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7.15 p.m.

Lord Kirkhill: My Lords, I rise to support, in general terms at least, the contents of the two White Papers. I shall confine my remarks to the White Paper proposing a Scottish parliament. It meets with my approval because I have long supported that principle. The present Government are to be commended for, as the noble Lord, Lord Mackie of Benshie, has said on more than one occasion, proposals which in essence are fairly generous.

I seek to make a contribution to the debate because the noble and learned Lord, Lord McCluskey, and I sat on the Front Bench 19 years ago repelling all boarders to the good ship "The Scotland Bill" of 1978. A considerable amount of ammunition came from the other side of the Chamber, but both of us could say, although the noble and learned Lord is not in his place at the moment, that we succeeded after about 16 Committee days in repelling a good deal of the gunfire, some of it emanating from the noble Lord, Lord Campbell of Croy, who I see has just resumed his seat.

The Bill outlined in the White Paper will be a better Bill than the Bill which we debated in the House some 20 years ago. The main reason why it will be a better Bill is that the reserve powers will be clearly delineated and the other powers, which in the meantime are under the aegis of the Scottish Office, will stand devolved. In one sense that will mean less time spent in debate in your Lordships' House. During the proceedings on the previous Bill we became bogged down in points of quite extraneous detail because of the need carefully to define each of the devolved functions. This time round I think the issues will be a little easier to understand and a little easier to debate. I think it is a better Bill for that reason.

I spent some years as a Minister of State in the Scottish Office. At that time there were some 10,500 civil servants in Edinburgh and 60 in Dover House. The six-man ministerial team was in Westminster for about four days a week. We used sometimes to get in touch with the civil servants in Scotland by means of a remote control chamber on the top of Dover House. That, in itself, in administrative terms was an unsatisfactory way in which to deal with major matters which required ministerial assent and ministerial decision. The devolving of powers from the Scottish Office to the parliament is greatly to be commended. It is also worth keeping in mind that at present Scotland, with a separate legal system, is probably the only country which does not have a legislature. That difference will be resolved as a result of the Bill.

I also believe that the instigation of proportional representation will go a long way to prevent criticism in areas outwith the central belt of Scotland about the over-domination of what, after all, are 4 million Scots living in that belt and a million Scots living elsewhere. The first-past-the-post system certainly weighs heavily on the west central belt as matters stand. I believe that the proportional representative system which is now being considered goes a long way to help what is a major problem in that regard.

I also believe that the previous Act gave the then Secretary of State for Scotland too much of a nanny power. He had to interfere at far too many points. He

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had to be consulted on too frequent occasions. That in itself caused much upset north of the Border. That has been eliminated this time, and in my view that also goes a long way to making this a mature Bill created for mature people living in what I hope will be a mature democracy, as here.

The two points of criticism I make are these. Like the noble Lord, Lord Steel, I am unhappy at the idea of vast sums of money for a new parliament building. I believe that the existing parliament building is adequate and that the old Scottish Office can certainly house the staff which are needed. One does not need to build a tunnel because one can build a walkway overhead. There is one on the other side of Leith Walk anyway at the moment. In essence, I do not believe that there is a huge problem. I believe that the Government are being too triumphalist at that point.

The other point that causes me concern is that, as matters stand, one is moving towards a unicameral system of government north of the Border. There is not a revisory power. I worry a little about that. I would like to consider that point rather more. That having been said, my welcome is warm and I believe that the Government's proposals should be commended by all.

7.22 p.m.

Lord Clifford of Chudleigh: My Lords, Oscar Wilde accompanied an apprentice orator to his first speech. When the young man sat down after his address he looked at Wilde and asked, "Have I spoken for too long?". Wilde looked up and said, "No, it just sounded as if you did". I shall not disappoint noble Lords.

Should September's referendum results approve of a devolved parliament for Scotland and a devolved assembly for Wales--unless I misunderstood the Government's resolve in the White Paper relating to devolution--these two aforementioned states will be able to negotiate independently over their position and their feelings towards, for example, the common fisheries policy.

