Scotland Act 1998 (Modification of Schedule 5) Order 2013

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Wednesday 16th January 2013 Lords Chamber

[Lord Browne of Ladyton]

My Lords, I am content to be associated with the challenge of the noble Lord, Lord Sutherland, to the Scottish Parliament and I am delighted to follow him. The earlier part of his contribution, in which he went through the elements of the proposed question and the criticisms that his expert group had made of it, was helpful and instructive. It complemented nicely the contribution of the noble Lord, Lord Crickhowell, who spoke with the authority of the Constitution Committee and its helpful report.

That report, although properly directed to a Minister of the UK Government, should really be directed to the Electoral Commission. The fact that the Constitution Committee of this House, with its modest resources, although it has a very distinguished membership, produced such an authoritative and well argued report in a comparatively short time reinforces the criticism from the noble Lord, Lord Forsyth, that the Electoral Commission, with all its significant resources, could not produce a report on the same issue in a time that was in step with the important decisions that needed to be made in relation to the process of this referendum.

It will be of no surprise to the noble Lord, Lord Forsyth, that even were he to divide the House, I would not have voted for his amendment. That is not because he is not a powerful advocate—he knows the view that I hold of his ability to make an argument—but for the reasons that my noble friend Lord Reid of Cardowan set out. I just think it would be bad politics at this stage in this process to support such an amendment to the Motion before the House. That is not to say that I do not have a lot of sympathy with many of the arguments that the noble Lord rehearsed, and which have been reflected in other contributions.

As I am speaking so late in the debate, I am in the fortunate position of not needing to repeat many of the points about the question, the role of the Electoral Commission or expenses. There is both the amount of expenses that the Electoral Commission proposes to allow for the conduct of the referendum and the fact that it appears that we have allowed foreign money to interfere with our domestic politics, contrary to everything that I think we would all agree on about not allowing that to happen. There are people taking advantage of that to bring in foreign money to influence significantly the conduct of this decision in Scotland. I say to the noble and learned Lord, Lord Wallace, that if our regulatory legislation on the conduct of elections has such an obvious lacuna in it that we are allowing foreign money to be used in this way to affect political decisions in this country, it is incumbent on us quickly to close that loophole. As it appears that it is planned that the referendum will take place in late 2014, we have the time to do that. If we can do something to achieve the closing of a lacuna in our electoral regulations to stop this happening, it is incumbent on us to do it. We all agree that we should not allow foreign money to be used in this way and should do something about it.

I intend to concentrate on a small number of points which I think are genuinely additional to what we have already heard. My first point is in support of the noble and learned Lord’s argument that this is being done properly in devolving the power to the Scottish Parliament. I was interested in the irony of the argument that my noble friend Lord Reid of Cardowan deployed for this: the analogy of those leaving the club being entitled to make this decision for themselves, while those who stay and want to change the rules have to do that with everybody in the club. I may be wrong, but I think the first time I heard that analogy was when it was deployed by the noble Lord, Lord Forsyth of Drumlean, in making the argument that there should be only one question in this referendum and that if we went on to the issue of devolution max—a phrase that has slipped away from this debate, thank goodness—that was a matter for everybody in the United Kingdom, not just one for the people of Scotland, and that it therefore had no part in this referendum. I agreed with him then. The noble Lord, Lord Forsyth, may be sitting there thinking that there is a degree of irony that this argument was deployed so skilfully by my noble friend Lord Reid to undermine the argument that the noble Lord was making.

However, there is an additional argument as to why it is right, in the circumstances that we find ourselves in politically and democratically, that we should devolve this power to the Scottish Parliament. The current Scottish Government won an overwhelming majority, a majority that overwhelmed all of the other unionist parties in the Scottish Parliament in 2011 on a manifesto that pledged to deliver a referendum on the issue of independence. Of course we can say that was beyond the competence of that Parliament and we can make all these clever arguments, but actually we were left with a democratic problem. The answer to that problem—we have to face up to the political reality of that—is to give the Scottish Parliament the power to run this and then deal with the issues in that context.

My second point is about the way in which we are proceeding. I agree with all of the points that the Constitution Committee has made, which are essentially criticisms of the way in which the Edinburgh agreement was concluded and presented and the lack of parliamentary involvement, scrutiny and engagement in that. But that agreement has now been made. We have to decide whether to respect that agreement made by the UK government leadership and the leadership of the Scottish Government. We have chosen to respect it, and I think that is right. It appears that we have here an order that we have a role to play in, which is what we are doing now. We also have an interesting constitutional linkage between the order and the agreement, the status of which appears to be a matter of dispute. I say that because I understand that the principal legal adviser to the Scottish Government is describing the agreement in a very particular way that is in contradiction to the way in which it is being described here. What is the legal status of the Edinburgh agreement? Can it be used by those who seek now to use it as some sort of legal platform to allow them to do other things, or is it, to paraphrase what the Secretary of State for Scotland said, simply an agreement between the UK Government and the Scottish Government as to how the referendum is to be run?

That leads me on to my third point, which is directly about the question. I will be astonished, as I think everybody will be, if the Electoral Commission does other than advise the Scottish Government that the draft question that they have proposed is inappropriate and will have to be changed quite radically, for all of the reasons that we have heard. The noble Lord, Lord Forsyth of Drumlean, in an excellent speech, described it as a misleading question. The fundamental problem with it, from my point of view, is not that it is misleading but that it is leading—leading in the way in which lawyers deploy that word: it is a question that begs its answer. A question that can instinctively be answered yes, as the noble Lord, Lord Stephen, suggested, is a leading question. In certain parts of the conduct of legal proceedings, we have a history and a tradition of not allowing those sorts of questions to be asked because they lead the witness to an answer. We do that for the very good reason that in certain circumstances, when people are engaged in that kind of a relationship with an interrogator, they incline to say what the person wants to hear. So it is a leading question, and I cannot for the life of me believe that the Electoral Commission will say that it is an acceptable question.

The real issue is whether the combination of this order and the agreement that the UK Government have extracted from the Scottish Government lead to the Scottish Government putting before the Parliament that they control effectively a proposal in a Bill for a question that reflects the advice that the Electoral Commission has given. In other words, will they respond properly to that advice? Whether we can have confidence that the man who leads the Government at the moment can be trusted to do that or not, we need to know that there is some form of audit or enforcement of that process that goes beyond our ability to be able, at some future election, to make the nationalists pay the price for what they did then, as the noble Lord, Lord Forsyth, said.

In those circumstances, is it legitimate to consider that a refusal to take that advice and an insistence on a question—a question which the Electoral Commission said was entirely inappropriate and leading and misleading for that reason—is reviewable in a legal sense in the light of the agreement that the Scottish Government have entered into with the UK Government? I ask that not because I am such a clever lawyer that I have worked it out for myself, but because I had an informal conversation with one of the leading legal brains in this country, whom I will not identify, who suggested to me that such a decision would be reviewable. If there is a preponderance of that view among other leading lawyers in the United Kingdom, that will be enough to ensure that the Scottish Government behave in the way in which we want them to.

