Scotland Bill

Debate between Lord Hope of Craighead and Lord Lang of Monkton

Monday 29th February 2016 Lords Chamber

[Lord Hope of Craighead]

My Lords, I would like to pursue the points made by the noble Lord, Lord Forsyth, and the noble and learned Lord, Lord Wallace of Tankerness, about dispute resolution. As a lawyer, one tends to look to the dispute resolution bits, because they are the things that matter to us, to see that there is actually an effective mechanism for that, rather than at the fiscal parts, which I am content to leave to others.

Would the Minister care to look at paragraph 46, which the noble Lord, Lord Forsyth, identified? It contains the definition of “policy spillover effects”, which is where either Government make a policy decision that affects the tax receipts or expenditure of the other. If that happens then there is a spillover and a spillover effect. In paragraph 98 we enter the dispute resolution system, which applies to, among other things,

“All disputes arising from the consideration of direct and behavioural spillover effects, including both gains and losses”.

So this particular group of paragraphs deals with the resolution of the dispute. We can see how it works: first, if it cannot be settled at working level then it becomes a disagreement and is referred to senior officers at director level or above, including consideration at Joint Exchequer Committee official level too. If that does not work, the matter becomes not a disagreement but a formal dispute. It is then referred to Ministers to be raised and discussed at a meeting of the JEC.

We then move to paragraph 100, and so far we are working down the line of complete impasse:

“If … there is a dispute that cannot be resolved between Ministers, there is an automatic pause placed on the disputed finances, i.e. no decisions … can be taken by either government in relation to the disputed amount until the dispute is resolved”.

That seems a strange system, given that revenues either way are crucial to the running of the country. To have a dispute simply frozen in that way is very strange. The formula goes on a little further, because if that happens then the Governments are to draw up a statement of fact on the dispute, and technical input may be sought to ensure that the facts are correctly stated. It will then be considered by both Governments, who commit to using their best endeavours to resolve the dispute.

However, the agreement says in paragraph 103:

“If no agreement can be reached then the dispute”,

fails—or rather “falls”—and, as the noble Lord, Lord Forsyth, pointed out,

“there would be no specific outcome from the dispute and so no fiscal transfer between the Governments”.

What puzzles me further is paragraph 104, and maybe the Minister can help here:

“If either Government wishes to pursue the dispute further”—

let us imagine that the UK Government are anxious to do that—

“it can be referred to the ‘Protocol on the Resolution and Avoidance of Disputes’ attached to the Memorandum of Understanding between the UK government and the devolved administrations”.

I do not know where the memorandum is—it is not in the Printed Paper Office, as far as I know—and it is also said to be subject to review. So there is a cloud of uncertainty over exactly what paragraph 104 means and how fixed it is as a system for resolving these disputes.

If one is entering an area like this where it is plain that there will be political arguments on either side that may lead to a complete impasse, it is crucial that there should be a system for the resolution of disputes; otherwise one is left with a situation where no transfer takes place although one side is calling for it and the other is not. How can the system be left in that situation, hanging in the air without anyone to decide it? Can the Minister inform the House about that? It has a direct bearing on the amendment by the noble Lord, Lord Forsyth.

[Lord Lang of Monkton (Con)]

My Lords, we all slightly feeling our way in the dark in this debate, and that is very unfortunate because the fiscal framework is crucial to the future not just of the Government of Scotland but of the Government of the United Kingdom, and indeed to the stability of the UK and holding it together in the face of the assault coming from the Scottish nationalist Government in Scotland.

One would not have thought that we were feeling our way in the dark, though, from the absolutely masterly exposition by my noble friend Lord Forsyth of Drumlean, who laid out the issues with great clarity and considerable force and raised a number of very important points to which we have not yet had an answer. I share his view on almost everything that he said, and he has helped me to share it more clearly than I did before.

I shall focus on one fairly simple issue as I understand it—although here, too, we are in the dark—namely, the way in which the implementation of the financial assistance that is to be given to the Scottish Government over the next five years on the population issue will be put into force. I should start by saying that, yes, I welcome the fact that a deal has been done because it is a political situation that we also have to consider, as well as the proprieties, the economics and the constitutionality. Having a deal done means that the Bill can come into force and the Scottish Government can be put in the position of becoming accountable to a greater degree for their actions, possibly exposing themselves to the shortcomings of their policies and attitudes.

As I look at it, in the context of the Scottish block and the Barnett formula, there seems to have been a finesse of a somewhat insidious nature and we need to try to get to the bottom of it. I am perhaps thought pedantic because I do not like to hear the whole financial settlement in Scotland referred to as “Barnett”. Barnett is a very small part of it which simply deals with the annual increases that are added to the very substantial Scottish block, and the effect it has on those increases is, by an infinitesimal and unreliable amount, to reduce what comes to Scotland from what it otherwise would have been under the old Goschen formula, when the Barnett formula did not exist. I will not bore the House with the reasons why; I could do so but it has never had much impact on people before so I will ask your Lordships to take my word for it.