The leader of the Scottish National Party will demand, obviously, a major executive role in the proposed Scottish parliament. He has already stated that his party is committed to renegotiate the common fisheries policy in favour of Scottish fishermen. He will not forget, of course, that the 1989 United Nations Convention removed the 200-mile fishing limit around fish-abundant Rockall but failed to recognise that Rockall is within 200 miles of St. Kilda, the westernmost fishing port in Scotland.

Nor will the proposed Scottish parliament forget that it will have to finance the Scottish Fisheries Protection Squadron; boats formerly financed by Whitehall. Should Scotland "go independent" perhaps Her Majesty's Government will specifically designate Royal Navy ships to look after the fishing interests in the South West of England.

I say "of England", for surely the independent status of the Welsh would encourage them to claim their right to protect their fishermen. Should this be so, should power be so devolved, and should Scotland and Wales argue successfully for their independent status within

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the European Union, the Government would be at risk of trade discrimination against fishermen just across the Bristol Channel--the fishermen of the South West of England and the men and women of Devon and Cornwall. I am sure that they would like to take their case to the European Court at Luxembourg.

Although today's publicity in the media concerning the Welsh assembly may cause a rethink, leading to more and greater powers being given, what would stop a future Welsh assembly from permitting the internationally-recognised sport of competition pistol shooting being carried out in Wales? What could be better for the Welsh economy, the Welsh tourist industry and the Welsh employment problem? The people in the South West of England will be watching this devolution game with interest--and the elected Members in the other place should remember that Bristol is not the South West; the South West may start there, but it goes all the way to the Scilly Isles.

7.26 p.m.

Lord Gisborough: My Lords, the White Paper seems to assume that agreement will be reached between the Scots and the British Parliament and the Secretary of State on all matters. It is news to me that even members of the Labour Party can always agree. It is even less likely that a future Conservative Government will always be able to find a middle ground with the Scots. When that clash comes, the Scots will undoubtedly say that as elected members they have the right to override Westminster and, failing that, will want independence.

Disagreement could come on a number of matters, most likely unforeseeable at present. The single currency could be the spark that breaks Scotland and England. It could be defence and the stationing of nuclear vessels or the rules on abortion. The friction with Wales will come when they find themselves powerless to stop legislation passed by the next Tory Government and they discover that they are no more than a talking shop. The North Welsh, from where my family comes, anyhow believe that Cardiff will be as remote from them as London.

Where the assemblies disagree with the reforms at Westminster they will be able to drag their feet, while blaming Westminster for the failures from the lack of those reforms. The new assemblies will inevitably trespass on matters that the local councils see as their patch. Just as the district councils resented the counties and took their powers, so will the district councils sooner or later demand the powers given to the assembly to be devolved to them.

One obvious bone of contention will be the oil. Scotland will very soon be demanding a greater share of the oil revenues from its seas and that must lead to friction. In 1979 to 1995 Scotland had a £27 billion surplus over the United Kingdom, largely owing to oil. How long before they claim that for themselves? But is Scotland in surplus or deficit in the United Kingdom? That seems a matter of how statistics are interpreted.

The Government and Revenue in Scotland document by the Treasury suggests that in 1994-95 England subsidised Scottish residents by £23 billion. That is per

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capita 10.5 per cent. of UK revenue, compared with 8 per cent. of the population. But whatever the figures, they can be proved to go either way; for sure the Scots will use the statistics to prove that they are the losers.

But when the Scots have their independence, and if those figures are right, why should England continue to subsidise them with their 25 per cent. per capita advantage over the English? Should not the piper play some of the tune? What is odd is that while the European Union is attempting to federate Europe and bring down all barriers and nationality, the United Kingdom is breaking itself up into more national states. Perhaps in 100 years or so from now we shall become another Yugoslavia.

If an independent Scotland is to be a success, it is vital that the assembly should somehow be able to attract highly qualified and experienced members rather than a morass of political councillors with little value other than the colour of their politics, as too often happens in local government.

