WEDNESDAY 7 NOVEMBER 2001

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Members present:

Mrs Irene Adams, in the Chair
Mr Alistair Carmichael
Mr Peter Duncan
Mr Eric Joyce
Mr Mark Lazarowicz
Mr John Lyons
Ann McKechin
John Robertson
Mr Michael Weir

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RT HON HELEN LIDDELL, a Member of the House, Secretary of State for Scotland, MR GEORGE FOULKES, a Member of the House, Minister of State, Scotland Office, DR LYNDA CLARK QC, a Member of the House, Advocate General for Scotland, MR IAN GORDON, Head of Department, Scotland Office, examined.

Chairman

Good morning, ladies and gentlemen. May I, first, apologise to the Secretary of State and to the team for having you in and out twice this morning. Can I thank you very much for agreeing to appear before the Committee this morning, it is greatly appreciated. For the purposes of the record, would you like to introduce yourselves at this point?

(Mrs Liddell) Thank you very much, Chairman. I am very glad to have the opportunity to appear before this Committee. This is my first appearance before the Scottish Affairs Select Committee and it is a very useful opportunity for an exchange of views on how the Scotland Office functions. My fellow witnesses are the Minister of State, George Foulkes, Lynda Clark, who is the Advocate General, and Ian Gordon who is the Head of the Scotland Office and its Accounting Officer.

I am going to kick off, then, with something from the Departmental Report on recruitment of Scotland Office staff. We noticed in the report that there is a section that says all staff of the Scotland Office are currently on loan from the Scottish Executive. What administrative requirement underlies the arrangement whereby staff to the Scotland Office are on loan from the Scottish Executive?

(Mrs Liddell) If I can give some background and go slightly wider I can be more explanatory about it. The Scotland Office is a brand new department in a brand new arrangement, and whenever the changes were made when the Scotland Office emerged from the previous Scottish Office (as you know, previously all staff were the staff of the Scottish Office), that was an operation that had been in existence for 116 years, with everybody with clearly defined roles. At the time of the devolution I was Minister of State at the Scottish Office and it was agreed that initially the Office of the Secretary of State for Scotland would be a very small operation; it would, in fact, be little more than a private office and that the bulk of briefing and policy development work would all be done by the Scottish Executive. Indeed, Dr Clark has a team of about 30 lawyers who work with her as law officer, and that was part of the set-up. Of course, whenever you look at devolution you have a blank sheet of paper. At the beginning we did not know quite how the role of the Scotland Office would develop and it became apparent, when the first Secretary of State post-devolution was appointed, that there was a need for much more policy development than had previously been envisaged. For example, the Scotland Office ministers set up something like 19 different Standing Cabinet Committees plus a whole range of ad hoc Committees, and we need support to be able to do that. It was felt the best way to deliver that support rather than it being from 450 miles away was to second staff from the Scottish Executive to the team that operates the Scotland Office. By and large it works successfully, but, of course, we are still learning about the devolution process and still learning about the demands that are on the Scotland Office.

Does the arrangement contain any difficult implications for staff at the Scotland Office?

(Mrs Liddell) I think one of the difficulties, as you will see from the figures, is that we are not yet up to full complement because we are largely a Whitehall department with the exception of the people who work for the Advocate General and a small team who operate between Glasgow and Edinburgh. It is quite difficult to attract staff whose homes may be in Scotland to take secondments to operate in Dover House. I think it is fair to say that prior to the General Election of this year there was some uncertainty about the future of the Scotland Office, which has now been resolved. We are hoping to increase our staffing complement, but I have to say I am also quite interested to encourage secondments from other Whitehall departments to the Scotland Office, not just because it would give us access to a whole range of expertise - although the expertise we do have access to is indeed very considerable - but we are a repository of best practice now in how to deal with a devolved administration, and as devolution rolls out to those parts of England that want it I think it would be quite useful for other Whitehall departments to learn the process of dealing with devolved administrations.

To what extent and at whose behest do staff ebb and flow between the Scotland Office and the Scottish Executive?

(Mrs Liddell) That might be one that would be better answered by Mr Gordon.

(Mr Gordon) Perhaps I can add one or two more technical points about the way the Scotland Office looks to staff. We do not act as an employer in our own right, we are a small department which does not take on the full functions and legal responsibilities as an employer of staff. We are a department that is created by the secondment of staff from other organisations to it. Given our inheritance, as the Secretary of State has explained, that, in effect we were created from staff seconded from the former Scottish Office whose legal employment transferred to the Scottish Executive, staff are almost entirely from the Scottish Executive. However, we have started already, as the Secretary of State mentioned, to recruit staff on secondment from Whitehall. Indeed, some people have come to us from the House of Lords. The practicalities are that most of the staff are still based in Scotland, there is a significant number of staff based in Dover House, so these staff based in Scotland feed into the United Kingdom system on behalf of Scotland, and they can expect, in due course, to return to employment in the Scottish Executive. We are similar to various other small departments like the Wales Office and the Northern Ireland Office, which also rely on secondments from various other departments.

Where would their first loyalties be, to the Scottish Executive or to Westminster?

(Mr Gordon) I think there is no doubt about it at all that the staff of the Scotland Office are loyal to the Secretary of State for Scotland and those ministers they work for. It is common for civil service staff to move from one department to another and then to return. For example, the Cabinet Office has a significant number of staff appointed to the Cabinet Office from other departments and returned to those other departments. There is no question raised about their loyalties to the Cabinet Office.

Their career structure would clearly be seen at Westminster and the career structure of the staff coming from the Scottish Executive would presumably be seen in Edinburgh. Does that not pose a difficulty?

(Mr Gordon) I do not think we have found any difficulties at this stage. Clearly, this is something that we may have to watch and see how it evolves, but as things stand at the moment I do not think we have detected any significant problems.

(Mrs Liddell) We work very much in partnership with the Scottish Executive. I think one of the great successes of devolution has been that we have been able to broker a partnership and, to some extent, that is helped by the fact that staff know their way around the Scottish Executive staff. However, if that partnership was to be fractured at any time then there might be difficulties, but I have never had anxieties about the loyalty of my officials to the Office of the Secretary of State.

Mr Weir

You talk about career structures, and the career structure within the civil service in Scotland is different to Whitehall. If people do not want to come down from Edinburgh to London for secondment, is it seen as affecting their career?

(Mr Gordon) The civil servants who transferred to the Scottish Executive are still considered to be home civil servants subject to the code of behaviour of civil servants, and the arrangements for determining their pay and conditions of service are similar to those throughout the UK civil service, in the sense that significant responsibilities have been devolved to departments to determine pay and conditions locally within some kind of framework. So in that sense there is a good deal of commonality still between the way civil servants look on their careers. It is intended that there should be movement of civil servants from the Scottish Executive to other Whitehall departments and back again, and that there will be secondments in both directions to maintain a degree of interchange. We do not, a t the moment, see any reason why there should be significant difference. The fact of the geography, of course, is one that simply cannot be avoided; people will have families and ties which will make them more or less willing to accept movement.

Within Whitehall those civil servants can be moved from department to department, but I wondered if there was a problem, given that the Scottish Executive has, presumably, a departmental structure within its own civil service as well, with moving from that structure to the Whitehall structure and back again and whether there was any resistance from civil servants.

(Mr Gordon) There are movements of staff from Whitehall to Government offices throughout the UK. A lot of UK departments have offices around England; the Northern Ireland Office has staff posts in Belfast and staff posts in London, and the Wales Office at the National Assembly of Wales may also envisage movements. The Scottish Executive is of a size to be able to offer its staff a career in Scotland. Even then, it might be looking for staff to move within Scotland to various offices that there are. So civil servants accept, at certain levels, an obligation to move. The opportunity to move and to work in Whitehall is there. I think, in various respects, that might be seen as being advantageous, but whether an individual is willing to accept such a move will, obviously, depend on a whole variety of circumstances.

Chairman

Secretary of State, you said that partnership is key to ensuring that the Scottish Executive and the Government achieves the best possible outcome for the Scottish people. What examples of the Scottish Executive and the UK Government working together have been particularly noteworthy since devolution?

(Mrs Liddell) I will begin the answer and ask the Minister of State to continue. I think we had an example of it yesterday with the announcement of the Fleet Facilities Grant (?) for the Rosyth to Zeebrugge Ferry. That was an example where we worked together to secure the best possible outcome for Scotland. My own involvement, for example, in seeking to resolve the difficulties of the widows and people suffering from asbestosis following the collapse of Chester Street Holdings, the Insurance Company, could not have been progressed had it not been a partnership between myself and the Executive and a partnership between the Scotland Office and other Whitehall offices. Indeed, there are a number of occasions where the regular contact that I have with the First Minister and the regular contact the Minister of State has with other ministers means that we can progress issues before they become problems. That ability to talk to one another and to understand one another and be seen to be working together, I think, is one of the most powerful lessons that we have learned from the two-and-a-half years of devolution. I will ask the Minister of State, who has a specific role of liaising with the Scottish Executive and the Scottish Parliament, about some of his experiences.

(Mr Foulkes) Thank you, Secretary of State, thank you, Chairman. Can I say I also welcome the opportunity of appearing before the Select Committee. In my four years as Under-Secretary of State at International Development I never once appeared before that Select Committee, so it is a great pleasure. As the Secretary of State said, I have been given this specific responsibility. It is done informally and formally; informally I keep in touch with the Minister for Parliament, Tom McCabe, on a very regular basis - two to three times a week on the telephone and meet with him from time to time - to find out what is happening in the Scottish Parliament, talk about things like Sewell Motions, which I am sure all Members are aware are vitally important for allowing us to legislate on devolved areas, where it is sensible to do so. I have also established formal meetings with each of the operational ministers. We have had 11 so far, with six of the ministers - Jack McConnell, Sarah Boyack, Malcolm Chisholm, Susan Deacon, Alasdair Morrison and Jackie Baillie, and there is one pending with Jim Wallace - at which we go through a whole series of matters of mutual interest, and pass on information, try and resolve problems and discuss generally the partnership the Secretary of State has described. I have also been at a number of sittings of the Scottish Parliament, sitting in the gallery, on areas that are of particular relevance. For example, when they discussed the Sewell Motion on the Proceeds of Crime, I sat in the gallery and listened to their comments about the Bill, so that when I am representing the Government on that Bill I will understand better their feelings and their views on it. I think Sewell Motions and the way we have been able to get those without any real debate or difficulty is one very good example of the kind of partnership that we have built up.

