widely accepted that a drastic change to almost every parliamentary constituency boundary every five years is unnecessarily disruptive. The motive of the 2011-12 exercise was undoubtedly correct, since the variation between the sizes of some constituencies led to unacceptable inequality. However, there clearly needs to be a further reassessment along the lines suggested just before the election by the late, lamented Political and Constitutional Reform Committee in the House of Commons.

I noted also, in the last few days, a report in Total Politics that the 1922 Committee of Conservative Back-Benchers may no longer be so wedded to the idea that changes similar to those postponed in 2013 should now be resurrected. In particular, any reduction in the number of MPs without recourse to the other changes needed in our constitution is likely to be controversial with colleagues of all parties recently elected to the other end of the corridor.

My third issue relates to local authorities. As I said during the debate on the gracious Speech, after a political lifetime of seeking a fairer voting system, I am sufficient a realist to know that newly elected MPs are unlikely to rush to reform the way that they have just been elected. MPs have always proved more enthusiastic in favour of proportional systems for everyone else—for Holyrood, Cardiff, Stormont and even the European Parliament—just as your Lordships’ House has for internal elections here.

However, that need not stop us tackling the appalling way in which the system currently cheats those who vote in local authority elections. Here we have empirical evidence of the huge benefits of moving to a better system. I am indebted to Dr Lewis Baston for his meticulous comparison of the results of Scottish council elections before and after the change made by the Labour and Liberal Democrat coalition there to introduce the single transferable vote. The core of his case is that the consumers of the democratic process—the voters—now get a considerably better deal north of the border than south of it. They are more likely to be “happy voters” whose choice contributes towards the election of someone who can truly represent them. In Scotland, fully three-quarters get to see the candidate they gave a first preference to elected, and 90% of them see a candidate to whom they gave either a first or a later preference.

My fourth point follows immediately on from that. The Cities and Local Government Devolution Bill, currently before your Lordships’ House, offers an early opportunity to address this deficiency in our election law in England. As it stands, the Bill will create a potentially unprecedented concentration of political and economic power in one person’s hands, or that of a very small clique. Without effective electoral authority and constraints, the new mayors and their immediate entourage will clearly be a classic case of elective dictatorship in one-party states—totally unrepresentative new rotten boroughs—and, as the Minister may have noted, they are unlikely to be, at least in the first tranche, dominated by her party, or mine for that matter. We will start work on improving the Bill next week, when I anticipate there will be concern in all parts of the House to address this democratic deficiency.

My fifth issue concerns the franchise. We have yet to have conclusive evidence of the success or otherwise of the efforts to transfer from the old electoral registration system to the new one before the May polling date. My impression is that the pessimists will prove to be excessive doom-mongers but that the Liberal Democrats were right to insist on a steady transition, which will not end until after the Scottish, Welsh and London elections in May 2016. It could also be the register for the forthcoming referendum to decide our future membership of the European Union.

Obviously, there are different opinions about the date for the referendum. Personally, I think the sooner the better—as was indicated by the previous debate—as indecision could do much harm to the UK’s economy and individual job prospects.

However, there seems to be a growing conviction that the political establishment cannot exclude 16 and 17 year-olds from this crucial decision about their future. After the triumphant involvement of this age group in registration and voting in Scotland last year, I pity the poor politician who tries to pretend that English, Welsh and Northern Ireland young people are somehow less mature, less well-informed and less responsible than their Scottish counterparts. As a long-term advocate of this change, I welcome new recruits to the cause.

My sixth issue, and by far the most urgent, relates to the law which seeks to monitor, constrain and illuminate the money spent on electioneering. The Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014—it is quite a mouthful—attempted to ensure that the efforts of non-party campaigners to assist the election of candidates and parties became more transparent and that the amounts spent were limited. Despite huge concerns at the time, we have yet to hear from the Electoral Commission if there were any serious infringements or confusions arising from it. In due course, I know, we will get the report of the reviewer, the noble Lord, Lord Hodgson.

