The Minister of State, Scotland Office (David Cairns): I beg to move,

I welcome you to the Chair, Miss Begg.

The primary purpose of the order before us is to ensure full compliance in Scotland with a European directive—the integrated pollution prevention and control directive.

The order is made under section 63 of the Scotland Act 1998, which allows for the transfer to Scottish Ministers of functions that are exercisable

commonly known as “Executive devolution”. The order will allow Scottish Ministers to make regulations under the Pollution Prevention and Control Act 1999, which in turn will allow the Scottish Environment Protection Agency to implement the directive fully.

Briefly, the directive imposes a requirement for industrial and agricultural activities with a high pollution potential to obtain a pollution prevention and control permit, subject to certain environmental conditions being met. Currently in England and Wales, operators must obtain this permit from the Environment Agency in order to operate industrial installations. In Scotland, as most of the directive relates to devolved matters, Scottish Ministers have already made regulations which are enforced by SEPA.

However, the directive also requires that competent authorities must ensure that installations are operated in such a way that energy is used efficiently. Energy efficiency—as you know, Miss Begg—is a reserved matter, and as such Scottish Ministers cannot empower SEPA to implement that important aspect of the directive. So, the order empowers Scottish Ministers to give SEPA the legal authority to add and enforce “energy efficiency” as a condition to these permits and exercise connected functions, such as the issuing of guidance to SEPA. It will also enable Scottish Ministers to exercise functions—concurrently with UK Ministers—in relation to any Community obligations relating to energy efficiency.

Given that SEPA already enforces the bulk of this directive in Scotland, it is only sensible that it is able to enforce the energy efficiency requirement, alongside the devolved elements. It would be an additional burden for businesses to have to deal with energy efficiency under separate regulations, by a separate authority. This order will allow Scottish Ministers to make regulations that cover all aspects of the directive, and allow SEPA to enforce that regulatory regime.

Finally, allowing Scottish Ministers to exercise this function does not alter the legislative competence of the Scottish Parliament; energy policy remains reserved to this place.

Mr. Ben Wallace (Lancaster and Wyre) (Con): I welcome you to the Chair, Miss Begg.

I do not like to talk when it is not necessary to talk, nor to oppose for opposition’s sake. Her Majesty’s loyal Opposition will of course support this statutory instrument and the implementation of it. I shall sound just one note of caution.

While the order devolves the right for the Scottish Parliament to enact and comply with the directive, it does not of course devolve the legal responsibility of the member state to comply. Should any fine be incurred for breach of that compliance, therefore, the UK member state would pay the penalty, not the devolved institution; and in fact the European Commission could take action against the member state only. I therefore ask the Minister to set out in writing, at some stage, what clear mechanism is in place for new environmental legislation such as this—and the many other examples of functions now being devolved to the Scottish Parliament—to ensure that should ever a devolved Government, such as the current Scottish Government, fail to implement an EU directive correctly, there would be an easy mechanism to transfer any fine back to the Commission, without the nationalists exploiting that for their own separatist agenda.

Mr. Alan Reid (Argyll and Bute) (LD): I welcome you to the Chair, Miss Begg.

I support the order. I believe in devolving more powers to the Scottish Parliament, so I believe that this is a move in the right direction. I have just one question for the Minister.

I note that the powers are now exercisable concurrently by a Scottish Minister and a Minister of the Crown. Why are the powers not being devolved completely to Scottish Ministers? If they are exercised concurrently, is there not a possibility that a Minister in this place could make an order and a Scottish Minister could also make an order and the two orders might be in conflict? If that happened, what would be the legal position?

David Cairns: I am grateful for the general welcome that the Opposition parties have given to the order. I shall deal briefly with the questions that have been asked.

The hon. Member for Lancaster and Wyre is quite right that where responsibility for enacting and enforcing EU directives has been devolved, the member state still remains liable for any infraction proceedings. That is the case across the whole gamut of devolved areas; it applies in Wales and Northern Ireland as well.

Clearly, if members of the Scottish National party wish Scotland to be a full and independent member of the EU, they would not particularly do their case any good if they were to be willy-nilly in violation of EU directives that they themselves had taken on responsibility for, and we do not reckon that that would arise. The hon. Gentleman is absolutely right to remind us that the UK is the member state, and that any fines following infraction proceedings would fall on the UK, but we are confident that the risk of infractions in this particular instance—because we actually have missed the deadline—is relatively low.

The hon. Member for Argyll and Bute picked up on a point to do with the concurrent nature of the exercise of these powers. It is to do with the fact that energy efficiency, in the widest sense of the word, is still reserved. It is a reservation in section 5 of the Scotland Act 1998. However, there is an exception to the reservation to do with the promotion of energy efficiency, and what we are doing here is enabling SEPA to exercise a full suite of functions within the context of a Community directive—and it will only always be within the context of a Community directive. So, Ministers of the Crown still retain the right to legislate in this area for energy efficiency outwith Community directives, should such an occasion arise, and we are limiting the transfer of functions under the order to exercising within the Community directives.

This is a pretty obscure area because there is a general reservation and then there is an exception to the reservation, and now we are putting on the further limitation, which is to do with compliance with EU directives. So, I do not envisage the particular circumstance that the hon. Gentleman mentioned.

Mr. Reid: It does sound a bit complicated. What would take precedence if a UK Minister had issued one order and a Scottish Minister had issued another order and the two were in conflict? What would the legal position be?

David Cairns: The legal position is that the Scottish Parliament is a devolved body of this Parliament, and this Parliament remains sovereign; and we can legislate in any area that we want, but we choose not to because of the conventions contained in Sewel. The broader Sewel conventions would apply in this case as well. If the hon. Gentleman is asking me for the constitutional theoretical position, this Parliament is sovereign.