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Lord Sewel: It is important to make clear what this amendment deals with; namely, the designation of assisted areas according to Section 1 of the Industrial Development Act 1982. Although I did not agree with everything that the noble Lord, Lord Lang, said, his appreciation and understanding of the interplay between assisted areas and our European obligations was absolutely spot on. To take away this reservation and give power to the Scottish parliament to make its own designation of assisted areas is simply not compatible with our European Union obligations.

Assisted areas are those areas which in the context of regional policy are identified as deserving or effectively requiring higher levels of aid to promote their economic development. To that extent a certain distortion in the single market is allowed in order to benefit those areas so identified. Because of that distortion it is important that designation is handled fairly across all areas. All parts of the country have a legitimate concern about the basis upon which assisted areas are selected and the criteria that are used.

The European Commission has the role of enforcing the European Union rules. As the noble Lord, Lord Lang, said, the Commission sets a ceiling on the total eligible population in a member state and expects evidence of a proper methodology adopted by each member state to determine which areas qualify for additional help. That applies across an entire member state. I believe that the argument starts and stops there. One cannot get round that problem by seeking to devolve responsibility to a devolved parliament for defining assisted areas. Essentially, it is a member state function. With that explanation, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Steel of Aikwood: Before the Minister sits down perhaps he can clarify one point. It used to be the case that the UK Government could define assisted areas either on the basis of unemployment or (as in the case of the constituency that I once represented) depopulation. I believe that a Scottish parliament would be more sensitive to the second issue. Latterly, the UK Parliament has not been. For that reason I have sympathy with the amendment. It does not detract from the powers of the European Commission to determine the total population that is eligible for assisted area status, but I hope that the question of depopulation will not be overlooked in the future as it has been in the recent past.

9.45 p.m.

Lord Sewel: I make the general point again. A single methodology applying to the whole of the member state is required. We cannot take a methodology which is of particular benefit to Scotland and apply it to Scotland. One could keep on developing individual methodologies to one's heart's content. That is not a way forward. It has to be a single methodology applied within the

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member state. As I recollect, the main drivers of the methodology now are unemployment and GDP. I am not sure about depopulation. It may have been, but I am not sure that it still is.

Lord Mackay of Ardbrecknish: This has been a useful probe. I am pleased that at least some of my fears have been set aside by the Minister. It is odd that the Minister now changes his ground from that on which he stood firmly previously and tells me that the designation of assisted areas is deeply tied up with the European Union and that it would not be sensible to devolve it. If anything is deeply tied up with the European Union it is the common agricultural policy and the common fisheries policy. The Minister refuses to address the argument as to why they cannot be devolved, and yet the European dimension remains. Here we have the argument turned on its head because there is a European dimension, which I fully accept.

I remember one redrawing of the boundaries in the early 1980s when I was at the Scottish Office. I fully accept the European aspects of that. But why cannot that be devolved to the Scottish parliament? It can play within the European rules, just as it is supposed to do on farming and fishing without being represented at Europe and without being a member state. I am left in some puzzlement as to the contradiction in the Minister's arguments.

I see the point of keeping designated assisted areas at a UK level, as my noble friend Lord Lang explained. He is rather uniquely placed to do so; not only was he the Secretary of State for Scotland but the President of the Board of Trade--it is always nice to count a president among one's friends--and he saw the problem from both sides.

I am grateful to the Minister. I accept that the reservation here is narrowly drawn. Perhaps my fears--triggered by Mr. McCartney's interventions earlier in the year into this general field--were unfounded. I shall read the defence on the European aspect with some interest when we come back to the common agricultural policy and the common fisheries policy. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sewel moved Amendment No. 197A:

Page 73, line 14, at end insert--
("( ) the subject-matter of Part II of the Food and Environment Protection Act 1985 so far as relating to oil and gas exploration and exploitation, but only in relation to deposits in the sea outside such controlled waters,").

