Scotland Bill

Lord Kerr of Kinlochard Excerpts

Tuesday 28th February 2012 Lords Chamber

I think that the noble Lord, Lord Foulkes, tabled the amendment out of sheer frustration. He is on to a good point, but unfortunately it is a bit of a blunderbuss. It has served to give us a good opportunity to debate these issues. However, it is very important, if we are to have a devolved Parliament, that it sticks to its last, does not create confusion and does not have a leader who thinks that it is his job to pursue competing policies. I am all in favour of competition, but competition between Parliaments on foreign policy is going a bit far.

[Lord Kerr of Kinlochard]

My Lords, I will privately reveal that I have not been briefed by the noble Lord, Lord Browne of Ladyton, on why the amendment goes too far; I worked it out for myself. The idea of seeking consent seems to be a little insulting. Co-ordination is what we are talking about. The idea of writing into law a requirement for co-ordination seems very odd. I admit that the Foreign Office that I worked in completely failed to co-ordinate the travel plans of Ministers of both political persuasions. It is very difficult for the Foreign Office to attempt the task, and it is universally ignored by the rest of Whitehall. The person who can achieve the task is the ambassador who is lucky enough to have a couple of ministerial visitors. If he tells A or A’s office that B will be in the House at a certain time, A will decide that his plans require him to come at another time. In my experience, the collegiate atmosphere of any British Government has meant that it is perfectly easy to separate visits one from another. Therefore, this is unnecessary.

The innuendo was made that the Scottish nationalists are going around arguing with other NATO Governments against NATO. I have not seen any evidence of that. I would be surprised if it were true.

[Lord Forsyth of Drumlean]

Perhaps the noble Lord would care to read the Scottish nationalists’ manifesto.

[Lord Kerr of Kinlochard]

Yes, but the innuendo today was that they must not be allowed to talk to foreign Governments because they would try to persuade them in some way to leave NATO. That is a big jump. Of course it is in the Scottish National Party manifesto; we have all read it. However, again in this debate, I have been worried by the splendid attack of the noble Lord, Lord Foulkes. He said that he is up for the fight. It is easy to have this kind of fight when the opponent is not in the ring. We ought to be careful about insulting somebody who is not here. I am happy to be insulted because I am here. However, the fight should be conducted out there on the hustings. Here, we should try to avoid insult and innuendo.

[Lord Maxton]

To be fair—and not even to be fair—the fact is that the Scottish nationalists are not here through their choice, not through the choice of the House. If they wanted to be here, putting their case, they could be—instead of relying on the one Welsh nationalist in the House.

[Lord Kerr of Kinlochard]

It may well be true that it is their choice. If so, it is a great mistake. I hope it is the view of all in this House that it would be very good if they were here. While they are not here, we should try to avoid insult. It does not do us any good when our debates are reported in Scotland.

[Lord Forsyth of Drumlean]

I did not say anything that was insulting, and I do not do innuendo. I am quite direct. I said that the First Minister should not use his position to make the case against Britain being in NATO. There is nothing insulting about that. Nor is it an innuendo. Equally, the First Minister, who is paid from my taxes, should not go around the world arguing against our nuclear deterrent. He should concentrate on his duties as First Minister. There is nothing insulting about that, and there is no innuendo.

[Lord Kerr of Kinlochard]

I am sorry but I am not aware that the First Minister is going around the world arguing that people should leave NATO or that Britain should leave NATO. I am sure that he is saying that, if elected, he would choose to leave NATO. The innuendo is the implication that he is undercutting the policy of the British Government policy by saying that Britain should leave NATO. I do not think that he is doing that. I do not know what he is doing; he does not have somebody here to tell us, which is a pity.

I intervened on the amendment to ask the Minister whether there has been any proposal from the Scottish National Party for the inclusion in the Scotland Bill at this point—because Clause 27 is where it would fit—of a provision that would clarify or increase the role that it should play in EU negotiations, in the delegation that comes from these islands or in the preparation of the positions that the delegation will advance. I ask that because I do not know the answer. Last summer, as I recall, the Scottish Government indicated that they wanted something of the sort. I do not know what they want. I would like to see the proposal, if it is around. Are the Government sitting on a suggestion from Edinburgh that has not found its place in the Bill because they did not agree with it? If the Scots came forward with something at this stage, would the Government insert a clause in the Bill?

