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Noble Lords: Order!

The Earl of Dartmouth: My Lords, I shall come to the end of my point, if I may. People living in Yorkshire and the Humber are paying for grants which induce companies to locate to Scotland rather than to their region or, worse still, paying to induce companies in Yorkshire to relocate away.

Lord Sewel: My Lords, I am finally grateful to the noble Earl. Perhaps I may point out that that was one of the significant achievements of his noble friend Lord Lang.

The Earl of Dartmouth: My Lords, my noble friend is a noble friend, but the noble Lord must think of something new. I was not part of my noble friend's administration, I was not part of the previous administration nor was I even a candidate for my party at any time in the past 18 years. So the noble Lord will have to use that point on someone else: it is not valid so far as I am concerned.

It has always been difficult for a fair-minded person to justify the privileges for Scottish residents, even when there is a wholly integrated United Kingdom such as we shall have had until this Bill becomes law. However, the setting up of a Scottish parliament with material powers amounts to a new constitutional settlement. The privileged position of Scottish residents, of which I have given just three examples, becomes impossible to justify.

I want to address particularly the Government's stated intention to leave the Scottish block and the Barnett formula unchanged. As I said earlier, someone living in England receives 23 per cent. less public expenditure than the same person would receive if he were living in

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Scotland. To put that in money terms--confirmed by other noble Lords in the course of the debate--in the fiscal year ending 1996 an extra £871 per head of identifiable public expenditure was spent on the residents of Scotland as compared with those of England.

It was in that context that I was interested to read of the contribution of the noble Lord, Lord Barnett, in this House on 9th June. I remember the noble Lord as a distinguished Member of Parliament for another Greater Manchester constituency when I last stood for my party, also in a Greater Manchester constituency, in a general election 24 years ago. That is why I do not take seriously interventions such as that produced by the noble Lord, Lord Sewel.

The noble Lord, Lord Barnett, said then,

    "I am not unhappy to have my name associated with something which for a long time has been relatively rational and intelligent. But today it is long overdue for reform".--[Official Report, 9/6/98; col. 906.]

Once the noble Lord, Lord Barnett, himself had said that, I was agog to hear the response of the noble and learned Lord, Lord Falconer, from the Government Front Bench. Earlier today I contacted the office of the noble and learned Lord, Lord Falconer, to warn him that I would be quoting him tonight in this debate.

The noble and learned Lord said,

    "We have no plans for a fundamental review of the ... Barnett formula rules".

I characterise that as a dismal and unacceptable response to the historic and insightful comment of my fellow chartered accountant the noble Lord, Lord Barnett. The reason that the noble and learned Lord, Lord Falconer, gave was,

    "That formula has been in operation for nearly 20 years and it has been accepted and used by successive governments".--[col. 919.]

I know that there are many hereditary Peers in this House--indeed, I am one myself--but the notion that just because something has been in operation for 20 years is sufficient justification for it to continue unreformed is singularly unconvincing, even in this House. I can assure noble Lords opposite that that line of reasoning will certainly not convince the electorate of Yorkshire and the Humber, and indeed other English regions.

I had expected the noble and learned Lord, Lord Falconer--that celebrated legal luminary catapulted on to the Front Bench--to produce a more substantive and convincing line of reasoning to justify the Government's point blank refusal to reform the Scottish block and the Barnett formula in the context of Scottish devolution.

As the noble Lord, Lord Dean, pointed out yesterday, the current UK Treasury team features a Scottish Economic Secretary, a Scottish Chief Secretary and a Scottish Chancellor, all of whom also represent Scottish constituencies. That is not a reassuring line-up from an English point of view. As a member of a profession--as my noble friend Lord Lyell pointed out--and like many other Members of the House who are also members of a profession, I recognise there is a clear and potential conflict of interest.

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My noble friend Lord Lang said in his speech that there will be a demand to move away from the Barnett formula to a needs-based system. I should like to make that demand to the Government now. So as to take away any suspicion of partiality and bias in the Treasury, I propose that the Government announce forthwith that there is to be an assessment of needs and from henceforth public expenditure shall be allocated entirely on the basis of need and not on the present basis of the Scottish block and the Barnett formula.

In conclusion, when the Secretary of State described the Bill in another place as "far-reaching", he was absolutely correct; it is indeed far-reaching. In fact, it is so far-reaching that it makes the present privileged position of residents of Scotland in logic untenable and, in practice, unsustainable. Should the Bill become law in anything like its present form, the Government will have to make substantial compensating changes to the benefit of England and the English regions. Should they fail to do so, they will be aiding and abetting the break-up of the United Kingdom, not for the reasons given by other noble Lords in the debate, but because that is what England will then want. I say that very much in sorrow and not at all in anger.

9.20 p.m.

Lord Pearson of Rannoch: My Lords, it is a rare honour to be the last of 65 speakers in such an important debate, and I know it is an honour which carries with it the duty to be brief.

Like the noble Earl, Lord Glasgow, I find myself somewhat schizophrenic about this Bill. With a Scottish father and a Sassenach mother I was brought up in the wilderness of Rannoch but sent to school in England. I spend most of my time in London, but only feel at home in Scotland. Perhaps for these reasons, and because I abhor the Treaty of Rome and what it is doing to Europe, I have in theory no objection to a devolved Scottish parliament, and no difficulty either with a completely independent Scotland, provided that the Scottish people do not become disadvantaged and embittered by those changes. After all, one can hardly hold the view that the Treaty of Rome, with its explosive commitment to the premature union of the peoples of Europe, is wrong for the nations of Europe and in the same breath insist that Scotland must stay in the Union with England if her people no longer want to do so.

