Authorised Push Payment Fraud Performance Report

Lord Browne of Ladyton Excerpts

Tuesday 14th November 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, it would be interesting to look at that and at how that data might be collected. The point at the heart of my noble friend’s question is absolutely right. Banks have a responsibility in this area, and that is why the reimbursement obligation is coming forward, but others have an obligation in this area too. The recent Online Safety Act imposes new obligations on the largest social media companies and platforms to prevent their users being exposed to harmful content, including fraudulent content. I am sure those measures will make a real difference too.

[Lord Browne of Ladyton (Lab)]

My Lords, APP fraud rose by 20% in the first half of this year alone and, according to the Payment Systems Regulator, customers of banks and building societies have wildly different and divergent experiences of receiving compensation and restitution. While I welcome the mandatory reimbursement requirement that will come into force next year, in the meantime, what consideration is being given to mandate appropriate resourcing of out-of-hours fraud and complaints teams within banks to ensure that where an APP fraud has occurred it can be reported and acted on with appropriate speed?

[Baroness Penn (Con)]

As the noble Lord has noted, a significant step towards ensuring greater consistency and user experience will be the mandating of reimbursement; we already have 10 signatories to the voluntary reimbursement code. Of course banks need to have proper processes in place to deal with suspected fraud, and I think publications such as the data we had at the end of last month shine a light on how banks are performing and allow consumers to make informed choices about where they bank.

Gross Domestic Product: Wales and the UK

Lord Browne of Ladyton Excerpts

Thursday 6th July 2023 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords—

[Lord Browne of Ladyton (Lab)]

My Lords—

[Baroness Williams of Trafford (Con)]

My Lords, I think that noble Lords need to decide between them which one of them will speak.

--- Later in debate ---

[Baroness Penn (Con)]

The statistics that the noble Baroness refers to are more experimental than the ones that I used in my Answer, but they are being refined all the time and they can be subject to greater volatility due to the smaller size that they represent. However, the Government are delivering on their commitment to replace European funding in Wales. As I set out in my earlier Answer, that is just one of the UK Government’s investments in Wales that recognise its great potential to grow even further.

[Lord Browne of Ladyton (Lab)]

My Lords, talking of figures speaking volumes, the Minister will be aware that last month the annual fraud indicator for the United Kingdom, which of course includes Scotland and Wales as well as England and Northern Ireland, assessed it at £219 billion. Are those fraudulent transactions, the muling of that money and the transfer of it from shell company to shell company, and the export of it in crypto assets, counted as economic activity and therefore aggregated into GDP? When the money comes back into the country to buy houses and land, works of art and other things, is it counted as inward investment?

[Baroness Penn (Con)]

The classification of these matters is for the ONS, and I shall get the ONS to write to the noble Lord.

Energy Profits Levy

Lord Browne of Ladyton Excerpts

Tuesday 9th May 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, I disagree with the noble Baroness that there is preferential treatment for the oil and gas sector, which faces a far higher tax rate based on the extraordinary profits it is benefiting from. That is entirely appropriate. On the investment incentive, we will continue to need oil and gas as we transition to net zero. We need to encourage investment into UK oil and gas fields to help meet that demand, and that is something the Government will continue to do.

[Lord Browne of Ladyton (Lab)]

My Lords, in November 2022 the current Chancellor estimated that the levy would raise £40 billion over six years. Six months later, the Treasury’s estimate seems to have gone down to £28 billion. What is responsible for that? Is it by any chance the OBR’s estimate of the increase in oil and gas expenditure by these oil and gas companies, rather than renewables expenditure, which they released alongside the Spring Budget, and the consequential forecast increase in tax relief on those sectors’ windfall tax bills?

[Baroness Penn (Con)]

My Lords, a number of factors affect predicted revenues from the EPL, not least the high degree of volatility that we have seen in commodity prices. I say to the noble Lord that, if we do not have investment allowances in place and if we do not invest in the future of this industry in the UK, there will be less revenue in future coming from UK oil and gas fields to contribute to the Exchequer and our priorities in future.

Tackling Corporate Tax Avoidance: EAC Report

Lord Browne of Ladyton Excerpts

Wednesday 30th October 2013 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a genuine pleasure to speak after the noble Lord, Lord Lawson of Blaby, and not just because I rise while the sense of the Government getting a bit of a drubbing is still in the air—although I am not unhappy about that. The noble Lord’s robust, challenging interrogation of the Government’s position did the House a service beyond just making life difficult for the Government. I apologise to the Minister for glorying in that a little. The noble Lord shared with us some common sense, straightforward arguments based on his extensive experience that made many points with which I agree much more understandable to me than they were before I rose to speak.

I look at the list of those who have chosen to speak in this debate. Excluding those who speak from the Front Benches, I see that there is an unwise minority of us who are not members of the distinguished Select Committee. As I am the first of that unwise minority to speak, it falls to me to thank the noble Lord, Lord MacGregor of Pulham Market, and his committee for the service that they have provided to the House not only in taking on this short inquiry but in producing such a readable, comprehensive and accessible report in an area of great complexity. The committee has produced a series of serious, simple recommendations. I join the noble Lord, Lord MacGregor, my noble friend Lord McFall and the noble Lords, Lord Smith of Clifton and Lord Lawson, in expressing regret and disappointment that the Government’s response was so self-congratulatory. It was not just disappointing but complacent.

I intend to devote a significant amount of my short contribution to expanding on the argument, which has already been made, about whether the Government are entitled to any degree of complacency or self-congratulation in this area. There is significant and recent evidence provided through the witness examination of the Public Accounts Committee that there is no room for complacency or self-congratulation, but that the challenges are still significant and growing.

In its report, the committee justifies the whole process in the first phrase of the first sentence of the summary, which states:

“The UK faces a serious problem of avoidance of corporation tax”.

The last sentence of that paragraph states:

“This damages the economy and undermines trust in the tax system”.

I know from previous debates that the Minister shares the view that that is a serious and significant challenge. That view has gone well beyond those who are in the know about the detail of what happens in the Treasury or in her Majesty’s Revenue and Customs. The people of the United Kingdom know in spades that we face a serious challenge on that, and there is an expectation that we will respond in a serious manner to those challenges.

When we search for some proxy for describing the nature or the scale of that challenge, in previous debates, we have gone to the tax gap. I now know, although I did not fully appreciate this, that the avoidance of taxation by the methods referred to in this report are not included in the tax gap, but the tax gap is a good proxy indicator of the scale and nature of the challenge.

I last spoke on these issues in your Lordships’ House on 6 June, when we debated a Motion moved by my noble friend Lord Foulkes of Cumnock that this House take note of the economic and social consequences of tax evasion and avoidance. In the Official Report, at col. 1308, the noble Lord, Lord Newby, followed the estimate that we were all using that the tax gap was about £32 billion—not all of which, of course, is avoidance of tax by corporate bodies, and none of which, it would appear, is avoidance of tax by multinationals operating the devices referred to in this helpful report.

It was said to be £32 billion and falling. To test whether the Government’s confidence in what they intend to do to reduce tax avoidance is well-placed, I go to the first answer given by a man by the name of Edward Troup, who is the tax insurance commissioner for Her Majesty’s Revenue and Customs, when he gave evidence before the Public Accounts Committee only this Monday, 28 October, at a hearing of the committee to which the noble Lord, Lord Smith of Clifton, has already referred. The transcript is a veritable mine of useful information to test whether what we are doing as a country to address this issue is having any effect at all, or any measurable effect.

I should say that this is the uncorrected transcript of the oral evidence, and it may be adjusted later, but the very first question put to Mr Troup is about the tax gap. He says that it is £32 billion and falling but that it,

“has gone up from £34 billion on an adjusted basis last year to £35 billion in cash”.

I am not sure whether those two figures are comparable, because I am always conscious of vocabulary, but he says that it has gone up from £34 billion on an adjusted basis last year to £35 billion in cash. Thereafter follows some significant to-ing and fro-ing between the members of the Public Accounts Committee and the witness. That to-ing and fro-ing is calculated to leave everybody utterly confused about how those figures are made up and how reliable they are. What is unequivocal is that the tax gap is going up. That is the evidence that was given only a few months after the Minister who will respond to this debate unfortunately told your Lordships’ House that it was lower than that and going down. That was the best information with which he was provided from the same sources. I understand that because I have been in that position myself. The first proxy for this that we can find indicates that the situation is getting worse, not better.

My first question is: what is the current estimate of the tax gap? Is it £32 billion, the figure which was being deployed in June? Is it £34 billion which was apparently the unadjusted figure for last year? Is it the £35 billion cash figure for this year, and is the gap going up or down?

Secondly, this evidence makes it clear that the tax gap does not include any estimate of the taxation we as a country are being denied by the practices identified in this report, with which we have all become familiar. This is for good reason. As the noble Lord, Lord Lawson, said, this is not illegal. Until the policy and the law change, there is no way of estimating what it is. From page 8 onwards in the transcript of the evidence there were some interesting exchanges between Austin Mitchell, a Member of Parliament, and the same witness. The committee tries to put some scale to the taxation avoided by these processes. The way it does so is interesting. The scale is drawn from information communicated to the SEC in the United States of America by companies discussed before in the debate—Google, Starbucks, others—about the scale and nature of their sales in the United Kingdom. The disparity between the figures is astounding. These companies are telling the United States regulators and others that they are doing billions of pounds’ worth of business in the United Kingdom whereas they are telling Her Majesty’s Revenue and Customs that they are doing at most hundreds of millions of pounds’ worth of trading here.

The most interesting thing about this evidence is that nowhere does there appear to be any estimate of the revenue lost. Nowhere does there appear to be an estimated figure we can put to the nature and scale of this problem. That passage of evidence alone—I shall end on this because I want to do service to this report but I cannot go into all the detail of it—generates an incontrovertible argument for the recommendation of the Select Committee for some method of coherent and appropriate accountability to Parliament. That method should follow the example of the Intelligence and Security Committee. The reason the argument is incontrovertible is that as you follow the evidence you discover that HMRC witnesses cannot give any answers. They cannot answer for policy because apparently they have no involvement in policy. They cannot answer for estimates because their business is collecting the taxation that is due, not estimating. They cannot answer in relation to individual taxpayers’ experience with Her Majesty’s Revenue and Customs because that is confidential. Thus there is no accountability at all.

This is not a question of confidence in the taxation system being bolstered by a process in which there is no accountability. It is an example of confidence in the taxation system we have in this country ebbing away because there is no accountability for it. Rebuilding confidence will require Her Majesty’s Government to realise that transparency, accountability and a shared knowledge of what is going on inside our tax system lie at the heart of the matter. As to what the noble Lord, Lord Lawson, has suggested about restructuring the taxation system, I should have to look at the details carefully, but what is necessary is accountability in Parliament. We, at least, need to know who owes what or who should have been paying what, and we do not.

Taxation: Evasion and Avoidance

Lord Browne of Ladyton Excerpts

Thursday 6th June 2013 Lords Chamber

[Lord Browne of Ladyton]

My Lords, I congratulate my noble friend and my good friend Lord Foulkes of Cumnock on securing this timely and important debate, and on his characteristically robust speech of introduction in which he covered quite a lot of the waterfront. He constantly promised that others would add to it. I am not entirely sure that he has left much room for anybody to add anything, but I shall do my best while trying not to repeat what he has already said in great part.

It is disappointing that so few Members of your Lordships’ House consider this issue important enough to make a contribution to the debate because it is hugely important. The scale is mindboggling in the United Kingdom, as my noble friend has already said. According to Her Majesty’s Revenue and Customs, the tax gap—the difference between what Revenue and Customs believes should have been paid and what it received from the entire economy—amounted to £32 billion in 2011-12. One can disaggregate that, and it is interesting to see that it is not all corporation tax. Quite a substantial part of it is VAT, there is some customs and excise avoidance and a comparatively smaller amount is income tax. It is a significant amount of money. As my noble friend said, it is a third of the deficit for 2012-13. If this money were brought in, it would obviate the necessity for any further spending cuts; it would deal with that issue. While I accept the remonstrations of the noble Lord, Lord Forsyth, that we should be careful not to conflate tax avoidance and tax evasion, I do not think that there are any positive consequences from either of them for our community.

The tax avoidance industry is clearly damaging the interests of developed countries, including our own; there is no question. It is almost certain, however, that the harmful tax practices are an even greater problem for economies in transition and for developing countries. The leader of my party said recently:

“If everyone approaches their tax affairs as some of these companies have approached their tax affairs we wouldn't have a health service, we wouldn’t have an education system”.

Thankfully, everyone does not, but he makes a very important point. This is exactly the case in many of the world’s poorest countries. Because of the way in which businesses approach their tax affairs, many of these countries do not have these basic services that we can continue to sustain. It is estimated that countries in the developing world lose three times more money—three times more—to tax dodging than they receive in aid every year. The estimate is that they lose about £160 billion a year through tax dodging. If that money stayed in those countries, rather than being spirited away to the offshore accounts of multinational companies, it could be transformative. These tax havens—to which I will come back in a moment—are the life support system for that tax dodging, and the plug needs to be pulled on them. They play no useful role in the global economic system.