Meanwhile, however, the comparable weakness of the law relating to the political parties themselves is now shown in sharp relief. I take just one disturbing example. All Members of your Lordships’ House who have previously contested parliamentary or local authority elections will recall the dire warnings from our agents about incurring any expenditure over the limit set which could be said to enhance our chances of election—that an election court could declare our election invalid.

But in the recent contests vast sums were spent, no doubt by all parties, to persuade electors in marginal, target constituencies, by means of mailshots, telephone calls and social media, to change their votes. However, since the candidate was not explicitly named, all this activity fell outside the constituency limits. This tears up the principles controlling payment for local electoral advantage which have been in place since 1883. What is good for the goose must be good for the gander. If non-parties are to be subject to constituency-based regulation on any and all targeted spending, the same should apply to political parties. Surely now is the time to grasp the nettle on a full party funding reform—and the template is already there to do it.

Following the excellent report of the Committee on Standards in Public Life in 2011, I convened a cross-party group, with Andrew Tyrie MP and Alan Whitehead MP, to develop a draft Bill based on the CSPL recommendations and on the previous recommendations of Hayden Phillips. That draft Bill sought to provide material on which a consensus for reform of party donations and party expenditure could be built. This is classically an issue that needs to be addressed well in advance of general election campaigns. The CSPL should be invited, under its current chairman the noble Lord, Lord Bew, to advise urgently on the next steps, and this time the search for complete consensus, which amounts to giving the veto to the most reluctant and recalcitrant, must not be allowed to impede the whole process. Ministers can retain credibility only if they proceed with the whole CSPL package. If they do I will stand with them in facing down its detractors. They cannot simply deal with the relationship between the unions and the Labour Party.

My noble friend Lord Rennard will deal in detail shortly with issues of electoral fraud, and the continuing opportunities for potential fraud, and I am grateful to him for his continuing efforts in your Lordships’ House to highlight and prevent these problems.

Some noble Lords may take a relatively complacent view of the health of our democracy and the extent to which it is reinforced by our electoral laws. I am far from optimistic and certainly not complacent. The perception among the public is that we no longer occupy a leadership role in these matters, and can hardly lecture other countries on how to run their democracies. In recent days, I have heard people suggest that the outcome of the elections in Turkey was not legitimate. We should note that success there was built on 41% of the vote. Our own Government were elected with just 37%.

The barons at Runnymede may not have known just what they were starting, 800 years ago. I trust that Barons and Baronesses today will surely realise that the price of democracy is eternal vigilance and that clearly our electoral laws are well short of perfection.

18:47

[Lord Cormack (Con)]

My Lords, I thank the noble Lord, Lord Kennedy, not only for choosing this subject but for the moderate, balanced, sensible way in which he introduced it. His call for a review of electoral law is a powerful one and it was made more powerful by the fact that he understated it. I hope that my noble friend, who I welcome most warmly to this debate, will be able to give him an encouraging answer to the moderate points that he made.

It is difficult to accuse the noble Lord, Lord Tyler, of moderation when it comes to electoral law and I will not do him the injustice of accusing him of that. He talked about Magna Carta and Runnymede. I had the honour to be at Runnymede this morning in the meadows for the 800th celebration. It was, I am pleased to say, a very happy, warm and splendid occasion. A number of fine speeches were made, not least by the Attorney-General of the United States at the rededication of the American memorial at Runnymede.

Of course, Magna Carta was not the foundation of democracy, but it was the foundation of our liberties. From that shaky start—it was annulled within 10 weeks by the renegade King John—nevertheless it planted some seeds that have grown and grown remarkably, not only in this country but around the world.

I would like to touch on one or two of the points made by the noble Lords, Lord Kennedy and Lord Tyler. The noble Lord, Lord Kennedy, made a plea for clarity, precision and an end to confusion in the law governing our elections. His points were well made and should be heeded. In a civilised society it is important that all should fully understand just what the electoral law is.

