Scotland Bill

Lord Wallace of Tankerness Excerpts

Tuesday 24th November 2015 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, we on these Benches very much welcome the fact that we now have this Bill before us and congratulate the Minister on introducing it.

Many times before today, and already in this debate, the history of the Bill has been well rehearsed. Reference has been made to the agreement among the three party leaders and the fact that on the morning after the very successful outcome of the referendum—which showed that the people of Scotland did, by a significant margin, wish to remain part of the United Kingdom—the Prime Minister announced the establishment of the commission under the chairmanship of the noble Lord, Lord Smith of Kelvin. I am delighted to see the noble Lord with us today. As has been said, there was a very exacting timetable for the publication of the commission’s proposals, which were due before St Andrew’s Day last year, with the draft clauses due before Burns Night. I had some engagement in those days with the Scotland Office, the Cabinet Office and the Treasury, and the work that was put into meeting that particular deadline is a great tribute to the staff. Since then, in the light of further discussions, there has been some refinement of the clauses, but we on these Benches believe that the commission’s recommendations and proposals—taking forward, as they did, the agreement among the three party leaders—are delivered in full in this Bill we have before us. The noble Lord, Lord Smith of Kelvin, has also indicated that, and we look forward to hearing more precisely what he thinks about the detailed provisions of the Bill.

We also support the Bill because it is a further step along the road to federalism, which for my own party has been the ultimate destination for many years. Indeed, the Scottish Liberal Democrats’ contribution to the Smith commission was based on Federalism: The Best Future for Scotland, the report produced by a commission chaired by my noble friend Lord Campbell of Pittenweem. We very much look forward to hearing his maiden speech today. He brings to this House great expertise and experience, not just in politics but also outside politics, in particular on this subject. We also look forward to the maiden speech of our fellow member of the Faculty of Advocates the noble Baroness, Lady McIntosh of Pickering.

While it is important that we support this Bill, as the noble Lord, Lord McAvoy, echoed, the House must do its job properly—a job of proper scrutiny. I think that is more incumbent on us, given that the three principal parties actually agree on the Bill. As I said at our briefing last week, I think we should be haunted by the Child Support Agency which went through Parliament with the support of all parties. Those of us who were Members of Parliament at the time know how much our constituency mailbags and surgeries expanded because, I think, something that was agreed by all parties did not perhaps get the scrutiny that it should have had. If we seek to improve on the Smith commission proposals and do so in the spirit of the commission, then we should feel that we can certainly do so.

[Lord Reid of Cardowan]

In fairness, since the noble and learned Lord said that we have to give this scrutiny, I should ask him the same question that I asked my noble colleague here. How can we give it scrutiny if an essential, central, crucial part of it—the fiscal framework —is not available for us to scrutinise? Does he have a view on how it might proceed? My noble friend gave us his view that we should have a degree of trust and wait to see how things develop. Does the noble and learned Lord have a view?

[Lord Wallace of Tankerness]

My Lords, I do. If I start answering that partly now, I will probably end up repeating myself. I certainly will address the point that the noble Lord, Lord Reid of Cardowan, asks.

I see the Bill as having a number of different parts, dealing with constitutional issues, fiscal issues, welfare issues and what might be described as miscellaneous provisions issues. On the constitutional issues, the commission recommended that,

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions”,

and that,

“The Sewel Convention will be put on a statutory footing”.

Clause 1 of the Bill does indeed state that the Scottish Parliament and the Scottish Government are permanent institutions, and it is claimed, as the Minister said, that it should not encroach on the sovereignty of Parliament. I certainly believe that federalism would be a better guarantee of the long-term establishment and entrenchment of the Scottish Parliament, but that is not on offer—it was not before the Smith commission.

During the Scottish Constitutional Convention—there are a number of noble Lords present who were party to that convention—we had many agonising debates as to how we might best entrench the Scottish Parliament that we were intent on establishing. We came to no really good conclusion. When the Labour Party, in Opposition in 1996, recommended and proposed a referendum, my party colleagues and I were opposed to that. In retrospect, I think we were wrong. The fact that we had a referendum in 1997 with such an overwhelming result—both on the Parliament itself and on its tax powers—means that there was a political entrenchment that no amount of legal debate, legal argument or legal wording was ever going to establish. While it is undoubtedly the case that, technically and legally and in constitutional theory, Parliament can repeal what has been said here, nevertheless the fact that it is suggested that there should be a referendum before there is any abolition of the Scottish Parliament lends a political entrenchment which is very welcome indeed.

With regard to Clause 2, I note that what is in the Bill is almost literally what the commission proposed—that it should put on a statutory footing the Sewel convention—because it states:

“But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament”.