In 2004—I cannot find any more recent statistics but perhaps the Minister can—half of the world’s trade appeared to pass through tax havens. That is 50% that at some stage passed through a tax haven, even though these jurisdictions contributed then only 3% of the global GDP. Recent ActionAid research—which I believe is the research that my noble friend held in his hand while making his speech—reveals among other things that the taxes lost to Zambia from tax haven transactions from just one United Kingdom Company, Associated British Foods, was a sum 19 times greater than the United Kingdom’s aid to Zambia for hunger—19 times more from the activity of one British company. That would be enough, ActionAid estimated, to send 48,000 Zambian children to school each year. This is a scandal, which needs to be addressed. I will accept the remonstrations of the Minister, which no doubt we will receive, that nothing was done about this for a significant time when we were in power, and we have to live with that. However, we are learning much more about this now and there is much more understanding of the effect of these issues. What is now necessary is collective action, to which we on these Benches and across this House should contribute.

I turn for a minute to the issue of morality. Frankly, I am fed up with being lectured to by chief executives of industry, who tell me that they have some kind of moral duty to minimise taxation. I will address that point in this way. In September 2012, writing in the context of the revelation that the then presidential candidate Mitt Romney revealed—or was forced to reveal—that he had been subject to an income tax rate of “at least 13%” for the previous 10 years, Joseph Stiglitz, the US economist and celebrated professor at Columbia University, wrote on his blog:

“Democracies rely on a spirit of trust and co-operation in paying taxes. If every individual devoted as much energy and resources as the rich do to avoiding their fair share of taxes, the tax system either would collapse, or would have to be replaced by a far more intrusive and coercive scheme”.

He goes on to say:

“Both alternatives are unacceptable … More broadly, a market economy could not work if every contract had to be enforced through legal action. But trust and co-operation can survive only if there is a belief that the system is fair. Recent research has shown that a belief that the economic system is unfair undermines both co-operation and effort. Yet, increasingly, Americans are coming to believe that their economic system is unfair; and the tax system is emblematic of that sense of injustice”.

In concluding, he wrote that,

“tax avoidance on Romney’s scale undermines belief in the system’s fundamental fairness, and thus weakens the bonds that hold a society together”.

That is my first point about morality—and I rely on Joseph Stiglitz, who put it better than I could.

I have already said that all the economic and social consequences of tax avoidance and tax evasion, which we are debating today, are corrosive, and none of them is positive. Paying tax is one of the fundamental ways in which private and corporate citizens engage with each other and with broader society. Tax revenues are the life blood of that social contract—and, dare I say it, the life-blood of the big society. They are vital to the development and maintenance of physical infrastructure and to sustaining the infrastructure of justice that almost all the people who operate in this system rely on to underpin liberty and their market economy. Why is it, therefore, that tax minimisation through elaborate and frequently aggressive tax avoidance strategies has come to be regarded as one of the prime duties that directors are required to perform on behalf of their shareholders? Why has it been elevated to a moral imperative, when not paying fair taxes is not?

My noble friend made reference to the observations of Sir Roger Carr, the CBI chairman. This man’s views on the issue deeply worry me. He is the representative of British industry. Speaking at the University of Oxford’s Said Business School on 19 May, he said:

“It is only in recent times that tax has become an issue on the public agenda”.

I have to say that I do not know where he has been living, but certainly all my adult life tax has been an issue on the public agenda. He goes on to refer to,

“Starbucks, Google, Amazon—businesses that the general public know and believe they understand”.

I do not understand that part of the sentence. I think he is trying to give an impression that somehow these organisations are a good in themselves and that understanding them somehow means that we like them. We may use them, but I do not have that relationship with those organisations. He continues,

“businesses with a brand that become a perfect political football, the facts difficult to digest; public passions easy to inflame”.

He goes on, in what is clearly a criticism of rhetoric from our Prime Minister. He says that tax avoidance,

“cannot be about morality—there are no absolutes”.

I do not think I need to go much further than that; not many people in your Lordships’ House would not understand why I am disturbed that the man who represents our industry at its very pinnacle holds these views. I would like the opportunity to engage with him about them, but I cannot have that opportunity here. I do not really understand why he feels compelled to make that argument, particularly in the face of the fact that, in January, our Prime Minister said in a speech to the World Economic Forum in Davos:

“Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues”.

I agree with him. He urged multinational members to wake up and smell the coffee, obviously taking advantage of what was in the public domain.

Not entirely but relatively unusually for me, I am on the side of the Prime Minister on this issue. It is necessary for us to spend some time engaging with the view that has permeated our businesses, at least at one level of representation although not universally, about why they think their obligation is to avoid paying fair taxes and to challenge that directly. I ask the Minister, and I am sure that he will find it easy to answer this, whether he agrees with the Prime Minister or with the chairman of the CBI that this is a moral issue. If it is a moral issue, does the Minister agree that we in the United Kingdom, because of the position that we occupy in the world and our relationship with many of these tax havens, have a moral obligation to engage with them in a way that helps to solve this problem and undermines their activity?

While I am at it, can the Minister give some indication of how the Government intend, in the process of putting pressure on these tax havens—as they are— which I commend, to ensure that we do not replicate the situation that we allowed to happen in the first place? That situation put these communities in the position of finding some way to sustain themselves in the absence of natural resources and opportunities for the economy, which forced them into the hands of clever people who showed them a way of making large amounts of money in a parasitic fashion so that they were not a burden on us. We have to accept that part of this deal must be that we accept our responsibility to ensure that people can live in these places at the standard of living that they have achieved—maybe beyond that, in some cases—which does not rely on them having to perform these functions in the world at such a disproportionate rate in order to keep body and soul together.

I commend to noble Lords the briefing I have in my hands from the co-ordinator of the All-Party Parliamentary Group on Anti-Corruption, and the one that was sent to all of us by Action Aid. These are excellent documents. I cannot, in my last minute, do any of them justice, but they have a list of arguments and questions that go to nub of this issue. If others who speak after me can engage with these issues in the way that these briefings deserve, I commend the briefings to them.

I make one final point to the Minister. There is a deeply corrosive effect of the structures that have been created by tax avoiders and tax evaders which we need to interdict: they have created a set of structures of which the crooks of this world are taking advantage. We discovered recently, because of the uncovering of money-laundering through a legitimate process of international banking in cyberspace, exactly what crooks are able to do. That is exactly what is happening in this environment. If the Minister wants evidence for that, he should look at the World Bank’s recent report, which showed that there were 800 corporations involved in the 150 examples of serious money-laundering and crooked use of money, all of them taking advantage of structures that were otherwise legitimately created. We are allowing crooks and deeply tainted money to get into our legitimate exercises and economy.

Scotland Bill

Lord Browne of Ladyton Excerpts

Wednesday 28th March 2012 Lords Chamber

[Lord Browne of Ladyton]

My Lords, I have immense respect for the noble Lord, Lord Forsyth of Drumlean. I listen carefully to what he says, and I have heard this argument from him on a number of occasions and respect it entirely. I have listened carefully, too, to the arguments put forward by the noble Lord, Lord Lang of Monkton. I thought that his contribution ranged much wider than the actual provision that we are considering, but he made some very important points, which are worthy of being recorded. The noble Lord, Lord Kerr of Kinlochard, rose to debate some of them and made a helpful contribution. The noble Lord, Lord Pearson of Rannoch, read in short—and with respect to him, slightly misleadingly—a part of the Bill to make another point. I hope noble Lords will forgive me, but we have debated these provisions in some detail in different ways. I had my say both at Second Reading and in Committee, and that is all recorded. If people want to know what my views are for supporting this provision and its maintenance in the Bill, they can read them at length.

However, in response to the point made by the noble Lord, Lord Pearson of Rannoch, it can sometimes be deeply misleading to read in short a piece of legislation. I am not intending to read it at length, but the operational way of this Bill is to amend other legislation. I think that the answer to his point—the Minister will be able to correct me when he comes again to the Dispatch Box if I am wrong—lies in the fact that the active verb in the piece that he read to us is to “specify” a tax, not to impose a tax. The answer lies in the words that the noble Lord, Lord Pearson, chose. That, put another way, is the point that the Minister was making to him.

In any event, whether or not this provision generates deep and interesting constitutional issues, we know that where this constitutional imperative resides—in the other place—they have already approved this devolution. The Bill has come to us with their approval. It may be that we can say, with some merit, that they did not pay a lot of regard to this clause. It was a differently numbered clause at the time. However, they will certainly pay a lot of regard to it when it goes back to them, and it will not become law if they do not approve it. The responsibilities that they hold in terms of our constitution, they hold. If they choose to devolve them and encourage us within this Parliament to support that, I do not think it is our privilege to prevent them doing so.

For clarification, we also need to look at the genesis of this provision. It is not entirely true to say that Calman was silent on this point. The Calman commission recommended:

“The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland”.

The noble Lord, Lord Forsyth of Drumlean, who is comprehensively knowledgeable about Calman and this Bill, and has proven that time and again, will see that this provision goes significantly further than the Calman recommendation. However, it is not true that there is no reference in Calman to the devolution of taxation or the creation of a power of this nature to assist future devolution. There is consideration of it in some detail in the report. The arguments for and against are there, and there was a clear recommendation, but I accept that it has been taken further.

As I said in Committee when this issue was debated at great length, the deletion of this provision would leave the Bill significantly reduced, not only in its constitutional significance but in its significance for the people of Scotland. I am not interested in achieving that objective. Our position is that we support the inclusion of this provision, provided that certain checks are in place. That is why rather than seeking to support the deletion of this provision we have tabled Amendment 16, to which I will speak at greater length in the next group, and which we believe would allay much of the concern over the breadth of this provision, were it to be accepted in some form. This of course all depends on the House’s position in relation to this amendment. I accept that the debate on my amendments is dependent on the decision that the House makes in relation to this amendment. However, I was given a certain assurance by the noble Lord, Lord Forsyth, in his introductory remarks that I need not worry about that, so I will now sit down and prepare to argue the next amendment.

[Lord Pearson of Rannoch]

Before the noble Lord sits down, and with the leave of the House, neither he nor the Minister has answered my main question on this matter: have the people of Scotland given their informed consent to this provision? If they have not done so, will they be invited to do so, perhaps with the provision being specifically flagged up in any eventual referendum?

[Lord Browne of Ladyton]

I might just respond on this point and leave the Minister to deal with the matter if he thinks I have not dealt with it adequately. My response to the noble Lord, Lord Pearson, is that I think I answered his question by pointing out where he was misreading the provision that he himself chose. He now asks another question and I am happy to answer it.

Scotland is a representative democracy, just as the rest of the United Kingdom is. It has two levels of parliamentary democracy: the Scottish Parliament and the UK Parliament. The Scottish Parliament, which speaks for the people of Scotland, and all parties overwhelmingly approve of the provision. I have no doubt that we will see that in the second legislative consent Motion, which I am confident will be passed unanimously by the Scottish Parliament.

[Lord Forsyth of Drumlean]

My Lords—

[Lord Browne of Ladyton]

Perhaps the noble Lord will allow me to finish answering one question before he poses another one. I am asked where the democratic support for this comes from. It comes in the unanimously expressed will of the Scottish Parliament. The noble Lord, Lord Pearson, may not think that sufficient, but I can tell that the people of Scotland think it is.

[Lord Forsyth of Drumlean]

I do not mean this in a cheeky way, but my recollection is that when we discussed this at an earlier stage the noble Lord indicated that he had not appreciated that these powers were quite so wide-ranging. If he, with all his brilliance and his close study of the Bill, did not realise that, surely the noble Lord, Lord Pearson, is right in suspecting that the people of Scotland might not know that these powers were being provided, or indeed the people of England, Wales or Northern Ireland who could be affected by them?

[Lord Browne of Ladyton]

The combination of cheek and flattery is so appealing that I can barely resist it. The noble Lord’s recollection of what I said when we discussed these provisions before is not my recollection, but the Official Report will have recorded it. I think that I said it was not fully appreciated how significant these provisions were—not by me; I thought that I had helped those who had not fully appreciated that, but maybe this was a process of education in which I was a pupil, not the educator.

In any event, I am not suggesting that the significance of this important provision of the Bill is widely known and appreciated by the people of Scotland, whatever that phrase means, but I was asked a different question by the noble Lord, Lord Pearson—where the constitutional democratic support lay for this from the people of Scotland. The noble Lord, Lord Forsyth, will recall that I referred to a representative democracy; I did not suggest that all the people of Scotland understood this.

[Lord Pearson of Rannoch]

I merely say that the record will confirm that the noble Lord has not answered the question that I asked him.

--- Later in debate ---

Moved by

[Lord Browne of Ladyton]

16: Clause 27, page 20, line 24, at end insert—
“(7) The use of an Order in Council under subsection (1) of this section shall be assessed against the following criteria—
(a) the potential for the new tax to create or incentivise economic distortions and arbitrage within the UK;(b) the potential the new tax might create for tax avoidance across the UK;(c) the impact of the proposed tax on compliance burdens across the UK; and(d) the compatibility of the new tax with EU Legislation and Rules, such as those covering State Aid and the Single Market, and the Human Rights Act.(8) In proposing an additional devolved tax under subsection (1) of this section, the Scottish Parliament shall provide evidence in support of the criteria specified under subsection (7), including in particular—
(a) the rationale for the devolution of such a tax;(b) the intended tax base, taxable activity and expected revenue;(c) an assessment of the expected distributional impact, including the impact on business and individuals and the wider economic impact;(d) an assessment of compatibility with the Human Rights Act, EU State Aid rules and other directives;(e) plans for the collection and administration of the tax, including means of ensuring compliance; and(f) an assessment of any interaction of the proposed new Scottish tax with UK-wide taxes, including plans to protect policy and geographical borders.”