That is an example of exactly the sort of thing that it is quite legitimate for us as politicians and the UK Government to be exploring publicly in this environment. When we debated the Scotland Bill we had concerns about what the Government would agree with the Scottish Government. We set them off, in a sense, with a mandate not to do certain things. They have to be congratulated on coming back and meeting a substantial part of that mandate. The noble and learned Lord who will be responding to this debate deserves a significant degree of credit. The way in which he conducted himself in the early stages of this controversy, particularly the speech he made at the University of Glasgow, changed the whole tenor of the debate in Scotland. He carefully and calmly pointed out the legal basis of the powers of the Scottish Parliament and of the UK Government in the devolution settlement. He did the same thing on Scotland’s potential membership of the European Union, in a speech he skilfully gave in Edinburgh, and changed the debate.

However, there are still some issues for which we could use the same sort of devices to shift in a way that would allow us to have the confidence that this referendum would be legal, fair and decisive when it is conducted.

[Lord Forsyth of Drumlean]

I am not a lawyer and I wonder whether the noble Lord might give me some free legal advice. I asked my noble and learned friend why the Edinburgh agreement was not linked to the order. Perhaps naively, I assumed that it was to avoid any litigation. This whole process was started on the basis of trying to get a legal base that would avoid any legal challenges interrupting the process. Is the noble Lord arguing that there would be the opportunity for litigation if it was linked, or is he arguing that there might be an opportunity even if it was not linked?

[Lord Browne of Ladyton]

There is at least an issue worth exploring as to whether, with the current arrangement of an agreement—a public agreement, which raises a level of expectation—and the order, if the Scottish Government behave in a particular way, the decision to do so might be judicially reviewable. I do not look forward to the prospect of getting bogged down in litigation which might end up in the Supreme Court, for the obvious reasons of the relationship between the Supreme Court and the Scottish Government. I do not want to resurrect all that, but if there is something in this—I think there may be—the very fact that it is being aired in the public domain with reliable, informed and trustworthy legal advice, such as the sort of advice that the noble and learned Lord, Lord Wallace, gave publicly on previous issues of controversy, could well settle these issues so that we could have confidence that we were moving forward. That is my point.

My final point is that at one stage not too long ago we were led to believe that the UK Government would deploy their resources in such a way that we would get a series of papers that would set out their view on the implications of independence for Scotland and its separation from the rest of the United Kingdom. That information is crucially important to the debate. I hope the noble and learned Lord, Lord Wallace, will take the opportunity when he replies to the debate to indicate to the House where we are in the expectation of that. We know that the Scottish Government are deploying all of their resources towards the objective of a yes vote in the referendum in 2014. There is no reason at all why the UK Government, whose policy is to keep the United Kingdom together, should not deploy extra resources in order to achieve that objective. We should be utterly open about that. The sooner the Government are able to do that, to disaggregate that information from the information that only they hold for the rest of us to be able to deploy in this debate, the better. I am delighted that we have this order now because we are getting to the meat of the issue. I am desperate to get to the meat of the issue, but I want to be in a position where I can make arguments that are convincing.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Tuesday 24th April 2012 Lords Chamber

[Lord Browne of Ladyton]

My Lords, those who have been engaging in our deliberations on the Bill and following its process cannot have failed to notice that not only have we been able to consider it today—a Tuesday—but that we have not had to wait until the fag end of the day’s business to do so. Of course the deep irony is that this is the day on which we least needed to get on early to consider the matters before us. However, we are moving through the Bill at a pace, and as we are nearing the end of our consideration of it I think it appropriate for me to make a few remarks.

I do not think that anyone could disagree that the Bill has been subject to rigorous scrutiny during its passage through this House, and I am confident that it is a better Bill because of that scrutiny. At least two Members of the House—my noble friend Lord Foulkes of Cumnock and the noble Lord, Lord Wallace of Drumlean—have made significant contributions.

[Lord Forsyth of Drumlean]

Forsyth.

[Lord Browne of Ladyton]

I am sorry—it is Lord Forsyth of Drumlean. On this occasion I cannot even give the excuse that I am tired. In Committee and at Report these two noble Lords paid assiduous attention to almost every detail of the Bill and ensured that we all had the opportunity to scrutinise it rigorously.

I also want to thank the noble and learned Lord the Minister. I extend my thanks beyond him to the Bill team and to officials in the Treasury who have shown me the greatest courtesy. In a sense they have supported me by giving me access to substantial amounts of information on the Bill. Throughout this process they have engaged with our Benches and with my noble and learned friends Lord Davidson and Lord Boyd of Duncansby, and my noble friend Lord Eatwell, who have shared the responsibility for our Front-Bench work on the Bill. They have engaged with us very positively and I am exceptionally grateful to them for that: it has made my job much easier. I think that we have improved the Bill particularly on the issue of references to the Supreme Court—a process in which my noble and learned friend Lord Boyd of Duncansby has been intimately engaged. The process has been wholly satisfactory and I think that we can all be satisfied with the final result.

I feel duty bound to inform noble Lords of the conversations with the Government that have taken place since Report on the issue of the conditions for using the extraordinary power to add new devolved taxes that is now contained in, I think, Clause 23. There was significant consensus across the House that it would be valuable to place in the Bill the conditions for using this extraordinary power—first, to safeguard its use by the Executive, and, secondly, as a way of obtaining the buy-in of the Scottish Parliament on these criteria. As I was substantially responsible for encouraging that consensus across the House, I have a responsibility for, in a sense, disappointing the House at this stage in the debate.

As I have also been very careful to say at all stages of the Bill, we have to be mindful of the political realities that we currently face. We have been treated to some interpretation of those political realities in our rather extended and diverse debate on the Bill, but one has become used to that in considering some of its aspects. The political realities are such that the Government’s commitments at Report were unsatisfactory, as I said in the debate. In essence, a year after enactment they are to bring forward a report on implementation of the financial provisions which will make specific reference to the list of conditions for using this power. That is the issue that exercised my and other noble Lords’ minds. Significantly, we have learnt since Report stage that the report will also be submitted to the Scottish Parliament, which will have an opportunity to thoroughly debate and agree to the provisions. That at least provides the opportunity for the engagement of the Scottish Parliament that I sought. However, it is not guaranteed to happen and I am not overplaying it.

Those additional facts, combined with the clear priority of the LCM—the legislative consent Motion, which was to be debated before we came to Third Reading—were, on balance, enough for it to be considered unwise to bring forward further amendments on this issue. With some reluctance I accepted that conclusion, despite being aware that I was disappointing the expectations of many noble Lords, and noble and learned Lords, in the House. I had encouraged those expectations, so to that extent I apologise. If it has in any way damaged my relationship with noble Lords or reduced their view of my worth to this House then I shall have to endeavour over the course of the coming months and years to remake that. However, that is where we are.

I turn now to the amendments of the noble Lord, Lord Forsyth of Drumlean, as somebody has to. I do so with some reluctance because I know how it encourages him to come back.