Those are the words that Lord Sewel used on 21 July 1998. Of course, in practice, legislative consent Motions have been extended by Devolution Guidance Note 10 to include Bills in the United Kingdom Parliament which confer new powers or responsibilities on Scottish Ministers and the Scottish Parliament. By definition, if we are conferring new powers, the powers cannot already be devolved. My question for the Minister is: why is the clause limited to the very narrow, literal expression used by Lord Sewel in July 1998? In practice, that wording plus Devolution Guidance Note 10 has worked. Strictly speaking, this Bill does not require a legislative consent Motion because it is conferring new powers on the Scottish Parliament. Are two categories of legislative consent Motions envisaged and, if not, why not just put the whole practice of legislative consent Motions on to the statute, rather than limit it to the words of Lord Sewel during the passage of the Scotland Act 1998?

With regard to welfare powers, we believe—and it was reflected in the outcome of the Smith commission report—that it is consistent with the principle of securing a social union that many welfare benefits are rightly reserved to the Westminster Parliament, but we support the proposals for the Scottish Parliament to have power to create benefits in the areas of its devolved responsibility: housing, carers, disabilities and discretionary payments in areas of welfare. As the noble Lord, Lord McAvoy, said, no doubt they need to be looked at in more detail so that they deliver what was said on the packet, and we will certainly do so.

It is also important to remember that with that power goes responsibility. There is not much point if people go around promising more in terms of top-up benefits unless they are prepared to say where the money will come from to pay for them. It is an inevitable consequence of having a mixed welfare system—partly devolved, partly reserved—that the Scottish Government and the United Kingdom Government will have to work more closely together. That in itself cannot be a bad thing; we hope that it will generate more collaborative working than we have sometimes seen in the past.

The amendments made in the other place have to some extent taken away the concern that there was a veto, which is welcome. I always thought that the veto case was totally overstated. I think it is a question of practicality. I remember that when I was in the Minister’s position of having to answer to your Lordships’ House, I asked: “What is actually meant by this?”, when we were dealing with the draft clauses. The example given to me was: “If the Scottish Parliament decides that it wants to have a top-up benefit for left-handed redheads, frankly, the social security system does not have a database for that, so we could not agree to it until such time as we had one”. It was therefore not unreasonable that such a mechanism was included to allow the practicalities to be resolved.

There are one two other specific provisions. The commission recommended that there should be,

“a formal consultative role for the Scottish Government and the Scottish Parliament in designing renewables incentives and the strategic priorities set out in the Energy Strategy and Policy Statement”.

Clause 58 refers to “Renewable electricity incentive schemes”, but it does not refer to heating schemes. I am not sure that any explanation has been given as to why heating schemes should not be included, given the wider remit of the Smith commission proposals.

I echo some of the comments made by the noble Lord, Lord McAvoy, on equality. However, I think it is important that we ensure that the basis of equalities legislation in the United Kingdom is in no way diluted through devolution.

With regard to the Crown Estate, the commission recommended that there should be devolution of management to the Scottish Parliament—or, more practically, to Scottish Ministers—and onward devolution to the communities of Orkney, Shetland and the Western Isles, and indeed, other local authorities. Many of us here are hugely suspicious about whether a Government in Edinburgh who seem to spend all their time centralising, as the noble Lord, Lord Maxton, said during Questions today, will actually adopt the spirit of decentralising power further. The noble Lord, Lord Smith of Kelvin, in his personal comments on the commission, stressed the importance of devolution going beyond Edinburgh. We may wish to examine amendments along the lines of those moved by my right honourable friend Alistair Carmichael in the other place to leapfrog, as it were, and genuinely ensure the empowerment of local communities.

Turning to the fiscal powers, we now have full income tax, aggregates tax, air passenger duty—the latter, too, having been recommended by the Calman commission on which I served. Can the Minister indicate why aggregates tax is included now? We did not include it before because we were awaiting judgments from the European Court of Justice. An update on where we are on that, and why the Minister thinks it is possible now when it was not in previous legislation, would be welcome.

We owe it to your Lordships’ Select Committee on Economic Affairs to respond to the report that it has given us, which undoubtedly has aroused some controversy. I certainly understand and recognise the frustration that we do not yet have the fiscal framework. In response to the noble Lord, Lord Reid of Cardowan, I believe that it is important that we should have sight of that at some stage in our proceedings, but I just utter this word of caution. We cannot do this in a political vacuum. Delaying the Bill at this stage would effectively give the SNP Government a veto on the progress made, and that would not be particularly desirable either. The Minister said that John Swinney was on record saying that he wanted this agreement. We must take that at face value, but, equally, those of us who are immersed in Scottish politics well know that, if something went wrong and we did not manage to reach agreement, they are the masters and mistresses of turning that to their account, and the finger of blame would point unequivocally at your Lordships’ House. Those who have made milking grievances a master art would be only too pleased to have a narrative of betrayal.

