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Lady Saltoun of Abernethy: The Minister says that the detail is to be spelt out in the White Paper--namely, that such tax-raising or lowering power applies only to income tax. I am sorry, but we have not yet seen the White Paper and indeed we do not know when we shall see it. If my assumption is true, what is the objection to spelling it out in the question in the referendum?

Lord Sewel: I believe I dealt with this point on a number of occasions during the course of today's debate. The Government are approaching the whole issue by putting before the people of Scotland in the referendum points of principle. The point of principle is the power to vary tax; the point of detail, which will be covered in the White Paper and upon which I have given assurances on several occasions this evening, and indeed previously, will relate only to income tax. Our objection

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to going beyond principle is that once you get into detail you cannot actually stop. As I said, you go through the process of identifying that it is income tax, the fact that it is 3p income tax, the fact that it is related to where a person lives--the point made by the noble Earl opposite--and you go into more and more detail and finish up with a question which runs into paragraphs. That is the problem. Similarly, if you applied the same approach on the question of powers, it would not run into paragraphs; indeed, it would run into pages. Therefore we have deliberately adopted the approach of identifying and focusing on principle, backing that up through reference in the White Paper.

Lady Saltoun of Abernethy: Surely that is the problem with having a referendum on a White Paper before you have legislation. If you had a referendum after the legislation on what was actually in the Bill and had been through Parliament, there would not be such a problem.

Lord Sewel: As I said before, the purpose of the referendum is to demonstrate the degree of support which exists in Scotland and Wales for the Government's proposals. That is the purpose.

Lord Simon of Glaisdale: I am increasingly confused. As the Minister repeatedly says that it is all so simple, the fault is obviously my own. I believe that the amendment expresses precisely what the Government propose to do. Both the Minister and the noble Lord, Lord Williams, have said exactly that. However, all the Minister can say now is that it is a point of principle. Why is it a point of principle to ask the Scottish people the misleading question, "Do you agree to tax-varying powers", but not a point of principle to ask them, "Do you agree to varying a power to vary income tax"? I cannot see why one is a point of principle and not the other.

As I am on my feet, perhaps I may ask the Minister to clear up a matter where, again, I have been left confused. I refer to the previous debate. What would be the financial effect on Scotland of reducing taxation? The noble Lord said that if you reduced taxation by, say, 3p on the basic rate, that would cost £450 million. Therefore, there will be that amount less to spend on the services. However, the noble Lord, Lord Haskel, went further and said, as I understand it, that the Barnett formula, which I think we ought to call the Barnett-Rees formula, the block grant, would be reduced by an equivalent amount which seems to me to amount to £900,000. I apologise if I have misunderstood and I shall gladly give way.

However, the noble Lord, Lord Sewel, said that we may later want to move from the basic rate, but there is nothing in the amendment about the basic rate; it is merely about income tax. If the real answer is, "We don't intend to accept any amendments because we don't want the Bill to go back to the other place", it

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would be better if the noble Lord would say so. We could then save our breath to cool our porridge. I hope that that idiom will appeal to the noble Lord.

Lord Sewel: The Government will look upon all amendments. If, in our view, certain amendments add to and improve the Bill, we will accept them and then, by definition, they will have to return to the other place for consideration. There is no attempt to confine consideration in this Chamber to prevent amendments being moved and accepted; indeed, that would be most improper. If they are amendments which improve the Bill, they will have our support in this Chamber and they will automatically go to the other place.

I deeply regret that I have so far failed to satisfy the noble and learned Lord, Lord Simon of Glaisdale. I have tried to satisfy him. He made two points, of which one escapes me. However, he asked what would happen if the Scottish parliament reduces taxation. I tried to spell that out in the debate on the previous amendment. If the parliament decreases the tax, clearly the Inland Revenue's tax take will be reduced, and, to reflect this, the overall level of resources passed to the Scottish parliament through the block and formula approach will have to be reduced by a similar amount. I hope that that deals with the issue.

Lord Mackay of Ardbrecknish: This has been an interesting short debate. However, I did not think it would be as long as it has been. The noble Lady, Lady Saltoun, put her finger on the matter when she said that if we had had the referendum after the Bill had been enacted we would not be having this trouble with these questions. I hope that the Government are not blaming anyone for having to go into these details, because this is a hole of their own making. They did not need to go down this road.

It seems to me that the principal question is the first one. I should have thought one could argue that the second question is a detail. It is just as much a detail as the matter of how the block grant will be arranged, or the matter of the voting arrangements for the parliament. The Government have got themselves into this trouble because they have asked this second question. I am sorry that the Minister has to defend the pretty indefensible, but that is the simple fact of the matter.

Having started to ask the question, we are entitled--as are the Scottish people--to ask for absolute clarity. If the noble Lord is telling me--as he is again--that this measure will concern only income tax, I fail to understand why that cannot be included in the question. It does not add too many words--just one word--it does not make it more complicated; it simply makes it clearer. I am not satisfied with the Minister's reply. He could have accepted this amendment and it would have helped to clarify the situation. However, I shall read what we said in this debate and what we said in the debate before supper. I may return to this issue at Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Perth moved Amendment No. 6:

Page 1, line 6, leave out ("tax-varying powers") and insert ("power to raise or lower taxes").

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The noble Earl said: At last I come to my amendment, which is grouped with that of the noble and learned Lord, Lord Simon. I fully understand why the noble Baroness, Lady Farrington, said that it was important to break for supper rather than discuss this amendment at an earlier point.

I move my amendment despite the fact that the noble Lord, Lord Sewel, dealt with it generally when dealing with the amendment of the noble and learned Lord, Lord Simon. He made it clear that he felt the issue to be one of principle. I understand that the Scottish parliament should have revenue raising powers. But, if that is so, I wonder why we do not make that clearer. I do not like the words "tax-varying powers". The noble Lord also said that in practice the only thing that would occur would be a 3 per cent. variation in income tax. If that is firmly the view of the Government, why do they not say so?

Given that there must be flexibility on all these matters, I should have hoped that the Government would consider my amendment which instead of using the words "tax-varying powers"--which I think can mean all things to all men--would make it quite clear that what is proposed is to have powers to raise or lower taxes. Having listened to this debate I have come to the conclusion that to ask the Government to accept the words "or lower taxes" is perhaps wrong. My reason for saying that is that I have heard that, if the parliament lowers taxes, all that will happen is that the block grant will be reduced by the same amount. We are being asked, "Do you agree to raise taxes?" because lowering them means nothing.

My second point arises from what I have heard in this debate and outside the Chamber. Are we wise to have the second question at this time? In its first life, the Parliament at Westminster will have many issues to debate which will take up all its time. Would it not be better to defer the question of the principle on tax-raising powers to a later stage, to a second Parliament? There is nothing to stop the Government at that time, if they wish and are still in power, to have a second referendum directed to this all-important point of principle: is the Scottish parliament in principle to have revenue-raising powers? I beg to move.

Lady Saltoun of Abernethy: As my name is to the amendment, perhaps I may say that, although I strongly agree with the objectives of my noble friend Lord Perth, I should prefer the amendment to refer to the power to raise income tax. My noble friend's point about lowering tax is valid. Therefore I shall not comment on it. But the fact that it is income tax which is involved should be spelt out.

9.15 p.m.

Lord Sewel: I am at some loss. I have to say with the utmost respect to the noble Earl, Lord Perth, and the noble Lady, Lady Saltoun, that I believe I have covered these points in some detail and may be in danger of losing the attention of the Committee if I seek to rehearse the arguments yet again.

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