I start off by saying that I have sympathy with his analysis of the paucity of understanding of the full implications of this Bill in Scotland. I agree with him that we ought to ensure that the Bill is better understood in Scotland. I almost immediately part company with him thereafter, for two reasons—first, because renaming the Bill will do little to address that deep-seated problem for which many of those in devolution parties have to take responsibility. It is inappropriate to expect those who do not support devolution but seek independence for Scotland to trumpet the opportunities and potential benefits of a piece of legislation that reinforces devolution. Although it will probably never settle the argument of Scotland’s relationship with the rest of the United Kingdom, for some people in Scotland—and I expect this to continue throughout the rest of my life—if properly understood, it will strengthen the union.

The responsibility lies with us. It is potentially helpful, but not the answer, to simply change the Long Title of the Bill. I understand why the noble Lord, Lord Forsyth, seeks to do that, but you do not have to listen to him for very long to realise that it is a vehicle for him to articulate arguments that he has been articulating to the people of Scotland for some time in the confident knowledge that, if he lives long enough, some day he will be proved correct. The fact of the matter is, with all due respect to the noble Lord, that although we listen to him intently and I enjoy immensely his ability to make an argument, the people of Scotland stopped listening to him a long time ago. It is unfortunately true and I am sorry about it, because they would be better informed, perhaps, if on occasion they did listen to him—but they stopped listening to him a long time ago. That is part of the problem. The British tourist abroad, speaking slowly and loudly, does not work any longer with Scotland. Those of us who put ourselves forward for political office have an obligation to make our arguments in a much more sophisticated way and go with the grain of people’s expectations. Of course, we all have responsibility for generating those expectations, as indeed I did—and disappointed expectations at Report on this Bill. Those of us who believe in the union all have our DNA to some degree in the state of the Scottish scene at the moment, and we have a responsibility to deal with the issues and challenges generated from that.

This is a good Bill, and I fundamentally disagree with the noble Lord, Lord Forsyth, in that regard. It is a constitutionally significant Bill, and the new tax-raising and borrowing powers are worth in the order of £5 billion to £6 billion, marking an historical development in the financial accountability and autonomy of the Scottish Parliament. Furthermore, measures such as the devolution of drink-driving and speed limits as well as the regulation of air weapons ensures that the devolution settlement continues to respond to the needs and aspirations of the people of Scotland.

In recent months, much reference has been made to a new, notional devolution settlement, or maximum devolution, which for the most part has taken the form of a fill-in-the-blanks exercise. But ultimately politicians are kidding themselves if they think that the people of Scotland are interested in some esoteric debate about devo-max versus devo-plus versus the status quo. This Bill is the consequence of a sensible process; its origins lie in the Calman commission, and I repeat my thanks to those Members of this House and others who served on that commission. The work that they did has not been given the credit that it deserves, and it is well worth revisiting the argumentation for the recommendations that gave rise to the Bill. The Bill presents the people of Scotland with a clear and concrete vision for the future of devolution, a vision that is evidence-based, thanks to the Calman commission; has the support of Scottish business, Scottish civic society, experts and academics; and will when properly understood and implemented support the future prosperity and aspirations of Scotland within the union.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Wednesday 28th March 2012 Lords Chamber

[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.

--- Later in debate ---

[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.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Monday 26th March 2012 Lords Chamber

[Lord Browne of Ladyton]

That is the point: it has got worse. It has got worse now after 11 years and the answer appears to be that we will impose a solution by amending the Scotland Bill because we have the Scotland Bill before us. The noble Lord, Lord Forsyth, shakes his head. I am sure that is not what he intends but that is what we are doing. From what I can gather having listened carefully to what noble Lords have contributed, those who were involved in decision-making and those who have been party to the process, we are doing this without any attempt to try to get what a number of noble Lords, including the noble Lord, Lord Sutherland, the noble Lord, Lord Empey, and others, have called for, which is a discussion across the United Kingdom to see if we can resolve this issue. Everyone’s briefing appears to be that we have been put into this position because of the activities of others and these are the consequences.

[Lord Forsyth of Drumlean]

The noble Lord, Lord Stephen, made an important point in his speech which I do not think is appreciated. We have been using the term fees but there are two issues here: one is fees and the other is the teaching grant. The fees have been of the order of £1,800 per head; the teaching grant has been £5,800. I understand the noble Lord’s problem in that he feels that his colleagues may have played a part, but when the noble Lord, Lord Stephen, and his Labour colleagues decided on this, the issue was the fees of £1,800. The £5,800 per place taken by rest of UK students has been paid every year up until now. It is only next year that that money is being taken away. That is the £28 million that the noble Lord, Lord Sutherland, is discussing.

The Scottish Government have changed the position and the numbers are very much larger. They have used opportunistically the position where students are going to have to pay high fees in England to turn the rest of the UK students into a cash cow for the universities. That is where the change has occurred and why my noble friend Lord Steel says it has got much worse.

[Lord Browne of Ladyton]

I appreciate that it has got much worse but the catalyst was a similar action by the coalition Government in that in England they transferred the burden from the public purse to the student. It was a similar action. This is not the place to debate whether student fees in a particular place are right. In the context of devolution, the debate is about whether it is appropriate for your Lordships’ House to impose on the Scottish Parliament an obligation, or a restriction, on a power that they have been exercising in a particular way for the best part of 10 years, when no attempt has been made to have a serious cross-UK discussion about the situation to see whether it can be resolved.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Wednesday 21st March 2012 Lords Chamber

[Lord Forsyth of Drumlean]

My noble and learned friend is absolutely right. Amendment 74B is indeed about the impact on the privileges of the House of Commons. Everything that I said can relate to that if I think very carefully on my feet. Amendment 74B relates to the previous debate that we also had with my noble friend Lord Sassoon about enabling new taxes to be created in Scotland by Order in Council. That related to new Section 80B created in Clause 28, which is the power to add new, devolved taxes. It says:

“Her Majesty may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description”.

I cannot think of an example since ship-money where it has been possible by Order in Council to create a new tax. We have very particular procedures for creating new taxes. The Finance Bill right up until, I think, 1969 had to be considered on the Floor of the House of Commons in Committee. Special rules apply to the conduct of the Finance Bill, including—still, I think—that it is not subject to guillotine. The noble Lord, Lord McAvoy, would be able to help me with that. I certainly think that it is not subject to a guillotine in Committee. The Chancellor of the Exchequer has a leeway, given to no other Minister in the Government, to have as big a Bill and as much time as required. That is because the Finance Bill is central to the whole nature of Parliament, which is about voting and raising means of supply.

The particular innovation in this Bill enables a completely new tax to be created. Mr Alex Salmond might decide he wants a window tax or a tax on landed estates or our local income to finance local government. All that is required is that an Order in Council is approved by both Houses of Parliament. As has already been pointed out, Orders in Council are not normally able to be amended and are not normally voted against in this House. I am most grateful to my noble and learned friend for telling me which amendment I am speaking to. I have tabled this amendment because I cannot understand how, given the position of this House in respect of taxation, it can be right that first, new taxes can be created by order in the other place and, secondly, this House should be involved in consideration of the imposition of new taxes by order. That seems to impact upon the privileges of the House of Commons.