[Lord Browne of Ladyton]

My Lords, I beg to move Amendment 16 standing in my name and that of my noble and learned friends. It provides an opportunity for the Minister to make his own contribution to the new-found relationship between the House and the ministerial Front Bench and show that the Government are not only listening but responding positively to positive and helpful amendments that are being tabled to this legislation. We have had two very positive responses on Report today. I think that this is the time for a third positive response, and the Minister has the opportunity to make his own distinct contribution to that.

As I said in a previous debate and as has been apparent in the discussion about Clause 27 thus far, the provisions of the clause are of great significance, constitutionally or otherwise. However, the tenor of the debate in this House, both in Committee and today on Report, demonstrates that it is precisely because of the significance of this provision that there are legitimate concerns over democratic accountability in the exercise of the provision as presently drafted.

In creating the mechanism for the devolution of future taxes to the Scottish Parliament, the Government are providing a stable framework for the continued development of the devolution settlement and, in many ways, for the natural progression of the Calman commission project. It is significant that the commission did not at any point suggest that any new taxation powers should be devolved using the Section 30 order mechanism, which I agree with the Minister could be used for the devolution of taxation. Any of the taxes provided for in the Bill, or indeed any future taxes, could be devolved through a Section 30 order. However, I am not proposing to open a debate about that because, from the way they have chosen to proceed, the Government have clearly come to the view that that is not desirable and that in fact another mechanism should be framed in primary legislation for the devolution of any new or specified taxes. I imagine that the Minister will be able to confirm that that was a deliberate decision as they thought that it would be inappropriate constitutionally to make these significant changes or to allow them using the existing mechanism, and that there needed to be a separate and well understood distinct mechanism for doing so.

For that reason, we on these Benches believe it is important that the conditions which we have debated at some length—I shall not go into the detail of them—and which will be applied to any proposed devolved tax should be clearly understood and set out. Not only do they need to be transparent but the Executive—in the exercise, through Order in Council, of the specification of taxation in the future—needs to be accountable to Parliament. At the very least, there needs to be some mechanism to make the Executive accountable in their future dealings with the Scottish Government against the criteria that the Government themselves set out in the Command Paper, informing how they will exercise this power. Therefore, we support the mechanism but we believe that Parliament should have the right to debate and, if necessary, to amend the criteria to be applied in assessing the convincingness of the case to be made for the devolution of taxation in the future.

In their Command Paper on the Scotland Bill, the Government provided a helpful sketch of the criteria to be applied when considering any future new devolved taxes. However, unless these criteria are placed in the Bill, Members of this House and the other place will have no ability to comment on or amend that list; they will just have to accept it. It is on that consideration that I tabled Amendment 16, which would place in the Bill the list of criteria to be considered for the use of an order to add a new devolved tax, so that Parliament can vote for Clause 27 in the full knowledge of how it will be applied in practice. I imagine that the Minister will not wish to argue with any of the specific criteria listed in the amendment as it transposes verbatim the list in his own Command Paper, so we cannot have a dispute about the criteria. I must assume that if he does disagree, which I hope he does not, his disagreement will lie in an attempt to increase the democratic accountability of the clause.

I am coming to the end of this argument because it is comparatively simple, without going into the detail of it. The Government have given us the makings of a full and properly accountable Clause 27 but they have not brought them together. I recognise that there may be a deficiency in the drafting and that there is an opportunity to take it away and correct it, but all I seek is to bring the two parts of the Government’s thinking together and to put them into a legal framework in such a way that in future—well, actually we can debate now whether these are appropriate criteria or whether they should be augmented or further explained, and if not, we can settle them—we will know transparently that the test has been properly applied.

I am doing this for one other reason, which is very important, too. The Bill will not become active unless there is a legislative consent Motion in the Scottish Parliament. If these criteria are in the Bill, the Scottish Parliament will have to approve them. When the Scottish Parliament has approved them by a legislative consent Motion, which I am confident it will, we will have agreement. We will then have a framework against which to test any future decision we make on whether it complies with the agreement and the Scottish Parliament will know whether the criteria are met. It cannot say in future, “This is a set of criteria that those people in London thought up and imposed on us. They didn’t even have the good grace to put the criteria in the Bill, so they don’t apply to us. We don’t feel ourselves bound by them because they are in your Command Paper and not in ours; whereas, if the criteria are in our agreed legislative framework, we may have a dispute on whether they are met but at least we will know what they are and we will be able to make the argument that you have failed to meet the criteria that you voted for yourselves”.

[Lord Forsyth of Drumlean]

My Lords, I support the amendment. It is not even half a loaf. I hate the procedure but I agree that it is a great improvement for the reasons that the noble Lord put forward—the last one, in particular: that it would make it clear where the boundaries were in the use of this extraordinary open-ended power.

I have not seen my noble friend’s brief, but I am prepared to stick my neck out and make a prediction, which is that he will not accept the amendment. Writing it in the Bill will create the opportunity for judicial challenge, and the Treasury loves being able to decide the rules and not be subject to challenge. I do not think that my noble friend will like the amendment because it will constrain what he seeks, which is for the Treasury to decide what will and will not happen. He underestimates the extent to which there will be a political challenge from north of the border. I accept that this is an advance so I support the noble Lord’s amendment.

--- Later in debate ---

[Lord Sassoon]

My Lords, I take that as a no.

[Lord Browne of Ladyton]

I am not allowed to.

[Lord Sassoon]

Then it was a no for a very good reason.

My Lords, I thank the noble Lord, Lord Browne of Ladyton, and the noble and learned Lords, Lord Davidson of Glen Clova and Lord Boyd of Duncansby, for the amendment, which exposes an important issue that it is quite right that we should debate. As was well anticipated, I say at the outset that it does not find favour. However, in the spirit in which the noble Lord, Lord Browne of Ladyton, led me on, I will be positive in my response, because there is further reassurance to be given here about what I hope your Lordships will think is a pragmatic and proportionate way forward.

I am not sure whether we are talking about Amendment 17 at this point. My noble friend did not speak to Amendment 17, which is a fundamental one about removing the ability of the Scottish Government to legislate on any taxes that are devolved. Perhaps I will not need to say very much about that; it links to our previous discussion.

--- Later in debate ---

[Lord Sassoon]

We are going back to another question. I am answering the question about the empty space that is created. It is easiest to do that by reference to a specific example of where we are creating the space within which the Scottish Parliament will have the ability to create a new tax framework to fill that space. That example is specifically envisaged. By analogy, that is how I anticipate it will work for possible other taxes in the future if they meet a number of thresholds and requirements, legislative and otherwise, including meeting the requirements that we have been discussing in the Command Paper.

[Lord Browne of Ladyton]

My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. I am particularly grateful to the noble Lords, Lord Forsyth of Drumlean and Lord Kerr of Kinlochard, for their comprehensive support, stated commendably briefly, for my amendment. I very much thank the noble Lord, Lord Sanderson of Bowden, and the noble Earl, Lord Caithness, for their specific support for the last argument I made, which is the key perhaps to the future of this amendment.

I am also extremely grateful to the noble and learned Lord, Lord Cameron of Lochbroom, who has made a suggestion that will improve the amendment. I agree with him that the order of the amendment would be more fortuitous the other way around but we may have an opportunity to come back to that. I have to say that I will come back to the noble Lord, Lord Lyell, but I thank him for his intervention about “Monty Python”. He has given me an idea for a peroration, which I think he will appreciate—but he will need to wait for it.

In the way in which the Minister has responded to the debate he has entered into the spirit of the day, but that is where it ends. He has only entered into the spirit of the day; we now need to get the content. The Government are listening and responding to the House’s position on this provision. I think that the Minister gets it and understands the point. Although I was a Treasury Minister for a period, I am not entirely sure where the blockage lies but I am sure that it can be moved.

The Minister says that he has made the arguments and hopes that they are convincing. I have to say that I do not think that he made any arguments on either my first or second points, the first being that it would be better if this extensive provision was ring-fenced by the Government’s own criteria in the Bill for the purposes of accountability, at least for the future. With respect to the Minister, a report—I will have to look carefully at the words he used about how it will work—which is an augmentation of one that is part of the agreement with the Scottish Government for the legislative consent Motion will not do. It will not do for all the reasons that the noble Lord, Lord Kerr, and others identified. Although it may have a degree of prospectiveness about it, the problem is that it would be more likely to be retrospective. However, even if it is prospective, it does not have the element of accountability about it that your Lordships’ House is looking for and the Opposition are looking for.

I could have been convinced by some offer that was more solid than the one that was put to me, but I am not persuaded by that offer. I am wary of the devolved taxation equivalent of an impact assessment report, which I think is what he also offered me. A statement by a Minister saying that these criteria are met will not be enough for this purpose. I am afraid that it will probably come to some Minister, whose bona fides I am not questioning in advance, saying, “The criteria that we set are met by this”, or “I assure the House”, or whatever. That will not quite be enough for this.

Even if I have not, and we cannot, find in this Bill a mechanism that gives the accountability that I—and, I sense, your Lordships’ House—would like to see, the Minister did not address at all the point about how we get the Scottish Parliament and Scottish Government to buy into and own these criteria. Experience tells us that that is essential. Even when they do buy into and own criteria or legislation by legislative consent Motions, they deny it later on, or they say that it was not enough, or they ask for more. That I can live with. We can debate that. That is politics. But we surely need to get the Scottish Government and Scottish Parliament to own the whole of this process. We cannot allow them the deniability of saying, “That was your Command Paper. It’s not got our imprimatur on it. We did not agree to it. What we agreed to is in the Act, so we are not having these London-based criteria imposed on us”. We all know this script. They need to own them. If they want these powers—and they do—then they need to own the whole package. I do not know whether the Minister or any of his colleagues have applied their minds to how to get the Scottish Parliament and Scottish Government to own this package, but there is a very simple way: get them to pass a legislative consent Motion for an Act of Parliament that includes them.

How, therefore, given that I am not convinced by the Minister’s arguments, do I propose that we deal this issue? Members of the House will be relieved to know that I do not intend to divide the House in the afternoon of the day before Recess. I do not intend to do so for this reason: that the Bill has another stage to go and I wish to continue talking to Ministers about this issue. I sense a growing coalition across the House for a revision and amendment of the Bill which could attract wide support and I have not had the opportunity to build that coalition. I am being open. I want an opportunity to try to build a coalition for an amendment that will find favour with your Lordships’ House and have some possibility of being passed.

I make one more offer to the Minister—I do not expect him to respond now—to engage to see whether we can find a way of amending the Bill or of obtaining from the Government a bankable undertaking that is owned by the Government and the Scottish Government. I cannot see what that can possibly be other than this amendment. I shall not be leaving the country during the Recess and I will make myself available for any discussions—if I can, I will bring members of our own Treasury team with me—to see whether we can find a way around this issue and, if we can, I shall be happy to commend it to the House.

[Lord Maclennan of Rogart]

If the noble Lord does not get the response that he is seeking and he is right in divining that others are seeking, then he should not rely on his intuition about coalition around his point. I think he can have the assurance that a number of noble Lords on these Benches are of the same mind as he is.

[Lord Browne of Ladyton]

I am extremely grateful to the noble Lord for his contribution. I know where the key to success in a vote in this House lies: it is on those Benches. I am fortified in my resolve to try to improve this legislation.

The noble and learned Lord, Lord Wallace of Tankerness, will confirm that at all stages of this process I have endeavoured to be constructive and helpful. This provision has to be improved, although not necessarily directly in the way I have proposed. I am happy to be flexible but my suggestion passes my only test: it improves the ability of the Bill to contribute to the betterment of the Scottish people while, at the same time, strengthening the union. It gives us an argument that is owned across the union which we can deploy in the future.

I say to the noble Lord, Lord Lyell, that, as far as the amendment is concerned, this parrot is very much alive; this parrot is not no more and it is not deceased. It may not fly today, but it is very much alive.

I gave the Minister advice about Scottish football on a previous occasion. He scorned it, and he got himself into an argument in the House about Scottish football which he could have avoided. I give him this advice now: do not tempt the noble Lord, Lord Forsyth, to go away and come up with better criteria. I am almost certain that we will return to this issue at Third Reading. I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

--- Later in debate ---

[The Earl of Caithness]

My Lords, I return to the problem that we discussed earlier when we were on Amendment 16. I have read and reread Amendment 29 and wonder whether my noble friend can help me. Where does it tie in the Scottish Executive in the way in which the noble Lord, Lord Browne of Ladyton, mentioned in his amendment, which was supported by my noble friend Lord Sanderson of Bowden and the point that I raised? I listened to my noble friend with great care when he replied on Amendment 16 but I still cannot find the bit in Amendment 29 that will satisfy me.

[Lord Browne of Ladyton]

My Lords, I welcome the amendment. It is entirely consistent with a request that I have made repeatedly for reports on current progress in relation to the transfer of these powers. I hope that in anticipation of Third Reading, Ministers will take some time over the Recess to prepare at least an outline of a report on progress for the transfer of these powers to the Scottish Parliament. I say that for the reasons that I have articulated. I have a belief, based on information that I have received, that the Scottish Government and their Civil Service are ill prepared for the transfer of these powers. I should like to be reassured that we are transferring powers to people who are building the competence to use them appropriately.