It is worth addressing the question of whether, as you give a bit more devolution, you should give a larger role in the preparation of a position for certain councils. I do not know whether that would extend to the presence of a representative such as a Minister from the Scottish Government in the ministerial team. I remember days when that was the case. When we first joined the EU in the 1970s, we were always represented in the Fisheries Council by a Minister from the Ministry of Agriculture, Fisheries and Food, and by a Minister from the Scottish Office, operating in tandem. I will not comment on whether that was a good arrangement. The noble Lord, Lord Williamson, will have a better memory of it than I.

The German Länder are represented in the back row of many councils that deal with domestic affairs; they do not have a speaking part. I would not recommend that anybody look at Belgium, but if we do, we see that in many councils the Walloon and Flemish Ministers attend alternate meetings. That is ideal for those negotiating from a different point of view from that of the Belgian Government, because it means that the Minister never knows what happened in the previous council and it is possible to score some runs at his expense.

When devolution happened, a concordat was prepared in London and negotiated with Edinburgh that laid down detailed rules on what kind of issues the Scots should be consulted on in full. I do not know how well that has worked; I have been away. If it is not working well, it could be looked at again; there is no issue of principle there. As we devolve a little more, maybe we ought to devolve a slightly bigger role in the preparation of such things.

These are my questions for the Minister. Has anybody asked? Has anybody specified what is wanted? What would the Government’s attitude be?

[Lord Maclennan of Rogart]

I was a Minister who attended the Agriculture and Fisheries Council in the 1970s, although I did not belong to the Ministry of Agriculture; I was representing the consumer interest. I recall a number of Ministers coming to these councils but they all belonged to the same Government. Prior to our participation in these debates, we had clarified what our objectives were in common and we did not seek to confuse the other members of the council by putting forward entirely different points of view. That is the risk of having people who are seeking to separate one part of the United Kingdom from another.

The noble Lord has inquired of my noble and learned friend as to the Government’s position. It would be very interesting to know what he considers should be the position.

[Lord Kerr of Kinlochard]

I draw a distinction between the situation with a degree of devolved authority—maybe a little more if this Scotland Bill becomes law—and the position of an independent Scotland. That is a totally different question. I would think it extremely unlikely that a delegation consisting of representatives of the London Government and the Edinburgh Government negotiating in Brussels in a situation of devolution but not independence for Scotland could not work out in advance and in private what was the best line and who would make which point. I do not think it very likely that the representatives from Edinburgh would see it as their task to undercut the United Kingdom interest because that would—while devolution persists—also undercut the Scottish interest.

[Lord Sewel]

One of the difficulties in relation to Europe and getting a common view—almost parity between UK Ministers and Scottish Ministers—would be around fisheries policy. The position of the SNP Administration in Scotland is that—and God knows how it can be done; I do not think it can—Scotland would leave the common fisheries policy. That creates a totally different negotiating framework in that policy area from a Government who say, “We are staying in but we have to reform and modify the common fisheries policy”.

--- Later in debate ---

[Lord Steel of Aikwood]

I have no idea. The important point is that it should have the power to raise funds as it wishes for all the devolved issues. It is no good going on talking about refining the Barnett formula and changing the grant system. It is up to the Scottish Parliament to devise its own taxation methods and raise the money for its own purposes. That is what I would like to see happen, and this Bill moves us slightly in that direction.

[Lord Kerr of Kinlochard]

I have a great deal of sympathy with the argument that the noble Lord, Lord Steel, has just expressed. I cannot see the fundamental point of principle that the noble Lord, Lord Sewel, can see. He spoke of this procedure proposed in the Bill as not providing the necessary and appropriate degree of scrutiny. The people who would be taxed are the people of Scotland who elect the Scottish Government. I cannot see any particular point of principle in saying that they may not determine the form of their taxation. States in the United States of America have a considerable degree of freedom. Local taxes are different all over the United States. In many cases, they have a balanced budget requirement. The people of Scotland, speaking through their representatives in Scotland, cannot determine the level of the Scottish deficit.

