Brexit: Scotland

Debate between Lord Wallace of Tankerness and Lord Dunlop

Thursday 15th September 2016 Lords Chamber

[Lord Wallace of Tankerness]

To ask Her Majesty’s Government what discussions they have had with Ministers and officials of the Scottish Government regarding the implications of the referendum vote to leave the European Union, since the Prime Minister’s visit to Edinburgh on 15 July.

[The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Dunlop) (Con)]

The Prime Minister is clear that the Government will work closely with the Scottish Government and other devolved Administrations to ensure that the interests of all parts of the United Kingdom are properly taken into account. Discussions have already taken place between UK and Scottish Government Ministers and officials. The Secretary of State for Exiting the European Union first spoke to the First Minister on 20 July and underlined the importance that the Government attach to engagement in Scotland.

[Lord Wallace of Tankerness (LD)]

My Lords, the Government have rightly expressed their support for a continuing soft border with the Republic of Ireland, yet they also appear to want to control freedom of movement from the European Union. In trying to square that circle, what assessments have the UK and Scottish Governments made of the increasing number of immigration offenders travelling to Scottish ferry ports from Northern Ireland, and how do the respective Governments intend to address any consequent financial and operational pressures on Police Scotland?

[Lord Dunlop]

The First Minister of Scotland was before the Scottish Parliament’s European and External Relations Committee yesterday. I think she said that there have been extensive ongoing discussions between the Scottish and UK Governments and that she was very optimistic that the discussions could make progress. I am sure that the issue raised by the noble and learned Lord will feature in those discussions.

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Monday 29th February 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, Clause 44 devolves power to the Scottish Parliament for regulation of licences to search and bore for petroleum in the Scottish onshore area. Clause 45 transfers the functions of the Secretary of State to the Scottish Ministers. However, as consideration payable for such licences is to remain reserved to Westminster, Clause 45(8) retains the power of the Secretary of State to make model clauses on the consideration payable for a licence granted by the Scottish Ministers, and on matters related to the keeping of accounts and the measurement of petroleum.

Amendment 46 would revise Clause 45(8) to ensure that the Secretary of State’s enforcement ability in relation to such reserved matters is preserved for licences in onshore Scotland. This will be achieved by maintaining the Secretary of State’s current power to cancel licences in onshore Scotland, applicable only for infringements in relation to consideration payable for a licence, the keeping of accounts and the measurement of petroleum related to consideration and taxation. Nothing in this amendment changes the powers being devolved to the Scottish Parliament. A definition of “appropriate Minister” under Clause 45(5) is removed, as this is redundant in light of Clause 45(17). I therefore beg to move Amendment 45.

[Lord Wallace of Tankerness (LD)]

My Lords, I shall speak to Amendment 47 and others in this group which are in the name of my noble friend Lord Stephen and myself. Amendment 47 would in effect devolve legislative competence for consents for electricity generating stations and overhead lines to the Scottish Parliament. The position at the moment is that the Scottish Government have executive power to grant development consent for generating stations of 50 megawatts capacity or more and overhead lines of 20 kilovolts nominal voltage or greater. However, the Scottish Parliament does not have legislative power to reform the law in relation to such development consents. This is the only type of development that the Scottish Parliament does not have legislative power to regulate.

As I have indicated, such consents are governed by Sections 36 and 37 of the Electricity Act. This legislation, which goes back to 1989, is outdated. In fact, it is sufficiently outdated that, in the mean time, in England and Wales, it has been changed so that applications for development consent are dealt with under the Planning Act 2008, a much more suitable system. In Scotland, it has been described as effectively a legislative orphan. The Scottish Parliament has no power to reform it, and when the United Kingdom Parliament reformed it in respect of England and Wales, the opportunity was not taken to reform it in Scotland. Moreover, it is my understanding that the draft Wales Bill is devolving power to the Welsh Parliament, as it will be known, to legislate on consents for almost all energy development there. The aim of this amendment is therefore to devolve to the Scottish Parliament legislative power to reform the system of development consenting for energy infrastructure. The generation, transmission and distribution of supply of electricity is presently reserved although, as I said, the actual power to grant consents has been devolved.

This issue has some practical consequences in the context of the Energy Bill, which is currently in the other place. I was advised last week that a development in the south of Scotland, which I think is of about 65 megawatts, is therefore subject to the present regime under Section 36. However, if the same development had been just several miles further south in Northumbria, it would have been the responsibility of the local authority. If the local authority had refused it in England and Ministers had called it in, the grace period that the Government proposed for onshore wind farm consents would have kicked in. However, that does not cover the situation in Scotland given that it is already subject to ministerial fiat there, so there is a mismatch in practical terms. I apologise that this gap was drawn to my attention after Committee but I have certainly made the noble Lord, Lord Dunlop, aware of these concerns. He has had some notice and I hope that he may be able to give an encouraging reply.

The other amendments, to some extent, go over the ground that we covered in Committee. I appreciate that the Minister has met me since then and we have discussed these amendments. The Government argue that there is already adequate statutory provision for consultation, and the Minister asked why the industry was not satisfied and agreed to meet the industry to find out. My understanding is that, in the event, negotiations on the fiscal framework took over. That is perfectly understandable—there is no criticism there. However, his officials did meet the industry.

The current position is in spite of the fact that a commitment followed a request in the Smith commission for further consultation. Indeed, in the initial response to the Smith commission, the Government’s Command Paper stated:

“The UK Government will work with the Scottish Parliament and Scottish Government to devise a proportionate and workable method of consulting the Scottish Parliament on the strategic priorities set out in the Energy Strategy and Policy statement”.