In response to the point made and repeated by the noble Earl, Lord Caithness, about the buy-in of Scottish Ministers, there is a reference in subsection (2) of the proposed new clause to an obligation on Scottish Ministers to report in a similar way to the Secretary of State. However, it is deficient in the sense that it does not satisfy the desire on these Benches, which is apparently shared across the House, that the Scottish Government and the Scottish Parliament should buy in more fully to the whole package of transferring taxation powers for the reason that I gave before. I repeat that some time in the future they may be tested against that package and they should own it. That can be done only if they agree. If they do not agree, it will be interesting to hear their explanation, but I suspect that if it is put to them they will find it so impossible to agree that they will agree.

The reports, which we understand from the Government will be used to answer some of the points that I made earlier, do not in their present form answer those points, although I accept entirely what the Minister said about the Government’s intention to augment the reports in the way he suggested. I do not doubt that for a moment, so he should be clear that I accept entirely that that undertaking can be guaranteed to be delivered. I sense that it will not be enough but I do not want to go back to Amendment 16. I welcome the proposed new clause as it stands and as far as it goes, but it does not go far enough.

[Lord McFall of Alcluith]

Under the proposed new clause as far as it goes, I was taken with the Minister’s comment about taxation being an instrument of redistribution, as Calman noted. If that is the case, we need a deeper appreciation of the transfer of these powers. It is not just about money but how that money is spent. There is no association between tax levels and growth. As a Scottish citizen, I want to ensure that money from income tax in Scotland is spent properly and that I will benefit as a result.

As far as concerns subsection (5)(d) of the proposed new clause, it is important that the issue is looked at. As was suggested, Scottish public services are inefficient even by miserable UK standards. The Scottish health service, for example, spends 19 per cent more per person, and we have 30 per cent more doctors, yet in many cases—such as cancer survival levels for women—there are worse outcomes. This is a very important issue. If we are going to look at income tax levels, we should have reports from the Scottish and UK Parliaments to ensure that we spend our money in the proper way—as an instrument of redistribution, as Calman suggested.

--- Later in debate ---

[Lord Browne of Ladyton]

My Lords, I rise to support the amendments to which the noble Lord has spoken, and to speak to the amendments standing in my name and that of my noble and learned friend Lord Boyd of Duncansby. On his behalf, I should first tender his apologies for not being here to speak. Unfortunately, he has commitments that he could not avoid. He would have wanted to be here. He has put a lot of time and investment into this part of the Bill and this issue. He has given me an exhaustive seminar on it and I shall try to do my best to support the amendments which he would otherwise have spoken to.

Could we also offer our congratulations to the noble and learned Lord the Advocate-General for Scotland on achieving this level of agreement and the solution to what was a highly charged political problem in Scotland for a period of time? When it blew up, it was not obvious that it could have been resolved in this way. The extent to which the Minister has found agreement and a resolution to this problem lies in the words of the noble and learned Lord, Lord McCluskey, before he left. He said that he was 98 per cent satisfied.

In all the years I have known him, I cannot imagine the noble and learned Lord being 98 per cent satisfied in relation to almost any argument ever put before him. If he is satisfied to that extent, it is a measure of the achievement of the Minister and his officials. From observing this closely, I know that my noble and learned colleague has put a significant amount of his time and effort into trying to resolve this. I do not intend to speak to any of the amendments that the Minister has spoken to, with the exception of Amendment 52, because the two amendments proposed by the Opposition are attached to their Amendment 52. If noble Lords bear with me, even at this late hour I will try to cover this in a few minutes.

Amendment 52 is a wholly new provision which comes out of the agreement with the Scottish Government, paving the way for the legislative consent Motion. It establishes a review of the new procedures to take place,

“as soon as practicable after the end of three years”.

In principle, we see no difficulty with the concept of a review. It has much to commend it and the Minister set out some of those reasons. However, it is clear from the Written Statement from the Secretary of State, dated 21 March, that the agreement for this review stems from the dispute about whether there should be a requirement for certification of an issue by the High Court as one that raises a point of law of general public importance. Can I say how pleased we are that the Government have resisted the request from the Scottish Government to include certification as part of the package of agreement for the LCM? My noble and learned friend Lord Boyd set out the reasons for our approach in Committee and I do not intend to repeat them here.

More importantly, the clear tenor of the debate in Committee was against certification as a prerequisite for an appeal to the Supreme Court. Those who were present at that debate will recall the cogent and persuasive reasons advanced by the noble and learned Lords, Lord Cullen of Whitekirk and Lord Cameron of Lochbroom, who is in his place today. These were about why such an innovation should not now be made, restricting the right in cases involving the determination of issues of fundamental human rights. Had certification now been included in the agreement it would have been against the wishes of this House.

We appreciate, however, that Scottish Ministers wish to have a commitment to a review of the operation of the new procedures, with the issue of certification being directly addressed in that process. The noble and learned Lord has already alluded to this. If a review is to be meaningful, it must have sufficient evidence to inform it, and it must take into account all sides of the debate. This is where our concerns come in and why we have put down two amendments to Amendment 52.

First, we suggest that the review should be conducted after five years, rather than the three years specified in the amendment. We do not think that three years is long enough for a meaningful review. The Supreme Court took over the jurisdiction of the Judicial Committee of the Privy Council on devolution issues in October 2009. In the approximately two and a half years since then there have been around 12 cases from Scotland. However, seven of those were what have become known as “sons of Cadder”, arising from the case of Cadder on access to a solicitor before a police interview. These seven cases came before the court in two batches as they raised substantially the same issues, so the reality is that of 12 cases, eight arose out of the same issue; namely, access to a lawyer. Our concern is that in conducting a review after only three years there will be insufficient material and an insufficient spread of cases for a proper judgment to be made on the efficacy of the new arrangements. This is a serious issue as the person conducting the review may feel obliged to make findings and recommendations where it would be more prudent to await further information.

Secondly, although this is not in the Bill, the Written Statement made by the Secretary of State states that the review will be chaired by the Lord Justice General, whoever she or he may be at the time. The present Lord Justice General has been making the case for certification on behalf of the Scottish judiciary. We do not, of course, know the identity of the new Lord Justice General, nor do we know what view he or she may form on the evidence. Whoever it is, it seems inevitable that he or she will have been part of the debate on certification among the Scottish judiciary. It is improbable that the new Lord Justice General will not emerge from the existing Scottish judges. Moreover, he or she will have presided over a court whose judgments will have been subject to review by the Supreme Court. His or her opinions may have been overturned and he or she may have been criticised by the Supreme Court in the course of those judgments. This person is then being asked to stand back and conduct an impartial review of the mechanism by which such cases get from his or her court to the Supreme Court. Fundamentally, we do not think this is right. With the best will in the world, even the best jurist will find such a task very difficult and, indeed, may not even welcome such an imposition.

The issue of certification for the Scottish judiciary has arisen out of concerns raised by it about the effect of the Supreme Court on the criminal law in Scotland, and we believe that the new procedures in this Bill go a long way to addressing such concerns. Scottish judges have also seen this as a matter of respect. They point to the fact that in appeals to the Supreme Court from ordinary criminal proceedings from courts in England and Wales and Northern Ireland certification is required from the courts below. They consider that not to require such a certification procedure in appeals from the High Court of Justiciary raises the issue of consistency of approach. However, as the Minister pointed out in Committee, the introduction of certification in the other jurisdictions was, if I remember correctly, to stop what might turn out to be a flood of criminal cases coming from the courts below to the House of Lords. The purpose was wholly different from the issues of respect and consistency that were raised by Scottish judges.

Our amendment addresses these issues. Of course it is right that there should be a senator of the College of Justice intimately involved in the review, but that surely has to be balanced by a view from the Supreme Court itself. That is why we wish to see a commitment that a justice of the Supreme Court will be a member of the review panel to bring the other perspective. I hope that the noble and learned Lord, Lord McCluskey, will forgive me for reporting a private conversation I had with him in the precincts of your Lordships’ Chamber before he left. He suggested, and I agree with him, that it would probably be better if that justice of the Supreme Court was not one of the Scottish justices appointed to the Supreme Court. We on these Benches would very much prefer to see a chairman of the review who had no present involvement with either court, but we know the agreement that has already been reached and, although we think it is wrong, we are prepared to respect it.

I have one question for the Minister, but I hope he will respond to the points that I have raised. I know that he was aware of them in advance because I know there was communication between him and my noble and learned friend. Will the Minister give a commitment that the new Lord Justice General, whoever that might be, will be consulted on whether he or she thinks it is right for him or her to chair this review? If the new Lord Justice General considers that it might be difficult to do that task because of the points that I raised, will the Minister give an assurance that that view will be respected? Will he then work with Scottish Ministers to find a mutually acceptable alternative?

[Lord Cameron of Lochbroom]

My Lords, I pay tribute to the Minister for having listened so obviously to what has been said in all quarters—not least in your Lordships’ House—about these matters. The proposals in these amendments seem entirely reasonable and appropriate, particularly in the light of certain remarks that my noble and learned friend Lord Cullen and I made about the place of the Supreme Court in our judicial system.

Having listened to the noble Lord, Lord Browne of Ladyton, I have sympathy with the view that he has expressed, and indeed the amendment proposed, that the review should be carried out after a longer period than that proposed in Amendment 52. It seems that this is an important review, although apparently not one that will be repeated; therefore, the importance of its conclusions must be based upon a sufficient period to give those conclusions some justifiable basis.

Although the matter of the chairmanship and membership of the review does not appear in the amendment, there is substance in what the noble Lord, Lord Browne, has said about both the chairmanship and the inclusion of one of the Justices of the Supreme Court. I therefore support what he has said in that regard. Otherwise, I pay tribute to the noble and learned Lord for what he has achieved in bringing these amendments forward.

Scotland Bill

Lord Browne of Ladyton Excerpts

Thursday 15th March 2012 Lords Chamber

[Baroness Liddell of Coatdyke]

The noble Lord, Lord Forsyth, has raised the issue of the legislative consent Motion and my noble friend Lord Foulkes has raised the issue of the timetable. We have also had within the process a consultation which concluded at the end of last week. At Second Reading we were told that one of the reasons for the truncated consultation process was to allow amendments to be brought forward at Report stage. However, there is a very short period of time between the Committee stage and the Report stage. I echo the points made by the noble Lord, Lord Forsyth, and my noble friend Lord Foulkes about this debate taking place on a Thursday and the final day of the Report stage taking place on the Wednesday before the Easter Recess

The whole process is in a muddle, and that is not the way to deal with a serious constitutional issue. I have the greatest respect for the noble and learned Lord, Lord Wallace of Tankerness, and I know that he would wish to be as straightforward with the House as he can be. I hope, too, that the Leader of the House, as the leader of the whole House, will not see this as some source of mischief but as an attempt to get to the bottom of what is happening.

[Lord Browne of Ladyton]

My Lords, it is with some reluctance that I rise to speak but I think that my contribution will substantially meet the criteria that the Leader of the House has laid down for this debate.

I addressed the House at some length on the first day in Committee setting out the reasons why I thought it was important that we should conclude our scrutiny of the Bill and present it back to the other place ready to become legislation. That was on 26 January and I do not intend to repeat all the points I made on that occasion. Those who are interested can read for themselves that 45 minute contribution in the Official Report. However, I do wish to make one or two important points.

First, I rebut the suggestion that we are meeting on this Thursday to discuss this part of the Bill at the request of this part of the Opposition. I cannot speak for all of the Opposition, of course, but I have been privy to many conversations, getting uncomfortably close to the usual channels in your Lordships’ House, and never at any time in these discussions did I ask, or was I party to a request from the Opposition, that we should meet on a Thursday.

Noble Lords ought to remind themselves of the somewhat chequered history of the management of the Committee stage in this House. It was the great plan that this day would be devoted to a debate about referendums. It was broadly agreed because the consultation would be over and it was expected that the Government would be able to come to the Dispatch Box and indicate what their response to the consultation would be. There was a degree of consensus that went beyond the Front Benches that it was appropriate to handle the matter in that fashion. However, as has consistently happened with the Committee days of the Bill, we have been subject to other items of business being imposed on them. We have just had the same thing today. In fact, we lost a whole Committee day for this Bill because it was seized from us for ping- pong on the Welfare Reform Bill. I was assured that that would take only a couple of hours—at the time I laughed uproariously at that idea—but it took all day and we lost a whole day in Committee.

There was an attempt, to which I was a party, by those who want to see this matter proceed appropriately to manage the business in such a way that we would conclude it within the appropriate time. However, there was no agreement that we would sit on Thursdays. A lot of what has happened has been imposed on me and other Members of the House by the circumstances of the business of the House. I understand that it has to be managed and I do not want to be part of that process, but any suggestion that the Opposition requested Thursdays is not correct to my knowledge.

[Lord Forsyth of Drumlean]

I apologise to the noble Lord if I implied that he was responsible for it. I was misinformed.

[Lord Browne of Ladyton]

I shall savour that apology. I am grateful to the noble Lord for his gracious apology. I shall bank it away because we may get to a point during the course of today when I will need it in order to bargain for others.