In that context, I reiterate a plea that I have made several times in your Lordships’ House for better citizenship education in our schools. All young people leaving school should have a full and proper knowledge of the electoral system, which is not the same as saying that they should have the vote. The noble Lord, Lord Tyler, and I have clashed on that before. I fully respect the integrity of his opinions but I disagree profoundly with them. Where I do agree with him is that it was a pity that it had its introduction in Scotland. There should have been a greater examination of it. We now have a precedent that is difficult to fight against in some respects, but I am glad that the Prime Minister has made it plain that in the European referendum the franchise that we understand will apply. I sincerely hope that that will be the case. There are always inconsistencies in life, but when young people are not allowed legally to drink alcohol, smoke and drive motor cars it seems a bit odd that they should be given the franchise. I therefore hope that we will stand firm on that.

I also think that it is very important that we recognise the real disappointment that many of us feel in the percentage of people who vote. That is why I am so keen on citizenship education. I fought my first general election in 1964; I fought every general election from then until 2005. I have been involved in the last two general elections, just as I was in the one in 1959. What has been the most disappointing aspect over this long period has been the drop in the percentage, with the exception of the Scottish referendum last year, where there were very particular and peculiar—I use the word in its proper sense—circumstances.

There is a case, which I have raised in your Lordships’ House before, for compulsory registration—that everyone should be registered to vote. It is a civic duty. I would actually go further: I have become convinced that Australia has something to commend it in this regard. To oblige people to cast their vote, or to cast a vote and go to the polling station, is not saying that they cannot write rude slogans on the ballot paper or refuse to vote for anybody at all, but it concentrates the mind. The mind should be concentrated, because democracy—a system that we were celebrating this morning at Runnymede and which has been fought for bravely by people in all parts of the world over many centuries—is in danger of dying from apathy and from single-issue politics. Therefore, although my noble friend of course cannot give an undertaking from the Dispatch Box tonight, I hope that she will agree to talk to her ministerial colleagues about compulsory registration at least. It has a great deal to commend it.

Where I find myself in some agreement with the noble Lord, Lord Tyler, is in his remarks about the size of the other place. There is a case, of course, for proper boundary reviews, but to link that with a reduction in the size of the House is not necessarily the best way forward. Therefore, although I applaud the Prime Minister’s seeking to have proper boundary reviews, I urge him to reflect a little on the wisdom of linking that with a reduction in the size of the House of Commons from 650 to 600. That is perhaps a step too far at the moment.

I again agree strongly with the noble Lord, Lord Tyler, about the financing of elections. We have to look extremely carefully at how we finance our politics, without being partial in the direction of any particular group of people. There is a case for making a tax optional. There is certainly a case for saying that no individual or corporation should give more than a certain amount. Although it is entirely reasonable to say that individual members of trade unions should opt in to whether they pay a political contribution, we should not treat that group of people less fairly than others. There should be parity.

I agree strongly with the basic plea made by the noble Lord, Lord Kennedy. I accept, as the noble Lord, Lord Tyler, said, that nothing can be done until the group of elections that will be held in 2016. However, at the beginning of a new Parliament, there is a strong case for a commission or committee of both Houses—I am a great believer in committees of both Houses—to look at our electoral system thoroughly, dispassionately and in an unbiased way to see how we can improve it and make it clearer and more consistent, with the fundamental aim of engaging the interest of people, particularly young people and those who do not necessarily have a long history of residence in this country. We should engage their interest to take part in something which it is a privilege to take part in, and to do so in a way that makes it almost impossible for fraud to prevail. Another situation such as that which occurred at Tower Hamlets would do very little for our electoral system.