Of course, that dilemma makes the Government somewhat schizophrenic too. As one character, they pay the European Union billions of pounds annually to absorb the sovereignty of the United Kingdom into its venomous bosom. As the other character, they protest that their plans for Scotland must not lead to the break up of the United Kingdom.

At this point, and in order to save time, I hope that my noble friends Lord Lang of Monkton and Lord Nickson will not mind if I single them out from many excellent speeches made by your Lordships over the past two days and associate myself with their remarks made yesterday. I agree with my noble friend Lord Lang that the genie of full independence is well

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and truly out of the bottle. I also agree with the analysis of my noble friend Lord Nickson that the future is likely to prove more expensive for the people of Scotland, and of course much more expensive under full independence than under the devolution foreseen by this Bill.

Here I would underline a point eloquently made by my noble friend Lord Beloff today, to the effect that the people of Scotland are mistaken if they believe that the European Union will come to their financial aid. EU enlargement is almost certainly a pipe dream, because adequate reform of the common agricultural policy does not appear to be achievable, and Scotland will be well back in the queue of Eastern European applicants even if enlargement does occur. Of course it is true that Brussels would love to see the break-up of the United Kingdom and to absorb Scotland as one of its subservient regions, but it is difficult to see how this can happen in practice, unless, of course, Scotland becomes a net contributor to the EU budget, which I submit is also unlikely.

So, I am reluctantly forced to conclude that this Bill is not good for the people of Scotland, however much some 40 per cent. of them may have hoped it was when they voted in the referendum last September. When its financial and political implications come home to them, most of them will feel deceived and angry and will want to draw back. For some of them, the fervour of full independence will carry them forward, in spite of the financial cost. I fear there will then be deep division among the people of Scotland, and I can only pray that it does not lead to violence.

It is a pity that among the 68 speakers in this debate not one has spoken or will speak on behalf of the Scottish National Party. If there had been such a representative, I submit that noble Lords on the Government Benches would be less likely to dismiss my fears as groundless.

9.23 p.m.

Lord Mackie of Benshie: My Lords, I have listened and borne all I have heard with, if not equanimity, then at least in silence. I have enjoyed the debate and I have been very interested in the ancestors of the many hereditary Peers who have spoken and what they did or did not do. I thought that I would check up on my own forbears. There was a George Mackie who was a direct forbear. He was a farmer of Foreside of St. Fergus near Peterhead. I daresay that he was very interested in what was going on. But I believe that he would have been more interested in improving the bare land there and in securing a living for his family. In any event, he did not have any say.

The great difference today is that in this Bill we restore the parliament that was taken away. The people of Scotland have been consulted extremely well. I have no objection to a referendum if the questions are fair, and I thought that they were. Many referendums are, of course, loaded, but in this case I believe that the referendum on Scotland was fair. There was plenty of opportunity for both sides to put over their points of view. I believe that the result was a true reflection of how the Scottish people thought.

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We have had a good debate and we have had a long debate. The first Opposition speaker was my long-time friend, but not a political friend, the noble Lord, Lord Mackay of Ardbrecknish. He promised to ensure that every clause was examined in an impartial manner. It was splendid to hear him say that, although I found it hard to be wholly convinced that he meant it. A little later on the noble Lord, Lord Lang, made a powerful speech. I thought it was a sad and bitter speech. Perhaps he was feeling the loss of Eden as much as Adam and Eve did when they walked out of the Garden. But whether he actually lived in a Garden of Eden and acted with the knowledge and skill that has been attributed to him and other Tory Secretaries of State, I beg leave to doubt. There are plenty of examples where the organisation of the Secretary of State and his department has not worked particularly well. One has only to consider agriculture and one or two other matters--the poll tax has been mentioned ad nauseam--to see that there are snags as great as any that are likely to be incurred under the new system.

From then on I was very disappointed that the Tory Party generally followed a line that this Bill was introduced hurriedly; that it was horrible and ill thought out; that the Government were away with the fairies and so on; that the Tory Party was filled with despair because this legislation will lead to the break up of the Union; and that the rise of the Scottish National Party was without doubt entirely due to them.

Today the Tories in this House have done the SNP more good than anyone for a very long time. It is not true that the SNP has waved the banner of its great success. We have seen these surges before. I believe as strongly in the United Kingdom as any Tory here. I have lived my life in it. I hope to live on in the United Kingdom. But we have to get over this foolish tendency and fight against it in the way that the Canadian electorate is fighting against the Quebecois, and with some effect, instead of moaning that all is lost. However, all has been lost under the Tories--all the seats that the nationalists gained from the Tories. Here is a lesson that needs to be learnt.

There were honourable exceptions. My old opponent from Caithness and Sutherland was one of them. He spoke of what could be done by the Scottish people and their own parliament if they really went to town on it. Quite a few Tories have revealed some sense of there being a great adventure before us which might--they even went as far as to say "might"--do the Scottish people some good.

I turn now to the speeches by the other side of the House. I am not sucking up to the Government--

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