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Lord Sewel: I offer a rough and ready rule of thumb on this business of what is "in" and what is "out". Basically, we would make far quicker progress if we accepted that what is in should remain in, and what is out should remain out. I would move an amendment to that effect to cover the whole of the Bill, if need be.

Amendments Nos. 277 and 278 would require the Scottish parliament, in setting out its detailed rules for the effective control and scrutiny of spending of the Scottish executive, to do so in accordance with directions made by the Treasury from time to time. The difficulty is, of course, that, essentially, that strikes at

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the essence of devolution and cuts across the guiding principles behind Clause 66; namely, that the detailed procedures which the Scottish parliament makes to control and scrutinise the spending of the Scottish executive should be a matter for the Scottish parliament itself. Only in this way can the parliament take full ownership of its own procedures and so be committed to ensuring their success.

Furthermore, if the parliament is to hold the executive to account, it follows that it, not some external source, should decide on the details of the accounting. I am satisfied that the provisions in the Scotland Bill strike the right balance between prescription in relation to the matters the parliament must make provision for, while leaving it the maximum degree of freedom.

Of course we shall ensure that the parliament and the executive are given the best possible advice in these matters. That is why we set up the consultative steering group and the financial issues advisory group. Therefore they will not approach this matter "cold"; there will be much experienced professional advice not just available to them, but--not to beat about the bush--virtually rammed down their throats. On that matter they will be in a position to make the proper decisions on the basis of those recommendations. However, it is still an important point of principle that they should make the decisions for themselves. In that way they are committed to them; they accept ownership of them; and they will want to ensure that they are a success. On that basis I hope that the noble Lord feels it possible not to press his amendment.

As regards Amendment No. 278A, I am slightly puzzled as the amendment seeks to delete Clause 66(3) which makes provision for consideration of accounts and reports by the parliament. Clearly we shall return to the point slightly later in our proceedings. I look forward to the explanation.

Amendment No. 278B, covers a number of issues which I shall now turn to. The first concerns the form of the accounts, and suggests that these should be directed by the Treasury. That undermines the principle of devolution. It is important to realise the nature of the parliament we are establishing. It will be a legislative body with law-making powers, and--crucially in this context--it will have a clearly defined and separate executive. In these circumstances, it is the right, indeed the duty, of the parliament to hold the executive to account. It follows that it, not some external source, should decide on the details of the accounting.

As I have said, we shall ensure that the parliament and executive are given the best possible advice in these matters. However, it will be up to the parliament to decide for itself on the basis of the advice it has on the final shape of the arrangements.

The second point relates to the accountability of other bodies. In this respect it is important to realise that the Bill leaves underlying legislation regarding the accounting and auditing of other bodies such as health service bodies, non-departmental public bodies and local authorities substantially in place. It may modify the auditing by transferring it to the Auditor General for Scotland, and provide for reports to be made to the

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Parliament. But the essentials are the same. The parliament may, of course, modify those provisions, but it need not do so. Government Amendment No. 278AA clarifies that it may do so even where the body deals with both reserved and devolved matters but is funded from the Scottish Consolidated Fund. That is there to cover that eventuality.

The third also proposes the designation of accounting officers, and the fourth arrangements for the appointment of the independent auditor by Her Majesty along with certain safeguards in relation to that person's removal from post. I must admit to being confused by the noble Lord's suggestion. As he will no doubt know, similar amendments were proposed by the right honourable Member of Haltemprice and Howden, Mr. Davis, in the other place. In response to the concerns the honourable Member expressed, my right honourable friend the Secretary of State for Scotland tabled amendments which make provision for these matters. These fulfil the commitment given to the right honourable Member for Haltemprice and Howden that we would consider ways to strengthen the independence of the head of the audit service and for the appointment of accounting officers. The new sections can be found at Clause 66(1)(e), which refers to the appointment of accounting officers, and at Clause 66(4) and (5) covering the matter of the appointment and removal of the Auditor General for Scotland by Her Majesty.

At the risk of inviting the noble Lord, Lord Mackay of Ardbrecknish, to return to the referendum debate and bring in various members of his family, I do not think that the issue of qualified majorities in relation to a referendum and the need for a qualified majority to ensure a degree of protection and independence to an officer such as the Auditor General are comparable. I ask the noble Lord to withdraw his amendment.

Lord Mackay of Ardbrecknish: Before my noble friend decides what to do with his amendment, I am grateful to the Minister for his explanations. We shall study his amendments when we see them as a unified part of the Bill. They go a little way, but not very far, towards satisfying some of the problems that were raised.

It is the raising of moneys that is the problem. It is not an independent parliament which raises its own money. The problem is that it will be the other place that will still be raising the money. The question mark is over the ability of the raiser of the money to check that the auditing and accounting procedures etc. are properly in place. So perhaps I should not have included the Treasury--perhaps it should have been the House of Commons, the Public Accounts Committee or even the Comptroller and Auditor-General, to make sure that there is, as it were, a trace between the £14 billion raised through supply and its actual spending.

I can understand the difficulty of creating that trace when we want to ensure that the parliament looks after itself responsibly. Equally, I do not think we can ignore the fact that the other place has to raise the money. That is the problem to which I return. Will the Minister say what role he envisages the Public Accounts Committee in the other place will have as regards the £14 billion

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or the Comptroller and Auditor General? Will they rely entirely on scrutiny in the Scottish parliament? If so, we must find a way for them to be satisfied that they can rely entirely on the procedures in the Scottish parliament. If the Minister can give me some assurances on that, I would be more than content. However, I can understand that it is a complicated area and he may prefer to write to me before we get to Report.

9.45 p.m.

Lord Sewel: I am grateful for the spirit in which the noble Lord offered those comments. I shall take advantage of his invitation to write to him on those matters and ascertain what progress can be made.

Baroness Carnegy of Lour: Before my noble friend Lord Balfour decides what to do with his amendment, I do not believe I heard the Minister say what I understood to be the case. The auditor general in Scotland is not the auditor of the Scots parliament. He is not its auditor; he is an independent person appointed by Her Majesty to do the job independently. That is why the two-thirds majority recommendation is set. Is that right?

Lord Sewel: I am afraid that Her Majesty, knowledgeable as she is, would not act independently to appoint the auditor general. She would act on the basis of advice received in Scotland. The protection is there and there are examples from the local authority background. I believe it was the old sanitary officer who could only be sacked subject to a complicated arrangement. It is simply to protect that particular official, to give him a degree of protection, to secure his independence. The parliament would have to cross a significant barrier in order to dismiss him. It could not be done on the basis of a slight political whim.

Baroness Carnegy of Lour: Does the parliament then have to approve the name of the auditor general? I have not seen that anywhere. The noble Lord said that it has to be on the advice of someone in Scotland. How does a person become appointed? The independence is quite important. I do not wish to hold up matters, but it seems to me that there must be a reason for the two-thirds majority.

Lord Sewel: The parliament appoints him. It is difficult to see who else would appoint him; it would be inappropriate for the executive to do so. It is the parliament that appoints him and, having once appointed him or her, it is necessary to give him a degree of protection.

The Earl of Balfour: I am glad I initiated the discussion because it has cleared my mind a great deal. I should be most grateful if the Minister could send me a copy of the letter on this point as well. Otherwise, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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