18:57

[Lord Pearson of Rannoch (UKIP)]

My Lords, it seems that the law governing elections in this country may have been designed for a two-party system. Now that there are more than two parties I fear that it is no longer fit for democratic purpose. The most obvious proof of this is that modern Governments are elected by only about 24% of the electorate. Roughly 40% do not bother to vote and modern Governments are elected by about 40% of the 60% who do vote. Indeed, the present Government were elected by 37% of those who voted, or 11.3 million votes, which gave them 330 seats and an outright majority in the House of Commons. The SNP got 4.7% of the votes, or 1.4 million votes, and was rewarded with 56 seats in the Commons. The Liberal Democrats got 7.9% of the votes, or 2.4 million votes, and were rewarded with eight seats. My party, UKIP, got 12.6% of the votes—some 3.8 million votes—which gave us just one seat.

I submit that these figures speak for themselves. If we want to live in a democracy, I suggest that we have to change the system of election to the other place. I do not know to what, but to something which more accurately reflects the will of the electorate and respects minority views. In this respect I am most grateful to the noble Lord, Lord Tyler, for his remarks.

When we come to your Lordships’ House, the situation is just as unsatisfactory. Of course, your Lordships’ House is not appointed by any obviously democratic process, except that over the years the Prime Ministers of the day recommend peerages to Her Majesty. It is the law governing elections in the UK that decides the make-up of the Government of the day, thus who is the Prime Minister and thus who sits in your Lordships’ House. In your Lordships’ House, we are blessed with about 31% of our number sitting as Bishops, Cross-Benchers and independent Peers—perhaps the most valuable of us all because they provide the essential independence of your Lordships’ House and stop us being a rubber stamp for the House of Commons, where the Government of the day tend to get their way, which of course is democratically as it should be, but the Government are not always right.

After the 2010 election, the coalition Government said they would appoint new Peers in accordance with the votes cast in that election. I did not think that a wise policy because, as I have said, one of our great strengths is precisely that we do not reflect the composition of the Commons. But UKIP got some 3% of the votes in that election and so the Government’s policy should have given us some 23 Peers, whereas at the time we had only two. As the leader of UKIP at the time, I wrote to the Prime Minister in May 2010 and suggested that we should have perhaps four more. Three months later he wrote back, very politely, and said that he took the point on board and would keep the matter under review but that press speculation vastly inflated the number of Peers he could recommend to Her Majesty and he was not intending to do any UKIP Peers just then. At the time the media were speculating that he would recommend about 60 new Peers. In fact, he went on to recommend 185, but not a single one for UKIP.

I did not let the matter rest during the previous Parliament. I wrote again to the Prime Minister on 27 March 2013 when I heard that more Peers were on the way, and chased him for an answer on 9 May, to which I did not even get an acknowledgement from Downing Street, and again on 4 December 2013. In the mean time, my noble friend Lord Stevens of Ludgate had put down a Written Question which was answered rather beautifully for the Government on 21 May 2013 by the noble Lord, Lord Wallace of Saltaire, thus:

“It remains the Government’s intention that appointments to the House of Lords will be made with the objective of creating a second Chamber that is reflective of the share of the vote secured by the political parties in the last general election. The Prime Minister exercises his powers in relation to appointments to the House of Lords in order to deliver this coalition commitment and will continue to keep numbers under review”.—[Official Report, 21/5/13; col. WA 57.]

That seems pretty clear, does it not?

My colleagues and I raised this matter with the Government several times in Written and Oral Questions and were given the same Answer by the noble Lords, Lord Strathclyde and Lord Hill of Oareford, and even by the noble Lord, Lord Maude—as he now is—when he was in charge of the Cabinet Office, to which No. 10 appears to have passed the file. All those Answers confirmed the coalition Government’s policy, just that the Government had not got round to it.

I trust your Lordships will agree that this is a good example of a Government saying they have a policy which they intend to fulfil when in truth they have no intention of doing anything of the kind. Your Lordships will not be surprised that I have written again to the Prime Minister suggesting that UKIP should be better represented in your Lordships’ House. I have confirmed to the Prime Minister that I still do not think that the coalition Government’s policy of appointing Peers in proportion to the votes cast in the previous general election was a wise one.