(Mrs Liddell) Can I add to that, because often the real relevance of a partnership comes out when there is a crisis or a difficulty. Of course, in the events since September 11 it has been essential that the Executive and the Scotland Office have worked very closely on the anti-terrorism legislation. That has been exemplary in terms of co-operation, and I think, too, on foot and mouth, not just the relationship between the Scottish Executive and my office but, also, the Scottish Executive and ministers here. That is a case where if you do not have the real foundations of partnership in place beforehand then you do not have that exemplary performance. I am very grateful to officials in both UK departments and in the Scottish Executive for the way they have risen to these very real challenges.

Mr Carmichael

Can I just pick up a point about Sewell Motions. A number of us here were at the edifying debate on the Proceeds of Crime Bill at the beginning of last week, and one thing that struck me - and we had a very brief interchange on this during the debate - was that there can be aspects of legislation going through Westminster which will have an impact on the remaining business of the Scottish Parliament. Perhaps the best example of that would be in relation to the Proceeds of Crime Bill, and the rights of innocent third parties in relation to civil procedure. I have concerns about third parties. An awful lot of my concerns would be addressed if I could ask a minister about the provision of Legal Aid in relation to civil proceedings because we are dealing with this rather curious hybrid procedure of the Sewell Motion. That is not something which is open to me as a Member in Westminster debating legislation to be passed by Westminster. I float this as a suggestion for your comment. Might it be possible to see some revisal of Westminster procedures to take account of the novelty of Sewell Motions? The sort of thing that is forming in my mind is the idea that perhaps a minister of the Scottish Executive might be allowed to give evidence to a Standing Committee in the way that ministers give evidence to Select Committees as the Bill goes through the Committee procedure? I would be interested to know your thoughts on that sort of idea.

(Mrs Liddell) I will ask the Minister of State to respond first, but perhaps the Advocate General can fill us in on the general position?

(Mr Foulkes) I think we do need to look at Westminster procedures in the light of the practice of working with the Scottish Parliament. As you know, the Leader of the House has already started looking at that. I think it would have been a miracle if we had devised a devolved parliament and got right immediately every aspect of the devolved and reserved areas; it would have been just impossible. So we are bedding down, we are settling and we are evolving and beginning to understand that. Sometimes unexpected things crop up, such as the fact that the regulation of medical professions is a reserved area but the regulation of new professions in medicine, if there were to be new professions, would be devolved. So there are a lot of anomalies that come up. In fact, I will be having a meeting tomorrow with the Lord Advocate to discuss certain aspects of this, and I am hoping to have a meeting with a justice minister to discuss aspects of it. Of course, we will have officials of the Scottish Executive briefing Bob Ainsworth, the Under-Secretary of State at the Home Office, and myself on the Scottish aspect as well as the Lord Advocate and the Advocate General and her staff briefing us. So we will have briefing from the legal side in Scotland and the policy side in Scotland and from the legal and policy side down here as well.

I think that sort of interaction between the Scotland Office and the Scottish Executive is good and very important, but it is no substitute for Parliamentary scrutiny of the Executive, and I think we do need to look at the way in which we achieve that when we are dealing with Sewell Motion.

(Mr Foulkes) May I just make a small point, Chairman. I understand that Rhona Brankin, a Minister in the Scottish Executive, has given evidence to a Select Committee here, and Peter Hain, one of our Ministers, has given evidence to a Scottish Parliament Select Committee, so these things are evolving over time.

Chairman

Dr Clark, would you like to come in?

(Dr Clark) I am quite happy to explain my general role as Advocate General in relation to these matters, but that will take time.

Mr Carmichael: I do not think that is actually really what I was asking, anyway.

Chairman

I will give the three of you an opportunity at the end to mop up anything that we have not covered.

(Dr Clark) If there is any specific question as we go along.

Mr Lazarowicz

Could I endorse the suggestion that has just been made about the possibility of Scottish Ministers being asked to give evidence to a Standing Committee when that Standing Committee is dealing with legislation which affects Scotland in the way in which the Proceeds of Crime Bill does. Can I pursue the question of the way in which the partnership has worked out a number of the more formal aspects in that partnership? First of all, as far as Sewell Motions are concerned, on how many occasions has a Sewell Motion procedure now been used? If you do not know, perhaps you could give us a note at a later stage. The second question is looking at the way in which just as a Sewell Motion has led to Westminster legislating for areas which will then be dual competence, I understand there have been a number of occasions when, basically, by Executive action from Westminster level, executive or secondary legislative competence has been transferred to the Scottish Parliament. Can you give us an indication of how often that transfer has taken place? I would not want to suggest that Westminster is jealous of its responsibilities in relation to Scotland, in fact my understanding is there has been a transfer of quite a bit of that responsibility to the Scottish Parliament.

(Dr Clark) Can I just say in general about Sewell Motions that these are a procedural way of dealing with certain aspects. At the end of the day, we cannot transfer competence legally. At the end of the day that will be a matter for the courts to deal with if challenged. If, for example, the Scottish Parliament form a view that they have competence and they want Westminster to legislate, so be it, but, at the end of the day, it is a legal matter whether or not the Scottish Parliament has or has not competence to do something. Obviously, the UK Parliament always has competence in relation to any matters. So the discussions that go on between the Executive and various Whitehall departments do result, from time to time, in Sewell Motions and the co-operation involved in that is very high. What is important, surely, at the end of the day, is that we get appropriate legislation which is competent on the statute books, whether it be at UK level or at Scottish level. The aim always is to deal with the legislation in the most appropriate way, bearing in mind the Devolution Settlement that we set out in the Scotland Act.

(Mrs Liddell) I think in terms of the specific question of the number of times a Sewell Motion has been used, I think it is more than 20 times, but if it would help the Committee we will provide a memorandum with a list of all the occasions that that has happened, and vice versa.

Chairman: Thank you very much.

Mr Weir

I wanted to follow slightly the point of Sewell Motions and endorse what Mr Carmichael was saying about Scottish Ministers. One thing that concerns me (and I appreciate that the procedure is there at Westminster's competence) is that there are aspects of the Proceeds of Crime Bill upon which there might be disagreement. It is possible the Scottish Parliament, for the sake of argument, has agreed to a Sewell Motion on the basis that the Bill is published and there may be occasions in Westminster where amendments put forward to that Bill would have quite a serious impact on aspects of Scottish law. I wonder if there was a procedure to take the views of the Scottish Parliament into account when deciding on these amendments. I appreciate what you are saying, that there are discussions between the law offices and between the Executive, but there is the potential for a difficulty between this Parliament and the Scottish Parliament, if the Scottish Parliament think they have agreed to a Sewell Motion and then it is substantially amended at Westminster in ways they might find unacceptable.

(Dr Clark) The starting point for this, remember, is the fact that the UK Parliament has the power to legislate across the board. Because of the Scotland Act, the Scottish Parliament also has power to legislate within devolved matters. Where the Scottish Parliament, in devolved matters, have agreed that UK Parliament should legislate - possibly in order to free up further time in the Scottish Parliament to allow other measures to be dealt with - the UK Parliament will have to legislate in relation to these different matters. There are also various procedures under the Scotland Act whereby there can be a transfer of powers of consent. Therefore, there is a whole structure whereby the various powers can be properly sorted out. However, at the end of the day, as I said before, this is not just a technical discussion about who legislates in which particular Parliament; truly what is important is if the Members of the Scottish Parliament consider that there are good reasons, either because they fear they might not have competence or because they think it would be quicker, more expeditious or more suitable or more appropriate for the UK Parliament to legislate, at the end of the day what is important is that the legislation which is wanted goes through its various Parliamentary stages and ends up in the statute books so that it can be used for the general benefit of the population.

I am not arguing that, I am just pointing out that it seems to me there is a potential flashpoint there which could cause unnecessary difficulty. The Proceeds of Crime Bill is a perfect example that most of us want to see on the statute book, but if there are amendments - and I do not know if there will be - but one that cropped us was the question that Mr Lazarowicz raised of discretion in the courts, which might be something the Scottish Parliament has very strong views about. I can see a potential difficulty there, and I just wondered about the thoughts on how that is overcome.

(Mr Foulkes) I think, Chairman, Mr Weir asks a very perceptive question there. In fact, it is actually happening. At Second Reading a number of Government and Opposition backbenchers raised the question about the power in relation to confiscation of proceeds of crime in certain circumstances in England being mandatory and in Scotland being discretionary, and some of our colleagues on the back benches wanted it to be stronger in Scotland. Following the Second Reading I have asked the Scottish Executive to look at that and consider that matter. I will be talking with the Law Advocate about it, and I hope with the justice minister about it, and taking their views. Obviously, there will have to be continuous dialogue between us in relation to that.

That is the Executive in the law offices, but what I am asking is about Parliament itself, which passed the Sewell Motion on the basis of the Bill as drafted. I am not trying to be difficult here, I am just pointing out that this important bit of legislation could become a flashpoint between the two Parliaments.

(Mr Foulkes) You are certainly not being difficult, in fact I think you are being helpful. I do not know if it is intentional or not! Of course, it would be up to the Scottish Executive and it would be open to them to go back to the Scottish Parliament if there were to be a substantive change in the Bill in relation to Scotland during the course of the Committee stage. That might well happen.

There is no obligation on them to do so. That is the point I was coming to. The Executive could decide it is an important change to put before the Parliament. Equally, they could say "We agree with Westminster. Get on with it."

(Mr Foulkes) I think there may be no legal obligation but I think there might be a political imperative for them to do that, if there was a major change in relation to the principle. In relation to the question of mandatory/discretionary, that would be a major change.

Mr Duncan

In the vein of being helpful, to explore this transfer of powers, in your previous role the International Development Bill was recently progressed and there were aspects which were transferred to the Scottish Executive. Can I ask, in general, what is the Scotland Office's role in making representations both for and against such transfers?

(Mrs Liddell) In relation to the International Development Bill I will ask the Minister of State to expand, but the basis of our relationship with the Scottish Executive and the Scottish Parliament is goodwill. We have to be pragmatic in dealing with these matters; understanding one another's difficulties and responding to one another's difficulties.. I think that spirit of co-operation is key to ensuring that both institutions operate to the maximum benefit of the Scottish people. We consult on a day-to-day basis, particularly on aspects of legislation and a very important role on every aspect of legislation - and indeed policy matters - is the bilateral relationship between the Scottish Executive Minister and the relevant UK Minister. That is often the focus for resolving a lot of the difficulties. I bow to the Minister of State's superior knowledge on matters of international development.