I am as interested as any Member of the House in where the discussions between the Government and the Scottish Government are in relation to the legislative consent Motion. However, I have been consistently of the opinion that the Scottish Parliament will pass a legislative consent Motion in relation to this Bill. I am also consistently of the view that we have promised the Scottish people that we will deliver the Bill in such a way that it can be enacted by a legislative consent Motion effectively and that we should keep our word to the Scottish people and to the Scottish political classes.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, picking up on the final point made by the noble Lord, Lord Browne, there was a commitment in the manifestos of all three parties—the Conservative Party, the Labour Party and the Liberal Democrats—at the last general election that we would seek to implement the Calman commission proposals, which this Bill substantially seeks to do.

On the issue of sitting days, I readily recognise the concerns. Indeed, I was told that the House would sit to debate the Scotland Bill on a Thursday and I have turned up today with my noble friend Lord Sassoon to respond to the amendments. The noble Lord, Lord Browne, indicated some of the issues that we have had to address. There was one day—Tuesday, 14 February—when, because of the time taken by the Welfare Reform Bill, we did not manage to debate anything. The decision was taken late in the day that it would not be proper to start our debates after 9.30 pm, and there was general agreement that that was the right decision. Our previous debate in Committee was on a Tuesday. Next week we will be in Committee on Wednesday.

On the point made by the noble Baroness, Lady Liddell, it was not on Second Reading but when we moved into Committee in January that the Government announced, as a result of representations they had received, quite properly, from my noble friend Lord Forsyth, that there would be a consultation. There were amendments on the Marshalled List to the effect that we would not deal with referendums until after the consultation period had closed. I indicated at the time that we would hope to deal with them in the week beginning 12 March, and today was originally identified as the date for doing so. However, as has been indicated, as we lost a day because of the ping-pong on the Welfare Reform Bill, we were not able to make as much progress on the last occasion as we had hoped. These debates will now take place next Wednesday, when there will be an opportunity to address the issues around referendums.

It is perfectly reasonable for my noble friend to ask where we have got to with the legislative consent Motion. A Motion was passed in the Scottish Parliament in March last year, which I suspect is the one that our honourable friend Mr Gauke was talking about. I have no doubt that the noble Lord, Lord Foulkes, voted for it, as he was still a Member of the Scottish Parliament at the time. It is also worth pointing out that on the final vote, Mr Alex Salmond voted for it, too, as did many people who are currently members of the Scottish Government. That legislative consent Motion stands until any subsequent Motion is tabled that updates it.

The Government intend to secure a legislative consent Motion from the Scottish Parliament in favour of the Bill—

--- Later in debate ---

[Lord Wallace of Tankerness]

I am not aware of any other degroupings.

[Lord Browne of Ladyton]

My Lords, I thank the noble Lord, Lord Forsyth, for his amendments and for opening this debate. I also thank him for the opportunity to make a speech that will, I hope, over the hours that we will spend on debating these and related issues, be considered to be multipurpose.

I had expected—and anticipated in preparing my speaking notes—the amendments of my noble friend Lord Foulkes to have been regrouped, for maybe the second time, with those of the noble Lord, Lord Forsyth. Therefore, I wrote a note to myself to apologise to both noble Lords for giving a generic response, rather than addressing all the subtleties of the individual effects of their amendments. I do so because this is, ultimately, an issue of principle. I do not devalue all the detailed points that underpin the argument that the noble Lord, Lord Forsyth, put forward about the interesting debates that we could have in Scotland on the referendum and the detail of these specific taxation powers. However, whether we have a referendum on them is an issue of principle, and there are principles that we ought to apply. I will deal with that. I am sure that we will then get to the detail through the revised groupings, or re-revised groupings, of amendments that I have in front of me. The noble Lord, Lord Forsyth, has indicated that the details are exercising him.

My second point is one that I have made before. I deeply regret that timetabling prevented the other place dealing with the detail of these very important issues. The last time that we convened this Committee, we had a very interesting debate on Clause 28— probably for the first time anywhere in the United Kingdom, unfortunately. It is a matter of deep regret that our elected representatives in this Parliament were denied the opportunity for debate by timetabling, thereby denying us a quarry of their position that we could mine to inform our debate. Therefore, when we draw on what we believe is the will of the Scottish people, as expressed by their elected representatives, we draw on information that unfortunately cannot be in the public domain, such as conversations and observations. Some of us have expertise that we have built up over time from watching what is happening in Scotland and knowing, from the conduct of politicians, what the people they represent are telling them. That is deeply unfortunate but it is where we are. There is a bigger issue at stake in the politics of Scotland, but I will come to that strongly later in the debate. We should keep our eye on the prize, which at this time is the union of the United Kingdom. There is a political imperative at the moment that should dominate everything that we do. I regret that we are sometimes forced into undermining that by the way in which this has been handled, which has been deeply inefficient.

I turn to the principle of referendum. I do not believe that there is any constitutional imperative to hold a referendum on the devolution of financial powers to Scotland, as provided for by Part 3 of the Bill, for the following reasons. First, the conclusion of the Select Committee on the Constitution in its 2010 report, Referendums in the United Kingdom, was:

“We do not believe that it is possible to provide a precise definition of what constitutes a ‘fundamental constitutional issue’”.

It is a fascinating publication for the reasons that I am about to explain to your Lordships’ House. The committee did not look specifically at the example of the devolution of financial powers, although it could have because it was in the air. Therefore, noble Lords are entitled to look beyond such a conclusion to test whether what has been described by government Ministers as the largest transfer of financial power from London since the creation of the United Kingdom would be a likely candidate for a referendum.

In looking beyond the committee’s conclusions, we should look at the evidence that was heard, which is deeply instructive. If noble Lords will excuse me, I will go into this in some detail because it is interesting. Before I rehearse some of the evidence, I am prepared to concede that people who listen to this debate may think, on the basis of the expert testimony to the committee, that there is a legitimate view that that evidence tends towards the view that the devolution of financial powers would commonly be considered a candidate for referendum, given that the definitions posited included the following. I will share a number of them with noble Lords.

In giving evidence, Professor Gallagher referred to,

“fundamental questions concerning sovereignty or a major constitutional settlement, especially if they concern steps that would be completely or virtually irreversible once enacted”.

The Institute of Welsh Affairs, in its evidence on page 126, referred to,

“truly major issues of democratic principle—change that alters fundamentally the nature of the state”.

Caroline Morris, who is an expert, gave two definitions:

“Topics ... which directly affect the constitutional make-up and powers of a state”,

and,

“changes to the sovereign powers of a state”.

My noble friend Lady Kennedy of the Shaws gave the following definition:

“Anything that changed the power balances within our democratic system ... anything that in any way redistributed power in a significant sense”.

Professor Bogdanor cited:

“Legislative proposals which provide for a radical alteration in the machinery by which the laws are made”.

Professor Saward referred to,

“significant, encompassing and lasting change in the formal and general rules and rights which locate political authority”.

Professor Graham Smith mentioned,

“anything that changes the dynamic and the relationship between the people and those who are elected”.

All these definitions, which are not mutually consistent, could support the argument of the noble Lord, Lord Forsyth. However, they must all be considered against the backdrop of historic precedent. As the Constitution Committee noted in its analysis, no definition of principle can be extracted from historic precedent.

[Lord Forsyth of Drumlean]

I agree that all those definitions could be advanced and are open to argument, but what about something that has been approved by referendum but which you propose to reverse?

[Lord Browne of Ladyton]

I am grateful to the noble Lord for his intervention. I think that the somewhat delayed intervention by the noble Earl, Lord Mar and Kellie, on the noble Lord’s speech—it occurred long after the noble Lord had stopped speaking, but it was in the nature of an intervention—answered that point, but I will come to that in a moment. I think that I can answer that question.

Although it could be said that matters of significant constitutional change ought to be put to a referendum, many are not. Indeed, there was never a referendum on the Human Rights Act 1998—some people may regret that—the Fixed-term Parliaments Act, the Constitutional Reform Act 2005 or, indeed, if I anticipate the outcome of the debate that is presently taking place, on the future of your Lordships’ House. The House of Lords Reform Bill does not anticipate a referendum on that matter in the next Parliament. Therefore, although there appear to be certain broad principles on which academics and others can give evidence, which indicate what is a good candidate for a referendum, ultimately it seems that it comes down to a political judgment. We appear consistently to have exercised this power on the basis of political judgment. It is for this reason that I do not think we can discuss the noble Lord’s amendments—I anticipate my noble friend’s amendments—in a vacuum from the political environment. We have to defer to the political circumstances that face us during our consideration of this Bill. That is what I invite noble Lords to do.

I suggest that to require a referendum on the devolution of financial powers before the commencement of Part 3 of this Bill would be irrelevant in the present political context. Indeed, I go further—I think it would be irresponsible for the reason that the single fundamental question being posed to the people of Scotland at this time concerns the issue of secession. An additional referendum in this context would only confuse such a debate and distract from the single important question at hand. I understand that the circumstances have changed but we are discussing this matter now and not when we had expected that we would when this Bill was conceived as it emerged out of the Calman commission.

It is important to note that with the exception—it is an impressive exception—of the noble Lord, Lord Forsyth, and his shaky alliance with my noble friend Lord Foulkes, there is no political movement at all for any such referendum. There is no clamour for such a referendum in Scotland. I know that the noble Lord, Lord Forsyth, will say that is because many people in Scotland do not understand the implications of this piece of legislation.

[Lord Forsyth of Drumlean]

I hope I may interrupt the noble Lord again. His speeches are always carefully crafted and well thought through and I am enjoying listening to him. However, when he says that there is no demand for such a referendum in Scotland—I absolutely agree with him that the key issue is whether or not we are going to break up the United Kingdom—I had the impression that the First Minister, the Scotsman, Scotland on Sunday and every newspaper in Scotland were all campaigning that people should have an opportunity to have a referendum on devo-max. To my mind what is in this Bill is devo-max. Indeed, my noble and learned friend the Minister says that in my mind in some ways it goes beyond that. However, there are within the Bill the powers to deliver devo-max. Therefore, when the noble Lord says there is no demand for this in Scotland, I think there is a demand for a referendum on extra powers which are already being delivered by this Parliament, and which people are completely unaware of.

[Lord Browne of Ladyton]

I hope the noble Lord will not be surprised to hear that I anticipated this very point about devo-max. I intend to cover it very specifically. However, I am driven in these arguments by the political imperative of concentrating most of my political firepower on the arguments for retaining the union of the United Kingdom. I have tested every contribution that I have made to this debate against whether or not it makes that retention more or less likely. I ask noble Lords to join me in concentrating their minds on that issue, to look at this matter in the context of the political circumstances that face us at the moment and to make priority choices. In other circumstances I might well have supported the amendment of the noble Lord, Lord Forsyth, but in these circumstances I do not. I am trying to lay out the arguments.

As I was saying, there is no political movement for such a referendum. There is remarkably complete coherence between the parties in Scotland on the view that there is no necessity to seek a further mandate from the electorate as regards a referendum on these powers. Further, as the Calman commission noted, and the noble Earl, Lord Mar and Kellie, has reminded the House, there is an argument contrary to the argument put forward by the noble Lord, Lord Forsyth, that such a mandate has already at least partially been granted by the 1997 referendum on Scottish devolution in which 63.5 per cent of the Scottish electorate agreed with the statement,

“I agree that a Scottish Parliament should have tax-varying powers”.

That was the question, not plus or minus 3p, or what the consequences would be if this power was or was not used—we know the history of that—but whether the Scottish electorate agreed with the statement,

“I agree that a Scottish Parliament should have tax-varying powers”.

In a recent report on a referendum on Scottish independence, the Select Committee on the Constitution agreed with the UK Government’s position—this comes to the point the noble Lord raised about devo-max—that whereas independence is a Scottish question, devolution-max is not solely a Scottish question and proposals for a significant change to the devolution settlement considered under this title must be addressed only once the issue of secession has been clearly and decisively addressed by a referendum of the Scottish people. Therefore, we need to deal with these things in series and we need to keep our eye on the ball as regards the issue which is foremost in Scottish and UK politics at the moment in terms of the constitution. It is within this public and political discourse that we need to consider the priority of a referendum on the devolution of financial powers. I argue that the conclusions of the Select Committee are of precise relevance to this question. A referendum on the devolution of financial powers as proposed by Calman, and elaborated in this Bill, would in my view be politically misguided and publicly rejected prior to a referendum on devolution.

These are powers which I have said repeatedly the Scottish people want. There is significant evidence of that. I regret that I am not able to refer noble Lords to detailed debates in the other place to advance that argument but I know from extensive consultation with Scottish parliamentarians and Scottish people that the Scottish people want these powers. Much more importantly, they want these powers now because they want them to address issues which are important to the Scottish people now and were made obvious as a priority to them by yet another performance of the Scottish economy that has reversed the previous trend of devolution over the past few years in that we are now behind the rest of the United Kingdom in unemployment and growth. For almost all the period of devolution in Scotland the opposite situation applied. It is only since the SNP has taken control of government in Scotland that we have got into a situation whereby we are falling behind the rest of the United Kingdom as regards unemployment and comparative growth of GDP. Therefore, these powers are needed now.