In truth, however, this amendment is simply another opportunity to raise a serious constitutional innovation, which creates very unfortunate precedents. I am hoping that even at this late stage I can impress upon my noble and learned friend that the explanation we were given for these powers being contained in the Bill, when we considered them earlier, was that the Calman commission had recommended that there should be powers in the Bill to provide for additional, specified taxes. This Bill does not provide for additional, specified taxes; it gives a completely open-ended power.

We have just received, as was referred to earlier, an indication of the agreement that has been made in order to get Alex Salmond’s permission for this House to continue with the Bill. This is the deal that the Government have entered into. It provides for the inclusion of some new taxes—some of which we have already debated, such as the aggregates levy. Why can my noble and learned friend not amend the Bill on Report and make provision for those specified taxes to be included? I do not like the order-making power. He could put that provision into the Bill and it could be approved, then it would go back to the House of Commons and would be approved there. Why can we not have a list of specified taxes which are to be included rather than this open-ended and highly undesirable procedure, which I believe challenges the very basis of this House? I beg to move.

[Lord Browne of Ladyton]

My Lords, the amendment moved by the noble Lord, Lord Forsyth, seeks by very specific provision to restrict the operation of Section 28 of the Act. We on these Benches are broadly content with the Act, but the noble and learned Lord who speaks for the Government on these matters will, I hope, remember that we moved an amendment seeking to put into the Bill at least a mechanism, which would lead further into secondary legislation, to have some reflection of the criteria that need to be satisfied before either a new or an existing tax could be considered appropriate to be devolved. In response to that amendment, the Government’s position was that those criteria were already set out in a White Paper predating the publication of the Bill.

Our position on these Benches is still similar to that of the noble Lord, Lord Forsyth. It would be better if there were some restriction in the operation of Section 28—or, at least, some shape to how it would operate—by reflecting through primary legislation into secondary legislation the criteria that need to be satisfied, since it appears that the Government have a clear and advanced view of what those criteria will be. This is an issue that we intended to return to on Report, having looked at the drafting of an appropriate amendment. I gave notice at the conclusion of the debate in Committee on Clause 28 that that is what we intended to do. To that extent, we are in agreement with the noble Lord, Lord Forsyth, and I think also with the mood of the House when we debated this provision.

Reflecting on the specific terms of the agreement with the Scottish Government, it appears that the Government’s position on the aggregates levy is now that it will be devolved, as I understand it, not if but when the issues which are preventing its devolution are resolved. Up until now, I had thought that the conditionality in relation to the devolution of the aggregates levy was in the control of the European court. It now appears, though, that the Government’s confidence that these issues can be resolved is such that they were able to agree with the Scottish Government that the aggregates levy will be devolved when that resolution takes place and these issues are resolved.

If that is the case then I agree, with regard to that tax, that it would be more appropriate to have in the Bill a provision that could be activated and brought into force at that point, and that this House and the other place would have an opportunity to consider the implications otherwise for the devolution of the aggregates levy in detail. When we debated that issue, if I remember correctly, the noble Lord, Lord Forsyth, proposed a detailed amendment covering the aggregates levy, and the noble Lord, Lord Sassoon, told him that technically it was broadly correct. I may be misquoting his exact words, but he said that the noble Lord had made a good job of it and that it was fit for purpose. If that is right, at least the Government are in a position where most of the work has been done. That may need to be tweaked, and I dare say that the Government would not want to accept someone else’s amendment wholesale and may want to change it slightly, but we could be in a position on Report to have a debate that would do two things: satisfy this House’s desire to have a debate about the detail of that tax and its devolutionary implications, and immediately show good faith to the Scottish Government because this would put a provision in the Bill that could be activated to devolve the tax.

I turn to the amendment. One of the coincidences of this amendment coming forward, or it may be not entirely a coincidence, is that this House has been exercised by the issue of financial privilege in some detail in committees, briefings, debates and discussion since the House of Commons recently claimed financial privilege in respect of Lords amendments to the Welfare Reform Bill. When I saw the amendment of the noble Lord, Lord Forsyth, I was not clear exactly what he was getting at, but there was no shortage of briefing available to me about financial privilege.

[Lord Forsyth of Drumlean]

I was simply trying to find a way of raising the subject again. There was no deeper meaning behind it.

[Lord Browne of Ladyton]

I do not know whether I am grateful to the noble Lord for that, because I had a very clever ending to this part of my contribution and he has prevented me moving towards it as quickly as I wanted to.

I have never been able to do this before in a debate: I intend to quote the Clerk of the Parliaments. There is a Library note on the issue of financial privilege; it goes into this issue in some detail, and only our Parliament could produce something like this that was so interesting and esoteric. Paragraph 18 of this report says:

“In conclusion, it may be worth making two points … First, until the Commons asserts its privilege, the Lords is fully entitled to debate and agree to amendments with privilege implications”.

It seems, and I am grateful for this, that this is the complete answer to the noble Lord’s amendment. It would be ill advised of this House, given that it has that power, to seek for the first time to try to control it with legislation at its own hand. I cannot, as I am sure the noble Lord will be devastated to hear, support his amendment in these circumstances.

[Lord Steel of Aikwood]

My Lords, my noble friend Lord Forsyth has a technical point about taxation through Orders in Council, but I want to come back to this basic point regarding the Bill: Section 28 talks in bold type about the power to add new devolved taxes. That is something to which my noble friend is opposed; he does not want the Scottish Parliament to have the power to create more taxes, but I do. I think I am right in saying that the Calman commission also wanted to give the Scottish Parliament the power to add more taxes. Going back even to the referendum that we had, I know that my noble friend keeps saying that there is a difference between varying taxes and adding new ones, but that is too subtle a distinction.

--- Later in debate ---

[Lord Browne of Ladyton]

I thank my noble friend for his intervention, although I have no idea what the answer is to the question that he asks. We get many amendments that allow us to explore issues that are of less relevance and importance to the people of Scotland, but I certainly welcome amendments that allow us to explore issues that are important. Through their amendments, my noble friend and the noble Lord, Lord Forsyth, have been utterly diligent on this Bill. They deserve a great degree of credit for the amount of work that they have put into preparing amendments, by which they have created opportunities for some very good debates in Committee. They will be a quarry for the future for many good arguments that can be put forward about the positive nature of the United Kingdom.

To go back to my point, the noble and learned Lord says, “Not this Bill”, and I agree. He says that the preferred option is a Section 30 Order in Council, and I agree. The consultation reveals some very good and compelling arguments in some of the responses about why that is the right way to go. I have adopted some of them. The noble Lord, Lord Forsyth, asked the Minister, “What if there is no Section 30? Where does that leave you?”. The noble and learned Lord answered, “If agreement cannot be reached, we need to consider other options”. I understand why that form of words is the most that he can give your Lordships.

