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Baroness Linklater of Butterstone: I do not agree with the noble Lord, Lord Mackay, in his amendment. Sections 157 to 159 of the Road Traffic Act apply where the insurer or the vehicle owner contributes to the hospital treatment costs of the person injured up to a maximum of around £2,949. We do not see why the cost incurred of someone being treated should not be payable in Scotland to a Scottish health board.

The Scottish parliament should be able to vary the circumstances and rate at which payment for the treatment of patients in road accidents should be made. After all, the parliament is being entrusted with the responsibility of varying income tax by up to 3 per cent. and should also be able to take other decisions which impact on public spending. Health is one of those. Regulations on payments to health boards are a good example.

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The amendment would prevent the Scottish parliament from increasing the maximum amount that should be paid in compensation for hospital treatment or for stopping it altogether should it so choose. We do not support the amendment because it would further restrict the powers of the Scottish parliament.

Lord Hardie: For the reasons given by the noble Baroness, Lady Linklater, the Government cannot accept the amendment. The sections to which reference has been made deal with the recovery of payment for hospital treatment of road traffic accident casualties. The provisions are not an integral part of the roads legislation. Powers in relation to those charges are currently exercised by health Ministers. Most health matters are to be devolved to the Scottish parliament. Therefore, it would be inappropriate for this area of recovery of payment for hospital treatment to be reserved. I hope the noble Lord will accept that explanation and withdraw the amendment.

10.30 p.m.

Lord Mackay of Ardbrecknish: Frankly, no, I do not accept that explanation. The noble Lord, Lord Sewel, has taken pains to try to paint a logical pattern that if the major parts of an issue are devolved, that should drive where one goes with the other parts of the issue. I accept that the health service is devolved; but quite clearly, under transport, the bulk of transport is not devolved. I should have thought that there would be some logic in following the transport route here rather than the health route.

I do wonder whether the Government have spoken to the insurance industry about this. Will the provision lead to the possibility of higher or lower premiums? I did not understand the argument of the noble Baroness, Lady Linklater. She just seemed to think that the Scottish parliament should get as much as it can. But that was not my concern. I was concerned about what would happen to the customer. Will Scottish residents be treated differently from people in England for road accidents in the same National Health Service? That is what I am exploring. Before I decide what to do with the amendment, I should be grateful for an indication as to whether or not the Government have discussed this matter with the insurance industry.

Lord Hardie: I cannot give a direct answer to that question. But what I can say is that we are not treating Scottish customers differently from others. With respect, the noble Lord seems to misunderstand the position. Clearly, a driver from England who has an accident in Scotland and causes an injury would be liable to pay for the hospital treatment just as a Scottish driver in England or his insurers would be liable to pay for the hospital treatment of someone who was injured by him in England. I should be very surprised if the insurance industry were able to apply loaded premiums because someone drove in Scotland or might drive in Scotland.

Be that as it may, the issue is not a transport issue. The issue is a health issue. Health Ministers currently recover the costs from insurance companies for these accidents. If the noble Lord genuinely accepts the logic

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of my noble friend Lord Sewel, the position is that, if health is devolved, it makes sense to devolve this health aspect of the road traffic provisions. It happens to be a Road Traffic Act, but it is clearly a health provision.

Lord Mackay of Ardbrecknish: If a Scottish driver in England, or an English driver in Scotland, will be paying the same or will be liable to pay the same if he is involved in a traffic accident and has to go to hospital or have medical treatment, there does not seem to be any point in devolving it. The whole point about devolving it is the presumption that at some stage in the future the Scottish parliament may act differently. If it acts differently, if it says that for accidents in Scotland drivers will not have to pay anything, that is fine. I suspect that Scottish drivers will then suggest that they might pay slightly lower premiums. But if the parliament decides that they will pay more--I do not seem to be able to get this point over--I suggest that the insurance industry would then say, because that is the way its business works, that there is a risk of greater payments having to be made to a Scottish driver who is involved in an accident in Scotland.