The future development of the devolution settlement, be that full fiscal autonomy or whatever—there are all sorts of titles—may well ultimately be a question for a referendum, but it is a question that needs to follow the broader one of Scotland’s future membership of the union. In my view it cannot coherently be proposed before that. Consequently, these Benches cannot support the noble Lord’s proposed amendment of the Bill. I apologise to my noble friend Lord Foulkes far more in advance than I would normally have to do as we will not support his call for a referendum, no matter what the motivation for it is, when we come to that part of our debate in Committee.

[Lord O'Neill of Clackmannan]

I should like to follow my noble friend and say that I do not support the amendment. I had the privilege of being a neighbour of the noble Lord, Lord Forsyth, for many years. I have seen him exercise political skill across a broad spectrum, but on many occasions not without a degree of cynicism. I have to say that his amendment today is just a cynical opportunity to attack the principle of taxation. The idea that referenda have anything of any substance to do with this is just a bit of a smokescreen. The fact of the matter is that a referendum agreed that a Scottish Parliament would have tax-raising powers. The powers have never been exercised. Do we therefore need a referendum to take away powers that we have never used? I do not think so. There is a case, which has been made quite well by the noble Lord, regarding the clumsiness of the manner in which this taxation will be imposed. Were it to be imposed in its present form, it would probably be grossly unfair to too many of the poorest people within Scotland. That is the issue.

Let us not bother about the referendum question. Let us just question whether or not taxation in the form that is being suggested is the most appropriate way of trying to develop a sense of fiscal responsibility in a Scottish Parliament—whether it is separate or devo- maxed, or even with its present fumbling, incompetent and profligate way of expenditure.

--- Later in debate ---

[Lord Forsyth of Drumlean]

My Lords, we have had an interesting debate and I am grateful to everyone who has spoken. I seem to be somewhat isolated on this issue. I worry about the idea that the tax-raising powers in the Bill will increase the accountability of the Scottish Parliament. As I am sure my noble and learned friend will confirm, had those powers been in place and exercised since 1998 when the Scottish Parliament was established, the block grant which the Scottish Parliament had available to it would have been reduced by many billions. The exercise involves substituting a slice of the Barnett funding with funding that comes from the tax base. If public expenditure is growing faster than the tax base, the result is that far less revenue is available.

Tempted as I am to support the proposals because they would have had the effect of squeezing public expenditure in Scotland substantially and, I suggest, avoided considerable waste and the policies which have resisted reform of the public services, the notion that they would increase accountability needs to be looked at very carefully. It will squeeze the resources available to the Scottish Government over time and, in doing so, put pressure on them to use the tax powers, which by the nature of the gearing effect will result inevitably in Scotland becoming the highest taxed part of the United Kingdom. I venture to suggest that at that point, many people will say: “Why weren't we told this? Why didn't we know about it?”. If I am still around, I will take great pleasure in saying: “I suggested that there should be a referendum so that people had a chance to consider these arguments and know what they were being committed to”.

I entirely accept that the political classes and the political establishment have got together in the worthy cause of stopping the Scottish nationalists getting control of the Scottish Parliament and taking us towards independence, but I have my doubts about how it will increase accountability. I suggest that my noble and learned friend think about this again. If a referendum was held—I assume that those on both Front Benches are confident that the Scottish people would vote yes to these tax-raising powers, although I suspect that their opposition to the referendum may lie in their doubt that they would—there would be clear consent for the exercise of the powers.

The noble Lord, Lord Browne, and the noble Earl, Lord Mar and Kellie, suggested that a mandate was granted by the referendum on the original Scotland Bill. The noble Lord is quite right to say that the question was:

“I agree that the Scottish Parliament should have tax-varying powers”,

but those tax-varying powers were defined in the referendum campaign as being limited solely to 3p on the basic rate. This is far more than tax-varying powers. This is the introduction for the first time of a new Scottish rate of income tax. We are not talking about tax-varying powers here, we are talking about the ability to set a new rate of income tax that the Scottish Parliament chooses.

My noble and learned friend talks about opinion polls and surveys. I venture to suggest that if you go out and say, “Do you think the Scottish Parliament should have more powers?”, that is a bit like saying, “Do you love your mother?”. Of course people are going to say yes, the Scottish Parliament should have more powers. If you ask them, “Do you think that Scotland should be able to be made the highest taxed part of the United Kingdom?”, I think they might have a different view. If you ask them, “Do you think that the Scottish Parliament should be able to take money out of your pay packet?”, you might get a different answer.

[Lord Browne of Ladyton]

It is an important part of the noble Lord’s argument that there is an inevitability of Scotland becoming the most heavily taxed part of the United Kingdom and that that will be done against the wishes of the Scottish people, who will never be consulted about it. We intend to have general elections in Scotland for the Scottish Parliament. This issue will come to the fore when we get to the next group of amendments, but the issue of the rate of tax will be decided in general elections by the Scottish people through manifestos put before them, just as it is for the rest of the United Kingdom.

[Lord Forsyth of Drumlean]

I venture to suggest that I cannot think of any way in which any politician of any party, with the setup as it is in respect of the taxation powers and the way that the block grant will be calculated—subject to later review, but even assuming that Barnett survives—and given the levels of public expenditure and the position we are in, would be able honestly to do other than to tell the voters that income tax will have to go up. The numbers simply do not add up.

Let us just take the promises being made by the First Minister. On the whole, if you promise people free health care, free prescriptions, free bus travel, free nursery care and free this, that and the other and you do not have the money to pay for it, whoever comes in will find it very difficult to reverse that. Those are all very expensive requirements. If a Chancellor of the Exchequer gives the First Minister in an election year a bisque so that he does not have to cut public expenditure to meet the budget deficit requirements and the cuts have to be made in the subsequent year, you are building up very substantial gaps. I said that the gap on the budget deficit was about £3 billion. A tax-varying power where one penny on income tax raises merely £400 million will not get you very far in that respect. It is a delusion. If anyone in this House believes that the power will be used to reduce taxation, I think they are misguided.

I entirely agree with the noble Lord that we must be careful to focus on the issue of independence. He is absolutely right about that. Where I believe that the Bill is playing into the hands of the nationalists is that they are saying: “Look, you cannot play golf with one club. You cannot run an economy simply by having limited tax-varying powers that relate to one part of the income tax yield. You need corporation tax powers so that you can get growth so that the yield goes up”. That argument has a certain degree of logic to it—if not, altogether, a degree of fantasy.

Some of us remember that the First Minister interrupted my noble friend Lord Lawson’s Budget, scandalised the House of Commons and was thrown out of the House. We are told now by the nats that that was done to protest about the poll tax. Of course, he interrupted to say, “That is an absolute outrage” when the Chancellor, my noble friend Lord Lawson, announced a reduction in corporation tax and income tax to the same rate of 25 per cent. So there is a fantasy here. We should be absolutely clear what we are doing here. We are committing Scotland to a position where it will have a higher rate of income tax. I am prepared to challenge anybody. Once these powers are in place and are being used—after 2015—I will be astonished if I am wrong about that, in the way that the noble Lord, Lord Robertson of Port Ellen, was wrong when he said that the Scotland Act would kill nationalism stone dead.

--- Later in debate ---

[Lord Browne of Ladyton]

It would be helpful if the noble Lord could clarify the following matter. If in any set of circumstances a serving member of the Armed Forces who is ordered to serve and live in Scotland is thereby made liable to a higher rate of income tax, will the service of which he is a member compensate him for that difference?

[Lord Lyell]

Before my noble friend replies on that point, perhaps I may say that I also had it in mind. Indeed, 18 miles from my home, and not far from the place of birth of my noble friend Lord Forsyth, is 45 Commando at Arbroath. I took the trouble to ring the electoral office in Angus. I was told that servicemen can vote in Westminster general elections—not Scottish elections—when they nominate their place of residence. Is my noble friend saying that the Government have consulted him, the Treasury and the Scottish Government and are laying down a new law whereby servicemen will be taxable even though they cannot vote in Scotland? Of course, the Scottish Government would like to get more tax from servicemen, even if the latter are not getting a vote there. Will my noble friend please check that?

--- Later in debate ---

[Lord Forsyth of Drumlean]

My Lords, this has been a very illuminating debate. I have to say to my noble friend that this principle is bonkers. It says that if a Government take people out of tax by raising the threshold because they think that will help with welfare policy and encourage people to go to work because of the effects of the why-work taper, they follow the example that was given by the noble Lord, Lord Kerr, or they cut the top rate of tax—would that they would in order to generate growth and get the economy moving again—Scotland gets a cheque and gets the benefit. So a Treasury Minister trying to find the money to raise thresholds does not just have to find the money to compensate for the loss of receipts but has to send a cheque to Scotland to compensate it. It makes “We’re all in this together” rather strange because we are not all in this together. There is a different rule.

It shows the paradox of this whole Scotland Bill. If anything, it almost makes me become a devo-max person. It almost makes me think that we should go for fiscal autonomy, because it is absolutely bonkers. It is saying that this is not about giving the Scottish Parliament tax-raising powers and accountability for what it does but about taking the block grant and pretending that it is a tax-raising power and, when the tax-raising power does not quite work because of changes in the tax system, topping it up. This is just about recreating the block grant, calling it a tax-raising power and dressing it up as accountability. That is what this principle means. I have studied this quite carefully, and I think that if this principle is to be applied, it is quite shocking that it is not in the Bill, because it is fundamental. It changes the whole architecture. Not many people follow this subject, but I do not believe that among them there is an understanding that changes in the position in England will be compensated for by expenditure north of the border, if, indeed, that is the position.

I would like to give an example from ancient times when I was in the Scottish Office. In England, water was privatised; in Scotland, it was not. The result was that there was no expenditure on water services because they were provided by private companies in England. The result was that the Barnett consequences did not come to Scotland. Under the ancien regime, we did not get an extra grant from the Treasury to compensate us for not doing what would have been the sensible thing, which was to privatise water services in Scotland. This is wholly new, although perhaps I am wrong.

[Lord Browne of Ladyton]

I enter this fantastic debate, as it develops, with some trepidation. It has perhaps been less illuminating than it could have been because, with respect to the noble Lord, people are using terms very carelessly. This is not a comparison between taxation in England and in Scotland; it is a comparison between decisions that are made for the UK and the consequences of this provision being devolved to Scotland.

I am not going to go any further because if I try to extemporise I am in danger of confusing this debate even more. It may be better if noble Lords wait to see whether the Government write to show how this will work, as they intend to. It is far from the case that those who understand how this works are surprised by this no-detriment policy. This no-detriment policy is actually at the heart of what we are doing because it is about accountability for an element of the tax-raising power, and that has to be sustained. Therefore, decisions made by the UK Government for all of the UK that undermine that accountability have to be compensated for in a balancing mechanism.

I go no further than that. I keep it very general. However, many of these examples that have been used to try to explain what is going on here are very far off the mark because they are comparing apples and pears. This is about what the UK Government do and the effect of that on the principle that we are trying to establish in this Bill.

--- Later in debate ---

[Lord Forsyth of Drumlean]

I am doing my best. I am very worried, because I am also tempted to divide the Committee, if only for the pleasure of seeing the noble Lord vote against his own amendment. He started off making the case for his amendment and then seemed to argue that it was not appropriate.

The noble Lord, Lord Browne, was right to warn us that the world has moved on and that referenda are dangerous in the context of taking our eye away from the main issue, which is independence. All this chat about devo-max and additional powers puts us exactly where the separatists want us to be. The last thing they want us to discuss is what the consequences of independence will be for Scotland. My party leader contributed to that by suggesting that we could look at that after the referendum. Others have said the same, and I am sure that the right focus is to do that.

However, the Bill has been caught out by the passage of events and it does not seem unreasonable for the considerable tax powers to be subject to a referendum. I was therefore attracted to the noble Lord’s amendment. However, I do not for the life of me understand his argument that that question, given its limited scope, gives permission to go down the road of fiscal autonomy. At the very least I would like the opportunity to see some numbers. The speech of the noble Lord, Lord Sewel, was right on the button. It went to the heart of the difficulties being created by people embracing concepts and policies without looking at the numbers, the arithmetic and the fiscal and financial consequences, which are subject to assumptions.

The other day, someone in my party—an accomplished policy wonk—was challenged with the notion that the Scotland Bill and the move towards taxation would inevitably result in discussion of the Barnett formula. He said: “Oh, there is no way that people will ever take that money away from Scotland. We are safe”. We must not make these assumptions. These are deep waters. I am not with the speech of the noble Lord, Lord Foulkes, in support of his amendment, but I think that the amendment is reasonably sensible. We should be guided very much by the pertinent point made by the midwife of this whole exercise, who must feel like someone whose child has turned into a delinquent adolescent. We have to find a way of gripping the issue. Whether it is a federal or some other solution I know not, but I am sure that we should not distract attention from the referendum on the future of the union.

[Lord Browne of Ladyton]

My Lords, almost everyone who is in the House now will recollect that when I last spoke at any length in Committee it was on the group led by Amendment 53. As I had expected that that group would be much bigger and would include my noble friend’s amendments, I told the Committee that it was my intention to address those in anticipation. I had intended to restrict my remarks to referring your Lordships and my noble friend, in particular, to the speech I made earlier, but he has drawn so much support for his greater agenda from one part of that speech that I think I should pause for a few moments and remind him of what I said and the context in which I said it. It will then be open to him, of course, to draw any conclusions he chooses. I feel like a government Minister at this point, repeating words.

