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The Duke of Montrose: I thank my noble friend Lord Mackay of Ardbrecknish for the masterful way in which he laid out the framework under which we are now operating. I wish to make one or two observations about Clause 66. I listened to the speech of the noble Lord, Lord Lang of Monkton, when we were considering Clause 33, and to the Minister's reply to the debate. The first question that came to mind is: to which Secretary of State does the provision refer? In the first instance, one thinks that it must be the Secretary of State for Scotland. However, given the total lack of definition or content as to what constitutes the office of the

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Secretary of State for Scotland, one has to ask whether in the long term there will be such a position; and if not, who will take the action.

At present, the Secretary of State for Scotland receives a block grant from the Treasury. Presumably, that process will continue. In Amendment No. 274 the noble Lord, Lord Steel of Aikwood, asked that the payments to be made under subsection (2) should consist of a block grant to the Consolidated Fund. Presumably, we are talking about two block grants. Let us hope that they will always coincide, but I do not think that that will always be the case.

I see from Annex B to the White Paper that expenditure on domestic agriculture, fisheries and food is to be taken into the new Scottish block. When one looks to see whether there is any indication of that in the Comprehensive Spending Review to which the noble Lord, Lord Dean of Beswick, referred, one sees that the expenditure limits of the Scottish Office are approximately £1 billion per annum less than in the previously published government expenditure forecast. I wish I could offer this to the noble Lord, Lord Dean of Beswick, as a comfort. However, not being a statistician, I can only say that it must be a statistical quirk, because the Government tell us that this is an increase.

The figures given for the Ministry of Agriculture, Fisheries and Food refer only to domestic agricultural expenditure for England. I know from inquiries that the expenditure limits for the Department of Agriculture in Scotland have been set until the year 2002, but in the Comprehensive Spending Review they appear to have been dropped into a black hole. The question to which I should like an answer is whether this means that, even after devolution, the money supplied to the Secretary of State for domestic agriculture in Scotland will be under a separate heading and that any reallocation of funds carried out by the Scottish parliament will have to be within the department's own allocation?

The Earl of Mar and Kellie: The noble Duke, the Duke of Montrose, has brought us to a point at which it might be appropriate for me to speak to Amendment No. 275, which relates to the environment. Despite the encouraging way in which the noble Lord, Lord Mackay of Ardbrecknish, gave it the thumbs-down, I invite other Members of the Committee to consider it.

The amendment has been tabled to ensure that payments made to the Scottish parliament are adequate to meet the environmental needs of Scotland. This is the second amendment that has been suggested to me and to the noble Earl, Lord Lindsay, by the RSPB in Scotland. The amendment would supplement the Scottish block calculations, which are largely based on population--by that, I mean that they are based on the human population. It has to be recognised that Scotland is inhabited by more than just humans, and that land is taken up as habitat for many species, of which humans are but one, albeit a significant, component.

Scotland is distinctive within the United Kingdom in terms of environment, among other things. It is well known that Scotland is home to 8 per cent. of the UK's

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human population. Scotland comprises 33 per cent. of the UK landmass. The Scottish coastline is lengthy, and accounts for 54 per cent. of the UK coastline. In terms of sites of special scientific interest, Scotland has 29 per cent. of those notified, but examination of the area involved shows that this is larger than usual, and that Scottish SSSIs represent 79 per cent. of the UK's SSSI hectarage.

When it comes to considering special protection areas as designated under the Birds Directive 79/409, 52 per cent. of the still-incomplete list are to be found in Scotland. Under the Habitats Directive 92/43, 40 per cent. of the UK's special areas of conservation are in Scotland.

My penultimate percentage concerns wetland sites under the Ramsar convention. Here, Scotland enjoys 34 per cent. Perhaps I may link my final percentage with the purport of all this environmental data and the amendment itself. Scotland clearly has greater liability for its interesting and diverse environment and landscape. The Scottish parliament is, rightly, required to comply with international obligations. Clearly, the formal environment--perhaps I mean "Environment" with a capital "E"--is greater than its population would imply. The funding of the Scottish parliament must reflect that responsibility.

I conclude with a final statistic, which is that of the UK's protected birds, 67 per cent. live in Scotland. Those birds are a good indicator of how agri-environmental policies are working. They have the means of going elsewhere in the event of policy failure. That, of course, is a possible event if the Scottish parliament is not adequately funded to take up its task of environmental stewardship.

Lord Taylor of Gryfe: I have listened with great interest to this afternoon's debate. Although I have nothing original to say, I cannot help feeling that we are discussing the heart of the matter. Most of us are committed--I believe that all Members of this Committee are committed--to Scotland remaining part of the United Kingdom. Unless we resolve sensibly and acceptably the financial arrangements for the continued Union, we will be in immense difficulties.

The public expenditure review--I have a copy with me--promises that the Barnett formula will continue for another three years. That is not stated in the Bill, but it appears in the Government's spending plans for the next three years. The Barnett formula was formulated when Scotland was suffering severely from economic depression and neglect. For the past 15 years, I have been one of the vice-presidents of the Scottish Council (Development & Industry). As a result of its activities as well as those of the Government, we have been able to improve substantially the standard of living of the people of Scotland--

The Earl of Onslow: Under a Tory Government!

6.45 p.m.

Lord Taylor of Gryfe: It was a combination of interests. It started even before the coming to power

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of the Tory Government 18 years ago. I hope that a Scottish parliament will contribute to Scotland's further prosperity, but that will certainly diminish the differentiation in standards on which the Barnett formula was established.

There is reason to believe that some of the sentiments expressed by the noble Lord, Lord Dean of Beswick, will have some impact on political thinking, particularly south of the Border. I note that one of the candidates for the position of Mayor of London has said that if he is elected mayor of London, he will want the same level of GDP per head expenditure in London as is received by the people of Scotland. That is part of his manifesto programme. So, the noble Lord, Lord Dean of Beswick, has some friends in London.

The heart of the matter will be how much Scotland will have to spend. During the "yes/no" campaign, what the Scottish parliament was going to deliver was hyped up and exaggerated. It was not totally realistic. The public expenditure review states that Scotland will have sufficient money--bless his heart, Sam Galbraith, an excellent man who is in an appropriate position as Minister for Health, has said that Scotland will have the best health service in Europe. Others have promised that it will have the best transport service, with an integrated transport system. It is said that services in all other areas of public expenditure will be better delivered than ever before.

As we all know as reasonable and sensible politicians, getting the best health service in Europe is not simply a matter of having a good Minister in charge. It is a matter of cash, expenditure and the good running of the business. The Scottish people have been led to believe that there will be a tremendous economic and social transformation in Scotland. I hope that that will be delivered, but a good deal will depend on what we are discussing this afternoon in terms of the amount of money that will be made available to Scotland as part of the United Kingdom.

This is a most serious point. Any failure to deliver by the Scottish parliament will be blamed on the Westminster Government--and that is the beginning of the separatist argument. So, I hope that the Minister is fully cognisant of the importance of this issue--I am sure that he is--because it is the heart of the matter.

Lord Selkirk of Douglas: I rise to ask two brief questions. In his amendment, my noble friend refers to recognising the needs of Scotland. I should like to ask the Minister whether there will be a comprehensive needs assessment, as I understand happened in the past under the previous Labour Government. If there is not to be a comprehensive needs assessment, is it the Minister's view that the present system of funding equates with the needs of Scotland and other parts of Britain?

Lord Renton: The noble Lord, Lord Taylor of Gryfe, rightly said that he wished all of this to be considered

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as part of the United Kingdom. If he looks at Amendment No. 275A he may agree that it fulfils his wishes.

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