[Lord Sewel]

The argument that the Scottish Executive should have control over the level of taxation is one thing, but the creation of new taxes is a totally different thing.

[Lord Kerr of Kinlochard]

I cannot really see that distinction. I would be more worried about the level if the level affected the balance of the deficit of the United Kingdom. The levels would have to be adjusted so that the tax take in Scotland remained the same proportionate to expenditure in Scotland. But as for the creation of a new tax, going by a different form, if the Scots chose to lower taxes in form A and raise them in form Y, provided that they came to the same amount and had the same effect on the United Kingdom Exchequer, that seems to me entirely up to them. I cannot see a point of principle there.

[Lord Sewel]

The problem of the deficit is really a red herring, because the deficit would be controlled by borrowing powers.

[Lord Kerr of Kinlochard]

If the deficit is not important to the argument made by the noble Lord, Lord Sewel, what is the answer to mine? It is perfectly possible for the Scots, and reasonable, to decide the form in which they should be taxed.

[Lord Forsyth of Drumlean]

Perhaps I could help the noble Lord by asking him a question. If his position is that the Scottish Parliament should be free to invent any tax and raise it at any level as part of the devolved settlement, why do we need to bother with having both Houses of Parliament approving it?

[Lord Kerr of Kinlochard]

I agree that the Bill proposes a very eccentric procedure. I was going to go on to say that, first, on practical grounds, I would hope that no one would set up differential tax systems inside the United Kingdom. Secondly, I would not disagree with the argument of the noble Lord, Lord Forsyth, against the particular procedure for vestigial approval which is laid down here. My argument is on the point of principle of the noble Lord, Lord Sewel. Those who should be in the lead on the forms of taxation in Scotland should be the Scots; that seems to me to be clear.

I am disappointed with this bit of the Bill—

[Lord Sewel]

The noble Lord has challenged me on a point of principle. The argument surely must be that macroeconomic policy under the devolution settlement is reserved and, within that, it is absolutely right and proper that the United Kingdom Parliament examines any proposals for new taxation on the basis of how it impinges upon macroeconomic policy, and whether it is fair and would inflict great harm on any part of the economy of the whole United Kingdom.

[Lord Kerr of Kinlochard]

Yes, that is reasonable. We certainly agree on the macro point. We disagree on whether there is a point of principle about forms of taxation. I would like to pick up on the other point made by the noble Lord, Lord Steel, about the Prime Minister's speech in Edinburgh. Here, I disagree with the noble Lord, who says that we should proceed to have the referendum as soon as possible, which would give us a couple of years to work out what devo-max means. I do not know why we do not put into this Bill what we think devo-max means, with a sunset clause. I follow the argument that the referendum should have only one question but there is a genuine problem in that the Sir Alec point made by the noble Lord, Lord Steel, certainly applies in Scotland. People up there do not really believe that the London Government intend, once one has had the referendum and if its answer is no to independence, to confer a further substantial degree of devolution.

[Lord Forsyth of Drumlean]

My Lords—

[Lord Kerr of Kinlochard]

May I finish my argument? That is not widely believed up there. One could set out the definition that this Parliament believes would be right for further devolution. I do not expect the noble Lord, Lord Forsyth, to agree with me because he does not want any more, but the Government indicated that there would be consideration after the referendum of a further degree of devolution—your Prime Minister said it. I understand why that will not happen unless the referendum says no to independence—that is obvious—but I cannot see why one cannot specify that now.

[Lord Forsyth of Drumlean]

Perhaps the noble Lord can help me. He is quite right: I think this is a dreadful Bill which was introduced for political reasons, and that the best thing we could do with it is bin it—drop the whole thing and get on with the referendum. That is my position. However, it is a minority position, and we have the Bill and we are considering it. We are considering a clause on which the noble Lord, Lord Sewel, who after all was the midwife of the Scotland Act and believes in all this stuff, and I are agreed that it is a huge transfer of power. To me, that is devo-max.