Too often, authorities spend too long pontificating on matters over which they have little control or responsibility and the busiest and most competent of their members are sickened, until all that are left to run the authority are those who are unemployed, often unemployable and of no proven ability. In time, the most able refuse even to get involved in local government at all. It would be a shame for Scotland if the most able were to be driven out by the least able. I sincerely hope that the rules of the assembly will be designed to attract and keep as Members the most able people of Scotland.

The assumption that elected representatives are always the best is sad. Over and over again, it is the quangos and appointed bodies, made up of people of the greatest proven calibre, which have achieved the most. A good example is the Teesside Development Corporation and the Welsh Development Agency. They have been able to achieve enormous results with the funds awarded. Had those funds gone to an elected council, many councillors admit that they would still be arguing over how they should be spent.

It is like your Lordships' House, which some commentators say far surpasses the other place in the quality of debate--and so it should, with the wealth of talent of which it is composed, but it would never be so if the House were to be elected.

What of the future? It will not be long before Scotland answers directly to Brussels alongside England, and the UK would be broken up. How long before Scotland and Wales demand their own embassies?

Paradoxically, while the Scots want independence, they have no qualms about not only disregarding what the English may think, but of ruling us with an almost unacceptably high proportion of Scots in our present Government. Until now it has not mattered, but it will be quite unacceptable for the Scots to rule both their country and ours. English people have no interest in forcing their opinions over Scotland, but likewise they do not expect Scotland to force its opinions onto England, as the Scots will be able to do.

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In a MORI poll 68 per cent. of the English said that they saw no reason why Scotland should not have its own assembly, but that is very different from saying that they would want the Scots to control England. It is totally unacceptable that Scottish Members of Parliament in London, even if their numbers are reduced, should have any say in English affairs on those matters which in Scotland are devolved to their assembly. At the very least, there should be a convention that Scottish Members do not vote on any of those same matters affecting England. To put it another way, if Scotland demands independence, so should England. If, and as soon as, Scotland decides on independence, there should be a referendum in England to decide ours.

Robin Cook has said that devolution is the battering ram with which he will knock down the centralist state. Do we really want different systems of government in every different part of the country? If so, and if Scotland and Wales have home rule, are other parts of the country to have the same? I have no doubt that the ideas on education, for example, that are held by Members from West Yorkshire will vary from those held by Members in the south of England. Are both to have what they want? After all, it is said that if the Home Counties opted out of the UK, like Scotland, they would form the 11th most powerful economic country on the planet. If not for the Home Counties, there should at least be a voice for England.

7.33 p.m.

Lord Nickson: My Lords, like the Minister I spent my boyhood in North Wales, but I have worked in industry in Scotland for over 40 years and although certainly past my sell-by date, I still do. Therefore, I should like to confine my remarks purely to the effects on Scottish industry and business which I see arising from the proposals for tax-raising powers.

I believe that the position of Scottish industry is very much more favourable than has been the case for a long time. In a rather old-fashioned way, I believe that that is due to a number of factors. I refer first to the sensible partnership between government, local authorities, the private sector and the quangos. I refer secondly to the fact that responsibility for industry was devolved to the Scottish Office a long time ago.

I am a little nervous about my credentials on either these Benches or the Benches opposite, because the first quango on which I served was the Scottish Investment Advisory Board. I say that because I was appointed by the late Eric Heffer and at a time when Tony Wedgwood Benn was President of the Board of Trade--and I do not think that either of them could quite be classified as "New Labour". However, I was extremely proud to be the last chairman of the Scottish Development Agency and to be the first chairman of Scottish Enterprise. I was very proud also of the successful transition between those organisations.

From that background, I should like to concentrate on only two paragraphs of the Scottish White Paper. Paragraph 7.12 states quite explicitly why the

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Government rejected the idea of a different corporation tax: because it would be an unreasonable burden on Scottish industry.