However, the Government’s position now is that this is not necessary and that there is already a statutory regime there under the Energy Act 2013.

The fact that the industry remains unsatisfied is of some concern. Notwithstanding new Section 90C(4), which states,

“a ‘renewable electricity incentive scheme’ means any scheme, whether statutory or otherwise”,

people in the renewables industry have formed the impression that any consultation with Scottish Ministers is likely to be triggered only by legislative changes. It would therefore be helpful if, in responding to this debate, the Minister could indicate the overarching legal basis for the contract for difference regime being set out in primary legislation, while the main detail as to how it will operate is contained in statutory instruments and any changes to these statutory instruments would trigger the consultation in terms of this Bill and the Energy Act.

The experience of the accelerated closure of the renewables obligation for onshore wind, which went ahead with, I think, minimal consultation with Scottish Ministers, has given rise to the concerns within the industry. It would be useful if the Minister could indicate whether the position with regard to any order to remove specific technologies from the contract for different regime is something about which Scottish Ministers would be consulted. There is no obligation on the Secretary of State to consult on the budget notice issued in advance of each allocation round. However, there is a need to consult Scottish Ministers on other aspects of the contract for difference mechanisms, for example on setting the new administrative strike prices, and it would be helpful if the Minister could perhaps give some clarity on how he sees that operating in the future.

Officials seem content that the issue addressed by Amendment 55 is dealt with adequately under existing provisions, but the view is that the improved consultation mechanism would have been better if a Scottish member could have been appointed to the Gas and Electricity Markets Authority. Again, this is a matter that the Smith commission flagged up. The Bill does a similar thing for Ofcom, and perhaps the Minister could indicate how he intends to improve the consultation and whether there is any further mechanism through the GEMA board which would meet the industry’s concerns.

Finally, one of the amendments gives Ministers the power to bring forward a scheme which effectively would devolve contracts for difference to Scottish Ministers. I stress it is a scheme which UK Ministers could devolve, so the concerns that this could lead to a bigger levy on consumers across the United Kingdom would not necessarily come through. The specific point here is that there is concern in the industry that, under the next tranche or round of contracts for difference, onshore wind may not be included under the technologies, notwithstanding that onshore wind has been at £82.50 per megawatt hour for 15 years, index linked, while offshore wind has been at £114.40 per megawatt hour for 15 years and nuclear is index linked for 35 years at £92.50. There is a very strong argument that Scotland has a considerable abundance of resource in onshore wind and that it could be developed there. This is not in the Smith commission, but had it been known that the Government were going to change the rules on the renewables obligation for onshore wind when the commission was sitting, it may well have made such a recommendation, because it would have been entirely consistent.

I simply remind the Minister that in the Scotland analysis paper for energy, the then Government said:

“The UK Government is now introducing the Contracts for Difference scheme, which will provide long term support for all forms of low-carbon electricity generation. These contracts provide industry with the long-term framework to make further large scale energy investments at least cost to the consumer”.

I stress the words “all forms”, which includes onshore wind. I am sure the Minister would like to take the opportunity to say that the present Administration will stand by the commitment that the previous coalition Government presented to the Scottish people in the run-up to the referendum. I hope the Minister will be able to give us some reassurances when he comes to reply.

--- Later in debate ---

[Lord Dunlop]

I am very happy to make that commitment. The Government intend to make an annual report to Parliament that will cover how the powers under the Smith agreement are being implemented in practice. That is fundamental to our approach. Regarding the review, I can confirm what has already been confirmed: there is no default position for it. All the evidence that will be built up over the succeeding five years will be on the basis of the Government’s comparable model.

I turn to the prospects of reaching an agreement. This review will be informed by an independent report. We will have had five years of experience of how these powers operate. Instead of seeking to negotiate in the months leading up to an election, this will be a negotiation after an election. Those conditions lead me to believe that an agreement can be reached.

[Lord Wallace of Tankerness]

The noble Lord has indicated—and the agreement says—that the report has to be received by the end of 2021. What will happen if we are approaching the financial year 2022-23 and there is no agreement? While he is right to say that there is not an election to focus minds, one imagines—although one does not know—that there will not be the passage of a Scotland Bill to concentrate the mind either. Given how close we are to the start of the next financial year, when there is actually a Bill that we hope to pass before the Easter Recess, what happens if that imperative does not exist? What will the position be then? Will it be the transitional arrangements or will it be the Treasury model?

[Lord Dunlop]

I am not sure I will be able to satisfy the noble and learned Lord on that point because I have learned not to deal in hypotheticals or to speculate about what might happen in five years’ time. As I say, I think the conditions that pertain then will be favourable to reaching an agreement and I am confident that we will reach an agreement at that time.

On the amendments relating to the fiscal framework being approved by Parliament, the Government do not believe it would be appropriate to subject the framework as a whole to approval by both Houses. Many aspects of the fiscal framework are administrative, not legislative, and the need to update these aspects requires a degree of flexibility. There is also no precedent for these non-legislative aspects to require parliamentary approval; for example, the block grant adjustment mechanism arising from the power to devolve under the Scotland Act 2012 was not subject to separate parliamentary approval.

[Lord Dunlop]

My noble friend is of course quite right that the fiscal framework should receive detailed scrutiny from this Parliament. I know that this House will play a full part and I anticipate that the House of Commons will do the same. What the House is being asked to do today is to scrutinise and approve one of the most significant aspects of the framework: the capital and resource borrowing powers. The noble Lord, Lord Empey, raised this issue and we will have an opportunity to debate it in detail in the next group of amendments. Dr Angus Armstrong of NIESR told the Lords Economic Affairs Committee that the question of borrowing is,

“the most important question in the whole debate”.