(Mr Foulkes) I am afraid I am going to let the Secretary of State down on this occasion, because my recollection is not that there are any areas being devolved to the Scottish Parliament or the Scottish Executive in the International Development Bill. I am open to correction on that. In relation to the United Kingdom legislation, I think it is very important to remind (I know the Members of this Committee will be aware, Mr Duncan) the general public that in the reserved matters this Parliament legislates for Scotland as well on social security, on international development and in relation to a number of other areas. Specifically in relation to the International Development Bill, I will have a look at it and see if there is a specific area where the power is devolved to the Executive. Of course, the work of the Department for International Development is very important to Scotland and the Department for International Development has one of its headquarter buildings in East Kilbride and is a major employer.

(Mrs Liddell) Can I expand that slightly in a more generic sense? All legislation that goes before the House of Commons has to be approved first of all by a Cabinet Committee, which I serve on, and that is one of the key roles of the Secretary of State in terms of being Scotland's champion at Westminster. That is the area where I feed in issues that relate specifically to Scotland, and I have a vote on that. Also, much of that work is not necessarily done in a face-to-face setting, whereas the Whitehall round-robin goes round in relation to aspects of legislation which we pore over in some detail. Frequently we discover, perhaps, minor aspects of legislation that relate to Scotland and that is where the position of the Advocate General is very important. It is then my responsibility to ensure that those aspects are taken into account. If there are areas where I feel that common-sense might dictate a conversation with the relevant minister in the Scottish Executive I would have that conversation with the relevant minister.

Chairman: Thank you very much for your very full answers on partnership. Can we move on to objectives?

John Robertson

In the Departmental Report Objective 1 seeks "to improve public understanding of and confidence in devolution through preparing Ministerial speeches, articles and correspondence". I appreciate the Scottish Parliament is in its infancy and it is just over two years old, but we have learned quite a bit. Can you tell me whether any shortcomings in the devolution arrangements have emerged?

(Mrs Liddell) I think we are in a situation where we are learning with each day. I think I had to use, on one occasion, one order-making power to tidy something up, which was done in co-operation with the Scottish Executive, and that was done in complete agreement. There was another area where the Scottish Executive had a difficulty on tolls for the Erskine Bridge, where we were able, rapidly, to respond to some difficulties in that area. I think, by and large, it is quite remarkable the extent to which two-and-a-half, three years in a change of process that dates back 300 years has bedded in so successfully. That is not to say that I will not go back to my office and discover that something has emerged that we do need to look at, because every day in the devolution process is part of the learning process. In terms of the overall role, I do not think it is fully realised that I am actually the custodian of the Devolution Settlement. It is for me to make sure that the Devolution Settlement is properly adhered to and properly promoted, and that is something that I take very seriously indeed. Indeed, if I can stray momentarily into the realms of politics, it was something that was very much a feature of the recent General Election campaign. I think the response of the electorate to those issues was a very positive one.

Do you feel, maybe, it is that the message from your own office and from the Scottish Parliament itself and the expectations of the people of Scotland do not exactly marry up; the expectations of the people are very high and they have been, in effect, disappointed with the whole thing, and perhaps we, as politicians, and yourselves as the Scotland Office and the Scottish Parliament are not getting the message out to people?

(Mrs Liddell) I think there are a number of issues contained within that. The campaign to get a Scottish Parliament had gone on for such a long time and it was such a significant and exciting achievement, and that sense of excitement - particularly on 1 July 1999 - was tangible. However, the reality is - as I think everybody, and especially new Members here, know - that when you come into this place it is extremely exciting but then you discover that there is an awful lot of nuts and bolts work that needs to be done. Of course, the real power of the Scottish Parliament is it has a workman-like role of scrutinising legislation; already something like 25 Acts of Parliament have been put on the statute book by the Scottish Parliament. I was only in this place for about two-and-a-half years prior to the 1997 General Election and I know how difficult it was to get Scottish legislation (and, Chairman, you know much better than I do) in the statute book because of the sheer pressure of time. However, I think people in Scotland are seeing that Scottish solutions to Scottish issues can be delivered by the Scottish Parliament. I think the message, too, of that General Election is that they want us here at Westminster delivering as well. It is not all cakes and circuses; the workman-like, day-to-day scrutiny of legislation and passing that legislation relevant to the Scottish people is actually the hum-drum work of every legislator, and that is the bread and butter.

Mr Duncan

You mention, Secretary of State, that you are the custodian of the Devolution Settlement. It is probably fair to say that the extent and the periphery of that settlement will only be tested as issues come up and as time goes on. One matter that has come up and tested it slightly would be the passing of the Sutherland Report recommendations in Scotland, which has obviously caused some interesting discussions between the Scottish Executive and the Treasury. Can I ask how the resolution of that particular argument, if it has been resolved, has increased your understanding of the periphery of the Devolution Settlement?

(Mrs Liddell) Actually, I disagree with you that that is an area of difficulty. All of the areas that are covered by the Sutherland Report are devolved areas to the Scottish Parliament. The great strength of devolution is that it can deliver Scottish solutions to Scottish problems. However, everybody lives in the real world in politics. I think it was one of the great thinkers of my movement who said that socialism is the language of priorities. Every one of us who comes in here has to determine our priorities and every government has to determine its priorities. It is for the Scottish Parliament and the Scottish Executive to determine its priorities. That is the strength of the Devolution Settlement. We provide the resources through the operation of the Barnett formula, and it is up to the Scottish Executive to take its decisions. That is a case in point where there has been a very strong example of devolution working particularly well, especially in relation to brokering the partnership between the relevant UK departments that are involved. So I am, in overall terms, going beyond Sutherland. There is the opportunity where there are, perhaps, issues that emerge that are unexpected, that are at the fringes of the Devolution Settlement where, quite frankly, common-sense and pragmatism tend to be necessary.

Mr Carmichael

Do I understand, Secretary of State, you to be saying that one of the achievements of devolution is that it allows the Conservative Party to support the implementation of Sutherland in Scotland but not, apparently, in England and Wales?

(Mrs Liddell) You may say that, but I could not possibly say that.

Since Sutherland has been raised, there is now apparently a consequential impact of the implementation of Sutherland in Scotland on attendance allowances to be paid, which of course is a reserved matter from Westminster. Can you tell us what representations you have made to the Department for Work and Pensions on that point, because it does seem to me there is very a strong case for that money being retained for Scotland.

(Mrs Liddell) The issue of free personal care as it is delivered by the Scottish Executive is a matter for the Scottish Executive and has to be funded by the Scottish Executive out of the resources available to them. The social security system, however, is a reserved matter, and it is the belief of the Government that the social security system should be unified throughout the UK. In terms of attendance allowances, which I think is the issue you are alluding to, the numbers that are involved in attendance allowances are, actually, comparatively small - about 7 or 8,000 based on 124,000 people who receive attendance allowance. Within that, it is important for the proper operation of the social security system that we operate based on need. There is one of the cast-iron elements of how the social security system works that where need has been met in another direction it is not paid for twice. Indeed, that is a critical part of having an effective social security system. I think the discussions that have taken place between the Scottish Executive and the Department of Work of Pensions have been extremely amicable, and indeed it has been made clear by the Scottish Executive that they do have the resources to implement free personal care as the First Minister wishes to do so, and that is their prerogative. Indeed, it is a prerogative that is much more easily met given the very significant increases in public expenditure that have been made available through the Barnett formula as a consequence of the Government's management of the economy.

Mr Weir

Picking up that point slightly, Secretary of State, you mention it is not to be paid twice. Is the point not that it is coming out of a different budget from money that will normally go to Scotland on social security and may not be met by a different budget at the Scottish Office (?)? Is there not an argument ... (inaudible).

(Mrs Liddell) The logical conclusion of the line you are arguing, Mr Weir, is that if you had a situation where, for example, an administration in Scotland decided that they wished to reduce social security payments in Scotland to pensioners or whoever, therefore they could go ahead and do that, and that would not be in the best interests of the Scottish people. It is also fair to take into account that the Barnett formula delivers a very fair, stable and transparent settlement to Scotland. I think it is not generally recognised that the Barnett formula provides 50 per cent of the public expenditure that takes place in Scotland; the other 50 per cent comes through the reserved departments, and that is a very important relationship. I do not think Scotland would benefit from upsetting that relationship.

That does not answer the point that, in effect, there is a cut in the budget because that £20 million, or whatever it is, is not now going to Scotland in relation to the Barnett formula.

(Mrs Liddell) That money is therefore used in other directions, like the £200 winter fuel payment, the introduction of the Minimum Income Guarantee for pensioners, concessionary travel for pensioners. These resources are allocated in other ways. The important thing is to ensure that through the social security system those who are most in need get the best help, and that underpins the Government's policy in social security, not just in Scotland but throughout the UK.

Mr Lyons

Secretary of State, I return to the question of the Scotland Office and UK departments. Can you give us examples of recent advice tended by the Scotland Office to UK departments, particularly on matters concerned with energy, trade (particularly in Scotch whisky), work and pensions and asylum dispersal, in pursuit of Scottish interests?