I suggest to the Government that it would be nice if they would just take something away and think about it without commitment. Perhaps I may suggest to them that, before we come back for Report stage, they should explain this and say whether they envisage that there could be different arrangements for the payment. Perhaps they could even talk to the insurance industry. With those comments, I rather reluctantly withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 202:

Page 75, line 28, leave out ("or finish or both") and insert ("and finish").

The noble Lord said: I hope that this amendment is not too complicated for the Government to cope with. It is about shipping services. The implication is that the Scottish parliament will be able to finance, help and subsidise shipping services that run within Scotland; namely, leave ports in Scotland and arrive at ports in Scotland. So that deals with Caledonian MacBrayne, shipping services to the northern isles and so on. That is fine; I have no problem with it. However, there is a reservation on those services which do not start or end in Scotland. I take it that that means that the new service running from Campbeltown to Ballycastle in Northern Ireland or the services from Stranraer to Belfast or Larne will not be eligible for financial assistance. I do not believe that the Stranraer to Larne or Belfast service receives any financial assistance, but I suspect that the Campbeltown to Ballycastle service does. Does that mean that that is not to be a responsibility of the Scottish parliament but reserved to Westminster?

There is a possibility of a service from Kircudbright to the Isle of Man. Clearly, that would be outwith the powers of the Scottish parliament. The argument about it is based on the economic well-being of Kintyre and pulling in more tourists. All these are devolved matters.

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It seems a little illogical that when the case for subsidising a shipping business to get it started, if not to run it, is based on grounds which are devolved, I am puzzled as to why a restriction is contained in the schedule to forbid the Scottish parliament helping such shipping lines. I beg to move.

The Earl of Balfour: Amendment No. 203 is grouped with this amendment. I am quite happy that the protection of wrecks prohibition on approaching dangerous wrecks is a reserved function because the buoying and marking of such wrecks while at sea is carried out by the Northern Lighthouse Commissioners. Equally, I am quite happy that "ports, harbours, piers and boatslips" should be a devolved function.

Except in relation to paragraph (d), which is the protection of wrecks, I cannot see why, if there is a wreck within the precincts of the port or harbour, it should not be dealt with by the devolved parliament. That is my reason for deleting that paragraph.

Lord Sempill: I support my noble friend Lord Mackay of Ardbrecknish on this amendment. There is one issue which I find slightly baffling. Making the assumption that the company concerned is Scottish--there are quite a few of them--and it pioneers a new destination in which the port is outwith Scottish waters, surely it is right for the Scottish parliament to be in a position to give assistance in setting up or subsidising the company. After all, it is to the benefit of the Scottish economy that the boats return laden with tourists. I can see no reason why Scottish shipping companies should not turn to their own parliament to look for that financial assistance.

Lord Mackie of Benshie: Perhaps the Minister can tell us whether that phrase means that help will be available from the UK Treasury for those shipping lines which start or finish there (or both)?

Lord Hardie: On the question of the Campbeltown to Ballycastle ferry service, support for, or subsidy to, that service would be reserved to Westminster, so the noble Lord, Lord Mackay of Ardbrecknish, has correctly interpreted those provisions. That services operates commercially and without financial assistance, although the harbour facilities at Campbeltown and Ballycastle were both upgraded with support from public funds, including European assistance. The Scottish parliament would continue to have competence to provide assistance for ferry services in the form of support for pier and harbour works, just as they have already been so provided in that example.

I regret that I cannot accept Amendment No. 202. It would have the effect of devolving to the Scottish parliament the matter of financial assistance for shipping services between Scotland and another part of the United Kingdom, or even another country. Financial assistance to shipping services operating wholly within Scotland is a devolved matter.