The noble Lord said: The purpose of this amendment is to ensure that the reservation of matters relating to the oil and gas industry will catch the deposit of substances or articles in the sea so far as that relates to oil and gas exploration and exploitation. This does not represent a change of policy. The amendment is needed merely because there is scope for doubt that the reference to "pollution" in the present text of the reservation will catch this matter.

In particular, this reservation will catch the ministerial powers to exempt from the licensing regime under the Food and Environment Protection Act 1985 "operational

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discharges" from oil and gas installations and, where compatible with international obligations and where safe and practicable to do so, to license the deposit in the sea of oil-related articles such as redundant oil installations.

The Government recognise, of course, that the Scottish executive and parliament will have an interest in the protection of the marine environment. We therefore propose that there should be a statutory requirement for a UK Minister to consult the Scottish Ministers before exercising his powers to license oil and gas-related deposits in the sea under Section 5 of FEPA in Scottish waters and for operations commencing in Scotland, and to approve the in situ abandonment or disposal of redundant oil installations within Scottish waters under Part IV of the Petroleum Act 1998. The Government intend that, before exercising these powers, the UK Ministers should not only consult Scottish Ministers but also use his best endeavours to secure the agreement of the devolved administration.

I hope this explanation makes clear the reason for the amendment. I beg to move.

Lord Fraser of Carmyllie: I do not like to disappoint the Minister, but it is not clear what he has amended. I shall read carefully what he said, and perhaps return to the matter at a later stage.

In dealing with a matter relating to oil and gas, I suppose that I am bound to make a declaration of interest, as I am a director of Elf Exploration (U.K.), which is engaged in the largest capital project in the North Sea at £1.4 billion. I guess that that is probably a declaration of interest that is more appropriate to any future debate we may have on taxation in the North Sea rather than this Bill.

I am concerned to discover in narrow ambit from the Minister that we are dealing, as I understand it, with two separate statutes. One relates to pollution with regard to oil and gas exploration and exploitation, but only outside what are described as "controlled waters". As I understand it they are defined in Section 30A(1) of the Control of Pollution Act 1974. The amendment relates to a change to the Food and Environment Protection Act 1985. Where we talk about "controlled waters" I should like to be clear that there is no difference in definition between "controlled waters" as they apply to the Control of Pollution Act and as they apply to the Food and Environment Protection Act 1985. I believe that it is intended that "controlled waters" are the same area under control, but it would be helpful if we could have that confirmed.

Furthermore, as I understand it, for oil and gas exploration purposes and other administrative reasons, Scottish waters are in UK legislation for administrative purposes defined as being those waters that fall north of parallel 55o50'. Is there any difference in the way those Acts apply to those areas which are within Scottish waters for administrative purposes and those south of them? It is not such an arcane matter as it might appear to be, because the parallel that is used comes out, as it were, in a straight line from the Border at Berwick. If one were to look at a BBC weather map it will be found as coming out in a horizontal line directly across at 90

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degrees, whereas of course if we were to think the unthinkable and Scotland were to be unwise enough to contemplate going its own way as a separate sovereign state, there is real dubiety about whether that is the correct line to be drawn if sovereign waters are to be adjusted.

If we were to do it properly, according to my understanding of the existing rules of international law, that line has to be extended in a fashion outwards from the line of the Border. That would mean that waters, and oil and gas developments which lie some 200 miles off Aberdeen, would fall within the waters of England. I consider this to be an important matter, because the Scottish nationalists would tell all and sundry that there is no question but that they would be Scottish. There are sound international legal principles upon which to argue for the line being that of the land boundary that lies between two countries extended out into the sea.

I hope that those are unnecessarily arcane matters to raise under this amendment. But given the way that the Government's policy--I have to say--has been so remarkably unsuccessful in stemming the SNP's advance in the polls in Scotland, before we finish consideration of the Bill, it might be marginally advisable to ensure that we do not so set in concrete the administrative lines about what are Scottish waters that those who have the desire to separate Scotland from the rest of the UK would take advantage of what has been originally introduced as a purely administrative arrangement to argue a case at some future point for their sovereignty over those waters.

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