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The Earl of Longford: My Lords, is it permitted for an Irishman to interfere in a Scottish debate? I have six Scottish grandchildren and I suppose that that gives me the qualification. Can the noble Earl throw any light on whether he wants the parliament to become stronger and stronger? If so, does he want it in the end to become an independent parliament?

The Earl of Lauderdale: My Lords, I apologise to the noble Earl if I did not hear him clearly because I am pretty deaf. What I heard was a question as to whether I wanted the Scottish parliament to be strong. Yes, I do. I want it to be able to stand up to Whitehall and fight for Scotland.

My fear is that the Bill before us does not give us a strong enough Scottish parliament. I am afraid that I can see it dissolving into nitpicking wrangles on procedure instead of doing the real job that needs to be done. That is to fight for Scottish industry both at Dounreay and with the offshore industries. Both those need defending against the depredations of Whitehall.

There is much more that I could say if I could read my notes, which are illegible anyway. I could go on for longer, but I have only one or two more comments to make now. We have been talking throughout the debate about the United Kingdom. I am glad that the Bill is grammatically correct in referring to the "kingdoms", plural, of Scotland and England. Here we are in the United Kingdoms, not the United Kingdom, singular. I like to think of the grouping that we have hitherto called the UK as the gathering of the British peoples--Scottish, English, Welsh and Irish. I hope that in that context the Scottish parliament will prove strong and vigorous enough to defend Scottish interests and resist the ever greedy depredations of Whitehall.

There is more that one could say, but I have taken 12 minutes, which is too long. I am grateful to your Lordships for bearing with me thus far.

7.6 p.m.

The Earl of Northesk: My Lords, my position in the speakers' list presents a challenge, but I do not even pretend that I will be able to avoid repetition. It is inevitable that I shall trespass on ground already covered by others of your Lordships. What I hope to do is to develop a little further some of the themes that have been advanced so far--notably the powerful contributions of my noble friend Lord Lang of Monkton and the noble and learned Lord, Lord Hope of Craighead.

The Secretary of State for Wales argues that devolution is a process and not an event. I do not dispute that. Respective referendums in Scotland and Wales have set this process in train. They have let the genie out of the bottle. I find it slightly ironic, therefore, that

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both the Bill before us today and the Government of Wales Bill have been and are promoted as the means to deliver a new and improved constitutional settlement for the UK, that they will reinforce the Union. By inference, they have been promoted and are drafted as single events and not processes.

Where does this leave the idea of the settled will of the Scottish people? This is a concept to which the Government, to my mind a little desperately, attach great importance. I can understand the political imperative of so doing, particularly in the face of recent polls north of the Border. But it is an absurd oxymoron. How can a will, if it is to be free, electorally or otherwise, let alone as part of the process, be settled?

Clearly there is a contradiction here. Of course, it is true that Scotland has voted for its own parliament and for tax-varying powers. I neither question nor dispute that. But to interpret that vote as unswerving and permanent acquiescence to either the proposals espoused in the Bill or the maintenance of the Union stretches credulity. Electorates are much more subtle and fluid than that.

Perhaps, therefore, the noble and learned Lord the Lord Advocate will be able, when he winds up tonight, to advise the House which of those two contradictory versions of the Government's devolutionary agenda is the more accurate. Is the establishment of the Scottish parliament a single event or part of a much wider and deeper process?

Whatever the noble and learned Lord's answer in due course, it is necessary, in so far as we can, to test the Bill against the litmus paper of its capacity to deliver a lasting constitutional settlement. My thinking on this is coloured by what I consider to be three virtues--there will be some of your Lordships who see them as vices--of our existing constitution: continuity, stability and an absence of compulsion. Does the Bill entrench those virtues within the new constitutional landscape?

I turn first to the absence of compulsion. There exists the paradox of this Government espousing the cause of greater democratisation; of giving more power to the people at the same time as taking ever greater powers to the Executive here at Westminster. It is smoke and mirrors. This Bill, like many in the Session, is part and parcel of that process. Despite rhetoric to the contrary, the Scottish people will be increasingly bound to and compelled by the party political system. The electoral and parliamentary arrangements proposed in the Bill, especially the Government's obsession with the closed list, value the political party over any proper principles of representation. They have much more to do with strengthening the power of the political elite than with delivering genuine decision-making into the hands of the individual voter.

In that context many noble Lords have already expressed concern that the Scottish parliament is to be denied a second chamber. I leave aside the grave implications that that could have for the principle of the separation of powers. Rather, like my noble friend Lord Strathclyde last night, I am intrigued that this Bill, of all Bills in this Session, has inspired such lack of interest from the Government Back-Benches. Is it really

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to be supposed that the Bill is so perfectly drafted that all noble Lords opposite stand four square behind its every dot and comma? Or can we suspect that pagers have been vibrating furiously with the dictum of, "Say whatever you want, as long as you do not criticise party policy"?