Scotland Bill

Debate between Lord Hope of Craighead and Lord Lang of Monkton

Tuesday 19th January 2016 Lords Chamber

[Lord Lang of Monkton (Con)]

My Lords, a number of points have been raised on this group of amendments. Amendment 43 refers to “may” and “must”. When I was a young, dynamic junior Minister in the Scottish Office, I once tried to change “may” to “must” in a Bill that we were bringing before Parliament. I was told by my officials that: “In effect, Minister, ‘may’ means ‘must’”. This was, of course, in the premiership of my late lamented friend Baroness Thatcher. I rather like the triangulation, offered by the noble Lord, Lord Gordon of Strathblane, that “shall” is probably better than either of them. No doubt the Minister will have an answer to that point.

I support the noble Earl, Lord Kinnoull, on Amendments 45 and 47 and echo what has been said by my noble friends Lord Dundee and Lord Sanderson. This is an important issue because centralisation—to which the noble and learned Lord, Lord Wallace, drew attention—is a very alarming trend that is taking place in Scotland. We see it threatening the universities. I had a hand in the universities when I was Secretary of State: I created their separate funding council in Scotland and took part in expanding university activities. To see anyone intervening in the independence of the universities worries me greatly.

One can see it in the police, too. Again, I made changes to the police force when I was Secretary of State but I resisted any suggestion of centralising, which I thought was a seriously wrong step. I would have liked to have privatised Scottish Water, but I was able to set up three separate corporations. Once they had created a record of performance, they would have been able to follow the English ones—already in the form of corporations—into private ownership. Sadly, I was no longer in power, and nor was my successor, my noble friend Lord Forsyth, when that point was reached.

There has been a trend, not just confined to the present Government but over time, for the devolved Parliament not to devolve further: not to decentralise but to centralise. That is why I feel strongly that we do need, as the noble Earl suggested, a separate Scottish Crown Estate commission. Indeed, I had rather assumed that that would be forthcoming. I regret to say that I do not have the Smith commission report with me now and I cannot quote the wording, but I was under the impression that the noble Lord, Lord Smith, anticipated some form of further decentralisation affecting this organisation. I do not believe that he thought that it should pass into the maw of the Scottish Government, for them to despoil or develop as they think fit. It has been immensely successful over the years and it deserves to be maintained, as my noble friend Lord Sanderson said. It should, of course, be accountable to the Scottish Parliament and its Ministers, just as happens in the United Kingdom with the Crown Estate.

On Fort Kinnaird, I echo what my noble friend Lord Sanderson said. This is a separate venture, not a wholly-owned part of the Crown Estate Commission. To intervene in a joint venture with an outside commercial body, which is maturing well and is part of a good, well-established relationship with that body, would jeopardise the interests of both the outside partner and the estate commission itself. Therefore it was and remains right not to interfere with the arrangement but to allow it to continue. To force some kind of disposal might jeopardise the venture itself and the Scottish Crown Estate commission to some extent. That cannot be in the interests of anyone involved in this debate. So I support what the noble Earl, Lord Kinnoull, said and I hope that the Minister will respond favourably.

[Lord Hope of Craighead (CB)]

Just as a footnote to the point that noble Lords have made about Fort Kinnaird, one can see from the Crown Estate commissioners website the structure of the venture that has been described. The Crown Estate commissioners themselves have,

“a 50 per cent interest in an English Limited Partnership which owns Fort Kinnaird Retail Park in Edinburgh”.

The venture is a partnership. The ownership and presumably the management of Fort Kinnaird are in the hands of the partnership and I take it that the commissioners draw a revenue out of that arrangement.

That takes one to the essence of the role of the commissioners, as described on their own website, which is one of management of the resources in order, as they put it,

“to deliver the best value over the long term”.

Of course, the interest for the UK Government at present is in the revenue. The commissioners make it clear that their function is to pay all the “annual revenue profit” to the Government. I would have thought it absolutely crucial to maintain that position, that in so far as the assets are concerned, they are managed in the broad interest of maintaining the assets for the best value. Of course, the revenue would then be transmitted to the Scottish Government, as would be consistent with the present position. That distinction between capital and revenue management and payment is absolutely crucial to the point that various other noble Lords have been making.