(Mrs Liddell) All of these matters are day-to-day basis issues that we discuss regularly with the Scottish Executive. Energy is a particular case in point and I will ask the Minister of State to inform the Committee of the role that he plays in the PIU study on energy policy. Indeed, in relation to asylum policy, the Minister of State yesterday attended a meeting with Lord Rucker, together with the Moderator of the General Assembly of the Church of Scotland, to discuss asylum matters. Of course, during the summer, when there were some unfortunate events in relation to asylum seekers in Scotland, my office was very much involved. In relation to trade - and I can speak specifically of a visit that I made just three weeks ago to Brussels as part of Scotland Week promoting the Harris tweed industry - even in the most minimal ways we are able to help businesses that are specific to Scotland. I believe a number of Honourable Members were available last night when we hosted a reception in Dover House for the Salmon Growers' Association. That is something that is in the minor scale of helping trade but is also a very important facilitator. I see a big part of the role of my office in providing opportunities for Scottish businesses to showcase their products and find their way into markets. On Scotch Whisky, it is of course inevitable that when the Chancellor begins the round of preparing for the Budget any Secretary of State for Scotland would remind him of the importance of the Scotch Whisky industry. Indeed, we have been very successful in securing the Chancellor's ready response to freezing the duty on Scotch Whisky. One of my little personal ambitions is to ensure that every diplomatic post abroad offers Scotch Whisky in a range and variety that encourages people who have, perhaps, not been introduced to our national drink to sample it and, therefore, go out and buy it. In relation to the energy policy, I will ask the Minister of State to bring you up to speed

(Mr Foulkes) Can I also add, Chairman, in relation to asylum that as well as moderating the Moderator's visit to Lord Rucker (which, incidentally, went very well - he was very pleased with the decision to phase out vouchers and with the plans that we have to deal with asylum seekers, with some reservations) I also arranged for Jackie Baillie, who is the Scottish Cabinet Minister with responsibility for the integration of asylum seekers in Scotland, to meet with Lord Rucker, and we had a useful discussion. We also, during the course of those discussions, put forward the concerns of asylum seekers in Scotland that they have to come down to Croydon or Liverpool to report, and I understand from Lord Rucker that an announcement will be made shortly which will mean they do not have to do that and they will be seen either in Scotland or close by, depending on what arrangements can be achieved. In relation to energy, as you know the Prime Minister has asked the Performance and Innovation Unit of the Cabinet to produce a report on energy policy by 2050 by the end of this year, which is a challenging task. There are six ministers on the advisory committee, and some outside members. I represent Scotland on the advisory committee, and although energy policy is a reserved matter, because certain aspects of energy are devolved, including the very important one of consents for power station development, I have consulted very, very closely with both the ministers and the officials in the Scottish Executive - kept them in touch and met with them before and after each meeting of the PIU - so that as well as representing the reserved areas I hope I would be attempting to represent the interests of the Scottish Executive as well.

Just on the question of the PIU, which ministers are involved in the Scottish Executive?

(Mr Foulkes) Alasdair Morrison is the minister with particular responsibility. I have spoken with him on a number of occasions about it.

Mr Weir

I have a question of the Advocate General, touching on some of the areas of your responsibility. I wonder if you could give us a brief overview of what the Advocate General actually does?

(Dr Clark) Would that be acceptable? I will try to be brief but it is actually quite complex, as you will understand, I hope. Firstly, the Advocate General is a law officer of the Crown and the Advocate General is the chief legal advisor to the United Kingdom Government on Scottish law. What happened with devolution and the Scotland Act was that the Advocate General took over the advisory duties of the two Law Officers who previously advised in Scottish matters, that is the Lord Advocate and the Solicitor General. They became the advisers to the Law Officers and advisers on legal matters to the Scottish Executive. So basically I inherited the duties of these two Law Officers. It is true that the Lord Advocate had some policy responsibilities which he took back with him to Scotland, particularly the prosecution responsibilities, but in addition to the traditional advisory responsibilities which I inherited, I took over a whole range of new responsibilities which are entirely due to the Scotland Act. Firstly, I am a Minister one degree below Cabinet rank. Traditionally Law Officers have not sat in Cabinet. I function independently of the Secretary of State for Scotland and from the other departmental Ministers. In giving advice to the Government I am in the same position as the Attorney General and Solicitor General in England and Wales. They give advice to the Government in the same way but obviously about matters relating to English law or how it applies in Wales. I work very closely with the Scotland Office. We have had, hopefully, a very amicable relationship which has been very useful for my part and I hope I have been useful to the Secretary of State and to the Minister of State. We are in the same department but I am a little unit on my own and I am responsible for that unit directly. I have two lawyers and one or two administrative support staff based in London but my main legal department is based in Edinburgh. The reason for that is the legal department in Edinburgh services all the UK departments as it did in the past in relation to reserved matters. So, for example, in relation to legislation which is in reserved matters which is going through Parliament and UK statutes, lawyers from the Advocate General's Department/Solicitors' Office will be involved in assisting with that. They liaise very closely with the Scottish Executive lawyers who are in the same building and who do share certain facilities such as library facilities which helps to keep down costs. The lawyers who are in the Solicitors' Department also service the various Whitehall departments in relation to litigation, for example, the Child Support Agency, the various Sheriff Court actions that go on through that, the asylum cases that end up in the Court of Session, a whole range of UK-reserved work. In addition to advising about Scots law, issues which traditionally had also been advised about were things that became very important post-devolution because of the Human Rights Act and the European Convention and, indeed, in relation to European law, and of course the Scotland Act. So the advice that I give as Advocate General is quite often in association with the Attorney General and sometimes also the Solicitors General in England and Wales. We quite often give joint advice across a whole range of matters particularly in relation to European law and in relation to the Convention of Human Rights and the Human Rights Act. If I could perhaps explain the general Law Officer role because I am not sure that everyone fully understands it. It is not for the Law Officers to leap in and start advising departments. Departments come to us for advice and when we give advice at Law Officer level this can be after a long and difficult consideration of issues that are complex and perhaps controversial and sometimes disputed between different departments' legal advisers, and that might be one reason why one department or more than one department will eventually come to the Law Officers for advice. Basically once the Law Officers' advice is given that will be the binding advice on that particular issue. We are a way of dealing with disputes. There are other matters which traditionally come up to Law Officers for advice. So there is a whole advisory work going on behind the scenes. As you may have picked up from my Parliamentary questions, there is a Parliamentary convention about that which means that I am not at liberty as a Law Officer even to advise that I have advised a particular department, let alone to say what advice I have given. This is a convention which has been honoured by Parliament through a whole range of administrations for many, many years. I think that there is merit in that convention, and it would not be for me to depart from it anyway, even if I wanted to, because obviously there is a whole range of departments who have an interest in the convention, and at the end of the day it is a matter really for Parliament to deal with parliamentary conventions. In addition to that advisory role, which is fundamental to my office, I sit on a number of Cabinet committees, including the Legislation Committee which is a key Committee, as the Secretary of State said. I also sit on Cabinet committees such as the Nation and Regions one, which is very important in relation to devolution. My role there is legal. I give legal advice. I am not there to say, "I do not like that policy" or anything like that. If an issue arises which has an Scots law aspect to it or a European aspect and there is a problem, then I will advise. I will advise in relation to whether or not matters have been dealt with in relation to Scottish Parliament and pursual motions and where we are in relation to that. The other major aspect of my role, and this is completely new and therefore I had to develop this role when I came into office, is the role which is given to the Advocate General in terms of the Scotland Act. There are two main aspects to it, firstly, the role under Section 33. That Section relates to the Scottish Parliament. As you probably are aware, the Scottish Parliament has inbuilt into it certain protections in order to try to ensure that the Scottish Ministers are acting within the devolved competence of the Scottish Parliament so that the main responsibility and the legal responsibility for them to act in competence is theirs, but the Section 33 role means that every bill of the Scottish Parliament has to be intimated to various Law Officers including the Advocate General and a month must pass before that bill becomes law. That is in order to allow the Law Officers to consider the Bill. We are not looking at policy matters; we are looking at the legal competence of the matters. Legal competence can arise in three main areas: firstly, is it competent by being properly within devolved powers, and that can be a difficult issue; secondly, is it competent because it is within the Convention of Human Rights; thirdly, is it competent because it is not contrary to European law. So these are the issues that we would look at, some of which can be, as you would imagine, quite difficult that we would look at. Plainly it would not be helpful or in the spirit of the devolution settlement if I sat back on my hands until the Bill was intimated to me and then said,"What about this, that and the next thing?" That would not be a helpful response. As a result my lawyer engages with me at an early stage of the legislation and using some of the expertise from Whitehall departments engaged in constructive discussion over a whole range of legal issues, we try to get to a position where at the end of the day I feel that I would not need to refer the Bill to the Judicial Committee of the Privy Council for a legal decision about the competence - in other words, we have managed to resolve any difficulties we might have seen. This is constructive - and I hope it is seen as such - because at the end of the day it is very important that challenges to Scottish Parliament Bills are not successful. We want the Scottish Parliament legislation to withstand challenges and therefore the scrutinisation of them by the lawyers in the Scottish Executive, and the Lord Advocate has a very important role in this as well, the combined effect of this is to try to ensure that the Scottish Parliament legislation survives challenge. Having said that, it is not at the end of the day my responsibility to make sure the Bill is competent. I am under no duty to intervene even if I think there is a problem because I could take a view that the challenge should be allowed to proceed and I could intervene then if I feel it is appropriate because in that event there will be a second opportunity for me to intervene because it will then become a devolution issue. That is the next aspect of my role.

Chairman

Can I stop you there, Dr Clark, because if anyone ever accuses you again of not giving a full answer -

(Dr Clark) There are many other things I would like to talk about, bearing in mind I only get five minutes usually.

Chairman: I think one lawyer asking a question deserved that kind of answer. Do you want to come back on that Michael?

Mr Weir

No but it would be interesting, however, if the Advocate General could prepare a memorandum explaining her role in more detail because one of the problems is that a lot of us are unsure what the Advocate General actually does.

(Dr Clark) I have sympathy with that. One of the first things I did when I entered office was prepare a factsheet which I sent to all members of the last parliament. We are looking at that factsheet to see whether we should update it and re-circulate it. Obviously there are costs involved and that is an issue. The other thing I am hoping to do is to offer new members in particular the opportunity to come and discuss with me my role because I do realise that non-lawyers (even lawyers) do not understand it fully because the role is new and developing and because it is very technical. I am delighted to discuss with any Member of Parliament, in fact anyone, my role because it is absolutely fascinating.

Mr Carmichael

Advocate General, did I understand you to say that in terms of the litigation work being done on behalf presumably of the Inland Revenue and the Child Support Agency that the work is done by the Solicitors' Office? Is that part of the Scottish Executive?

(Dr Clark) No.

That is your area?

(Dr Clark) It is the Office of the Solicitor to the Advocate General. If I could just say very briefly, the instructing department in these cases is not me, it is for example the Home Office. My Solicitors' Office will also do some litigation, which is me when I am doing work as Advocate General under my statutory function. I have obviously been in court sometimes personally appearing as party litigant as Advocate General to do certain cases. Although I am Advocate General I am really appearing as counsel, instructed by the Solicitor on behalf, for example, of the Home Office or some department, and then it is still the Home Office who are technically giving the instructions, not me. If I am appearing as a party litigant or if it is properly a case for the Advocate General under the Act, then I am the person giving the instructions. If I say this case should be settled, the case will be settled. But if the Home Office is the instructing department then that would be different and it would be a matter for them to decide.