[Lord Forsyth of Drumlean]

Why?

[Lord Browne of Ladyton]

The noble Lord, Lord Forsyth, asks me why. The simple answer is: because he is a government Minister. The noble Lord should know that, and I am sure that he was adept at giving those sorts of answers himself when he was at the Dispatch Box.

[Lord Forsyth of Drumlean]

I never really felt much constrained by collective responsibility, as the noble Lord will recall. My noble friend Lord Deben is indicating that he agrees, which is a bit alarming. I thought that the noble Lord was going to say that the Minister could not say this because he did not want to put a gun to the Scottish Government’s head, but it is quite important that it is clearly understood that we are determined to resolve this question and that we have the lines that we have discussed. It is also clearly understood—and I understand where the noble Lord is coming from—that we would much prefer to do this on an agreed basis and for the Scottish Parliament to legislate, but at the end of the day this is going to be done.

[Lord Browne of Ladyton]

I am sure that, from the point of view of the record and those who read it, it is probably better that the noble Lord says this and is not contradicted from the Dispatch Box, rather than that those words be put into the mouth of a Minister. I do not want to go too far down this road.

My point is that there are precious few options anyway. Without persuading, badgering or compelling the noble and learned Lord to go any further than the words that he wants to use, it is clear to me and, I think, to everyone who has heard this debate that the options are limited. Whatever option the Government choose in future if that set of circumstances arises, there will be an opportunity for your Lordships’ House to have a detailed debate on the way in which the referendum is conducted.

That leaves us with the challenge of how we achieve that debate if it is a Section 30 Order in Council. We have been teasing out from the Government some concessions regarding that with proposals that have been made—one from my noble friend Lord Sewel and some from others—about iterations. However, it would be helpful if the noble and learned Lord indicated, perhaps even repeating what he said before, that something will be done to structure a process that allows the content of the order to be debated at some length here and in the other place before it gets to the point where it is set in stone and has to be either accepted or rejected and cannot be amended. I have so much faith in the noble and learned Lord, from the years that I have known him, because of his reputation before I knew him and from my dealings with him, that I know he will do his best to deliver that. If he gives the House an undertaking that some process will be found, I will accept that and play my part in that process.

[Lord Forsyth of Drumlean]

This is all very sensible and I have no problem with any of it, but will the noble Lord say a bit about the timetable? How long will this process run for? I would be horrified if we found ourselves coming back here at the end of the year with this matter still not resolved. Does he think that this needs to be done by the Summer Recess? He said earlier that it should not take too long. How long is too long?

[Lord Browne of Ladyton]

Clearly it could be done by the Summer Recess, and that would be my preference. It would be contradictory to issue a consultation document and argue for the resolution of this issue as soon as reasonably practicable and then put practical blocks on that being done because we cannot get through the process here. We in this Parliament have all had experience of dealing with things in an emergency. In the context of Northern Ireland, for example, in order to maintain momentum in the peace process or to respond to circumstances, we have taken legislation through each House in one day. So if there is a will there is a way, and there ought to be a will because this is the most important question that the people of Scotland have ever been asked—or at least since 1707—and, as we have heard repeatedly from noble Lords, it has serious implications for other parts of the United Kingdom. People have lots of investment in this. The Government should treat this as a priority and find a way forward. We have stuck to a timetable that is associated with the consultation that the Scottish Government have issued, and to respect them we must observe that timetable. Beyond that, though, we need to move as quickly as possible.

With regard to the noble Earl’s three or four amendments, I think we were all interested in the history lesson that we had about the islands of Orkney and Shetland, the observations about Rockall and indeed the argument about a complementary referendum for the United Kingdom after the Scottish people have had their say, if they determine to leave the United Kingdom. Like other attempts to amend the Bill, the complementary referendum falls down on the next question, which is: if the Scottish people decide to leave and the rest of the United Kingdom wants to keep them, how do you keep them in the United Kingdom? Unless you were going to ask that question, why would you hold the complementary referendum? I listened to my noble friend Lord Reid explaining the necessity for dealing with these issues in series. Many of us who have been in this debate consistently had got to that point a while ago. I read in some of the responses to the consultation attempts to explain this by analogy, but the best analogy that I have heard for this is that if you are a member of a club and you choose to leave, that is a decision for you, but if you are a member of a club and you want to change the rules, that is a decision for all the members of the club. That seems to be common sense. The analogy belongs to Sir Malcolm Rifkind, by the way; maybe he got it from someone else, but he said it to me and I thought, “That’s exactly the position”.

Consulting all the other members of the club about changing the rules, if that is what we choose to do in future, will be a complicated and difficult process because there is a lot to be done if we enact the Bill. First of all, we have to work out the exact implications of what we have already devolved to the Scottish Parliament. We have learnt a lot in this Committee about Clause 28, which is quite substantial devolution. We have to persuade those people who are good at making up phrases to describe what they want and what it means—they had their opportunity with Calman to come forward and explain what all that meant, and precious few of them appeared—and then find some mechanism beyond the separate party mechanisms of finding an inclusive, all-party process of measuring whether all this is in the best interests of Scotland and the rest of the United Kingdom. Then perhaps we can decide how we are going to ask for approval from the people of the country for that deal if we come to some recommendation. That, however, is a process for another day; it cannot be done in the context of this Bill.

I shall deal with the noble Earl’s other two amendments about the islands. My suspicion was that what lay behind those amendments was oil, which was perhaps doing a disservice to the noble Earl as I listened to him explaining the history of the islands and his knowledge of the island of Rockall and how it was claimed for the United Kingdom. He was quite candid about the issue towards the end of his remarks. I say to him that if that is the intention of any person in relation the Bill, that is not a game that people on these Benches will play. The challenge that we face is to persuade the people of Scotland to stay in the United Kingdom for good, positive future reasons. If we cannot meet that challenge, I will be no part of telling the voters of Scotland that if they vote for independence the UK will take away their oil. Starting down that line would be utterly counterproductive.

I must caution the noble Earl. Whatever the underlying motivation may be for these amendments—respecting the wishes of the people of the high north with regard to the United Kingdom, or the history of the island of Rockall, which is much more chequered and less specific than it first appeared—now that he has linked this issue to oil, I ask him please not to repeat these arguments in Scotland, as they will damage our ability to keep the union together.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Thursday 15th March 2012 Lords Chamber

[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 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.

--- 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 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 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

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Tuesday 28th February 2012 Lords Chamber

[Lord Browne of Ladyton]

I thought my noble friend Lord Maxton said that. I am sorry; it was my noble friend Lord Sewel. If I had had a private conversation with the noble Lord, I might have been able to reveal that beforehand. The noble Lord, Lord Kerr, in part of his contribution that was very helpful, blew that out of the water. States in the United States of America have, within the federal structure, the ability to raise taxes without being sovereign. Across the world, I am sure there are many other examples that I do not know about of devolved Administrations having the power to raise taxes within constitutions that deny them sovereignty. I am certain that I could find them if I had the research facilities available to me.