A number of noble Lords on this side of the House have expressed their concern about paragraph 7.26 and about the effects of a possible change to the non-domestic rates. I should like to explain what I think may happen and what I suspect will be the views of Scottish business when it is consulted. The first burden is perhaps not an enormous one. I refer to the £50 million which is to be imposed by the establishment of a new PAYE system for income tax purposes, and to the ongoing cost of £15 million. Perhaps Scottish businesses could absorb that, but if an additional 3p. income tax rate were to be imposed (amounting to, let us say, £450 million), it does not require much imagination to see who would bear that cost. It would not be those people who are taxed; it would be their employers--and the reason is extremely simple. Can you see a trade union negotiating national rates either side of the Border and accepting that people one side of the Border are very much worse off net than people on the other side of the Border? Can you see a small business in Carlisle and Dumfries ensuring that its employees are taxed, if they are on average earnings, some £6 per week differently or, for middle managers, perhaps £1,000 per year differently? What of the problems for companies which want to move people around between Scotland and England, as we all do? They will have to say, "I am very sorry, but you will have to go to Scotland because that is where your job will be but you will be £1,000 worse off". I see great problems and I suspect that most of that £450 million will fall as a non-competitive additional cost on Scottish business.

Another spectre lurks in paragraph 7.26 and I earnestly urge the Government to think it through and to consider where the responsibility lies. My noble friends Lord Weir and Lord Mackay of Ardbrecknish have already touched on this, as have other noble Lords. Perhaps I may remind the House of what happened before we had the uniform business rate. I should like to quote four examples to which I have referred previously in this House in a debate on the economy. They are very simple. I refer first to the element of rates if you lay your head on a pillow in a four-star hotel in Edinburgh. Before the introduction of the uniform business rate, you paid £3.50 in rates on your hotel bill for the privilege of doing so. At a similar hotel in London, the rateable element was £1.

If you brewed a barrel of beer--I was partly responsible for so doing in Fountainbridge--the rateable value for that barrel of beer was eight times what it cost to brew a barrel of beer in Burton-on-Trent from a brewer who shall be nameless.

Let us compare the costs of Jenners department store in Edinburgh with those of a department store which is fairly frequently in the news nowadays, Harrods. If Jenners rates were £1 million, that would represent 4 per cent. of its total cost base, yet it is one-eighth the size of Harrods which paid the same rates. There is a big complex at Grangemouth comprising BP and ICI. Before rating was revised it represented 40 per cent. of the total rateable value of the old central region.

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I remind my noble friend Lord Renton that in those days we did have regions. One last example which has already been quoted is the effect on big oil companies.

I believe that the aspirations and the appetite for public expenditure, and the demonstration that the Scottish parliament is working and local authorities are given the opportunity to do the things that they want, will prove almost unanswerable if the parliament has the power to impose additional tax through non-domestic rates. I plead with and urge the Government to think again when they have these conversations and not to abandon the uniform business rate, just as they have said that that would be an unreasonable burden on industry for the same reason as corporation tax.

That is the only point that I wish to make, except to say that I slightly regret I am no longer chairman of the Senior Salaries Review Body and therefore do not have the opportunity to fix the rate for MSPs.

7.41 p.m.

The Earl of Mar and Kellie: My Lords, thirteen and a half months after he took up his new job as Secretary for Scotland the Earl of Mar wrote to Queen Anne on 14th June 1708 thus:

    "I think myself obleidged in duety to lett you Majestie know that so farr as I understand, the inclinations and temper of the generality of this country is still as dissatisfied with the Union as ever, and mightily sowr'd".
Today we are at last addressing that dissatisfaction. This morning I read a brief analysis of the White Paper for a Scottish parliament in an article in The Times by Simon Jenkins. The article focused on a directly elected mayor for London. I should like to take each of his seven sentences and make comments about the issues raised in each. Mr. Jenkins begins:

    "Scotland is to have restored to it a domestic autonomy that honours the concept of a consenting 'union', in place of crude colonial rule from London".