Would you be in a position at some later date of giving an indication of how many lawyers are now employed in total between your department and the Scottish Executive because I think the figure that was given by Mrs Liddell at the beginning was 30 solicitors employed at your office and I have to say that from my experience - and I was a Crown Office trainee so I know a little bit about the advisory role which is interesting but not particularly substantial - 30 does sound like quite a lot for what is fairly routine work.

(Dr Clark) I think there are 29 and the major part of their work is advising about litigation, regulations, all these matters, for Whitehall departments. That is a major part of their work and also carrying through the litigation. I have two lawyers down here who assist me personally in relation to opinion work and various other aspects. We regard ourselves as a pretty lean machine.

(Mrs Liddell) It is actually 28.

Mr Weir

It goes down by the minute.

(Mr Gordon) Could I explain that that 28 includes administrative staff, not just solicitors.

Mr Carmichael

It is 28 staff, not 28 lawyers?

(Dr Clark) Most of them are lawyers but there are back-up staff too.

Chairman: I think you have all had a good go at that one. We can move on a bit now to the Parliamentary Boundary Commission for Scotland and Peter Duncan wanted to lead off on this.

Mr Duncan

In the last question we were looking to elicit a long involved response, and perhaps in question 5 we will be looking for a short one, Secretary of State; yes or no would do! You will be aware that part of the Scotland Office responsibility is to fund the Boundary Commission. I understand that yesterday you made an announcement about the consultation process, but obviously your office and you personally and your ministerial team have a key role to play in opinion forming, apart from anything else. Do you accept the principle that, following devolution, the size of a Scottish constituency in terms of size of the electorate should be the same as it is south of the border?

(Mrs Liddell) That is a matter for the Boundary Commission. They are completely independent. I do not have any discussions with the Boundary Commission other than instructing them at the start of the process and I think we have to await the report of the Boundary Commission on that. I think until they have published the order it would be inappropriate for me to give any personal view at the moment.

Can I tease a wee bit more out of you, perhaps unsuccessfully. Obviously this is a consultation exercise I understand you are embarking on, and consultation does imply leadership and opinion forming. Do you see the end result of that as a constituency north of the border - admittedly the recommendation will be subject to your acceptance or rejection - ideally being the same size as south of the border?

(Mrs Liddell) If you look at the Scotland Act, the Scotland Act is reasonably specific in that in that it takes away the argument for the lower number of constituents that a number of Scottish constituencies have because of the extra burden on Scottish Members for separate Scottish legislation, so the purpose of this change is greater harmony between the size of constituencies north and south of the border. It will be up to the Boundary Commission to take into account the size of English constituencies in coming to their conclusions. I am loathe to say anything that leads me into speculating about what the conclusions of the Boundary Commission might be.

Would it be fair to say that you are predisposed towards a view that they should be similar?

(Mrs Liddell) The Scotland Act is quite specific on it. It is not a question of my view, it is a question of the legislative issues that were raised when the Scotland Act was going through.

Chairman: You wanted to follow on with another question, Peter.

Mr Duncan: I think John had a question.

John Robertson

I asked it yesterday so I may as well ask it again. Now that the Scottish Parliament has been in existence for over two years, do you believe that 129 MSPs is the right number to carry out the work of the Parliament effectively?

(Mrs Liddell) As you know, Mr Robertson, I announced yesterday that we would consult on this. Indeed, if you look over the debates that were held at the time of the Scotland Act's passage both through this House and the other place, it was made clear at that time by my predecessor Dr Reid that we would be pragmatic in our view as to the size of the Scottish Parliament, bearing in mind the process of the bedding down of the Parliament and how it functioned in the first three to four years of its existence. My view throughout all of this has been that one of the great achievements of devolution was to broker a broad consensus on the Scottish Parliament and I think on this issue I should seek to find a consensus as well. There is no way I can give you an answer as to whether or not I want 129 or whatever. I am open-minded as to the consultation, it will be a genuine consultation, and I think it is appropriate that the Scottish Parliament, and indeed members of this House, have an opportunity to express their views on, and that a proper debate - and that may mean people disagreeing - takes place.

My feeling is that we are perhaps a bit early for this consultation. I know you disagree. After two years of a new Parliament it strikes me as being bit premature in re-looking at it. Do you not agree that we should be waiting a bit longer to give it a chance to bed down?

(Mrs Liddell) If you look at the Scotland Act, again you will see that it is quite explicit in the Scotland Act about the size of the Scottish Parliament. Given that issues relating to the size of Scottish representation in this place are live issues now I felt it was appropriate to begin this process of consultation because I think it would not be in the best interests of brokering a sound partnership were we not to listen to the representations that were being made.

Chairman

How wide-ranging will the consultation be?

(Mrs Liddell) It will be up to whoever wishes to make representation, members of the public, organisations, Members of Parliament, whoever wishes to express a view on this will be gratefully received.

Mr Lazarowicz

As part of the process, Secretary of State, will you consider looking at the experience of other European countries in relation to devolved government? I know that when the proposals were first developed there was considerable interest in what happened elsewhere in Europe and it seems to me it would be useful to look at other parts of Europe. Is that something you would consider as part of the consultation exercise?

(Mrs Liddell) As part of keeping ourselves informed about best practice in devolution I and my ministerial team take a close interest in the devolution systems of other countries. I was in Canada two weeks ago and visited the national parliament in Ottawa and had discussions about the functioning of devolution there. I have been in Italy where they are going down a similar route to us in relation to devolution. I am due to go to Spain because there are also very interesting issues emerging not just about the relationship of the devolved administration to the national government but also, where you do not have one-size-fits-all devolution, the relationship of the devolved administrations one with the other. That is a very interesting area that we need to have more thought and analysis on. As for me proactively going and seeking solutions or routes from other devolved parliaments to resolve this issue of 129, I think that would be beyond my position as the arbiter of the consultation process, however, it would not be out of order for people to draw to my attention from their own analysis of other devolved administrations their view as to how best practice could best be taken into account in this consultation for the future of the Scottish Parliament. Bear in mind that the next elections to the Scottish Parliament in 2003 will be on the existing system; this does not become live until 2007.

Mr Carmichael

The terms of the Scotland Act require that, with the exception of Orkney and Shetland (which is a very important exception, I am sure you will agree) the constituencies for the Scottish Parliament should be coterminous with those applicable to Westminster. The ratio of constituency to regional members in the Scottish Parliament is currently 56:73. Do you see any need to amend these arrangements?

(Mrs Liddell) Let me say first of all that I have no plans to seek to change the operation of the voting system for the Scottish Parliament, but I think you raise a very, very important point about this issue of co-terminous boundaries of MSPs' constituencies and' MPs constituencies. There are significant issues that need to be addressed and they are not easily addressed, they quite complex. It is important for us as parliamentarians, who as constituency members deal day and daily with these issues, to have a serious and detailed examination of how a system that did not have co-terminous boundaries would actually function. I am saying that in a sense of saying, "Look, we are the people that deal with the nuts and bolts. We need to get our heads round how a change in the system would work." I am not saying it would not work; I am just saying it is time for a grown-up debate about this.

Mr Duncan

In terms of that problem of coterminosity would it have been easier if during the passing of the Scotland Act you had accepted an amendment on the de-coupling of the numbers?

(Mrs Liddell) I do not necessarily agree with that given that Lord Sewel in the other place made it clear at that time that we would be pragmatic. The whole issue of de-coupling at that stage was not backed up by the analysis that I have just responded to in terms of saying how exactly will it work having boundaries that are a different size and also taking into account local government boundaries. You could have a situation where one Member of Parliament here had three local authorities and maybe three MSPs. All of us who work on a day-to-day basis know that that could be quite a complex issue to deal with. I think that is something that people need to look at. We also need to take into account that political parties in this country are currently organised on a Westminster constituency basis. The political partes will have a view on this because it affects their operation as well and in a democracy you need properly functioning political parties.

Mr Weir

Secretary of State, I speak as somebody who has already got three local authorities in their constituency.

(Mrs Liddell) I am awfully glad I am not in your situation!

Chairman: Can we move on now to the issue of special advisers.

Mr Joyce

Secretary of State, two very important members of your staff are special advisers. Can you give us an outline of what they do?

(Mrs Liddell) Can I firstly on behalf of my ministerial colleagues congratulate Mr Joyce on his recent happy event. Managing to have your family increased by two at one go is quite dramatic and if you would pass on our good wishes to Rose. The job of the special advisers is actually a very, very important one, and it has to be remembered that although much of the work that I do with Scottish Members is as the Secretary of State for Scotland, I am a member of the Cabinet and as a member of the Cabinet I have wide-ranging responsibilities and a wide range of areas where I need advice, and not all of it is the kind of advice that can be given to me by career civil servants. One important role that special advisers promote is to protect the Civil Service from any charges that they may be seeking to give me what is, in essence, political advice. Also because we are a very small ministerial team and we have a country to deal with of five million people, there are lots of different organisations that I need to keep in touch with, not just formally as the Secretary of State for Scotland but also as a Labour politician, for example with the trade unions and so on, and it would be inappropriate for career civil servants to do some of these contacts. That is where I am greatly helped by having one special adviser who has a particular background in the trade union movement as well as a wide academic background. Also in relation to the point Mr Robertson made in looking at my objectives, part of my role is to popularise and promote the devolution settlement. Some of that has to be in a political way rather than a straightforward ministerial way and I am helped by my other special adviser in doing that. I have been around the political process since the early 1970s when the whole system of special advisers - or political advisers as they were called at the time - was introduced. I think it is a very helpful way forward in ensuring not just that Ministers have advice that sometimes it would be difficult for a civil servant to give, but also that Ministers are kept in touch. One of the hardest things to do as a Minister is to keep in touch because of the volume of paper, the volume of work that has to be done. I find it very, very useful to have sensible advice that is rooted in the communities and institutions of Scotland that it would be inappropriate for civil servants to speak to me about.

Mr Duncan

Can I run a quote from the Opposition past you, Secretary of State, which read: "This is no longer a government; it is purely a propaganda machine. They are drafting in more civil servants not to do the work of government but to do their political dirty work for them." That Opposition was dated prior to 1997. I wonder if your views have changed since?