[Lord Forsyth of Drumlean]

I will not make a smart-alec point—although I should not say “Smart Alec” in this context in this debate—about other states that can raise taxes. I follow the noble Lord’s argument, which I absolutely respect. However, I respectfully suggest that he needs to distinguish between the ability to raise taxes and the ability to create new taxes. The point that his noble friend and I were making is that this clause gives the Scottish Parliament the power to create completely new taxes. His noble friend argued, as I did, that that is distinct from being able to raise taxes. There are states in the US that can set the sales tax but, as far as I am aware, do not have the freedom to invent completely new taxes. However, I might be wrong about that.

[Lord Browne of Ladyton]

Someone had to create the sales tax in the first place. I might be wrong but I do not think that in the United States the creation of a sales tax is a federal function that is then devolved to the states.

--- Later in debate ---

[Lord Forsyth of Drumlean]

I hope that the noble Lord might help me. Is he saying that he thinks this clause is too broad in its scope and that there should be some kind of constraint by way of criteria as to which taxes could be invented? As it stands, a wealth tax, a further tax on inheritance or a roof tax could be implemented, although a poll tax is probably less likely. Is he saying that, speaking for the Opposition, he favours some kind of procedure that would constrain the ambitions of a devolved Administration in this respect, or is he saying that this measure goes to the heart of the whole Bill and that it constitutes devo-max?

[Lord Browne of Ladyton]

I am not saying that this is devo-max; I am saying that this is the Bill. The Bill is a very significant piece of legislation and a remarkable advance in the potential devolution in Scotland. However, as the noble Lord has pointed out, it is misunderstood and has not been properly explained. Broadly, it is not supported or championed in the observations of those who have brought it to this Parliament. More specifically, it has not been championed by the Prime Minister, who has suggested in fact that it is just a small step and that greater steps can be taken in future.

The people who drafted the Bill and are responsible for it may not have intended to do this, but they have given us the answer to the challenge for the future post the referendum on the issue of separation. They may not know that they have given us the answer but they have. Now they need to build the other part of the mechanism that allows this Parliament—the sovereign Parliament—to play its proper role in deciding what the criteria are in advance of specific proposals of the sort of devolution that can take place. In other ways, they should spell out, as Michael Moore did in his evidence to the Select Committee, the criteria that need to be applied and would need to be met before a tax—either a new one or a part of the United Kingdom’s existing taxation—could be devolved.

We need to amend the Bill to provide that mechanism. I believe that it can be provided by regulation, which is why the amendment has been drafted in the way that it has. At the risk of boring noble Lords, particularly the noble Lord, Lord Forsyth, I do not think it is an issue of principle, once we establish the principle, as we will by passing the Bill, that taxation can be devolved in this way to the Scottish Parliament. It is a mechanism to make sure that that is done properly and in a way in which the various parts of this deal take their proper responsibilities. That is the bit that we are missing because this Parliament is entitled to be confident that any devolved taxes will be used for the benefit of the Scottish people and the union. It is for this reason that we believe the Government have a duty to enshrine conditions to this effect in some form of legislation—regulations would be quite sufficient. This would provide a clear regulatory framework that can be approved by this Parliament and then used flexibly in the future in the context of a changing settlement between the United Kingdom Parliament and the Scottish Parliament —between the United Kingdom and the people of Scotland.

I say to the noble Lord, Lord Sassoon, whom I welcome to our Committee’s deliberations—I do not know how much previous experience he has had of Scottish political matters, but over the next few hours he is in for a crash course—that the Scottish Affairs Select Committee raised these issues in its report on the Bill almost a year ago today. I therefore hope that having had the benefit of a year to consider the matter further—and I am sure the noble Lord has been thinking of nothing else—at the very least he will be able to provide this House with some sort of detailed explanation of the mechanism and criteria to be applied on the use of this power. If he cannot do so, it would be helpful if he provided us with at least some hypothetical examples of taxes that could meet such criteria.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, one thing on which I think we are all agreed is that we are getting to the heart of the Bill. There is a range of views about how significant the changes are in Clause 28, but we all recognise the importance of what we are discussing.

The Government are quite clear that the Bill delivers substantial new powers to the Scottish Parliament—powers that have been included as a result of careful and detailed consideration. I want to focus on what is in the Bill, not on what hypothetically might be in it. The Government have been clear that any consideration of further powers to be devolved is for after a referendum on independence. Let us therefore concentrate for now on what we have in front of us.

I should also say at the outset that as an intruder from outside Scotland and a Briton from elsewhere, as the noble Lord, Lord Browne of Ladyton, suggested, my observation is that to date devolution in Scotland, of which the Bill is part of a continuing process, has been delivered as a result of lengthy discussion, analysis of evidence and cross-party consensus. That was how the settlement was delivered in 1997 and that is how the measures in the Bill have been developed. I am grateful for the noble Lord’s confirmation at the outset that he believes that the tax-raising powers granted in this clause are appropriate.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Thursday 2nd February 2012 Lords Chamber

[Lord Browne of Ladyton]

My Lords, it is a pleasure to follow the noble Lord, who put the nub of the issue facing the Government and the Committee very forcefully and clearly. Once more in this Committee, the noble and learned Lord is caught in a pincer movement between my noble friend Lord Foulkes of Cumnock and the noble Lord, Lord Forsyth of Drumlean. Yesterday I was in conversation with a Scottish broadcast journalist, who shall remain nameless. He suggested that they were rapidly becoming the Chuckle Brothers of Scottish politics. No doubt as our deliberations go on the divisions between them will become apparent, although many of us know where they lie in any event.

In raising this issue, my noble friend Lord Foulkes brings to your Lordships' House a matter that is perceived by many in Scotland and, indeed, in this Committee, to be a cause of great unfairness. There can be no doubt about that. There are large numbers of people in Scotland who do not think that this is a fair way in which to treat students from England, Wales and Northern Ireland, and for good reason, because Scottish people pride themselves on the progressive nature of their thinking and on their values. Instinctively, they think—and they are right—that it is unfair that students who come to Scotland from England, Wales or Northern Ireland are treated differently from Scottish students or students from the European Union. The difference is obvious. We have the benefit in our deliberations of the summary by the noble Lord, Lord Sutherland, of the short history of this difference.

It is undoubtedly true that the fact that there are different systems of student support and student fees in different parts of the United Kingdom means that there is discrimination. While it has existed for some time, that discrimination has, by recent decisions of the UK and Scottish Governments, been driven to new heights, and consequently it is now much more apparent than it was. As my noble friend’s amendment and the support for it show, it raises real issues about whether within the United Kingdom we can continue to operate such a discriminatory regime without addressing its inherent unfairness. To that extent, my noble friend is to be congratulated because he focuses his arguments very sharply, and it is clearly right to debate them, as the contributions we have heard thus far make clear.