[Lord Reid of Cardowan]

I have a great deal of sympathy with what the noble and learned Lord says, because, on the one hand, we have the cause of rational scrutiny, and on the other the imperative of politics—of keeping a vow. My worry is actually politics: I worry that, in capturing the minutes, we will lose the hours. In other words, if the criticisms being made are correct, then we might have a political storm at present if we were to do as was suggested and in any way delay the Bill, but if the criticisms are correct, we will have decades of such grievances and political problems in future. I probably come down on the same side as the noble and learned Lord on this: the imperatives of the politics are necessary today, but it is essential that the Government recognise that this fiscal framework has to come back at some stage before we get to the end of this process. Otherwise, we are having to make the devil’s alternative choice.

[Lord Wallace of Tankerness]

My Lords, nothing I said takes away from what I said at the outset: that it is very desirable that we see the fiscal framework. The Government should take from all sides of the House that there has been a view to that effect. While I think it is nonsense to expect the Government to reveal their negotiating hand in this debate, it is not unreasonable to ask, perhaps, for more transparency to show that progress is being made, and for the Government to enunciate some principles as to what they wish to see in the fiscal framework.

For example, one hopes that the Government’s negotiating stance is to seek fairness on all sides—for Scotland and the rest of the United Kingdom. Their role is to take in the whole of the United Kingdom, not just the rest of the United Kingdom. The no-detriment principle should be at the point of devolution: that there is no detriment one way or the other when a particular tax is devolved. There should be a form of indexation—I do not underestimate the difficulties, but it should be one which in itself is neutral, with an automatic mechanism to avoid an annual row.

[Lord Forsyth of Drumlean]

Does not the noble and learned Lord think that there is a great irony that the Scottish nationalists are arguing that it is essential for the Scottish Parliament to be able to consider the Bill alongside the fiscal framework, in order to ensure the best interests of Scotland, when this is a Bill that will affect every part of the United Kingdom and the House of Commons has not had an opportunity to do what the nationalists are saying is essential, and quite rightly so, in a Scottish context?

[Lord Wallace of Tankerness]

My Lords, I am not sure what, if anything, was said in the House of Commons about the lack of the fiscal framework when the Bill was being debated there—in fairness, I am sure that it was discussed—but what I have said is that the Government should be seeking to negotiate for the whole of the United Kingdom: there should be fairness all round with regard to this.

Crucially, we should make it very clear that Scotland should bear the full fiscal consequences of its own decisions. There has been some suggestion somewhere that there has been a bit of “cake and eat it”: that somehow or other, if things go wrong, Westminster will top it up. There are those of us who believe that the important rationale for more tax powers is accountability, but that goes out the window unless—for better or worse—the Scottish Parliament accepts responsibility and accountability for the consequences of its decisions.

In conclusion, the important thing that many of us want is to get on and use the powers. From next April, there will be the Scottish rate of income tax. We look forward, once this Bill is implemented, to more than £15 billion-worth of tax powers and £3 billion-worth of welfare.

[Lord Lamont of Lerwick]

I am most grateful to the noble and learned Lord for giving way and apologise for having hesitated for a moment; I was just reflecting on what he had said. I strongly agree with him about the Scottish Government accepting responsibility when they have the power to make individual decisions relating to rates of income tax. He said they must be accountable because they have the responsibility, but is that not utterly inconsistent with the idea of the second no-detriment principle which seeks to safeguard them and does it not make a nonsense of the responsibility that they have?

[Lord Wallace of Tankerness]

I look forward with interest to what the Government have to say on the second no-detriment principle. If I may say so, one of the shortcomings of the Smith commission report—I am sorry, this will have to take up a bit more time—is that it just gives a heading on page 26 that says:

“No detriment as a result of UK Government or Scottish Government policy decisions post-devolution”.

It then says:

“Where either the UK or the Scottish Governments makes policy decisions that affect the tax receipts or expenditure of the other, the decision-making government will either reimburse the other if there is an additional cost, or receive a transfer from the other if there is a saving. There should be a shared understanding”.

Scotland has powers over the threshold and rates of income tax. As I understood it—no doubt the noble Lord, Lord Smith of Kelvin, will be able to tell us—if for example, as was indicated, the United Kingdom Government were to change the definition of an income tax payer, that could have an impact on Scottish tax rates. I see that as the other detriment that would have to be addressed. It is certainly how I understood it—but more important is how the Government understand it. Thank goodness I do not have to answer for that any longer.