The relative silence from the Government Back-Benches is, to my mind, an eloquent expression of the sort of critical analysis--if ever a Bill required critical analysis it is this one--to which this Administration wish to subject legislative proposals not only in Edinburgh by a unicameral Scottish parliament, but also here in Westminster by the Prime Minister's recomposed super-quango. Is that really the level to which the absence of compulsion in our constitutional framework should be reduced? That said, I note that the noble Lord, Lord Desai--for whom I have great respect and admiration--follows me on the speakers' list. I invite, and genuinely hope, that he at least will prove me wrong in this.

What of continuity and stability? First, devolution is a process and not an event. Of itself that does not imply either continuity or stability. More than that, as other noble Lords commented, there are many areas--funding, concordats, Europe and so forth--where we can have legitimate concerns as to how stable and continuous any settlement delivered by the Bill will be.

We must also consider the issue of sovereignty. In that I endorse the contribution of the noble and learned Lord, Lord Hope of Craighead. I am in full agreement with the simple reality outlined by the noble and learned Lord that parliamentary sovereignty will be retained here at Westminster. But it would be both wrong and naive to fail to recognise the huge expectations that the Government's devolutionary agenda released. Scottish desire for real legislative, administrative and executive power for a measurable degree of autonomy and sovereignty is genuine and incontrovertible. But the Bill does not and cannot satisfy that desire. Again, it is smoke and mirrors. Worse, it retains the most important levers of control of both devolved and reserved competence, particularly control of finance and European matters, within the hands of the Executive here at Westminster. That is a control which, to an extent, will be exercised unconstrained by parliamentary scrutiny either in Edinburgh or here at Westminster. That is not a recipe for continuity and stability, nor indeed for good governance. No, as Scottish resentment over mock expectations and unsatisfied desires gathers pace, what will flow quite naturally from it is constitutional mayhem and political chaos. The double mandate will spread the fire of that resentment throughout the United Kingdom.

I do not wish to be misunderstood in this; I am not anti-devolutionist. I repeat that I believe that the Scottish desire is both genuine and incontrovertible. I have no doubt that your Lordships' House will do its utmost to improve the Bill, and I hope that the Government will be receptive to attempts so to do. But I sincerely fear that the Bill as it stands has about it the worst of all worlds. It does not, in fact, deliver meaningful

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devolution. It does not, in fact, deliver a credible constitutional settlement that Scotland, within the United Kingdom, can take forward into the next century.

Scotland will of course have its parliament; there is no doubt about that. Our duty in the coming weeks is to do what we can to make it work.

I return to where I started. The genie has been let out of the bottle. There must be a real fear that even the wisest counsel and expertise of your Lordships' House may prove insufficient, as we scrutinise the Bill, to recork that bottle.

7.16 p.m.

Lord Desai: My Lords, I thank the noble Earl, Lord Northesk, for the kind words that he said about me and I hope that I can live up to his expectations. Let me begin by saying that, like the noble Lord, Lord Beloff, I am not a Scotsman; I am an academic. Therefore all I can do is be an academic. I cannot claim a grandmother anywhere on Scottish soil.

This is part of a collection of Bills and moves to which the Labour Government are committed, to modernise--I have no problem with that word--the constitution of the United Kingdom. I should have preferred all those Bills to have come together in a single framework and we could then have seen the interconnections which exist between them. But I will start as someone with a good colonial education in India by saying that that is not the British way and I shall therefore have to live with this piecemeal approach to constitutional reform.

Let me say this--I shall not spend too much time on it: we forget that this Parliament has made many constitutional changes in the past, especially while the British Empire was in existence, and many constitutions have been discussed. For reasons into which I need not go, I happened to be reading recently one of the longest Bills that this Parliament ever debated; that is, the Government of India Bill 1935.

That Bill was preceded by a statutory commission report, round table conferences, and a report from a joint Select Committee of both Houses of Parliament. It was an extremely long Bill which went into considerable detail about the constitution of India. The discussion on the Bill occupied 4,000 pages of Hansard. We are doing something equally important, but in a much shorter time; so we must be careful. But we are doing something monumental and we may perhaps benefit later by a joint committee report, if we can get hold of one. Important issues are being discussed to which we are not being exposed in sufficient depth.

Many noble Lords have said that there is probably no choice between Union and separation; either we have this or we have what the Scottish nationalists want. Members of the party opposite seem confused about that. They want either more powers for the Scottish parliament--for example, in European matters--or they want fewer powers. Either way, they believe that it will lead to independence. They should make up their minds as to what precisely they want the Scottish parliament to do.