I have no idea what the Prime Minister was thinking of when he said that there would be more devolution after it had been decided that Scotland would remain in the United Kingdom. I cannot think of anything that could be added that is not already in this Bill. This clause which we are considering, for example, provides enormous scope to introduce new taxes, so I would say that this is devo-max. The noble Lord is absolutely right that the people of Scotland do not know about it, because nobody is actually reporting it. We are all debating something that is already here in this Bill, and which was actually delivered by the previous Labour Government—with the support of my party, which I must say was very foolish. Having said that, what does the noble Lord, Lord Kerr, mean when he says that we should have something added? What would he add to this Bill that would be devo-max? Can he tell me?

[Lord Kerr of Kinlochard]

That is a very fair challenge and I have no complete answer. In respect of taxation, I would argue that devo-max should be precisely what the noble Lord, Lord Sewel, does not want: that the Edinburgh Parliament should be entitled to decide on the forms of taxation. There would need to be the macroeconomic control, which he and I would need to discuss, but the forms of taxation within a given tax take—or rather within a given deficit control, because that is where the control would be—seems to be something which should be devolved in principle. I have made my point and I do not see the point of principle here. I would argue that the difficulty with devo-max is: who is going to specify it? I cannot see Mr Salmond's interest in specifying devo-max, because he wants independence—

[Lord Foulkes of Cumnock]

I wonder whether, when the dialogue is complete, other people might answer your question.

[Lord Kerr of Kinlochard]

Perhaps I should try to finish my remarks.

[Lord Steel of Aikwood]

If the noble Lord will allow me, surely the point he is making is valid. If the post-referendum decision is not to go independent and we take the Prime Minister at his word that more is on offer, it is possible for all the parties—including the SNP, as the Scottish Government—to join in working out the best form of devolution-plus, as I prefer to call it, which enables the Scottish Parliament to raise the money that it spends.

[Lord Kerr of Kinlochard]

I entirely agree with the noble Lord. I suppose that my motive, as one who believes in the union and does not wish for Scottish independence, is that it seems that the chances of a vote for Scottish independence would be much reduced if the credibility of the devo-max option had been enhanced by its prior specification. I cannot see who is going to do that and I am rather sorry that we seem to be going to miss the opportunity in this Bill to do it, subject to a sunset clause.

[Lord Foulkes of Cumnock]

Perhaps I can say a few words on this amendment, as one of the people whom the noble Lord, Lord Kerr, describes as being “up there”. I am living in Edinburgh, I am a resident, and I will be voting in whatever referendum we have. I am looking forward to it. I do not think of it as “up there”; it is where I live and what I am part of. This is the amendment on which the noble Lord, Lord Forsyth, and I are going to disagree—at last—because I agree with the noble Lord, Lord Steel. We need full fiscal responsibility in Scotland, and we need to move towards that. Some people call it full fiscal autonomy; I call it full fiscal responsibility.

Is it devo-max? As other people have said, I do not know what Salmond means by devo-max. If he means other functions such as welfare or pensions being transferred to Scotland, I am totally against that. It would be catastrophic and cause tremendous problems in breaking up the system that has existed for so long in the United Kingdom. However, full fiscal responsibility is different. Having been in the Scottish Parliament, I know that at the moment it has responsibility for spending the money but not for raising the money. That means that you are irresponsible, and that at any time when you do not have any money you blame Westminster and say that the Barnett formula is not giving you enough. This is the problem that the noble Lord, Lord Kerr, referred to: how do you get to full fiscal responsibility?

I agree with the noble Lord, Lord Steel, and we might both get vilified for this, that David Cameron was right. He was right to say that once Scotland rejects separation, and we must reject it, the door will be open for discussions. There will be a dialogue between Westminster and Holyrood about the new form of devolution. The Secretary of State for Scotland is right that we need that yes/no vote as quickly as possible so we can reject separation and move on to discussing what kind of devolution we want. We could have a referendum with devolution options, but it would be far better if the federalist, unionist and devolutionary parties were to work out an agreed formula for the new enhanced devolution and full fiscal responsibility through a convention—