Whether it is appropriate to have this amendment in this Bill is a matter that the Minister will no doubt address. In one view, having devolved education, including higher education and student support, to the Scottish Parliament, it is a matter for it, and we should live with the consequences, which should be reflected in the political circumstances in which it operates. Whether there is some strong constitutional reason for leaving this to the Scottish Parliament, the amendment proposed by my noble friend raises real practical issues, and the debate that took place in the committee in the Scottish Parliament on the order that set out the specification of these fees encapsulated that. These practical issues will be reflected in the budget for Scotland. I do not think that any noble Lord who has contributed to this debate seeks to set the budget for the Scottish Government or, indeed, the Scottish Parliament but, effectively, that might be what we were doing if we dealt with this issue.

[Lord Forsyth of Drumlean]

My amendment is different from that of the noble Lord, Lord Foulkes, and we will no doubt come to it, but I have a simple, straightforward question for the noble Lord. Do the Opposition think that as part of the devolution framework, of which they were the midwives or architects, it is right that the Scottish Parliament should be able to exercise any power which results in discrimination against people resident outwith Scotland relative to people in the rest of the EU? It seems that there is an important principle here, of which fees are an illustration.

[Lord Browne of Ladyton]

I have not been long in your Lordships' House, but I have learnt to be wary of the noble Lord’s simple questions. It is a pretty straightforward question and, when we were sharing responsibility with the people of Scotland for the devolution settlement, it was certainly never envisaged that this discrimination against young people in relation to higher education would be a consequence. I do not think anybody imagined that. In fact, I suspect that had the issue of internal discrimination in the United Kingdom been raised, we would have set our face against it in the original Act.

However, the politics of Scotland have moved on and, as the noble Lord, Lord Sutherland, and my noble friend Lord Foulkes spelt out very clearly, decisions have been made about student fees and the way in which we support higher education, and they have had consequences. One of them has been a significant potential financial disadvantage to Scottish universities, which could have untold detrimental consequences in the longer term for their ability to hold on to the best of their staff or to provide the level of education that they pride themselves on having provided, in some cases over centuries. That was an issue that had to be addressed and those who have looked at the way in which this discrimination has come about and how it was debated in the Scottish Parliament will know what the issues about funding are. It may be possible to address them in other ways but I do not know the detail of that. I am not supporting the way in which they have been addressed here. It is right that we should debate them but I am not entirely certain that this is the right way to do it.

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[Lord Forsyth of Drumlean]

I am most grateful to the noble Lord and I am completely out of my depth because I have never really understood the legal profession. Is he saying that a situation existed where there were rights of audience that were unique to Scots that would not apply in England, but would apply to the French, the Germans and everyone else in Europe? Is that the position? If that is the case, rather like me I am sure he would believe in the single market and, advancing that, would regard this as anomalous.

[Lord Browne of Ladyton]

The noble Lord raises a point of principle. My point was that, to my knowledge, there was one other offence to that principle. Others may know of others. I do not know whether that situation persists because I am not up to date enough. I know that there was a period of time when advocates from the European Union had a right of audience in Scottish Courts as a consequence of their own domestic qualification, whereas, as I remember it, that did not apply to English advocates and vice versa. Indeed, I have many friends in the legal profession who qualified again, as it were, in England in order to be able to appear before English courts. But if that no longer persists, this area in relation to student fees is the sole area of discrimination that I can drag up from my own experience. Whether in those circumstances it is right to deal with this with some amendment of principle, I would have to consider. If the only issue relates to student fees, perhaps there is another way to address that apparent inequity and it should be thought through.

Going back to my noble friend’s amendment, I wish to make a point which has already been alluded to; namely, the real inequity of this current discrimination of regime is that these decisions are beginning to affect the kind of students we get in Scotland from England, Wales and Northern Ireland. The continuation of our union, which I support, depends substantially on our young people interacting. The differentials in the cost of education weigh heavily in decisions that our young people are taking about where they wish to be educated, as we have heard from those who are fathers or grandfathers of young people who have made those sorts of decisions. We are in danger of creating a Scotland in which our indigenous Scots student population will only meet the children of rich English, Northern Irish and Welsh families. At the same time, less well off children in other parts of the United Kingdom will be denied the benefit of a Scots university education. I do not think that can be right. The question that faces this Committee is the best way to address it.

I am pleased to say that on this occasion I do not speak for the Government. I am glad to have been able to make a short contribution to the debate. It has been enhanced by what we have heard from the noble Lords, Lord Sutherland, Lord MacGregor, Lord Maclennan and Lord Sanderson, and my noble friend Lord O’Neill. I do not think that the noble and learned Lord can be in any doubt about the mood of the Committee on allowing the scope for discrimination to persist in the framework of the Scotland Act. I will listen carefully to what he has to say and I am certain that we will find a way of returning to this issue on Report once we have had a chance to take in his response.

--- Later in debate ---

[Lord Browne of Ladyton]

I am grateful to my noble friend for his clarity of presentation. I do not think that anyone, having heard the debate or on reading it in the future, as people will, could be in any doubt about the mood of the Committee over this issue. That message will get through to those who need to hear it. In a sense, my noble friend was saying much the same thing as I was. I am not sure whether this is an issue which as a question of principle actually goes beyond the question of student fees, but if it does, then perhaps it needs to be addressed in the way suggested by the noble Lord, Lord Forsyth.

[Lord Forsyth of Drumlean]

Perhaps I can help the noble Lord. It is great to have a rebuke from the Opposition Benches. I was actually thinking that it would be easier for the Opposition to accept a point of principle in respect of devolution rather than accept a restriction on the policy freedom that was implied for the Scottish Parliament. I was just trying to be helpful.

[Lord Browne of Ladyton]

I am pleased to have been able to give the noble Lord another opportunity to be helpful to the Committee, and at this point I will conclude my remarks.

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

My Lords, the Committee owes a debt to the noble Lord, Lord Foulkes, and my noble friend Lord Forsyth for introducing this debate. As the noble Lord, Lord Browne, said, there can be no doubt as to the mood of the Committee on this issue, and views were expressed with great passion and sincerity. I think that I have some common ground with the noble Lord, Lord Browne, but I want to read his remarks carefully. I accept the sympathy that he offered me.

As the noble Lord, Lord Foulkes, said in moving the amendment, we have to be conscious of the sensitivities of relationships between the Westminster Parliament, the Scottish Parliament and the respective Governments of the United Kingdom. He said that we ought not to appear to be imposing something on the Scottish Parliament, albeit that is what the impact of the amendments would be.

I am in a slightly more difficult position for a number of reasons, not least because it would not be appropriate for me as a member of the UK Government to express an opinion about policies of the Scottish Government. Others have had the freedom to do that, which I could perhaps envy, but it would not be appropriate for me to do so other than to make some more general points.

My noble friend Lord Forsyth said that the debate should not be about the principle of tuition fees; on the other hand, it leads to a question of choices. A choice was made back in 1999-2000 by the Scottish Parliament not to charge tuition fees for domiciled Scottish students, whereas a choice was made by the Westminster Parliament under the previous Administration and continued by the present Administration that there would be tuition fee charging. The problem, which has given rise to such passion, would not have arisen at all if the United Kingdom Parliament had made a different choice.