In due course, this Parliament will also be asked to approve changes to tax legislation as a result of the fiscal framework and the Smith commission. That legislation will be scrutinised by Parliament in the usual way. Likewise, the legislation required in Westminster to establish the Scottish Fiscal Commission on a permanent footing by means of an order under the Scotland Act will receive scrutiny in both Houses before it is approved. As I said to the noble Lord, Lord McFall, the Government have committed to report annually to Parliament on the operation of the framework. I know that these reports will receive full scrutiny.

At the end of the day, the fiscal framework has been agreed between the two Governments. To introduce a further process at this stage would not only delay the transfer of powers, it would mean that the UK Government—

[Lord Wallace of Tankerness]

I understood the Minister to say that the establishment of the Scottish Fiscal Commission will require an order of the United Kingdom Parliament. I understood it to be a Bill that was going through the Scottish Parliament to establish the Scottish Fiscal Commission and put it on a statutory basis. Can he elaborate? What would be the content of an order in relation to the Scottish Fiscal Commission that would have to be passed by both Houses of the United Kingdom Parliament?

[Lord Dunlop]

I think I am right in saying that it does require this Parliament to establish the Scottish Fiscal Commission as a statutory body but I am happy to clarify that in more detail, perhaps in succeeding debates that will deal with this issue. That is certainly my understanding.

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Wednesday 24th February 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, I thank the noble and learned Lord, Lord Wallace, the noble Lords, Lord MacKenzie and Lord McFall, and the noble Earl, Lord Kinnoull, for their contributions. Let me begin by saying that I understand and sympathise with the intention of this amendment and with the island authorities. I also commend the noble and learned Lord, Lord Wallace, the noble Lord, Lord Stephen, the noble Earl, Lord Kinnoull, and my noble friend Lord Dundee, who have shown such resolute commitment to this important issue.

As the noble and learned Lord, Lord Wallace, has said already, I had the opportunity to meet the island authorities and other stakeholders. I found it an enlightening and informative experience to talk through this issue with them. I hope that I have further opportunities to meet them, and I certainly encourage others to do so. When he and I met the representatives of the Western Isles Council recently, it was clear how much appetite they had for the management responsibilities of the Crown Estate to be devolved with as little delay as possible. However, the Smith commission agreement was absolutely clear that:

“Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the Scottish Parliament … Following this transfer, responsibility for the management of those assets will be further devolved to local authority areas”,

such as Orkney, Shetland and the Western Isles or other areas that seek such responsibilities. The Smith commission chose these words with good reason. I believe that the devolution of management responsibilities will be quicker, simpler and come with fewer practical difficulties if the UK Government devolve these responsibilities in a single transfer to Scottish Ministers. A consultation can then take place in Scotland to determine the best way to further devolve these assets. I stress that the UK Government’s view is that this should be a consultation about how, not whether, the management of those assets will be further devolved to the island councils.

I note that the Scottish Government are never shy of saying how they will hold the UK Government’s feet to the fire on how they live up to the commitments under the Smith agreement. I assure noble Lords that the UK Government will take every opportunity to press Scottish government Ministers to deliver on the commitments made by the SNP as part of the Smith process. I was glad to note, and to hear the noble and learned Lord, Lord Wallace, repeat today, that the island councils met the Scottish Government on Monday and that some progress, although not complete progress, was made in those talks.

However, the Government do not believe it would be in keeping with the principle or spirit of devolution for the UK Government to determine how the management of the Crown Estate in Scotland should be further devolved. But I take this opportunity to assure noble Lords that the UK Government take this issue seriously. The Exchequer Secretary to the Treasury, who has policy responsibility for the Crown Estate, will make a Written Ministerial Statement to Parliament six months after the transfer of Crown Estate assets. This statement will outline the progress that the Scottish Government have made on the onward devolution of these assets. This is a new commitment which the Government are prepared to make, having been persuaded by the arguments in this House and having met and listened to the group Our Islands Our Future and other passionate voices. I hope that this commitment gives noble Lords comfort. As I have said, we will continue to press the Scottish Government to deliver what was promised to the island communities and other communities in the Smith agreement. I have no reason to suspect that the Scottish Government will not deliver the onward devolution of these assets.

The noble Lord, Lord McFall, asked about timing. Conversations between officials are ongoing, and it is envisaged that Ministers of the UK and Scottish Governments will commence further detailed discussions after the Scottish Parliament elections about the precise timing.

In conclusion, I reiterate that although I respect and understand the intention of this amendment, the Government cannot support it. I ask the noble and learned Lord to withdraw this amendment.

[Lord Wallace of Tankerness]

My Lords, I am grateful to all noble Lords who have taken part in this relatively short debate. I particularly thank the noble Lord, Lord MacKenzie of Culkein, who speaks with personal experience and knowledge about the challenges that face many of our islands communities and about the opportunities that those communities wish to have to be masters or mistresses of their own destiny.

The noble Earl, Lord Kinnoull, made an important point. Oban would certainly be outwith the immediate scope of the provision, but of course, as the Smith commission said, the measure could then go on to cover other coastal communities. He made the important point that in such circumstances, you have officials who know the individual concerned. Also, if you are a developer, you will then have to deal with only one regulatory body and will not have to get planning permission from an islands council and separate permission from the Crown Estate or the body that the Scottish Ministers set up after devolution.