The Government recognise that shipping services between Scotland and other countries are of economic significance to Scotland. Our intention in the Bill is to

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give the Scottish parliament appropriate powers to maintain and develop the internal shipping services it considers necessary for the maintenance and improvement of economic and social conditions in Scotland, particularly in island and remote Highland communities. The noble Lord's amendment would give the Scottish parliament and executive competence over financial assistance to existing or new external shipping services. I shall come in a moment to the point raised by the noble Lord, Lord Sempill, when I deal with the European position.

In the case of services between Scotland and other parts of the United Kingdom, the Government consider that those services are best dealt with on a UK-wide basis because they are as much the concern of the UK in its entirety as they are of Scotland. Furthermore, in the case of the devolution of international shipping services to or from Scotland, such a provision would be inconsistent with the general reservation of international matters, including trade.

Finally, if competence were exercised so as to provide for financial assistance to shipping services to or from Scotland where such financial assistance was not available to operators of services in other parts of the United Kingdom, there might be a valid complaint of unfair competition from those other shipping operators. There might also be difficulties with EC state aid regulations. That deals with the point of the noble Lord, Lord Sempill.

State subsidies to assist passenger ferry services are subject to EC state aid guidelines. Any subsidy agreed by the European Commission would have to seek approval as a public service obligation under these guidelines which apply strict criteria about when support is justified.

Support is available only for services serving,

    "peripheral regions of the Community or thinly served routes considered vital for the economic development of that region where the operation of market forces would not ensure a sufficient service level".

In view of my earlier comments, the examples given by the noble Lord, Lord Mackay of Ardbrecknish, are not in that position. Therefore, one cannot accommodate that service.

I turn to the amendment in the name of the noble Earl, Lord Balfour. I begin by declaring an interest as an ex officio commissioner of the Northern Lights. The noble Earl has set out the reasons for the amendment. I recognise that he brings experience to this subject and I understand the arguments behind his explanation, but I should like to draw the Committee's attention to our concern over his amendment and ask that it be withdrawn. The effect of Amendment No. 203 would be to give the Scottish parliament responsibility for the subject-matter of Section 2 of the Protection of Wrecks Act 1973 as it applies in ports, harbours, piers and boatslips around Scotland's coastline. Noble Lords will recall that responsibility for ports and harbours is devolved.

The Scotland Bill reserves to the Westminster Parliament legislative competence over matters relating to marine transport where there is a need for consistent

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provision across the United Kingdom. Schedule 5, Head 5, Section 3, reserves the subject-matter of the relevant legislation on marine safety and pollution matters. But the Bill identifies ports, harbours, piers and boatslips in Scotland as an exception from the reservation. That exception is, however, subject to a qualification which continues to reserve the subject-matter of certain legislation including at item (d) the subject-matter of Section 2 of the Protection of Wrecks Act 1973.

As the noble Earl explained, under Section 2 of the 1973 Act the Secretary of State has powers to designate an area round a wreck as a prohibited area if because of anything contained in it the vessel is in a condition which makes it a potential danger to life or property and on that account it should be protected from unauthorised interference. It is an important role in securing overall levels of safety in and protection against pollution of territorial waters throughout the United Kingdom. It is operated in practice by the Maritime and Coastguard Agency. Section 2 of the Protection of Wrecks Act 1973 is a reserved matter for very good reasons. The Government's guiding principle was clearly set out in the White Paper. Paragraph 3.3 states that transport safety and regulation, including regulation of shipping and marine services, would be reserved.

The subject-matter of this legislation is a reserved matter on the grounds that it is a matter of maritime safety regulation and pollution prevention which requires consistent provision across the UK. Section 2 of the Protection of Wrecks Act 1973 in our view comes clearly within that criterion and the Government wish to ensure that such matters are treated consistently on a UK-wide basis. Furthermore, these matters are bound up with international conventions to ensure the security of navigation throughout UK territorial waters. I hope noble Lords agree that for the reasons stated the Bill should remain unchanged. I hope that, given the explanations, the noble Earl is able to seek leave to withdraw his amendment.

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