However, the present composition of your Lordships’ House is perhaps even less representative of the views of our people than that of the other place. To make this point, the only guide I can take is as though that policy was indeed reflected in our membership. Thus we find that the Conservatives, with 11.3 million votes from 37% of those who voted, would have 202 Peers in your Lordships’ House, whereas they enjoy 226—24 more than they would have had under the previous Government’s policy. Fair enough, your Lordships might think, and I would agree. The situation with Labour is quite a bit worse: 9.3 million votes from 30% of those who voted would give Labour 166 Peers, whereas it has 212—46 more than it would have had under the previous policy.

However, it is when we come to the positions of the Liberal Democrats and UKIP that we see that things have gone badly wrong. The Liberal Democrats got a mere 2.4 million votes from 8% of the electorate in the election we have just had, which would give them 43 Peers. Yet they have 100, or 57 more than they would have under that policy. But UKIP got 3.8 million votes from 12.6% of those who voted and we have only three Peers, or 66 fewer than we would have under the previous policy. I repeat: the Liberal Democrats have 57 more and we have 66 fewer. I trust that your Lordships will agree that UKIP deserves a few more.

Apart from the inequity of the present position, one great advantage would be that your Lordships would hear less from me and more from my new, and I trust energetic, colleagues. I have heard another and perhaps complementary suggestion: that a number of Liberal Democrat Peers might care to stand down—perhaps quite a large number. I seem to remember that the Liberal Democrats have not been all that committed to your Lordships’ House or to its present system of appointment, so I hope that they will take this great opportunity to put words into deeds.

19:06

[Lord Rennard (LD)]

My Lords, first, I thank the noble Lord, Lord Kennedy of Southwark, for securing this debate. He brings considerable experience to this issue from his years of working for the Labour Party and as an Electoral Commissioner.

Tonight’s short debate is very timely in different ways. As my noble friend Lord Tyler and the noble Lord, Lord Cormack, said, it is of course 800 years to the day since the sealing of Magna Carta, the 14th clause of which sets out the role of the “common counsel” of the realm. Historians regard this as the initial basis for our modern Parliaments, although the emphasis then was on the role of,

“the archbishops, bishops, abbots, earls, and greater barons”,

rather than, as it states, those,

“summoned generally, through our sheriffs and bailiffs”.

We are now in the process of reviewing what can be learned from the conduct of a parliamentary election eight centuries later.

While the text of Magna Carta can be seen on a single page, our electoral laws are now expressed in 25 Acts of Parliament, as the noble Lord, Lord Kennedy, said. I do not know how many pages in total they would cover. These laws have not been consolidated since 1983—when I was the election agent for the noble Lord, Lord Alton of Liverpool, when he was elected to represent my home area of that city in the other place. Much has changed since then in the way in which elections are contested, and they are now held for many more bodies than when the Representation of the People Act 1983 had simply to cover Westminster parliamentary and local government elections. So now we wait to see how the Law Commission proposes to recommend changes, in the first major overhaul of all our election laws in the 32 years since I was a constituency agent.

The commission’s excellent consultation document of December 2014 poses a number of questions and makes clear the need to review our electoral laws, and to consolidate them. In this brief debate, I want to focus on the need to examine changes in electoral law to reduce the incidence of electoral fraud, which I believe must also be matched by efforts to improve voter registration and turnout. Measures to make it harder to commit electoral fraud should be one of the prime objectives of any review of electoral laws, even if the scale of electoral fraud under the present ones is hard to determine. I have often heard Ministers here make very complacent remarks on this subject because of the relatively low number of successful prosecutions made in relation to it. But as most crimes of any kind go unreported and undetected, this is clearly not a reliable indicator of the scale of the problem. Major problems may be confined to a few particular areas but the ease with which fraud can be committed means that we really have no idea how widespread it is.