I am grateful, too, for the very constructive and positive response from the noble Lord, Lord McFall. I think it was Lomondgate that he and I went to together during the referendum campaign. It was a very impressive set-up that he had had a considerable hand in developing and promoting.

I welcome the very understanding and sympathetic views of the Minister. He quoted the Smith commission quite properly, saying that following the transfer there would then be a transfer to the islands. That is precisely what our amendment says—that there would be a transfer and, following that, another transfer. However, the significant point is that he said that he would not hesitate to hold the Scottish Government’s feet to the fire, and that it was a question of how rather than whether. I fear that at the moment the Scottish Government have not taken that step. They are still talking about net revenues and not about management. Therefore, it might be helpful in holding the Scottish Government’s feet further to the fire if your Lordships were to agree to the amendment.

If the Minister was able to hold the Scottish Government’s feet to the fire and was able to tell us that they are now committed to the management and not just the transfer of assets, giving some indication of a timetable, no one would be happier than me to accept that positive outcome from the Minister’s efforts. In those circumstances, I think it would be helpful to test the opinion of the House.

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Monday 22nd February 2016 Lords Chamber

[Lord Wallace of Tankerness]

If there was migration from Scotland as a result of higher tax rates, clearly the population ratio would change, and we are being told that there was much discussion around the concept of per capita. How would the United Kingdom Government and the Scottish Government agree on how many of those who have left Scotland have left as a result of higher taxation as opposed to having to look after elderly parents?

[Lord Dunlop]

As I was saying, that is an indirect, or behavioural effect. It is not a direct effect: that is the point that I was making. What the adjustment mechanism takes into account is these direct effects. They are things that can actually be calculated, but I will come on to talk about behavioural or spillover effects, which is what I think the noble and learned Lord is talking about.

--- Later in debate ---

[Lord Dunlop]

My noble friend misunderstands what I am saying. I am not necessarily saying that those should be compensated for. In the evidence that the Chancellor of the Exchequer gave to the Treasury Select Committee, he said:

“My personal view is that tax competition is something that we should allow”.

He is effectively saying that if there are different tax rates north and south of the border, that is something that we should not automatically try to compensate for. Another example relates to childcare. We all remember that at the time of the independence referendum White Paper, central to the retail offer being made by the SNP was its childcare policy. It was a matter of complaint that, were that policy to be successful and increase income tax revenues, the benefit of that would actually flow to the Treasury and not to the Scottish Government. Under the Smith package, if such a policy succeeded in increasing participation by women in the labour market, the benefits of that would flow to the Scottish Government.

[Lord Wallace of Tankerness]

Teasing this out, may I give an example that is hypothetical in one sense, because it is historic? During the 1990s, the Conservative Government privatised the water industry in England, and, I think, in Wales. Clearly, the decision was taken by the then Conservative Government not to do so in Scotland. However, after that privatisation had taken place, there were no further consequentials under the Barnett formula for Scotland. The money had to be found to fund the water industry in Scotland in public hands. If the arrangements that we are now talking about had been in place then, and the UK Government had decided to take the water sector into private ownership in England and Wales, which would have led to a decrease in the funding for Scotland, would that have been a detriment for which the Scottish Parliament would have had to be compensated?

[Lord Dunlop]

No, I do not believe that that would be a detriment in the sense that the UK Government would have to compensate the Scottish Government. The situation would apply; the Barnett formula would apply; the equivalent departmental spending from England would flow through to Scotland. I do not think that this package changes that at all. Although the ownership structure north and south of the border is different, the cost of this on both sides of the border is met in water bills.

--- Later in debate ---

[Lord Wallace of Tankerness]

This is the point I was trying to get at before. The Minister has just said it; he may correct me, and I apologise as it is complex. He said that, if the Scottish population falls and is a lower proportionate share of the population, there would be a lower tax deduction. But if that population has fallen because of the tax policies of the Scottish Government, why should there be a lower tax reduction?

[Lord Dunlop]

I think we are reflecting at the outset that Scotland produces a lower proportion of total UK income tax. We are applying that comparability factor from the outset. The Scottish Government will still bear population risk. If there is deviation from that initial situation—whether it is a result of their policy choices—that is how they would bear the population risk.

--- Later in debate ---

[Lord Wallace of Tankerness]

On the important point made by the noble and learned Lord, Lord McCluskey, about having to table amendments again to maintain the sequence, and, indeed, in relation to the point made by the noble and learned Lord, Lord Hope of Craighead, on the last group of amendments, perhaps the Minister will take this opportunity to clarify whether, when we come to Report, the order of consideration will be as in Committee; in other words, that Parts 2 and 3 will be taken at the end—I think next Monday is the day currently set down for that—and the other parts will be debated on Wednesday.

[Lord Dunlop]

Yes, I can confirm that.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, it certainly had not been my intention to take part but I do so given the comments of the noble Baroness, Lady Hayter, and the contribution of the noble and learned Lord, Lord Hope, because I took part in the debates in the other place on the 1998 legislation. Indeed, I tabled an amendment to devolve abortion—the argument being that abortion law is a matter of health and the criminal law, both of which are themselves devolved. It therefore seemed anomalous that abortion should not be. The noble and learned Lord may correct me if I am wrong but I think that prior to 1967, the criminal law in relation to abortion was different in Scotland from what it was in England. So there have been many years, probably decades, in which there were differences on different sides of the border.