This should actually be an exciting time. The two most exciting elections I fought in Scotland were in 1999 and 2003, when we had got the constitutional settlement and were debating how we would use the powers we had. That made for real political debate. We should be able to use the powers imaginatively. Parties should be able to debate how we set out an agenda for an enterprising Scotland, a more socially just Scotland, a greener Scotland and a fairer Scotland, and how we can benefit all its communities—not just in the central belt but from the islands down to the Borders. This Bill is not an end in itself. It is a means to try and improve the governance of Scotland and the accountability of that governance, give the Scottish people an opportunity to take more decisions into their own hands and build the kind of Scotland we want to see. The Bill has our support.

--- Later in debate ---

[Lord Lang of Monkton]

The double detriment point. To do so would be to the detriment of my speech.

A similar problem attaches to the shared powers over welfare, whereby the House cannot assess how the vital intergovernmental relations will operate without the revised memorandum of understanding and joint ministerial committee structure now still being negotiated. Our report has therefore suggested that, as with the Economic Affairs Committee’s concern about the lack of a fiscal framework, a delay in the progress of the Bill may be necessary to allow for proper scrutiny of the welfare provisions.

I agree with my noble friend the Minister about the desirability of calming things down, but I hope that in his winding-up speech he can reassure me and the Constitution Committee on a number of points. Clause 1, on enshrining the permanence of the Scottish Parliament, seems simple, straightforward and declaratory, but it could have profound constitutional significance. The Government now appear to seek to compromise the United Kingdom Parliament’s competence with regard to the devolved institutions, first by stating their permanence in statute and secondly by creating conditions involving a referendum that have to be met before the UK Parliament could move to abolish them.

It is of course completely implausible to suggest that such a course would ever be contemplated, but the concept of parliamentary sovereignty is a fundamental principle of the United Kingdom’s constitution and it has long been understood that no Government can bind their successors. In seeking to limit Parliament’s powers in this manner, the Government are introducing confusion and uncertainty about the nature of parliamentary sovereignty where once there was none.

Clause 2 compounds this concern. By giving the Sewel convention a statutory basis, the Bill opens the door to judicial intervention on the right of Parliament to legislate. It risks creating a route through which the courts might be drawn—inappropriately but perhaps inescapably—into an area hitherto within the jurisdiction of Parliament alone: its competence to make law. That is serious enough, but it seems to me that the original meaning and purpose of that convention may have already mutated, with no debate or authority from Parliament, into something much more far-reaching, which could breach the whole principle of devolution: that power devolved is power retained. Even the word “normally” in the clause raises clouds of uncertainty and the prospect of judicial involvement.

Our committee believes that it is now vital that the Government clarify the purpose and reach of the Sewel convention as stated in Clause 2. Can my noble friend confirm that the guidance note GGN2, issued in 2005, to which the noble and learned Lord, Lord Wallace of Tankerness, referred, did not change the purpose of the convention in any material way? In addition, the combined impact of Clauses 1 and 2 could be dangerous and no thought seems to have been given to this. These two clauses might not be just declaratory and, taken together, could have far-reaching consequences. Will my noble friend also confirm that in the final analysis, no devolved Parliament or Assembly is entitled to veto legislation passed by the sovereign United Kingdom Parliament?

[Lord Wallace of Tankerness]

The noble Lord is raising an important point. Does he agree that, as we now have a system under Standing Orders whereby legislation passed by both Houses can be vetoed by a subset of the House of Commons—namely, English MPs—the Government have already sold the pass on the sovereignty of Parliament?

[Lord Lang of Monkton]

The noble and learned Lord identifies precisely the kind of confusion and obfuscation which endangers the sovereign nature of this United Kingdom Parliament. It is a very important area and I hope we are able to pursue it further.

The Bill also has significant implications for England. Considerably fewer issues will now be reserved, and the West Lothian question will consequently intensify. By increasing the scope of matters devolved to the Scottish Parliament, the number of issues to which the new English votes for English laws procedures will apply will increase. This will add to the complexity of establishing whether new legislation deals solely with devolved matters. I do not believe enough consideration has been given to that, and further confusion will flow from matters that are shared between the two Parliaments.

Our report commented on several other matters of concern, but the recurring theme was that no serious consideration seems to have been given to the implications of the Bill for the union as a whole. We need to articulate a coherent vision for the future shape and structure of the union if the ongoing process of reactive, ad hoc devolution, demand-led and indiscriminately granted, is to be stabilised. No major constitutional measure that does not take account of its implications for the United Kingdom as a whole can possibly claim the right to provide for an enduring settlement. It is that wider challenge of stabilising the union, and rationalising devolution within it, that your Lordships’ Constitution Committee is engaged with in our current inquiry.

--- Later in debate ---

[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?