(Mrs Liddell) I think we have modernised the system of special advisers. They operate very tightly within a Code of Conduct and indeed the use of short money to fund the Opposition Leader's office is a means of giving political advisers to the Opposition as well. Indeed, it was a Labour Government that introduced that. There has always been a tradition of special advisers in this Department. Every time the issue of special advisers is raised in relation to my office, I always remember one special adviser to Lord Forsythe who was appalled at the prospect of women being allowed out of the home, and he regarded nursery education as something that was way beyond the pale and would lead to Armageddon. Not only is he likely to be appalled by the fact that the New Deal for Lone Parents has meant that 52 per cent of lone parents, who are predominantly women, are able to find work, but I suspect now with a female Secretary of State he probably looks out the window in the morning to make sure that the milk float is not drawn by the Four Horsemen of Apocalypse. I think it is important to bear in mind that special advisers have a significant role to play and often when people attack them it is based on sour grapes.

Mr Carmichael

How do you acquire a special adviser? How do you appoint them?

(Mrs Liddell) By application.

Is it open advertisement?

(Mrs Liddell) It has got to be approved. Perhaps Ian Gordon can take you through what the actual procedures are because I cannot completely recall what the procedures are

(Mr Gordon) It is a personal appointment by the Minister but it can only be made with the approval of the Prime Minister. So the Minister will put forward names to the Prime Minister for approval and when the Prime Minister has approved them, then discussions can take place.

How do we acquire the names?

(Mr Gordon) It is a personal appointment by the Minister.

So there is no question of advertising?

(Mr Gordon) Different procedures can be observed.

Do you advertise?

(Mrs Liddell) I did not advertise because I was appointed, as you may recall, on 24 January in a completely unexpected manner and I needed to have special advisers very quickly indeed, and I knew of people who I felt could give me the kind of advice that I required and were available to come to me very quickly. They resigned at the time of the General Election and subsequently made it plain to me that they would welcome the opportunity to continue working for me. I was comfortable with their work, in fact very impressed with their work and wished that to continue. Indeed, you will find, for example, that Jim Wallace has two special advisers in the Scottish Executive. There is no way that a Minister can work with a special adviser that does not have a similar mind set and vision because the special adviser quite frequently needs to share the vision of the Minister. I have a very specific vision of where I want to take the Scotland Office not just as a facilitator of the devolution settlement but adding value to the government of Scotland and to the government of the United Kingdom, not least of which the European setting because major issues about the future of Europe have to be confronted. And I was very anxious to have a special adviser experienced in European matters.

I do not dispute the sort of profile that you are outlining. Everybody round this table would have similar considerations when they appoint their own staff. But do you not think it would do a great deal for the legitimacy of special advisers and go a long way to answering some of the criticisms we have heard here today?

(Mrs Liddell) I think there is transparency in their appointment. The Minister has to justify to the Prime Minister why that person has been chosen and they have to submit a CV and that is gone over in some detail. That appointment cannot be confirmed until the Prime Minister and the Cabinet Secretary have approved it. There are procedures and safety nets all along the process. In my own case speed was of the essence. I needed somebody extremely quickly, given that I had not had an opportunity to plan in any sense in advance. In fact, I think it is generally known that when the Prime Minister was seeking to find me to appoint me nobody had actually thought to look for me at the Despatch Box which is where I was at the precise moment when I was becoming Secretary of State for Scotland.

Chairman: Can we move on and can I make an appeal for brevity. Mark, I think you are next on Joint Ministerial Committees.

Mr Lazarowicz

When the devolution settlement was established it was always envisaged that the Joint Ministerial Committees would be a very useful way of having additional consultation and mechanisms between the various devolved administrations and the UK Government. Can you give us some assessment of your experience of the committee structure to date?

(Mrs Liddell) At the time devolution was conceived I think we probably were not aware of how rapidly and how effectively bilateral relations would develop between Scottish Executive Ministers and Ministers of the UK Government, and that has been one of the very successful elements of devolution. Where the Joint Ministerial Committees come into play is as a forum for best practice, for discussion, for raising issues. Indeed, there was a Joint Ministerial Committee in Cardiff just last Tuesday and it was very useful to share best practice and also in a forum to say the areas where perhaps things could be done better. Often there are minor aspects of our day-to-day working that could be improved and that is why the overall JMC chaired by the Prime Minister is very useful. There are, of course, specific JMCs on specific issues that allow the kind of debate and discussion that is not normally able to be fitted into a very business-like bilateral arrangement. It is more the apex of the system of bilateral relationships that is very important. Indeed, that is the way that the work in the Scotland Office is evolving because we intervene much earlier than the JMC meeting to help Scottish Executive departments or help Westminster departments, and we are often a facilitator where we can lift the phone if we see a difficulty emerging that may not have been spotted and we can try and ease those difficulties. The JMC as a sort of clearing house is much more the image of what is actually happening rather than the template that was set down at the time of the devolution.

How often does both the full JMC and the subset JMC meet?

(Mrs Liddell) I have attended one of the main JMCs just last week. The functional JMCs met as follows: the JMC on the Knowledge Economy, February and May 2000; JMC Poverty, May 2000; JMC Health, twice in June 2000 and once in October 2000 and once in October 2001. But the real workmanship is in the bilaterals. It is not just bilaterals with Scottish Executive Ministers to UK Ministers; it is also bilaterals between the devolved administrations as well.

One of the functions covered by a JMC is the European affairs side of things. My understanding from the original Memorandum of Understanding was that it was envisaged that the European Affairs JMC would be where there would be discussion about the participation by the devolved administrations in the UK representation at the European Council and other European levels. Is that function still being carried out by that JMC and, if so, can you give us an update of the number of occasions that Scottish Ministers have taken part in the UK delegation?

(Mrs Liddell) Again there is a much more workmanlike system that has developed. There is a Committee called MINICORE (?), which are European Ministers from all departments which I have sat on in all my various guises as a Minister, and the devolved administrations sit on MINICORE, and it is there that the real "nuts and bolts" work is done in relation to Europe. Again in relation to the devolved administrations appearing at Councils, that is often done on a pragmatic basis. There are issues of specific relevance to Scotland where Scottish Ministers have been the lead Minister in the European Councils. I do not have the specific number but I will certainly give the specific number to the Committee. My memory has been jogged. In relation to the JMC Europe, it has met once before and indeed it is due to meet very shortly.

Perhaps I might make an observation. Bearing in mind what has been said about the value there has been to the Secretary of State and Ministers from contact with their counterparts in Wales and Northern Ireland, maybe that is something this Committee should think about - the ways in which it can learn from the experience, for example, of the Welsh Affairs Committee. Perhaps that is something for this Committee. Can I ask the Secretary of State about another issue arising from the Memorandum of Understanding. What assessment has been made of the operation of the four over-arching concordats which were also provided for in the Memorandum of Understanding. Has there been any assessment of their effectiveness to date?

(Mr Gordon) The very first meeting of the top JMC, the one the Prime Minister chairs, took place just over a year ago, and it commissioned a review, in effect, of the system of Memorandum of Understanding. The Memorandum of Understanding is underpinned by four multilateral concordats, which are the ones that you are referring to - exchange of statistics, financial assistance to industry, EU business and international relations. Those were reviewed throughout the course of last year and a report was submitted to the JMC. The bilateral concordats between each individual administration and their counterparts in Whitehall are contained in that higher level of memorandum of understanding.

Mr Carmichael

Following the review of the working of the Memorandum of Understanding, what new advice on devolution matters and associated best practice has been promulgated?

(Mrs Liddell) In relation to the MOUs, these were discussed at the JMC last week with the Prime Minister and some minor textual changes were made. I am not sure when they are going to be published but I think it is pretty shortly. I will arrange for the Memorandum to be made available to the Committee. As well as operating in terms of the Memorandum of Understanding it is in terms of day-to-day working that we can best share best practice. It varies between bilateral arrangements between ministers as well. Some departments have excellent bilateral relations, some edged into bilateral relations more slowly than others. Sometimes it can be a question of the issues, sometimes it can even be issues of personality. They are now operating extremely well indeed. I can remember the discussions when I was in the Scottish Office before devolution and it was envisaged that the MOUs would be needed much more to resolve conflict. I think it is fait to say, apart from one or two cases, that has not been the case.

Mr Lazarowicz

Could I take up one aspect of the relationship between the Scotland Office and the Scottish Executive in so far as participating in European affairs is concerned. Moving away from the Memorandum of Understanding to the Concordat itself in terms of the actual participation, I still think it is called Scotland House, in Brussels, what kind of participation does the Scotland Office have in that shop window for Scotland and the Scottish Executive?

(Mrs Liddell) We have a great deal and, again, it is down to goodwill. It was Scotland Week in Brussels a fortnight ago and I went out and worked with Scottish Executive ministers on a lot of promotional activity. I made a major speech to a seminar on the future of Europe and how the United Kingdom wishes to sponsor debate on the future of Europe, particularly in relation to the devolved administrations. We find the Scotland Office extremely helpful. I, as indeed has the Minister of State, have served in many councils in all my many ministerial guises and to some extent I do not find myself needing to use formal structures as much now I know how the system works. Scotland adds great value, it is greatly respected in Brussels, and it is a facility that is available to Members of this Parliament as well as to Members of the Scottish Parliament. I would encourage Members, especially if you are making use of the visit that you are allowed to another institution, to take the time to go and look at Scotland House and how it functions.

Mr Carmichael

Specifically on the European affairs aspect of the work of the Scotland Office, my constituents would argue that the single most important aspect of European politics at the moment is the proposed forum next year on the Common Fisheries Policy, and equally they look to London to take a very strong position on the promotion of some of the proposals in the Green Paper. Can I ask what representations has the Scotland Office in particular made to the Commission on the Common Fisheries Policy?

(Mrs Liddell) We keep in very close contact with Rhona Brankin on these matters. It is, indeed, the councils where the Scottish Executive has tended to lead the UK delegation around fisheries. That is an area where Scotland predominates over the United Kingdom view from the point of view of the Scotland Office. We keep in touch with our colleagues in the department down here but because the great majority of fisheries' interests now are Scottish it tends to be the Scottish Executive that is very much in the lead on that, which I imagine should suit your constituents.

Something that we are not unhappy about but we will judge it by the results.

(Mrs Liddell) Fishermen always do.

Chairman: Can we move on to the Equality Strategy.