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The difficulty is patent. The United Kingdom has a multi-national quality which is unitary in its structure. We are devolving power but we are not creating a federation. That is a very peculiar thing. There is a step between the present union and Scottish independence, but we are not going to go in that direction. We have chosen to devolve power. However, in devolving power there are considerable risks because there will be a symmetry between Westminster and whatever assembly or parliament we create. As the noble and learned Lord, Lord Hope of Craighead, pointed out in a masterly speech yesterday, the symmetry is embodied in Clause 27(7), by which the Scottish parliament will be subject to the constitutional sovereignty of the United Kingdom Parliament. Unless that distinction is carefully followed through in some of the reserved powers and devolved powers that we create and unless we think of all kinds of possible disastrous scenarios and prevent them now, there may be trouble ahead.

I am especially concerned about the fiscal side. As usually happens in these matters, nothing much is said on the face of the Bill. There is talk about a consolidated fund being created with the Secretary of State putting in money or whatever he likes to do. We are given to understand that the Barnett formula will be continued, but as an administrative arrangement and not as a constitutional or legal arrangement.

Many noble Lords who have experience in these matters have already pointed out that Scotland gets more money than the Barnett formula stipulates. Therefore, at the beginning we face the problem that the amount of money Scotland gets is not as provided in the Barnett formula but is something else. But right now it is subject not to an administrative arrangement but to a political arrangement, which is whatever the party in power wants to do about Scotland and however rigorous or weak Scottish Ministers are. Given that that is currently the situation, it would be right for us to think through how we can incorporate as much of that as we can in legislation rather than leave it to administrative detail. I say that because a sovereign parliament can change its mind. If the next Parliament decides to cut 25 per cent. off the Barnett formula, nothing in the Bill can prevent it. That would lead to a terrible and frustrating quarrel.

I think we ought to understand for ourselves what we want to do. We want to do the best by Scotland. We want to create a parliament which will be beneficial to the Scottish people because that is what they want. We do not want to be mean as a Parliament; we want to be generous. If we want to be generous, we ought to state in a schedule to the Bill that future Westminster Governments may not touch the money other than to a very small extent. Unless we do that, there will be trouble ahead. Money will be central to this thing. As the noble Lord, Lord Nickson, pointed out, any delusions about Scotland's oil wealth and so on will be pretty well disappointed. Money will become a major ground for quarrel. It is not desirable that we pass an Act which will create room for such a quarrel.

My next point concerns Schedule 5, which is quite a long schedule. Very little is said there about the reserved power of taxation. It mentions only taxes and excise

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duties. Far too much fuss has been made about the variable rate of basic income tax. The party opposite has done a great deal of damage in this country by focusing all of its attention on income tax and the basic rate of income tax as if there are no other taxes to worry about. A great fuss is made about 3p in the pound, but I do not think that 3p in the pound matters very much. As the two previous Chancellors and the present Chancellor have shown, there are a thousand ways of raising taxation other than by going through income tax. But we ought to be clear in our mind whether we want the Scottish parliament to be able to create new taxes which are not income taxes. I could easily invent some taxes if someone asked me to.

I know very little about the real world but let us suppose that oil is carried in large lorries and a tax of £2 per lorry is put on any load that goes from the wellhead to outside Scotland. That would be very simple. One could also have an hotel tax or a restaurant tax. My noble and learned friend on the Front Bench will probably tell me that that is not allowed, but I should like an assurance from him as to what is or what is not allowed. Will the Scottish parliament be able to innovate in the area of taxation?

The Kilbrandon Commission was mentioned by the noble Lord, Lord Renton. It went into this issue and suggested various committees of the Exchequer which would give rulings about the powers of taxation of different jurisdictions. That is especially important if we are in a single market and a single currency region. It might be that a tax imposed in Scotland on Scottish residents would distort competition in the United Kingdom. There could be all kinds of problems. I should like an assurance from my noble friend that the Government have thought about this and that such quarrels will not arise or that they will be duly decided upon by either by the Privy Council or by a committee of the Exchequer.

Perhaps I may make one or two points which go beyond fiscal matters. I agree with the noble Lord, Lord Beloff, that there are a variety of ways of solving the West Lothian question. I do not think one should say that there is not a solution. If there were a federation there would be a straightforward solution. The difficulty arises because we do not want to go to a federal solution; we want to create a half-way house of devolution. It would be perfectly permissible for us to say that only on certain topics of United Kingdom interest would the Scottish MPs be allowed to vote and that they should go away when other matters relevant to English interests are being discussed. In that way the Westminster Parliament minus the Scottish MPs would become the parliament of England and Wales. That is very straightforward. The Scottish MPs could go and work in their constituencies or whatever it is that people do. I do not think that the West Lothian question is as insurmountable an obstacle as people say. It can be if people want to make it so, but I believe it can be solved if people wish it to be solved.

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Perhaps I may refer to the second chamber problem. Yesterday, my noble friend Lord Hughes referred to the Norwegian Parliament.

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