Having spoken for the devolution of abortion in debates in the other place in 1998, I recall that when the then Secretary of State spoke, there was a conscious decision that the Government’s position was that abortion should not be devolved. So the late Donald Dewar spoke very coherently, as your Lordships would expect, putting the case for a continued reservation of abortion. However, when we came out of the Chamber later he said to me, “I’m glad you did not read my speech during the debates on the 1978 legislation”. So before Committee on this Bill, I went back and looked at Donald Dewar’s speech when he advocated the devolution of abortion during the passage of the 1978 legislation. It made a compelling case for its devolution.

[Lord Dunlop]

I thank the noble Baroness, Lady Hayter, and the noble Earl, Lord Kinnoull, for the amendments that they have tabled. I hope that the Committee will indulge me if, given this late hour, I am relatively brief in responding to them.

As has already been explained, Amendment 80 would require the Secretary of State to lay a statement before Parliament stating that the Scottish Government and Scottish authorities have made appropriate arrangements in relation to the exercise of the powers which have been devolved to them before parts of the Bill are commenced. The Government regard this amendment as against the spirit of how devolution operates. Moreover, this is an enabling Bill: constitutional legislation which transfers legislative competence to the Scottish Parliament and executive competence to the Scottish Ministers. There will be no change in law until such time as the Scottish Parliament and Scottish Ministers use the powers devolved to them. It will therefore be for them to decide whether they have made appropriate arrangements before doing so. I have discussed this point with the noble Earl—namely, how we ensure an effective transition. It requires the co-operation of the two Governments to discuss those issues. A number of mechanisms are in place to support a smooth transfer of powers and joint working. We have already debated how that works in relation to welfare and I expect similar joint working with regard to the Crown Estate.

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Tuesday 19th January 2016 Lords Chamber

[Lord Wallace of Tankerness]

I am grateful to the Minister for giving way and for the way he is responding. Does he accept that there is a difference between the amendment moved by my right honourable friend Alistair Carmichael in the other place, Amendment 48, which was withdrawn, and the one we are now debating, which provides that the scheme for double devolution would be a Section 90B scheme, which, as the Minister has been at great pains to emphasise, will take place only with the agreement of Scottish Ministers? The amendment makes subsequent provision that it will be Scottish Ministers who make the transfer. So Scottish Ministers would be very much involved. Indeed, if the Minister were to accept my amendment to,

“leave out ‘C’ and insert ‘A’”,

the Scottish Parliament would have a role, too.

[Lord Dunlop]

I note what the noble and learned Lord says, and I will reflect on his point; I am sure that we will continue to discuss it.

The clause enables the Scottish Parliament to make its own legislation about the management of the Crown Estate in Scotland after the transfer—and beforehand, should it wish to have arrangements in place in readiness for transfer. The Scottish Government have already made commitments to devolution to island communities. In the document Empowering Scotland’s Island Communities, which has already been referred to, the Scottish Government have committed to ensuring that 100% of the net income of the islands’ seabed is passed to island communities. The Scottish Government have also said that they intend to consult on the future arrangements of the Crown Estate. Therefore, as I said, although I am sympathetic to the sentiments that have been raised about this issue, the Government do not believe that it is appropriate for the Bill to set out any onward arrangements for devolution to local communities. That is a matter for the Scottish Parliament. I look forward to hearing more from the Scottish Government on their further plans as they develop them.

I turn to Amendment 46. Clause 34 provides for a transfer scheme that would transfer all the existing Scottish functions of the Crown Estate commissioners to Scottish Ministers or to a person nominated by them. The amendment seeks to change the entity to which the transfer of those executive functions is made from Scottish Ministers to the Scottish Parliament; several noble Lords referred to this.

I note that the right honourable colleague of the noble and learned Lord opposite also tabled this amendment in the Commons in Committee. The Smith commission agreement stated that responsibility for the management of the Crown Estate and the revenue generated from those assets would be transferred to the Scottish Parliament. However, the Scottish Parliament is a legislative rather than an executive body, as I have already said, and for that reason it is not equipped to undertake the management functions that are currently exercised by the Crown Estate commissioners. The Law Society of Scotland also observed that the transfer is to the Scottish Ministers rather than the Scottish Parliament, and noted that there are good practical reasons why this should be so—not least that the Parliament does not exercise its executive powers.

--- Later in debate ---

[Lord Dunlop]

I thank your Lordships for what has been a set of powerful and knowledgeable contributions to this debate. Many of the points raised by noble Lords have great force. To address directly and upfront what the noble Lord, Lord McAvoy, asked, I can say that we meet regularly with Scottish Ministers—later this week the Secretary of State is meeting Deputy First Minister John Swinney—and these matters are obviously the subject of those meetings. I will ensure that the strong feelings that have been expressed in this House are conveyed to the Deputy First Minister and to other relevant Scottish Ministers.

The task of policing the railways in Great Britain is carried out by the British Transport Police, as has already been discussed, the priorities of which include tackling crime on the railways, minimising disruption to the railway as a result of crime or other incidents, and ensuring that passengers feel safe and secure on the network.

I was going to touch on history, but the noble Lord, Lord Faulkner, has already beaten me to it, and when it comes to railway or transport history I am very wary of tangling with him.

The BTP currently polices the national rail network in England, Scotland and Wales, as well as the London Underground and some other light rail networks. It operates under a divisional structure, comprising three geographically defined areas: Scotland, London and the south-east, and the remainder of England and Wales. Today a large proportion of the rail network in Scotland is self-contained and is currently policed by just over 200 BTP officers out of a total BTP staff of 3,000 officers.

[Lord Wallace of Tankerness]

The Minister said “other light rail networks”. Does the BTP have any responsibility for the Edinburgh trams?