I like his use of the word "restored" for it reflects accurately Scotland's sovereign heritage. "Domestic autonomy" accurately describes the semi self-government that is longed for and is in line with the Scottish negotiating position in April 1706. A "consenting Union" is what it should have been for the past 290 years rather than the pretence of Scotland being a unitary state. "Colonial rule" is what happens at present, even under a Labour government. The opportunity for measures to be imposed in Scotland against the wishes of the Scottish representatives is symptomatic of this. Home rule or domestic autonomy will resolve the cruder issues of colonial rule. At the same time, I persist in the belief that a union with England is worth pursuing, and that is an incentive to get the relationship to work on more equal terms. The imposition of an incorporating union into the treaty negotiations in 1706 was overbearing and also incompetent. The retention of pre-Union institutions and the subsequent creation of new Scottish institutions has to be the evidence.

Mr. Jenkins goes on to say:

    "The Scottish assembly will enjoy what is termed 'general competence'".

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Of course, the use of the word "assembly" is wrong for the proposal constitutes a parliament, especially if it has the power of supply. The Scottish parliament will take control of most aspects of Scottish domestic life. It is a pity that moral issues such as abortion have been reserved to Westminster. That was not the case between 1967 and 1990. Only from 1990 was there a single United Kingdom Act.

Mr. Jenkins goes on:

    "Statutes will set out not the powers of the Scottish assembly, but those remaining with the London Parliament".
The White Paper rightly takes the approach of the Government of Ireland Act 1920 and sets out to identify the powers reserved to Westminster. Although that approach to the reservation of powers is sound, there are bound to be overlaps. I am glad to read that the Judicial Committee of the Privy Council will be tasked with the resolution of any disputes between the Scottish parliament and the British Parliament.

Next, Mr. Jenkins says:

    "Scottish voters will be treated as mature".
At last the Scottish electorate will be entrusted with much of their future governance. This is the mark of a sovereign people. Historians will record that for a brief period of 290 years since the ice melted 10,000 years ago, the people of Scotland were deprived of their domestic sovereignty. The actions of the Scottish commissioners in 1706 earned them a sour rebuke by the patriot Andrew Fletcher of Saltoun. When the Union with England Act was touched with the Sceptre on 25th March 1707 Fletcher insisted on leaving Scotland, remarking bitterly:

    "It is only fit for the slaves who sold it".

I go back to the words of Mr. Jenkins:

    "A country the size of Denmark or New Zealand will be free to tax itself".
Clearly, that depends on the outcome of the second question. The White Paper allows the Scottish parliament to decrease or increase the budget by up to £450 million. An increase has straightforward consequences. The Treasury will increase the Scottish block grant by the appropriate amount, less the administrative costs of collection. However, a decrease has more complicated consequences. The UK Treasury will pay over the Scottish block grant, less the appropriate amount and less the administrative cost, but the full benefit of the tax reduction will not go to the people of Scotland. There will be a reduction in taxation but, should the tax take go up as forecast by the more right-wing think tanks, the UK Treasury will benefit rather than the Scottish parliament.

Next, Mr. Jenkins says:

    "There will be a price: fewer Scots MPs and the likely attrition of English subsidies".
I have no problem with a reduction in the number of Scots MPs at Westminster so long as that is aimed at equalising the representation ratio to that of England. Scotland has every right to a full say over the powers to be reserved to the British Parliament. The West Lothian question will pale into insignificance when English

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devolution is introduced. However, to start with I accept that it will be a symptom of asymmetric devolution. As to the issue of which way the subsidies flow, I believe that the jury is still out. Only with a federal solution will one have conclusive proof.

Finally, Mr. Jenkins says:

    "But that is for the Scots to choose, a choice the Tories denied them".
I believe that the Scottish electorate is more than ready for this advance towards its destiny. While musing on past resistance to Scottish home rule by various political parties, I conclude that the real issue is one of electoral advantage: for Labour, perhaps a substantial block of votes to help with its past problems in England; for the Conservatives, the existing set-up has allowed them to rule Scotland without a real mandate.

Following the example of the noble Lord, Lord Sempill, I also take this opportunity to announce my potential candidacy for the Scottish parliament.

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