The various judgments of Richard Mawrey QC, from different election courts, are required reading for anyone examining the need to review our electoral laws, especially his most recent, 200-page judgment in the case involving the disqualification of the former mayor of Tower Hamlets, Lutfur Rahman. The court over which he presided in relation to Tower Hamlets found that,

“corrupt practices extensively prevailed at the election both of the Mayor and of the Councillors for the twenty wards of Tower Hamlets held on 22 May 2014”.

His judgment explains carefully the ease with which fraud can be committed in relation to postal votes and the difficulty of assessing the scale of it. He was satisfied that people were registered to vote who did not exist, but on whose behalf postal votes were cast. Other people, he said, had their postal votes taken away from them against their will, and their votes were actually cast by others. In his judgment, he described “bribery” by the distribution of grants and the use of “undue spiritual influence”. He referred to,

“thuggish conduct at polling stations”,

and said that the bar for legal challenge is set,

“much too high for dealing with intimidatory behaviour during the conduct of the poll”.

In presiding over other election courts, he has concluded that these sorts of problems are by no means unique to Tower Hamlets. In 2005, he barred six councillors in Birmingham from standing for election after uncovering fraud that he said would “disgrace a banana republic”. In 2008, a case in Slough involved the use of bogus postal votes and, in spite of some reforms, he observed that,

“opportunities for easy and effective electoral fraud remain”.

We may, in my view, have reached the point at which it is no longer desirable to permit postal voting on demand and without reason. With my noble friend Lord Greaves, we secured some greater measures of security for the postal voting process in the past, such as requiring a signature to accompany a postal vote that matches the signature on the application to vote by post, and requiring a reason to be provided for a postal ballot to be sent anywhere other than the address for which the voter is registered. But these measures appear to have proved inadequate. The widespread incidence of postal voting in many areas means that we have now, in my view, effectively removed much of what was achieved by the ballot Act of 1872. The postal voting process means that ballot papers are often not completed in conditions of secrecy—and probably often not by the people entitled to complete them. Their votes are therefore stolen from them. Perhaps a reason should now be given for choosing to vote by post rather than going to a polling station and voting in supervised conditions of secrecy. A reason is required for the appointment of a proxy to cast a vote on someone’s behalf, and we should now consider if this principle should be extended to postal voting.

Certainly, some greater safeguards are required to prevent the democratic process from such abuse, but the measures taken must be proportionate, and care must be taken not to reduce participation in elections unnecessarily. Changes such as these should only be considered if we also properly address other and perhaps even more significant problems with our electoral laws, in particular the way in which many people qualified to vote are not included in the electoral register, and thereby denied their chance to participate in elections. This remains the most serious issue in terms of modernising our electoral laws.

In the last Parliament, I argued successfully in favour of the principle that registering to vote should remain a requirement, with at least civil penalties to be part of the process of enforcing compliance. But I am far from convinced that every appropriate effort is being made to make people properly aware of this principle and to address the issue of under-representation.

Irrespective of possible changes to the voting franchise that I support, involving 16 and 17 year-olds, we still need to ensure the proper involvement of all schools in the registration process throughout Great Britain, in the same way as now happens in Northern Ireland. This could be part of the civic education process that the noble Lord, Lord Cormack, referred to earlier. We should also look again at how students are registered and how people with two homes determine where their general election votes should most properly be cast. Above all, we need to look at how we increase participation in the democratic process.

There was an excellent article in the Guardian during the recent election campaign about the inconvenience to many schools from polling day always being on a Thursday. Thursday is generally a convenient day to vote for people not in work but it is much less convenient for many others. We therefore need to look more at polling stations perhaps being open on Saturdays and Sundays when many more people might be able to participate. All these potential changes will require careful scrutiny of the kind that was undertaken in the last Parliament in the other place by the Political and Constitutional Reform Committee. Therefore, further to my recent Question in the House on 4 June, can the Minister please explain to the House the Government’s justification for the abolition of this committee?