Likewise, if I may pick up the point made by the noble Lord, Lord Sutherland, the Scottish Government had a choice as to whether they should fund universities in the way in which they have done, with the fee structure that they are proposing, or to make more money available to the funding council, as did the Administration which I was proud to serve back in 2004. Then, we made the deliberate choice, from among all the priorities competing for government funding, to give additional funds to the further and higher education sectors in Scotland. That in some respects is what devolution is about: allowing the Scottish Government to make these choices. A part of what this Bill is about is making sure that there is greater accountability for the way in which money is raised. That is the background against which we should look at these issues.

Two strong issues emerged in the debate: one was the £9,000 fees for students from England, Wales and Northern Ireland, and the other, perhaps drawn out more in the amendment of my noble friend Lord Forsyth, related to the fact that European Union students do not pay fees if they study in Scotland. I fully recognise why the latter is seen as being very unfair to students in the rest of the United Kingdom. I make no bones about the fact that it is a result of European Union law, which, if it was to be changed, would require action far beyond this House.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Thursday 2nd February 2012 Lords Chamber

[Lord Browne of Ladyton]

My Lords, I am grateful to all noble Lords who took part in what developed into a debate that was much more interesting than my introduction. From my experience in your Lordships' House, that did not surprise me. I am grateful to the noble Lord, Lord Forsyth, who in one of his early interventions brought a degree of clarity that I had not managed to achieve to a point I had tried to make. I disagreed with some of his other interventions, but we will have an opportunity to debate the genesis and value of Calman at a later stage and in proper circumstances. However, in his most recent intervention he may well have pointed out where the problem lies in relation to a coherent approach to this. It is a matter of regret that we do not have a Home Office Minister at the Dispatch Box to respond to the debate.

The story that lies behind this is that repeated incidents in Scotland of the nature of the tragic death that I referred to generated a desire to regulate air weapons. The noble Viscount, Lord Slim, pointed out very wisely from his informed background that air weapons are all potentially lethal. There was a discussion between those who represented the Scots, including Members of Parliament and the Home Office, which moved toward the possibility of regulation on a UK level, but then stopped. The frustration generated by the Home Office's unwillingness to proceed exacerbated the discontent in Scotland. An indication that something would be done was snatched away. The key difference is between weapons that are regulated and those that are not, because those that are not have the potential to be lethal and have been proven to be lethal in a number of cases. This has caused the Scottish people to say, “We want our Parliament to have the power to do something about unregulated weapons and to regulate them”. That is the set of circumstances to which Calman responded. Far from having to look around for powers to devolve, the significant cross-party lobby for the regulation of air weapons in Scotland was waiting for the opportunity of Calman or something similar to articulate its arguments.

[Lord Forsyth of Drumlean]

I apologise if I gave the impression that the regulation of air weapons was not an issue. When I said that they were looking around for powers, I meant that they were looking around for powers to devolve. There certainly was an issue. Another example, which we will come to later, is giving the Scottish Parliament the power to decide speed limits. We have ended up with a Bill that gives the Scottish Parliament the power to regulate the speed of motor cars but not of HGV lorries. That is absurd. The distinction between different categories of air weapons is a similar example.

[Lord Browne of Ladyton]

I am grateful to the noble Lord for his intervention. I understood the rhetorical point that he made. In relation to the issue that we are debating, there is a very strong desire in Scotland to have air weapons regulated. The Scottish people would have been happy if there had been a prospect of a system of regulation that would have been applied to the whole of the United Kingdom. In the absence of that prospect, the Scottish people say—and I agree with them—that if the power can be given to the Scottish Parliament, this should at least have the opportunity to regulate air weapons and to deal in some way with the obvious menace of their misuse. I am grateful to the noble Lord for allowing me to make that point in this context. Otherwise, what may appear to some to be a trivial piece of devolution, or to others to be something that is delivering unnecessary complications, will not be seen in its proper context.

I am grateful to the noble and learned Lord for the care he took in responding to my probing amendment on these matters. Characteristically, he engaged with the issue and articulated what I thought was the Government's argument for this exception to the devolution of responsibility for all air weapons. He will appreciate that I need to study his response, because I am not familiar with this area of law and I know how complicated it is. I incline to the view that if the distinction is caused by the existing licensing regime for some weapons—when I anticipate that there will be a licensing regime for all weapons—I may not be satisfied and may have to return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord Browne of Ladyton

Thursday 26th January 2012 Lords Chamber

[Lord Forsyth of Drumlean]

The noble Lord is making a very interesting and important speech, and I do not want to ruin his thread, but I am not clear about what he is saying about legislative consent. Is he saying that because this process has been gone through, if the Scottish Parliament did not give legislative consent, we should go ahead anyway? Or is he saying that the Scottish Parliament ought to make up its mind and decide? Will he help me with that?

[Lord Browne of Ladyton]

I am grateful to the noble Lord for his question and I shall endeavour, if I may, to deal with those issues in the thread of my argument, because I will deal with them. I apologise if I am engaging your Lordships' House for a period of time on this, but it is important. I want to make this argument in its entirety so, if I may, I shall make it in the order in which I have thought about it.

Not only did the Calman review report, and not only did successive UK Governments welcome that report and start the process of implementing the recommendations—I say at this point that when it comes to the detail of the debate, I will be probing whether we have been true to Calman in some regards, because that is quite important—but we put this issue to the Scottish Parliament. I say “we put this issue”; the issue was put to the Scottish Parliament. We have a Bill that is largely faithful to Calman. Calman is, in my view, well argued and well explained. I know that all noble Lords do not agree with that, but we will have a debate about it. That Bill has been through a process in the Scottish Parliament, and this is important. On 10 March 2011, the Scottish Parliament, on a cross-party basis, which this time included the Scottish nationalists, voted in favour of a legislative consent Motion supporting this Bill—not precisely this Bill, but largely this Bill. It made certain recommendations and asked that the Government and the UK Parliament take those recommendations into account. In other words, it voted in favour of that with conditions, and Alex Salmond himself voted in favour of that Motion on the basis of those conditions, so we have a legislative consent Motion from the Scottish Parliament which Alex Salmond voted in favour of. Those conditions have largely been met. In fact, the amendments to the Bill, and the reason that the Bill arguably has to go back for a further legislative consent Motion, are substantially because of the conditions that the Scottish Parliament asked to be considered that are now reflected in amendments to the Bill. In 2011, Alex Salmond said that he was in favour of this Bill, if the Government did certain things with it. Substantially, those things have been done, as we will no doubt uncover when we debate this in Committee and on Report, and now there appears to be some question mark about whether the Parliament, which his party controls, is prepared to give that amended Bill consent. I do not know whether this is unparliamentary language in your Lordships' House, but it seems hypocritical in the extreme for him, having voted for it, to reject the Bill at this stage.