I remember the shock when I said, in making a broader argument about the political circumstances that informed the decision that we needed to make on ordering our priorities in terms of a referendum—no doubt the Official Report will correct me if I am wrong —that, as the Calman commission noted, a mandate had at least partially been granted by the 1997 referendum on Scottish devolution. It was a partial mandate, in one part of a broader argument.

I have probably gone further in explanation and beyond my prepared script than any Minister has in this House today. Perhaps I was unwise to do that. However, my noble friend is well able to read the rest of the context of that shortened quotation. If that gives him the comfort that he seeks—should there be any future Labour Government within a timescale that would allow him to resurrect his ambition for full fiscal autonomy—then I would be surprised.

--- Later in debate ---

[Lord Sassoon]

My Lords, we need to make sure that UK expenditure, including Scottish expenditure, continues to be controlled in a way that imposes appropriate disciplines. The purpose of the Bill is of course to give the Scottish Government more responsibility for a proportion of their tax-raising powers, and that is linked to the expenditure. However, the expenditure having been agreed, it is appropriate that money from taxation should continue to flow as it does now into the Consolidated Fund, subject to the current regime under the Scotland Act 1998, which permits the Treasury, after consultation with Scottish Ministers, to designate receipts that go to the Consolidated Fund.

The devolved Administration in Scotland is currently required to surrender receipts from fines, forfeitures, fixed penalties, dividends on public dividend capital and most interest collected by Scottish Ministers. So there is currently a provision to recognise the flow of funds between Scotland and the UK Consolidated Fund. At the moment, the vast majority of the income in question is derived from fines and fixed penalties, which the Office for National Statistics defines as analogous to taxes. That arrangement is consistent with the Government’s view that taxes that are not devolved should be collected centrally and then redistributed across the UK. We continue to believe that, with the exception of what is explicitly devolved, the revenue should flow into the Consolidated Fund and that expenditure controls should otherwise continue to be exercised on the current basis.

There are much wider questions to be asked about end-year flexibility in individual departmental expenditure in the rest of the UK, and there is certainly a debate to be had—it is well outside the scope of the Bill—on the appropriateness for all government departments across the UK to carry forward expenditure from one year to another. The Treasury rules on this have changed over the years. I cannot remember in which year it was, but health expenditure got out of hand in the latter stages of the previous Government. I cannot remember if it was when the noble Lord, Lord Browne, was Chief Secretary. The noble Lord is indicating that it was, so he will know very well the difficulties of any regime under which expenditure is carried forward.

I do not want to be dismissive of my noble friend’s point, because there is a real issue here.

[Lord Browne of Ladyton]

For the purposes of clarity, my recollection is that the problem arose before I became Chief Secretary to the Treasury. However, it was brought under control when I was Chief Secretary.

[Lord Sassoon]

If my memory serves me, it was got under control by ending the system of end-year flexibility for departments to carry forward expenditure. There is an important debate to be had about this, but locking up funds in the Scottish Consolidated Fund, as a sort of back-door way of addressing the question of what should or should not be carried forward, which applies to the whole United Kingdom, is not the appropriate way to deal with this. However, I recognise that there is a broader issue here which the Treasury has wrestled with over a number of years.

--- Later in debate ---

[Lord Browne of Ladyton]

My Lords, I did not expect to be on my feet at 10 o’clock at night contributing to the debate on this amendment. The issue that has raised its head in our discussions in this Committee over the course of the day is the apparent failure to organise its affairs in a way that is at least predictable if nothing else. I will not report all the conversations that I have had because apparently it would be a breach of the protocol of the usual channels. I am not part of the usual channels, although I have been dragged into them repeatedly.

I have tried to get a predictable order into the way in which these matters are dealt with so that people could have that communicated to them. Over the course of the day—as, indeed, over the course of this Committee—I have had clear understandings that matters would be dealt with in a particular way only for them to be changed, sometimes within minutes, sometimes within hours. There was a flurry of activity just before 10 o’clock, which was far too little too late, in an endeavour to manage the timing of affairs in such a way that would be respectful not only to the contributions that needed to be made but to those who serve and support this House and your Lordships and that would allow them to make sense of the way in which this work is being done.

I have now given up, by and large, trying to reach any kind of agreement on how matters can be dealt with, and I am extremely disappointed that my best endeavours have not been able to introduce some sort of sense into the proceedings. It was my experience in another place that if there were agreements and people stuck to them, and they were communicated throughout the House, then, by and large, we could control the business. I am defeated by the way in which business is organised in this House. I have tried to achieve that repeatedly and it has been a great disappointment to me.

Turning quickly to the amendment because of the time—and, because of the rules of the House, I understand that this time of itself generates another momentum in this House that is unwelcome—I am grateful to my noble friend Lord Forsyth for his comments and for the amendment.

[Lord Forsyth of Drumlean]

It is in the name of your noble friend Lord Foulkes.

[Lord Browne of Ladyton]

I am sorry; it is. I have been here too long now; I am too tired and that is it. It is an indication of where we all are. It is probably why we should not debate matters as important as this after the hours we have been on our feet, deprived of food, in here.

In any event, my noble friend has done us a favour: he has exposed an issue that is of importance to the people of Scotland. With all due respect, it is important not because it is an issue of controversy—many issues of controversy are not important—but because it is important to the people of Scotland. It is important for this reason: good governance in our constitution depends on the impartiality of the Civil Service. Those who have had the privilege and experience of serving in the Executive know—we all know—that the Civil Service is there to serve the Government.

Of course, as the noble Lord, Lord Forsyth, identifies, on some occasions that leads to accusations of politicisation. That is inevitable and I can think of many such accusations during the time when we were last in government. They were always rebuffed and arguments were always made that the Civil Service was simply doing its job. However, there was always a sense that when these issues got to a certain pitch, the Civil Service itself ensured continued impartiality. The nature of the Civil Service’s relationship to the constitution requires, in a sense, that the service polices itself. A number of distinguished former civil servants, including former Cabinet Secretaries, are Members of your Lordships’ House. It is a great pity that none of them is here to contribute to this debate and to explain to those of us who have not been civil servants how these issues ought to be dealt with in the Civil Service codes; and whether the experience in Scotland, and the apparent failure of the Civil Service to be able to respond to these concerns in a way that reassures people that this impartiality is being protected, has been run properly or not.

[Lord Forsyth of Drumlean]

I agree with the noble Lord that it would have been marvellous to have contributions from the noble Lords, Lord Butler and Lord Armstrong, but I should think they are probably making their cocoa and going to bed. The reason that we are not able to devote attention to these things is because we seem to be engaged in this sort of endurance exercise. I must say that carrying out this business, at this time of night, in this way, is the most persuasive argument I have heard for devolution since we started discussing the Bill.

--- Later in debate ---

[Lord Forsyth of Drumlean]

My Lords, some months ago I tabled Amendment 74, which would provide for some kind of sanction should Ministers in the Scottish Parliament act in a manner that is ultra vires. I was concerned that, following the considerable election victory by Mr Alex Salmond, there seemed to be something in the rhetoric to suggest that, because he had won an election, he had a mandate to do what he liked in the context of, for example, holding a referendum; and that if a referendum on independence was not within the powers of the Scottish Parliament, he had a mandate from the Scottish people. As I have reported before in this House, I understand that it was suggested to my right honourable friend the Chancellor of the Exchequer that if a referendum was properly conducted and held under the legislative provisions of Westminster, the First Minister would boycott it and instruct his officials to do so accordingly.

This seemed to highlight the fact that checks and balances on the behaviour of Ministers and Members of the Scottish Parliament might be lacking. Certainly, I know that the former Prime Minister Mr Tony Blair got into trouble for comparing the Scottish Parliament to local government. However, as Shirley Porter discovered to her considerable discomfort in Westminster, very serious sanctions apply in local government if elected members operate beyond their powers. I have tabled this amendment to tease out whether Ministers think that some kind of sanction or control would be appropriate.

I am sure that that applies to civil servants who are accounting officers and can be held to account by the Public Accounts Committee. It could be said that this does not apply to Ministers of the Crown, but there are sanctions that can be applied to them. I think we have lost the noble Lord, Lord Sewel. I may be mistaken but I do not think that the original Scotland Act provides for any sanction. I would be most grateful if my noble and learned friend could point me in the direction of some sanction, if indeed there is one.

This measure is not a means of achieving political control: rather, it follows on from the debate that we have just had. It is meant to ensure that what have been long-standing and well regarded conventions are accepted and operated, and that there is a sanction if that is not the case. I beg to move.

[Lord Browne of Ladyton]

My Lords, initially I had no sympathy at all with this amendment. I think that is a consequence of political conditioning because I am old enough to be of that generation in politics for whom the imposition of surcharges has a certain resonance that makes one react against them. I do not intend to go into all the reasons for that but those who are old enough to remember surcharges, or the threat of surcharges in the politics of Scotland, particularly in local government at one stage, may well remember why that is the case.

Secondly, I instinctively believe that the combination of audit and a PAC according to the Westminster model of government is the appropriate way to deal with these issues. Interestingly, today the Public Accounts Committee, under the leadership of Margaret Hodge, appeared to challenge elements of parliamentary accountability and called for powers to be developed that reflected the changed way in which we deliver services. Margaret Hodge made a very interesting speech today about that issue, which arose out of the controversy associated with the evidence given by civil servants in HMRC about tax deals.

For those two reasons I was instinctively opposed to this amendment because I think we have a very valued and flexible constitution in this country that can adjust to circumstances. Indeed, I have faith that the Auditor-General in Scotland and Scotland’s own accounts committee should be able to handle these issues, and that the appropriate sanction will be available. The appropriate sanction is the exposure, principally to the electorate, of what those in charge of public spending do with that spending. That is the traditional method by which we redress these issues.

I am told by my noble and learned friend that there may be ways of imposing financial penalties on members of the Executive who behave in certain ways, but I do not know the detail of that and I do not wish to speculate on it at the Dispatch Box. I listened to the noble Lord argue for his amendment in a measured way, anticipating that we would probably be able to resolve the example he gave of an improper use of funding for a matter that was outwith the vires of the Scottish Government. It is almost certain that we will find a way of transferring the power—even if temporarily—to the Scottish Government to run the referendum. I would like them to do that more quickly than they plan to do, but I am happy to respect their electoral mandate to administer and run that referendum, provided it is run in an impartial and fair way. I do not think, therefore, that the concern that immediately generated the amendment is likely to persist.

To the extent that the noble Lord raises an issue that will continue beyond devolution in Scotland, this is a matter to which I would like to hear the Minister’s response. Whether I veer towards support for some form of statutory regulation of behaviour, with consequences in the longer term, will be a function not just of the reasonableness of the noble Lord’s argument for the amendment but the response that I hear from the noble and learned Lord.

Scotland Bill

Lord Browne of Ladyton Excerpts

Tuesday 28th February 2012 Lords Chamber

[Lord Lyell]

My Lords, I declare an interest as honorary patron of another Titan of the Scottish football game, which I call “Athletico Forfar”—Forfar Athletic. I get a trifle worried when I hear outpourings in the media in Scotland along the lines that something must be done to help Rangers Football Club. A great football club it may be, but I wonder how it got into that condition. The answer to that can wait, but perhaps my noble friend could write to me with an answer to the following question. Why in the winding up of a football club such as this—perhaps under Scottish insolvency law; I am not sure—is Her Majesty’s Revenue and Customs not a preferred creditor? South of the border, HMRC is an ordinary creditor. However, I had understood that north of the border HMRC was a preferred creditor and would therefore get the first bite in relation to the sums owing. If my noble friend could write to me on that at some stage, I should be most grateful. I thank him for his patience.

[Lord Browne of Ladyton]

My Lords, for all the reasons that I set out in my first contribution to this Committee when it convened some time ago to consider the Bill, I want to see this Bill passed. Consequently, I support the devolution of the tax powers to the Scottish Parliament and I want to see Clause 29 stand part of the Bill because, without that mechanism, the amendments relating to the commissioners for Revenue and Customs will not be able to work. I do not intend to delay the Committee with any debate or argument about what I think is genuinely a technical part of the Bill in terms of the mechanism for the implementation of its provisions.

My second point is by way of a bit of advice to the noble Lord, Lord Sassoon, whom I welcomed to the Committee earlier. He had an interesting baptism in the Committee. I am sure that he enjoyed the hour that he was at the Dispatch Box engaging, as he did, with my noble and learned friends and noble Lords around the Chamber. If he thought that that had a distinct quality about it, then he ain’t seen nothing yet if he succumbs to the invitation to engage in a discussion about the position of Scottish football clubs. We have already had a reference to behaviour on the internet with cyberattacks and so on, but the nature of the comments that will be unleashed on the internet if he is unwise enough to be attracted into debate and discussion about the health or welfare of any Scottish football club will be worse than he has ever seen.

[Lord Maxton]

Does my noble friend agree that perhaps that is why Mr Alex Salmond has decided that he is switching his loyalties to rugby?

[Lord Browne of Ladyton]

Taking my own advice, I am utterly reluctant to express any opinion that is even marginally related to any football club in Scotland. Most people in Scotland know where my allegiances lie, and engaging in this debate would make it even worse for me. I apologise to my noble friend Lord Foulkes, who has been engaged in Scottish football. His support for Heart of Midlothian Football Club is well known and he has made an important contribution to Scottish football over the years. However, I think that he probably has more scars on his back from that time than he has from any political confrontations in Scotland. I just give the Minister a bit of gratuitous advice: he would be wise to take these matters away and perhaps write some very carefully worded letters to my noble friend and his noble friend if he thinks that these questions need answering.