19:16

[Baroness Chisholm of Owlpen (Con)]

I thank the noble Lord, Lord Kennedy, for this debate. After a general election and a new Parliament there are always points raised about the electoral system and it seems that this year is no exception. This debate has raised many interesting issues and I thank all noble Lords who have taken part. I will start by making some points I feel are important and then answer noble Lords. I apologise if I miss out any of the points that have been raised, and I hope noble Lords will come to me at a future date so I can answer them—there is a lot to try to get through.

The Government have already set out our intentions on a number of points that affect elections or involve polls, such as removing the 15-year limit on voting by British citizens living overseas and carrying forward commitments to devolve electoral responsibilities to Scotland and Wales for the polls relating to their national and local governments. As part of looking at devolution across the UK, there are plans to allow for the election of metro mayors as part of packages to give powers to the cities so they can develop their local economies and take responsibility for matters such as transport, housing and policing to bring decision-making into a more local arena. I think the noble Lord, Lord Tyler, expressed reservations about this but there is no evidence to suggest that metro mayors will not be a positive move towards more effective local democracy. Party funding is a long-standing debate that I am sure will continue to be a subject for change in the future.

There will be other areas to look at too during the course of the Parliament but, specifically related to the noble Lord’s question is the ongoing review of electoral registration being taken forward by the Law Commission with the support of the Government and input from the Electoral Commission. This will report later in the Parliament with proposals to simplify electoral legislation and will doubtless benefit us all in allowing a clearer understanding of the now complex law governing electoral matters. This area requires a much more streamlined approach, making it much simpler for the election registrars to understand and implement. The Electoral Commission is charged with ensuring consistency through performance, standards and guidance, which is a point the noble Lord, Lord Kennedy, raised. Other work started in the previous Parliament is continuing, in particular the transition to individual electoral registration, or IER. This has been a positive process so far, with the introduction of online registration being recognised as a major achievement by electors as well as by those who run elections. Record numbers of people applied to register ahead of the elections on 7 May and we now have a more secure registration system. We are committed to taking the process forward to completion in order to safeguard the electoral process and ensure that the electorate can have trust and confidence in it. If we are going to get more people to vote, public trust and confidence in the integrity of elections is of paramount importance.

There is a programme of work that is looking at building on the successful implementation of IER to date and, in particular, the online registration service. We are keen to build on the benefits that flow from the system. For example, it takes only three minutes to register online. This can be done on a smartphone or tablet, which is obviously popular with the young.

There will be a decision on ending the transition to IER in due course, informed by the report from the Electoral Commission that is due later this month. Underregistration remains a challenge, but important steps have been taken to improve the position: for example, the introduction of online registration and the investment of more than £14 million over the last two financial years to support activities aimed at increasing levels of voter registration. All political parties and community organisations have a responsibility to encourage people to register to vote and take part in our democracy. Before the general election, we communicated with organisations such as the British Youth Council, UK Youth and the National Union of Students, and undertook media advertising, which included the Sol Campbell and David Harewood poster where they whitened up and said, “If you don’t vote, you’re taking the colour out of voting”. It is clear that online registration has helped all these things.

On a more mechanical level, as with any area that attracts close scrutiny, there will be issues of detail raised throughout the Parliament that will require some changes. For example, forms and notices are constantly kept under review and improvements made where they will assist electors and the process in general. We need to look at the Electoral Commission’s report on the May polls when that is available in the summer and see what recommendations are made.

I turn to some points raised by noble Lords. The noble Lord, Lord Kennedy, suggested that the Electoral Commission should be reviewed and that the Speaker’s Committee should do more. The Electoral Commission was reviewed in 2007 by the Committee on Standards in Public Life. This led to some changes in the commission’s focus. The Speaker’s Committee has now been set up for this Parliament, and I am sure that the Speaker will be made aware of the noble Lord’s comments so that he can take them into consideration in looking at the commission’s work.

The noble Lord also said that the Law Commission needed to produce a review with no party bias. The commission is operating in an independent capacity. It is consulting all relevant organisations, including political parties, but its recommendations will be its own.