Ann McKechin

Mrs Liddell, you have mentioned the fact that your staff are mostly seconded from the Scottish Executive and I take it that you follow the Scottish Executive's equality strategy for staff. Does your Department have any specific strategy with regard to recruitment and equality issues?

(Mrs Liddell) Just on the general equality point, we made a major breakthrough with the appointment of a woman Secretary of State, the first for 116 years. Save the presence of the Minister of State, at a ministerial level I think we outnumber men, so there may be other equality issues that have to be brought to bear there. I think Mr Gordon can best fill you in.

(Mr Gordon) The Scotland Office is committed to the same policies that the UK Government is requiring of all departments in terms of promoting diversity in ethnic terms and in terms of sexual discrimination. In terms of measuring it, we have taken the view that because the Office is really quite small we would see huge movements with one or two movements of staff and given that our staff are for the most part almost entirely from the Scottish Executive, for the purposes of monitoring it we would be brought together with the Scottish Executive staff for monitoring of diversity. If you would like specific figures for this ----

I wonder if it would be possible in future Departmental Reports to give information on targets and how that is taken into account.

(Mr Gordon) There is certainly no difficulty doing that.

If I could go on further from the staff issue and equality to whether the Scotland Office makes any assessment of the impact of policy decisions concerning Scotland on gender, ethnic background and disability issues? A recent experience I had was when I visited the Inland Revenue Scotland Office during the summer recess I was advised that they were only now producing leaflets in ethnic languages on Tax Credits despite the fact that they had been introduced 15 months ago. Has the Scotland Office issued any guidelines to offices in Scotland about how they should address these issues?

(Mr Foulkes) Can I say on that that, as you know, during the summer I, on behalf of the Scotland Office, arranged for Members of Parliament and invited Members to meetings with the Inland Revenue, with the Disability Rights Commission and with the Health and Safety Executive, all of which are reserved areas and operate in Scotland. The officers in Scotland explained their functions very well but also took on board some of the suggestions that you and others made at the meetings. It was a particularly useful one with the Disability Rights Commission and also, as you say, with the Inland Revenue. I have had separate discussions with the heads of the Inland Revenue and the Health and Safety Executive in Scotland and that was one of the issues we discussed with them.

Chairman: John, you wanted to come in?

John Robertson

With the link between health and social security do you see yourself to be in an unusual position or a special position, particularly in Scotland, particularly in dealing with disabilities and for that matter any kind of benefit that might come from social security where it is linked to health? Carers, for instance, who are receiving benefit from social security are linked to the health service and health system. Do you see yourself as an important person in this as the link between them?

(Mrs Liddell) Brokering the bilateral relationships between the two departments is very important and in this case it is three departments. Often where we can add value is making sure that the UK department is aware of the issues that are specifically Scottish. They need not necessarily be legislative issues. For example, the high incidence of heart disease and cancer in Scotland which is larger than it is in any other part of the United Kingdom, issues related to diet and so on that we all know are significant issues for Scottish people. We have worked quite hard to ensure that colleagues here are alert to the fact that not everything appears on the face of a Bill, there are a lot of issues that are much wider, that are cultural and institutional. In terms of overall equality policy the Minister of State sits on the Equality Committee. We are not an employing department so we are not front line in relation to that but making sure that in issues of diversity, especially in relation to disability, that the specific needs of Scotland are taken into account is something we do as a matter of routine.

Chairman: We are going to move on to the funding questions now. Before starting that can I say to the Secretary of State, the Committee recognises the technical nature of many of these questions therefore we would expect a broad reply but followed by a detailed memorandum. They are important to us in an attempt to follow and understand the funding arrangements. Could I ask Mike Weir to pick that up.

Mr Weir

We were all given a copy of Funding the Scottish Parliament National Assembly for Wales and Northern Ireland Assembly, while it is a very interesting document one of the points is that the figures that are followed through are not publicly available, what role does the Scotland Office play in assisting the funding for the Scottish Parliament described in the document?

(Mrs Liddell) We do not actually do the computations, we have a route whereby the money goes to the Scottish Executive, so the Barnett consequentials are all done by Treasury, although it goes through us as a conduit, that is what we are, rather than the arbiters of what should be actually done with the funding

Do you have access to the Treasury figures?

(Mr Gordon) Yes, indeed we do. In the course of the Spending Review one of the outcomes of that is, in effect, decision is taken on the spending programmes of United Kingdom departments. The key components of the consequentials will be calculated for the Scottish budget. We, and indeed the Scottish Executive, have access to those figures to make sure that a fair share is coming to Scotland.

Are these figures published in any form?

(Mr Gordon) There were figures published at the time of the announcement and we produced those in the memorandum.

(Mrs Liddell) Often the Red Book will give you a fair amount of detail in relation to that.

On the funding of the Scotland Office itself I was interested in the figures in Tab 1 on page 15 for the running costs of the Office. I notice they seem to have gone up in the first year fairly substantially and they remained steady thereafter. I appreciate that in 1999/2000, which was a partial year, it seems to come to about four point something million. I am curious as to why there seems to be a large difference. I would have thought that the start-up costs would have been higher in the first year.

(Mrs Liddell) The reason they are small, firstly, is because it was a nine month period. At the very beginning, understandably, all of the focus of activity from our election in 1997 was making sure that all of the systems were right in the Scottish Parliament, that the Scottish Executive had all of the staffing requirements put in place. I think it is fair to say that we did underestimate what would be needed by the Scotland Office to carry out our functions. As I said at the beginning, we sit on something like 19 different Cabinet committees and that requires advice and analysis. As we were talking in relation to the legislative programme, there has to be detailed analysis of every Bill that goes through for the impact on Scotland and we had not really factored that in to the functioning of the Scotland Office. My predecessor, Dr Reid, took a most worthwhile initiative in raising the issue with the Chief Secretary and it was recognised that we really did have to have a much more policy oriented Scotland Office rather than a small functioning private office. That is the point at which a bigger structure was put in place to make sure we did have the kind of advice that was actually needed. If you look at the range of issues where the reserved matters apply they are very, very considerable indeed and even to have the ability to analyse the anti-terrorism legislation, for example, that was of huge, huge importance to us. At the beginning we had a blank sheet of paper, we wrote down what we thought was a template for what the Scotland Office should be, we did not get it right and basically that is why we have had to put in place a Scotland Office that has a bigger infrastructure than we had initially envisaged.

That may be the remit of the Scotland Office but as such how do the running costs compare to the previous costs?

(Mrs Liddell) It is infinitesimal.

(Mr Gordon) I cannot give you specific figures but the direct running costs of the core of the Scottish Office, leaving aside the large agencies which surrounds it, was of the order of £200 million.

I notice the staff numbers seem to have gone up from 1999, again that is partly due to the 53 going to 110, is that the same reasoning?

(Mrs Liddell) Yes.

Mr Carmichael

Do you actually see a long term future for the Scotland Office, you yourself, when in your introductory remarks you are saying that you saw there was a degree of uncertainty about it before the election? I have listened with great care to all that you are saying today and I accept that there is a legitimate role for representing the interests of the various devolved assemblies within the Westminster Government, do you not think there will come a time when it is no longer appropriate that that be done by the Scotland Office, the Wales Office or the Northern Ireland Office but that some over arching body could do it just as effectively?

(Mrs Liddell) If you cast your mind back to the time before the General Election or just immediately after the establishment of the Scottish Parliament there was quite a debate in Scotland about was there a case for a Secretary of State for Scotland. What I have found very interesting is the extent to which that debate has changed. In the run up to the General Election explicit statements came from the business community and the trade union community about their desire to maintain a Secretary of State for Scotland. Some of that may be down to the nuts and bolts way that we actually work. If a business has encountered a difficulty it is not unusual now for them to phone me directly and often our intervention can resolve a difficulty within 24 hours, they see a facility there they can respond to. I mentioned earlier on the whole issue of Chester Street Holdings, the insurance company that went into liquidation leaving victims of asbestosis high and dry. The trade union movement contacted me and I was able to use my office as a way of moving along very rapidly and as a means whereby these issues were dealt with. Whilst there was a debate I think we have shown by our ability to respond to situations that we do add value. Indeed the Prime Minister made it clear during the General Election campaign that he saw a role for the Scotland Office and the Welsh office into the future. I have heard these debates in terms of an over arching department, the reality is my job as champion of Scotland and the Cabinet has actually not changed that much from the role of Secretary of State before. What is different is that I do not take executive functions, they are now devolved to the First Minister and to the Scottish Executive. Even in my terms it is a wider ranging role than even I anticipated it would be when I became Secretary of State in January of this year. There are other areas where we can add even more value. One of the areas that we have tried in the past to have stabs at was getting the profile of Scotland up abroad, not just in trade or in tourism but the generic quality issues about Scotland. I as Secretary of State for Scotland have access to the whole panoply of Her Majesty's Government's international posts internationally and I see it as one of my responsibilities to promote Scotland internationally, to act in a small way as an Ambassador for Scotland. Just two weeks ago I was in New York where I was able to represent the Scottish Police and Fire Service in laying a wreath at Ground Zero but also to address the Scottish/American Foundation. It is not generally recognised that there are twice as many people in the United States claiming to be Scottish as there are living in Scotland. That is a resource that historically we have never properly plugged into. The Irish are very good at it, there is no reason why we should not be good at it and it is something that I am determined we should do.

Do you see your department continuing to build?

(Mrs Liddell) In terms of resources we are stretched, there is no doubt about that, but I see no need for empire building. What I think would be useful would be for us to have more of an interchange with other Whitehall departments. It would be useful for people from the FCO and Treasury to have experience in a department such as ours, which has very wide ranging experience because everyone has to be multi-disciplined in a department that is as small as this department is. I do believe we do add value. There was a point where we were dangerously under resourced and I think that was the point where you could have put a question mark over it.

Do you think it is still necessary for the Scotland Office to have the presence in Edinburgh that it does? I am thinking particularly of the building that was acquired as a replacement for Bute House. Is that adding value or is it just duplication?

(Mrs Liddell) We do not have a replacement for Bute House, we just have a functioning office in Edinburgh. That is my key base for liaising and, indeed, the Minister of State and the Advocate General. That is where we are formally based as part of our carrying out the job of liaison with the Scottish Executive, working with the Advocate General's solicitors at Victoria Quay. We have a tiny outpost in Glasgow which is more functional than anything else. For us to operate in a portakabin somewhere around about the Gyle Centre would not be appropriate for the good conduct of the business of the Scotland Office. George, do you want to add anything?