[Lord Dunlop]

That is a very good question to which I do not know the answer, but I will be very happy to clarify that point for the noble and learned Lord. Noble Lords have raised a range of important issues, and I will try to cover as many of these as I can in my response.

--- Later in debate ---

[Lord Dunlop]

We anticipate that the BTP will continue to have limited functions in that scenario; I will come on to address that later in my remarks.

Amendment 53A was tabled by the noble Lord, Lord Empey, who spoke with great authority from his Northern Ireland experience. Regardless of how the Scottish Government legislate with regard to railway policing, the British Transport Police and the British Transport Police Authority will continue to exist in England and Wales. There is no question of abolishing or dissolving the British Transport Police. We also anticipate, as I have just said, a limited but continuing role for the BTP in Scotland, particularly in relation to cross-border services—a point raised by the noble Lord, Lord Faulkner—working alongside the new Scottish model. There is already existing co-operation and collaboration between the BTP and Police Scotland. The BTP uses Police Scotland police stations, for example, and Police Scotland can be first responders to rail-related incidents. Inter-force co-operation will be one of the many important issues to be agreed between the UK and Scottish Governments before the BTP’s current role and function are changed. The need for this sort of collaboration between different police forces is not confined to railways; it happens every day in other fields.

It is the BTP’s Scottish division—its functions, staff and contracts—which would be transferred if the Scottish Government decided to implement a new operational model, and which would be legislated for by the Scottish Government once the necessary legislative competence had been provided through Clause 42 in order for us fully to deliver the Smith commission agreement.

The debate this evening has highlighted the complexities. Both Governments are aware of the complexities of such a transfer and of the need for close collaboration and engagement to work through the details. I reassure your Lordships that this work is already under way and we will keep the House informed as it progresses. The starting point is for the Scottish Government to determine the operating model and to legislate for future policing of the railways. The aim of both Governments, working together, is to ensure an orderly transfer of property, assets and liabilities. Clearly the UK Government will work to ensure continued co-operation during the transfer and afterwards to achieve the best possible outcome. Many of the issues raised by noble Lords this evening—in particular, the noble and learned Lord, Lord Wallace—will be determined as part of this process.

The need to maintain high levels of service should be at the forefront of any planning for an efficient and effective transfer of functions. As the noble Lord, Lord Berkeley, mentioned, BTP officers have a wealth of knowledge and important skills, which it will be important to retain and ensure are reflected in any new Scottish structure. The expectation from the discussion we have had so far with the Scottish Government is that a specialist transport policing unit will be established within Police Scotland. The transfer of experienced officers from the BTP will help ensure that these valuable capabilities are appropriately shared, and we will continue working with the Scottish Government during this important period.

I note what my noble friend Lord Forsyth said about Police Scotland, but I make it clear that, as is consistent with the nature of devolution, it will be for the Scottish Parliament to legislate in relation to the policing of the railways in Scotland and for the Scottish Government to decide how they want the new structure to operate in practice. I think that this echoes what the noble Lord, Lord McAvoy, said. The Scottish Government will be held to account for that by the people of Scotland, as they are currently being held to account for the performance of Police Scotland. That is leading to a review of the governance of Police Scotland.

The noble Earl, Lord Kinnoull, talked of teething problems. The importance of getting this right, both for maintaining the standards of railway policing in Scotland and for preventing any adverse effect on the BTP regarding the rest of England and Wales, will not be overlooked. Given its importance, we expect the transfer of the BTP’s property rights and liabilities to take between two and three years.

The noble Lord, Lord Empey, raised an important practical point when he asked whether the BTP would have powers to operate and arrest in Scotland, should it need to follow a criminal across the border. It is a point that I am confident both Governments will discuss and on which they will agree an effective approach as part of the transfer and set-up of new collaborating arrangements so that criminals can effectively be pursued across the border.

I accept that the devil will be in the detail. However, there is no reason in principle why the high standards of railway policing in Scotland cannot continue under a devolved model, and the Government will continue to work with the Scottish Government to achieve this. For those reasons, I urge noble Lords not to press their opposition to the clause.

[Lord Wallace of Tankerness]

I raised a number of questions, one of which concerned funding. I know that the devil is in the detail but, from his discussions thus far with the Scottish Government, can the noble Lord give us some indication of the United Kingdom Government’s ideas regarding the funding arrangements that will be put in place?

[Lord Dunlop]

As I have just said, this is about devolution to the Scottish Parliament. Following devolution—and this matter will form part of the discussions—it will be for the Scottish Parliament to determine what the charging arrangements will be. However, perhaps I may end on this point. Democratic accountability is absolutely key here. I do not think that the voters of Scotland would be very pleased if the Scottish Government, through the train operating companies, increased costs to the travelling public in Scotland. For all the reasons I have given, I urge noble Lords to agree to the clause.

--- Later in debate ---

[Lord Dunlop]

I did answer it, to the extent that there is a plethora of detail that lies behind this. However, it requires, as I said, the Scottish Government, in discussion with the UK Government, to specify what their operating model is. Until we have that, we cannot answer in a lot of detail. I come back to the fundamental point that we are devolving something, and it is for the Scottish Government and Parliament to decide how that will work within Scotland.

[Lord Wallace of Tankerness]

On that point, and in reflecting on his answer to the noble Lord, Lord Berkeley, and his earlier answer to me, which he has just repeated, does that mean that the Scottish Parliament and Government could load up the charges on Network Rail, which is a pan-UK body, and would that therefore have implications for transport rail users in England and Wales, as well as in Scotland? Does he not think that that is a matter on which the United Kingdom Government should have a view?