The noble Lords, Lord Kennedy and Lord Rennard, mentioned weekend voting. It is not clear that voting at the weekend would be more convenient than on a Thursday. Voting at the weekend would also raise concerns for faith groups and potentially increase the cost of elections.

The noble Lord, Lord Tyler, brought up the point about 16 and 17 year-olds and why they could not vote. The Government have no current plans to lower the voting age. However, they welcome the ongoing discussion and debates on the issue and believe that it is important to engage with young people, so this will be kept in mind for the future.

The noble Lord, Lord Tyler, also mentioned lobbying. The transparency Act is about giving the public more confidence in the way third parties interact with the political system. My noble friend Lord Hodgson of Astley Abbotts has been appointed to conduct an independent review of the impact of the new rules, as required by the Act. The report must be published before November 2016, and the Government will consider it carefully.

My noble friend Lord Cormack brought up compulsory registration. There are no plans to introduce such a system at present. Electoral registration officers have the discretion, after completing several safeguards, to issue a civil penalty for not responding to an invitation to register to vote. It is equally important for all in our society to work together to explain why registering to vote is important, not simply to penalise those who are not registered. My noble friend feels that voting is a civil responsibility and that the importance of political participation should be reinforced without making voting compulsory. We feel it is up to individuals to decide whether they wish to vote.

My noble friend Lord Cormack brought up reducing 650 MPs to 600. He feels it is a step too far. Change is already in law. The review will start in 2016 and will report by 1 October 2018. He also mentioned better citizenship education in schools. Citizenship education has been a statutory programme of study in schools since September 2014. Schools have been encouraged to do much more in this regard. My noble friend also feels it is time for a review of the electoral system. The Law Commission’s work will provide a basis for considering legislative change. It provides an opportunity for people to raise views on change. No doubt it will be put forward for a debate in future.

There are lots of questions still to be answered about this subject.

[Lord Pearson of Rannoch]

I sense the Minister may be coming to the end of her remarks without mentioning my speech. I quite accept that my suggestions are not within her department’s remit, but what I said is within the remit of the Government and the Prime Minister, so I trust she can pass my remarks on to No. 10, the Cabinet Office and even, perhaps, to the Liberal Democrats.

[Baroness Chisholm of Owlpen]

The noble Lord got in just before I was about to say that, indeed, he is right that it is not within my remit. However, I was going to say that I will certainly come back to the noble Lord with a written reply as soon as I can.

Many interesting points have been raised during this debate. We will probably have further debates on these subjects. Voting is enormously important. It is our democratic right, and everybody should be encouraged to take part. Overall, we have a challenging programme of work and reform before us. It will include a number of changes to the law governing elections in the UK through direct changes to the process and systems, such as full transition to IER and ensuring that Brits abroad are not excluded, and wider changes that include electoral events, such as devolution across the UK, to ensure that decisions are made closer to the people they affect and that those people have more input.

[Lord Kennedy of Southwark]

Before the Minister sits down, I am conscious that she said that she could not respond to all the points in the debate today and that we could speak to her later. Could she go a bit further and agree to write to the five noble Lords who have spoken in the debate, as some very important issues have been raised here today?

[Baroness Chisholm of Owlpen]

Indeed, the noble Lord is right, and I shall certainly be doing that. I have made a note of several of the points that I would like to go back to, to make sure that I have a fuller answer, rather than just giving a short answer now. I shall certainly go back to noble Lords with written replies.

[Lord Pearson of Rannoch]

Could the Minister give an undertaking that she will pass my speech on to No. 10 and the Cabinet Office—and I leave the Liberal Democrats as an option? A reply to me may not get into the system in the way that I hope it will.

[Baroness Chisholm of Owlpen]

I shall certainly make sure that the noble Lord’s speech goes to everybody, including to those on the Liberal Democrat Benches, as I am sure they would like it.

House adjourned at 7.30 pm.