I want to raise a point that I mentioned in my contribution to the debate on the previous group of amendments. I do this by reference to my contribution to the Second Reading of this Bill, which took place on 6 September 2011. During my contribution to that debate, I asked about the progress of the high-level implementation group and the joint Exchequer committee, which are complementary elements. The joint Exchequer committee, led by Ministers, and the high-level group of civil servants—from both the Civil Service that supports the Scottish Executive and the UK Civil Service—are to work out the process and deal with the challenges and issues in preparation for the implementation of the provisions that we have been debating when this Bill becomes an Act, as I hope it will.

I raise this because I have a suspicion—and I put it no higher than that as I share my motivation with the Committee—that perhaps from the Scotland side of this process of engagement there is less willingness to engage, and less capacity to engage, in the preparation for these issues than we will need if we are to meet the expectations that we all share that these devolved powers will be available to be used for the benefit of the Scottish people, broadly by about 2015. I do not expect the Minister to make any comments at the Dispatch Box about willingness, but I would be able to deduce from the detail of his answers whether there has been that willingness.

I raise this issue for one very good reason. There is an impression in Scotland that the Scottish Government are anxious to get their hands on these additional powers. In fact, they want more. It is not sufficient to say to the Scottish people that you want these powers; you have to explain to them what you are going to do with them when you get them and you have to convince the Scottish people that you are preparing yourself for these powers and for the use of them. I went on at some length at the beginning of this Committee about what I thought was happening in Scotland, and there was convincing evidence that the Scottish Government were falling down in all of those respects.

Therefore, can the Minister tell the Committee not just how many times the high-level implementation group has met but what progress is actually being made? Even if it has to be described generically, I will be satisfied by that, but I will keep pressing as long as this Bill is before this House to get more detail. What progress is being made to prepare the structure in Scotland to receive these powers or any powers that relate to the raising of taxation?

[Baroness Liddell of Coatdyke]

I apologise to the Committee that I was not present through the earlier parts of the discussion of Clause 29, but my noble friend is making one of the most critical and crucial points in relation to these tax-raising powers. I would be interested if, when the noble Lord, Lord Sassoon, replies to him, he could put some figures on to the costs of implementation. He will know well that one of the essential ingredients of analysing the effectiveness of any taxation is the cost of collection. In this case, it is not just the cost of collection that we need to know about; it is also the cost of disaggregation of HM Revenue and Customs and the cost to the overall UK taxpayer, not just the Scottish taxpayer. If the noble Lord does not have those figures available at the moment, I would be grateful if he could give them to us in due course.

[Lord Browne of Ladyton]

My noble friend Lady Liddell—through me as a conduit—raises some very interesting questions for the noble Lord. I expect that, because of the nature of the amendments in further groups, we may get an opportunity to explore in more detail the issue of the cost of implementation of these provisions and of who should bear that cost. I will be interested to hear the Minister’s response to my noble friend’s very pertinent question.

I have dealt with the high-level implementation group. I am interested not only in how often it meets but in what it does and in whether we are making genuine progress toward creating the infrastructure that will be necessary for Scotland to receive these powers. I have said before that almost all members of the Scottish Government voted in the Scottish Parliament for these tax-raising powers. Therefore, I expect them to be at least beginning the process of consultation with the people of Scotland on how they intend to use them. If they are to be ready to use them by about 2015, and if they are to give the people of Scotland a level of consultation that devolution has conditioned them to expect, they should be beginning to draft the documentation to put before the Scottish people that explains how they intend to use the powers.

It does not matter whether this is devo-plus or devo-max. Whatever powers the Scottish Government have in relation to tax, they should be getting ready to implement them. As I said earlier, there is an extraordinarily interesting debate and discussion to be had in Scotland about how stamp duty land tax could be used to help to inject energy into the economy in different parts of Scotland. I am not an expert in these areas, but I know from representing for many years a constituency in Scotland that using taxation revenue in a more localised way at least has the potential to generate economic activity. I would like this explored further. If the debate and discussion reveal that it cannot be used in this way, at least that would be a conclusion.

There are two aspects to this. First, there is the engagement between the UK and Scottish Governments and their respective civil servants on planning for this. Secondly, there is the question of fitness and preparation, and the condition that the Scottish Government are putting themselves in to exercise any devolved taxation powers. I see no evidence of any of this in Scotland.

I turn to the joint Exchequer committee, about which the noble Lord and I have already had an exchange. I asked about the committee at Second Reading and was told that it was anticipated that it would meet for the first time on 27 September. My earlier intervention implied that I thought that that was a bit late when one considered how long the process had been in gestation and how long the Bill spent in the other place and here—but I had to live with that. The committee met on 27 September. The noble Lord implied that when it met it made progress on some issues that were aired in the debate on the previous group of amendments, which dealt with some of the challenges that people had identified.

My information, which was provided very graciously by the Scotland Office, is that the committee met and there appeared to be some agreement on a set of principles on the block grant adjustment mechanism. Apparently, three principles were agreed that will apply to the mechanism for the adjustment. The first is fairness. It is not defined, but we all know what it means. The second is resilience in different fiscal circumstances. The third is the avoidance of unintended consequences, including the transfer of resources one way or another. It may be my fault, but the principles do not tell me very much about the nature of the agreement. They smack a little of motherhood and apple pie and do not seem to engage with some of the difficult and challenging issues that the devolution of tax powers to Scotland will inevitably generate, some of which we have already debated.

Certainly, if the committee is not to meet again for another six months, unless the high-level implementation group is drilling down into some of these difficult issues and starting to display a level of competence and ability in dealing with the infrastructure that is necessary for implementing this, these meetings of the joint Exchequer committee are not going to make very much progress. Before this House gives its approval to this Bill and it becomes an Act—I fervently hope that it will and I will do everything in my power to achieve that—I ask of the Minister that at least we spend some time getting some sense and some idea of whether Scotland, its Government and its Civil Service will be in any shape to actually use these powers if and when we pass them.

--- Later in debate ---

[Lord Maxton]

That is very much so and it was quite interesting, as I listened to the debate earlier on taxation, that the Scottish Government, led by Alex Salmond over the past—what is it now?—three or four years, have not allowed local authorities to increase their council tax. They have put a cap on it, so they have in fact restrained taxation at a local level. My noble friend is quite right. They have actually reduced the democratic rights and responsibilities of local government, whereas what ought to have been the next step was to say, “We have devolved power to a Scottish Parliament for democratic reasons. We now need to devolve further down, to give more democracy to our local communities and our people to take the decisions at their level that need to be taken at that level”. That to me is what devolution is about. It is not about independence; it is not actually about nationalism or nationality at all. In fact, nationalism has been the bugbear of devolution, not the natural progression of it. Therefore I support my noble friend's amendment, which would put “devolved” into this Bill.

[Lord Browne of Ladyton]

My Lords, I had not intended to speak in this debate for the simple reason that I do not support the amendment and I feel that I am destroying my relationship with my noble friend Lord Forsyth bit by bit in a salami-slice fashion.

[Noble Lords]

Oh!

[Lord Browne of Ladyton]

Sorry, I meant my noble friend Lord Foulkes. Maybe I should start again.

The reason I do not support the amendment is not that it gives us an opportunity, as my noble friend Lady Liddell of Coatdyke has indicated, to celebrate devolution—I intend to do a bit of that myself—nor that it created the opportunity for what I thought was an excellent contribution from my noble friend Lord Maxton on the reasons for devolution and why we should support it in principle. But over the course of this Parliament, I have been surprised by the ability of people to make the most detailed and engaging speeches about the concept that has become known as localism while at the same time resisting devolution. I do not really understand how people can hold those two concepts together in their head, as localism is just a form of devolution. As my noble friend Lord Maxton has suggested, we ought to start looking at the powers that we as politicians in government of any description exercise over people. We should look at the appropriate level to exercise them that is relevant to people. Given the experience that the political classes have had in the United Kingdom over the past few years of the deterioration of their relationship with the people they govern and legislate for, getting their relationship with the people of the country back would be very helpful.

I am a passionate supporter of devolution. I do not have anything like the history that some of my noble friends and other Members of this House have, but I have been committed to it for the whole of the shorter political life that I have had, and I was committed to it in my membership of the Labour Party before I had a public life in politics. At some stage in this debate we need to move away from arguments about what other people are doing or personalities—I include the noble Lord, Lord Forsyth, in this; he ought not to be the manifestation of a particular type of politics that we define ourselves against, any more than we should be obsessed by what other people are doing—to a collective narrative for devolution and for the union that describes the sort of United Kingdom that we want for the young people of today in Scotland and their future. That will be, as the people of Scotland demand, a Scotland in which there is significant devolved power, exercised by a Parliament that they elect independently of the United Kingdom Parliament.

We have to recognise that whether we have conditioned people into that expectation because of their dissatisfaction with the previous settlement and the sense of disfranchisement that there was between the people who governed them and the exercise of their votes, whether we have conditioned them into it by their expectations of devolution, or whether they have just been conditioned into it by their espousal in significant numbers of the concept of nationalism, it does not really matter what the motivation is—that is where the people of Scotland are. The sooner we get a collective narrative that describes the sort of Scotland that we want our children or our children’s children to live in, and what powers the people who govern them will have, how they will be able to use them and how they will be accountable, the more chance that we have of preserving the union. I passionately believe that the best way of describing that is in the context of the union.

I come to the issue of the use of the word “devolved”. The people of Scotland do not actually need that word attached to anything. They understand that their Parliament is a devolved Parliament and the Scottish Government are a devolved Government. Whether or not the people who happen to have charge of that Government or that executive power for a particular period have other ambitions and behave in a particular way, as they do, that is designed to give some alternative impression, the people of Scotland are not fooled. The people of Scotland want an Executive who address the issues that Scotland faces, which are manifest to anyone who lives there. We have problems in relation to unemployment, particularly youth unemployment, health, the abuse of alcohol, sectarianism and a lot of issues that have their roots in decisions made by previous generations, such as the movement of people, the death of economic drivers, changes in economic circumstances and the movement of jobs from these islands. There is a whole series of things, over many of which we have not had any real control.

Of course, the people of Scotland do not want a First Minister who is more interested in consorting with people who give the impression that he is somehow much more important than he is. They do not want that and they see through it. We do not need to spend much time describing all that. However, they definitely want politicians who can address the issues and challenges of their everyday lives. They want people to explain to them why these issues are best addressed in the context of the United Kingdom, wider Europe and the world. They understand that.

Traditionally, Scots knew and understood their position in the world. That is why, while there are approximately 5 million people in Scotland who claim to be Scots, there are in excess of 40 million people around the world who claim Scots heritage in one way or another. We are a nation of people who have an understanding and concept of our place in the world. I honestly do not think that we need to spend any more time in this Committee or on the Bill debating these issues. We need to start describing the future of Scotland in the context of devolution and celebrate what we have already achieved by being a template for genuine localism in the United Kingdom.

It has not been perfect. We have a very young Parliament in which people are growing up. Members of the Scottish Parliament who were not politicians at all when we devolved powers to it are becoming significant politicians in the United Kingdom. I simply do not support my noble friend’s interesting amendment, which has led to a short but interesting debate, because the last thing that the people of Scotland need is for their politicians to spend another few hundred thousand pounds on changing the name of their Government.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, can I perhaps be somewhat boring and brief at this time of night by focusing on the amendment? It would insert the word “Devolved” into Clause 30, Clause 37 and Schedule 4, where the reference would become to the devolved Scottish Government. Clause 15 changes the formal name to the Scottish Government from the Scottish Executive. It was felt that the Executive were increasingly widely known as the Scottish Government and that it made sense to amend the Act to reflect public perception and to avoid confusion. However, the fact that the Scotland Act refers to “Scottish Executive” prevents the use of “Scottish Government” in legislation, contracts and other legal matters. Therefore, Clause 15 is designed to prevent inconsistencies in what the Scottish Executive are called by the public and in the legal name.

The noble Lord, Lord Foulkes, wishes to insert “devolved” in front of “Scottish Government”. That is unnecessary and may even lead to further confusion. Altering the name of the Scottish Government to “the devolved Scottish Government” would in no way strengthen the position of devolution. Indeed, it is important to note that no such prefix attaches to the devolved Administrations in Wales and Northern Ireland. It would look very odd and lopsided if it happened just in Scotland.

That said, this has been a useful debate on devolution. I will not go into all the highways and byways but some important points were made. Some of us who very much support what has happened over the past 12 years sometimes miss a trick because so often, ahead of the debates in 1997 and the referendum leading up to that, we talked about devolution in terms of the Scottish Parliament dealing with matters related to the domestic agenda of the people of Scotland and the United Kingdom Parliament being responsible for macroeconomic policies, defence, foreign policy, social security and pensions. Although we will undoubtedly debate where the boundaries should be—the Bill seeks to address some of these issues—I nevertheless believe that the idea of a Scottish Parliament within a United Kingdom still commands the support of the vast majority of the people in Scotland. I hope that the noble Lord will withdraw the amendment.