Scotland Bill

Debate between Lord Hope of Craighead and Lord Lang of Monkton

Tuesday 8th December 2015 Lords Chamber

[Lord Hope of Craighead]

I am obliged to the noble and learned Lord. There are really two points. First, Clause 2 as worded uses “normally”; secondly, it does not set out in full the way that the convention is applied in practice. These points were made very effectively by the noble Lord, Lord Stephen, a moment ago in moving Amendment 11, which is read together with Amendments 15 and 16. There are two points which needed to be added to Clause 2, one being to alter the legislative competence of the Scottish Parliament and the other being to alter the executive competence of the Scottish Government. These matters are in practice the subject of a consent resolution or a Sewel convention Motion and should be referred to expressly in the clause to cover the reach of the convention. That is the point which the committee of the noble Lord, Lord Lang, was talking about.

[Lord Lang of Monkton]

I am grateful to the noble and learned Lord, Lord Hope of Craighead, for his comments about the word “normally”. It is not a word that alarmed me particularly, as a non-lawyer, but the clause as a whole certainly alarmed and concerned the Constitution Committee. I shall say something about that in a moment but “normally” in its location there seemed to strike the balance between permitting the Scottish Parliament to legislate on devolved matters without intervention from the United Kingdom Government while, at the same time, giving the Government of the United Kingdom the clear right and entitlement in special circumstances to intervene. I will be interested to hear what my noble and learned friend at the Dispatch Box will have to say about it.

My own Amendment 13 simply seeks to strengthen new subsection (8) of Section 28 of the 1998 Act by reasserting the supremacy of the United Kingdom Parliament to reinforce the terms of subsection (7), which subsection (8) might otherwise seem to contradict. Having heard the treatment given by the Front Bench to my noble friend Lord Forsyth’s amendments, I suspect that I may not be on an ideal wicket. But I want to say a word or two about this clause because the Sewel convention is a dangerous situation in which to legislate.

The Sewel convention is as slippery as a fish. It has changed throughout the years since it came into being quite considerably and may yet change again. When I was first asked about it, I was told informally by my late lamented noble friend Lord MacKay of Ardbrecknish, who was at that time our Front-Bench spokesman on the Bill, that it was really just a courtesy to the Scottish Parliament for the United Kingdom Parliament to offer to legislate on its behalf, if it was an issue devolved to it on which it would plan to legislate. It would thus save time, expense and duplication. I do not think it was ever quite thus but that was the flavour of how I first understood it. It has now turned into something quite different and I see it as a weapon that seems to allow the Scottish Parliament to intrude into United Kingdom legislation to an unsafe extent, possibly even to the extent of a veto.

What is clear is that the Sewel convention is still so fluid and unsettled as not to deserve the name of convention. I do not think, in its present form, it is fit to be converted into law. It may be that those who have drafted the Bill have found, in the form of words they have used, a more stable and secure base for the long term, but the convention has changed a lot over the years and may again. Initially, the United Kingdom Government seemed to maintain that it applied only to powers already devolved or to restricting or diminishing such a power. That was certainly the original intention as I understood it, but in 2005, Devolution Guidance Note 10 was published, which suggested:

“The convention applies when legislation makes provisions specifically for a devolved purpose”.

I see that as something much broader.

Since then, the Scottish Parliament has claimed it applies to devolved areas rather than devolved matters, so that it also applies to legislation increasing devolved powers, which the UK Government seem at times to have accepted. The Scotland Act 2012 bore this out, as it was almost entirely an empowering measure and was taken to require legislative consent Motions. Astonishingly to me, the Labour Opposition supported an SNP amendment in the Commons and tried to enshrine devolved areas into the legislation. That could have given the Scottish Government a veto on UK legislation, which is what prompted my question to my noble friend on the Front Bench at Second Reading. This one-way degeneration of the original purpose of the convention is potentially damaging to the sovereignty of the United Kingdom Parliament, and we have to exercise great care in handling this.

The Smith commission asked only that it be put on a statutory footing. Even if we can be confident of a clear, unambiguous wording, the potential troubles do not end there. My noble and learned friend Lord Hope indicated at Second Reading, as he will recall, that it could become challengeable in the courts. My noble friend Lord Norton had serious concerns also, pointing out:

“Clause 2 does not transpose the Sewel convention into statute. It simply states the convention”.—[Official Report, 24/11/15; col. 639.]

I am completely out of my depth in reacting to that and I look forward to his speech a little later in the debate.

My amendment echoes the concerns of others to counter the uncertainties generated by the present wording of the clause. We have all felt the need to reiterate, in every possible way, the need to reassert the sovereignty of the United Kingdom Parliament. My amendment is the simplest and shortest—it may not be the best but at least it has a different wording from that rejected by my noble friend on the Front Bench. We must have a wording that is clear and unambiguous and able to withstand challenge in the courts, where I suspect it will probably end up.