(Mr Foulkes) I just want to add a word because I think there was perhaps a slight misunderstanding in Mr Carmichael's first question about representing the Scottish Executive in Westminster. Although we deal with the Scottish Executive and liaise with them and are the custodians, as the Secretary of State said, of the Scotland Act, we do not represent the devolved administration but we represent the people of Scotland in the reserved areas, just as you all do as Members of Parliament. Just a personal point: I was Under-Secretary at the Department for International Development and felt I worked very hard there and was busy morning, noon and night and everyone said when I was going to come to this job that there was not really a job to be done. I have got my diary for this week if anyone would like to have a look at it, at the various meetings, the Clyde Task Force on Friday and I spoke to the Coal Industry Society on Monday and I am talking to the Scottish Council on Single Homeless on Westminster Still Matters. A lot of people are very interested to hear from us that Westminster is still vitally important for the people of Scotland.

Chairman: Mark, did you want to come in on this point?

Mr Lazarowicz

It was not on this point, it was a point that we discussed earlier. A question was asked in relation to the memorandum which has been promised and I wondered would it be possible for that memorandum specifically to look at the way in which the operation of the Barnett Formula has generated increases to the Assigned Budget in the years covered by Spending Review 2000? I wonder could that be included as a specific point in the memorandum.

(Mr Gordon) I think we can try to include a works example to show how the Barnett Formula actually works, yes.

(Mrs Liddell) If it would help the Committee to have a seminar on the actual functioning, I promise you it is something to look at when you are having difficulty sleeping because it is quite complex. I was around at the time when the Barnett Formula was put together. Officials could take people through the arithmetic if they wanted.

It was not so much a works example but actually to show how the Barnett Formula had resulted in increases in Assigned Budget for the years covered by the Spending Review 2000.

(Mr Gordon) We will have to discuss that with the Treasury and come back to you.

Mr Lyons

Secretary of State, could I just turn to the question on the July 2000 Funding Policy document. Do you still think it is an accurate description of the operation of the devolution financing system? When are we likely to see an updated document?

(Mrs Liddell) I think in relation to the July 2000 Funding Policy document it is the current up-to-date version and there are no plans for any further edition of the statement on Funding Policy. If there are any specific areas that you are anxious about we will seek to give you a more detailed answer in writing.

Mr Weir

We appreciate that not all of the money comes through Barnett. Page 27 of the Funding Policy document shows the part of the Departmental Expenditure Limit which falls outwith the formula and also the main items within Annually Managed Expenditure, but there are no numbers there. I wonder if the Secretary of State could provide us with a table for the years 1998-99 to 2003-04 showing numbers for these separate items?

(Mrs Liddell) We certainly can provide a memorandum on that. I think Mr Gordon could probably give some simplified figures if it is useful to the Committee to have them right now.

(Mr Gordon) The detailed forward projections, the kind of breakdown that is implied by that table, are decisions for the Scottish Office to take and I do not know whether they have taken and projected those details as far forward as that. There is, I think, a reasonably helpful table in the Departmental Report which gives you at least some sense of scale of these various components. The assigned budget essentially embraces what is called a departmental expenditure limit. Certain items which are handled outside departmental expenditure limits under what are called annually managed expended these are elements that are more difficult to forecast. Within the departmental expenditure limit the Barnett Formula applies to almost all expenditure. There are a very small number of items, as you will see in tab 27, which are outside the Barnett Formula, and they represent a fraction of one per cent of the departmental expenditure.

It would be useful to have the actual figures?

(Mr Gordon) We will try and get figures for you.

Mr Joyce

For the annual managed expenditure and the departmental expenditure there will be a switch next year with resource based accounting coming with Treasury, will future departmental reporting reflect any implication that has and also what accounting changes has for the funding system of the Scottish Executive?

(Mr Gordon) Yes, of course.

Chairman: I think that is all of the funding questions. Can I thank you for agreeing to give us a follow up memoranda, the Committee will look forward to those as soon as possible. We have one or two other matters, John Robertson would like to come in on ship building.

John Robertson

The Secretary of State and the Minister will not be surprised at me coming in on this subject, the plight of the workers is well known in Scotland, I want to broaden it out a bit more about the ship building in Scotland in general. We know what has happened in Clyde and other areas, perhaps you can say what you and your department are doing to assist the ship building industry and how you see the future of that industry in Scotland?

(Mrs Liddell) I will ask the Minister of State to talk about the Clyde Task Force in a minute. One of the ways we were able to help in relation to the Clyde yards was in our liaison with the Ministry of Defence, particularly in relation to procurement issues. The Minister of State and I both as representatives of the Government travel reasonably frequently and I have discussed with ministers for enterprise and lifelong learning means whereby we can act as, not quite salesmen, but where we can draw it to the attention of governments who may have an interest in placing orders the facilities are available on the Clyde. That is something that we will happily do. I think in relation to ship building in general the fact that the Minister of State sits on the Clyde Task Force gives us a very important liaison role, a facilitating role there, which allows us also to feed back the views of that Clyde Task Force into the Ministry of Defence as well, because often, particularly now in Clyde, with defence orders being of critical importance, keeping the MOD on side is of great value. The Minister of State is doing this as a day-to-day issue at the moment.

(Mr Foulkes) We did anticipate that Mr Robertson might raise this and I hope it is not gratuitous to say he has been taking a very keen interest in it. He will know that after every meeting - and I have been at every Clyde Task Force meeting - I have written to the Members of Parliament representing the areas affected telling them exactly what has come up at the meeting and I have also had informal discussions with them about it. I have offered to meet all of the members, individually or collectively, in relation to that. Also, as the Secretary of State said, I have had a number of meetings and discussions with Adam Ingram, the Minister of State at the Ministry of Defence about defence orders. We are hoping that the decision about the landing craft will be made very soon, it has gone on too long, the debates and discussion between the Ministry of Defence and the company. We hope that that decision will be made soon. We have also indicated, and I think it is a very important role for the Scotland Office, that in relation to overseas orders that we can promote and work to try and ensure that these come to Scotland. I have indicated that to the defence exports sales organisation through the Minister of State. We have had a positive response and we hope to set in motion some specific activity in relation to that. Also, the Under-Secretary of State at the Department of Defence, Lord Bach, visited Malaysia to encourage the possibility of additional orders from Malaysia to the Clyde. So everything that we can do is being done. I think my membership of the Clyde Task Force keeps me plugged into that. Also, because we are here regularly in Westminster we can talk immediately with our colleagues in the Ministry of Defence.

(Mrs Liddell) I think too the shipbuilding issue very much underpins how important it is to have a Scottish voice at the heart of Government because there are issues wider than the defence issues. For example, the European Council Industry Council is looking at unfair subsidies to shipbuilding industries and, indeed, there are anxieties among many of our European partners who are shipbuilders about Korea and the levels of subsidy that are given to shipbuilding in countries such as that and there have been representations by the European Union to the WTO on these matters. Being plugged into those discussions is actually very important for the Scotland Office and for Scotland. That is a way whereby our detailed knowledge of what is happening on the ground in Scotland can feed in to overall discussions that are being held by Her Majesty's Government in Europe and elsewhere.

If I can thank particularly the Minister of State for all the help he has given myself in particular and the area of Scotstoun. I want to open it up a bit because it was shipbuilding in general in Scotland. Rosyth has suffered quite a lot of job losses and there are other areas of fishing vessels not being built in Scotland where we hoped to have these vessels being built in Scotland. What I am aiming for is support for the industry in Scotland in general. I would love everything to go to Scotstoun on the Clyde but I do not expect that to happen.

(Mrs Liddell) I think that is an area where we, as part of the United Kingdom Government, have a role to play because we still have a significant shipbuilding and boat building industry that is of importance to us, but often Scotland's interests have to be represented internationally because it is international competitiveness and perhaps some anti-competitive practices elsewhere that can have a negative impact on our industry. That is why the strength of the United Kingdom Government's position is of great value to Scotland.

Mr Lyons

What will be the impact of the landing craft order coming to the Glasgow yards?

(Mr Foulkes) That is very important for the yards. We would hope that steel cutting would start fairly quickly after an agreement about the prices. There is an understanding that two of them will be built on the Clyde but the agreement has not been absolutely finalised yet, it is taking longer than expected. It would mean steel cutting would start this side of the new year, which is very important.

(Mrs Liddell) And it is this issue of steel cutting, as you know, which is the one that we are most concerned about.

Chairman

Before we finish on a general point, you have said that one of the Scottish Office's key roles is to ensure Whitehall is sensitive to Scotland's interests. What steps can be taken to ensure that the Scotland Office performs this role effectively?

(Mrs Liddell) I think our involvement in Cabinet committees is very important. Sometimes we are stretched because there are only two ministers and we are very grateful to the Advocate General who has been known to stand in for us at Cabinet committees. That is the area where the voice of Scotland is most heard in Government. Also keeping close contact on a personal basis with our Whitehall colleagues. I frequently can resolve issues with a chat, with a phone call to a Whitehall minister or a fellow Member of the Cabinet on issues that might be causing difficulty. Going back to something I mentioned earlier, I think from the point of view of spreading best practice in devolution, we are a resource for Whitehall as well as a resource for the Scottish Executive and I think by giving more people experience of how the devolution settlement works that will enhance the overall knowledge of how we make devolution successful, not just for Scotland, Wales, Northern Ireland and also with an elected Mayor in London but also if devolution rolls out across England as well. Indeed, we have found in discussions about the nations and regions and the impact on England that we bring a body of experience, of change, and what we are about is the management of change, probably the biggest constitutional change we have seen in this country, certainly for 300 years. At the end of the day it is very important that the Scottish Parliament legislation stands up, that we have a good working relationship to make the UK legislation we do in Scotland for Scotland consistent with Scots law and the various institutions that exist in Scotland. The Secretary of State and I are working in parallel as well as in tandem to achieve the same objective, which is to make the devolution settlement work. So far I am pleased with the way things are going and I am hoping to build on that work in the future.

(Mr Foulkes) It will not surprise you, Chairman, to hear that I agree with every word the Secretary of State said. The only point I would add is just as we are convinced there is a very important continuing role for the Scotland Office, I hope it does not sound gratuitous also to add that that means there is a very important continuing role for the Scottish Affairs Committee.

Chairman: Thank you very much. Thank you very much again for your attendance this morning and we look forward to issuing our report. Thank you.