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Tuesday 19th January 2016 Lords Chamber

[Lord Dunlop]

The noble and learned Lord, Lord Wallace of Tankerness, is very interested in these energy schemes and very knowledgeable about them, and has spoken on other pieces of legislation in this connection. He raised a number of specific points in the debate. I am, of course, very happy to meet him to discuss those further.

Clause 58 creates a formal consultative role for the Scottish Ministers in the design of renewable electricity incentive schemes that will apply in Scotland. Our aim is to ensure the Scottish Ministers are able to comment on the design of new incentives to support renewable electricity generation that will apply in Scotland, or the redesign of existing schemes as they relate to Scotland. The new arrangement provides for a general duty to consult the Scottish Ministers on the design of incentive schemes for renewable electricity which will apply with respect to the existing schemes as they relate to Scotland, and any new schemes that will apply in Scotland.

The noble and learned Lord has tabled amendments that would extend the scope of Clause 58 to heat incentive schemes. We have exchanged correspondence and discussed it further. He has put on the record the response that I gave in my letter, so I will not repeat what he has already said. However, we believe that these amendments would duplicate existing regulations and are therefore unnecessary.

Amendment 67 seeks to amend Clause 58 to require the Secretary of State to consult the Scottish Parliament, in addition to consulting the Scottish Ministers, on renewable electricity incentive schemes, treating the Scottish Parliament as a conventional stakeholder rather than a legislative body. The amendment requires the Secretary of State for Energy and Climate Change to statutorily consult all 129 Members of the Scottish Parliament when making changes to renewable electricity incentive schemes. In our view, this would lead to overly complex and time-consuming consultations that would affect the smooth operation of renewables schemes. For example, were the Scottish Parliament in recess, this could delay the conclusion of a consultation, delaying the implementation of UK government policy. The Government consider the inclusion of consultation with the Scottish Ministers is appropriate. However, Members of the Scottish Parliament are already able to make their views known during public consultations.

Amendment 68B seeks to amend Clause 58 to require the Secretary of State for Energy and Climate Change to consult the Scottish Ministers on amendments to renewable electricity support schemes which are of a minor nature or are made only for technical or administrative reasons and to consult the Scottish Ministers about any levy in connection with a renewable electricity incentive scheme. The noble and learned Lord took on board the de minimis aspect of the first part of that. As drafted, Clause 58 excludes the requirement to consult the Scottish Ministers on minor, technical or administrative issues. In general, this exclusion will apply to changes unlikely to have a significant impact on generators or potential generators, such as making changes to references to technical documents, or making changes to an application procedure. This amendment would, therefore, lead to overly complex and time-consuming consultations that would affect the smooth operation of the schemes.

Amendment 69 also seeks to amend Clause 58 to require the Secretary of State for Energy and Climate Change to consult the Scottish Ministers about any levy in connection with a renewable electricity incentive scheme. I note what the noble and learned Lord said about that and I am very happy to discuss this further with him. Levies on particular companies—for example, electricity suppliers—are sometimes created to sit alongside renewable energy incentive schemes as a way of funding them. An example is the supplier obligation which requires electricity suppliers to pay for the contracts for difference scheme. Levies to fund renewable support schemes are considered to be a form of taxation and taxation is generally a reserved matter. Devolution of specific tax powers is dealt with elsewhere in the Smith commission agreement

[Lord Wallace of Tankerness]

I am grateful to the Minister for giving way. My first question is: where in the Smith agreement is provision made for such an exception? Secondly, even allowing for what he says— and I would want to read it and consult on whether it is a legitimate point—does the Minister not think this is drafted very widely? It says “any levy”, and could completely negate what is set out in subsection (1).

[Lord Dunlop]

As I have said, I am very happy to meet with the noble and learned Lord to discuss this specific point and I undertake to do so.

Similarly, Amendment 68A is also unnecessary as the phrase “a renewable electricity incentive scheme” would include a hydropower incentive scheme. I met and discussed this with the noble Lord, Lord Steel, last week. I put on record the importance of small-scale hydro installations. Some 500 of these have been built in Great Britain since the start of the feed-in tariff scheme in April 2010. These installations represent a doubling in the number of hydro sites across the country but a significantly smaller proportion in terms of capacity, as none of these new sites is above 2 megawatts in size. The majority of these are in Scotland, where hydro accounts for 16% of the capacity of all feed-in tariff installations, with solar on 44% and wind on 39%. Going forward, the tariffs should still offer sufficient incentive for well-sited installations, with an estimated return of 9.2%, based on costs supplied by the industry. It is therefore estimated that around 500 further installations could be installed in the next three and a quarter years, to April 2018-19.

Clause 58 ensures that Scottish Ministers will have a formal consultative role on contracts for difference, the renewables obligation and feed-in tariff schemes, all of which incentivise the deployment of hydropower. Therefore, we do not believe it necessary to make specific provision for any of these amendments within the Scotland Bill and I ask that this amendment not be moved.

Amendment 73 would duplicate existing arrangements. The Energy Act 2013 already gives Scottish Ministers a clear, formal consultative role in the development of the Ofgem strategy and policy statement, which gives them an opportunity to influence its content. Section 135 of the Act makes the Scottish Ministers “required consultees” on drafts of the statement and Section 134 also requires the Secretary of State to consult them on the action that she proposes to take following any review of the statement. The current strategy and policy statement arrangements give effect to the Smith agreement and therefore the amendment is unnecessary.

Amendment 73A seeks to introduce a new clause to transfer powers to the Scottish Ministers to award contracts under the contracts for difference scheme and to set the level of feed-in tariffs in respect of electricity generation from renewable sources in Scotland. Publishing such proposals, as well as the transfer of any such powers, goes well beyond the Smith commission recommendations, as the noble and learned Lord himself said, which relate to consulting on establishing and amending schemes that apply or relate to Scotland. In addition, both contracts for difference and feed-in tariffs are Great Britain-wide schemes and do not currently operate in a regionally specific way. This is linked to the fact that we have a GB-wide integrated energy system on which those schemes rely, which has been shown to work well over many years and from which all energy consumers benefit.

Scotland has more than proportionally benefited from financial support from all GB bill payers under current energy policies. Around 9% of the UK population is in Scotland, but we estimate that just over 20% of the support under the renewables obligation as a whole—around £760 million of the total—will go towards funding Scottish renewables projects. For feed-in tariffs, Scotland represents over 10% of the renewable electricity capacity installed to date, particularly in the wind and hydro sectors. In conclusion, I urge the noble and learned Lord not to move this amendment.

Scotland Bill

Debate between Lord Wallace of Tankerness and Lord Dunlop

Tuesday 24th November 2015 Lords Chamber

[Lord Dunlop]

The noble Lord anticipated what I was going to talk about. He is always very prescient about these matters. I want to explain why the Government believe that the Bill can proceed without delay and without compromising the detailed scrutiny of the fiscal framework, which Parliament rightly expects to carry out. First, there are the practicalities around delivering the promises that we made. People in Scotland made a decisive choice to remain part of the United Kingdom. They voted for a more powerful Scottish Parliament with the strength that comes from our union of nations. To achieve this, voters in Scotland will expect to go to the polls next May knowing what powers the Scottish Parliament and the Scottish Government will have, so they can cast their votes knowing how the parties will use those powers.

It is important to get the Scotland Bill to Royal Assent before the Scottish Parliament elections next year. A number of noble Lords have made that point in this debate. That is for a very good reason. It is not just a political priority for the Government. I believe—this has been confirmed in the debate today—it is a priority shared by the Labour Party and the Liberal Democrats, too. If we seek to delay the Bill now, it will be very difficult to meet that timetable, which is one that Scottish voters expect and one that the UK Parliament has adhered to every step of the way so far.

[Lord Wallace of Tankerness]

I am very grateful to the Minister for picking up the question of when we will see the fiscal framework. Everyone without exception said that it was really required. Will he explain what he means when he says that the Bill must “be there” before the Scottish elections? Does he literally mean the Scottish elections, or does he mean when purdah starts before the Scottish elections? Is the deadline the first Thursday in May or the last week or March?

[Lord Dunlop]

To answer the noble and learned Lord’s last point, we absolutely need the Act by the time the Scottish Parliament breaks for the election.

The second point I wanted to make is on ensuring that the fiscal framework receives detailed scrutiny. There has been widespread support around the House for that concept. I reassure noble Lords that both Governments aim to complete the framework as soon as possible to give both the Scottish Parliament and the UK Parliament time for due consideration of it. As mentioned by several noble Lords, the Government will keep updating Parliament after each negotiation session, as we have done. We will invite all relevant committees to look at the framework, including Lords committees and the Scottish Affairs Committee in the Commons. We will welcome their comments.

If legislation is needed to implement the framework, both Houses would be involved in that in the normal ways. There was such legislation in 2012, with primary legislation debated in both Houses. As I said in my opening speech and reaffirm now, the Government’s firm intention is for the fiscal framework to be available to the Scottish Parliament and both Houses of this Parliament before the Bill completes its passage. In response to my noble friend Lord Griffiths, I confirm that the intention is for this to be a detailed written agreement.

[Lord Dunlop]

On my noble friend’s first point, it has been evident from the debate today that the framework is of critical importance. It raises very complex issues that need to be worked through to get it right. That is exactly what we are doing. I repeat what I said: the Government’s firm intention is for the fiscal framework to be available to the Scottish Parliament and both Houses of this Parliament before the Bill completes its passage. Clearly, a range of procedural options are available. We will need to consider them nearer the time in light of how negotiations progress.

[Lord Wallace of Tankerness]

I would be grateful for further clarification from the Minister because he said, I think, in the very useful briefing he gave for Peers last week, “If the fiscal framework gives rise to further legislation”. Could he elaborate on what he has in mind there? What kind of legislation would that be? Would it be amendments to this Bill, or fresh primary or second legislation?

Smith Commission: Implementation

Debate between Lord Wallace of Tankerness and Lord Dunlop

Monday 8th June 2015 Lords Chamber

[Lord Dunlop]

My Lords, I am not sure exactly where the SNP stands now on full fiscal autonomy. Its position seems to change by the day but I am absolutely clear, and the Government are clear, that full fiscal autonomy would be bad for Scotland. By the end of this Parliament, it would leave a £10 billion funding gap that would have to be addressed by higher taxes or larger spending cuts in Scotland. The noble Lord is absolutely right that one of the benefits of being part of the UK is that which comes from pooling and sharing resources, so that public expenditure remains relatively stable when revenue flows such as oil and gas are so volatile.

[Lord Wallace of Tankerness (LD)]

My Lords, I welcome the fact that the Government are honouring their commitment to bring in a Bill to deliver the Smith commission proposals. However, does the Minister accept that when responding to the request of the First Minister of Wales for a constitutional convention before the referendum, the Prime Minister accepted that there would need to be an open, involved and comprehensive conversation about the kind of union we want to see and that, 15 years after the process of devolution started, we should consider the best way to go about doing so? What consideration are the Prime Minister and the Government giving to that very necessary constitutional convention?