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Lord Burns: My Lords, I agree with noble Lords in relation to the importance of the G7 Statement in that it seeks both to deal with the challenges and the present situation and also to put in place arrangements for dealing with crisis management in the future. When faced with failures of banks in a domestic context, it has been widely agreed that we should seek to minimise the contribution of the taxpayer and to maximise the contribution of the private sector in the work-out. Can the Minister confirm the interpretation in today's Wall Street Journal that the new IMF facility is also expected to put a great deal of emphasis upon the role that the private sector will perform in problems and not simply leave them to the IMF, the World Bank and the taxpayers of the individual countries?

Lord McIntosh of Haringey: My Lords, I can certainly confirm that. In fact, there are three strands to anything that we do for individual countries. One will be the IMF strand, which is an international contribution. The second, referred to in the Statement,

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is the possibility of bilateral contractual assistance. The third, as the noble Lord, Lord Burns, rightly says, will be the contribution which can be made by the private sector.

Lord Sudeley: My Lords, to what extent does the Minister recognise the problem of fractional reserve banking in this situation whereby banks lend out more than they have in the proportion of 10:1 of the reality? That situation would not exist if, as happened under the old thinking, banks were forbidden to lend money without taking a share of the risk.

Lord McIntosh of Haringey: My Lords, the noble Lord is surprisingly modest. Many hedge funds, such as long-term capital management, lend out far more than a multiple of 10 of their reserves. It is a very real problem, which is referred to in detail in the Statement. We have to balance the risks, as do the investors concerned, of lending, investing or gambling, if you like, beyond the available reserves, against the undoubted benefits to the global economy of wider credit which have arisen over recent decades. It is a difficult balance to sustain.

Lord Grenfell: My Lords, first, does my noble friend agree that although one welcomes the idea of precautionary credit lines, that idea is still far from being properly thought through? What happens if a country is accorded a credit line on the strength of good policy and those policies deteriorate after the credit line has been started? That would put the IMF in an extraordinarily difficult situation. I would not like to be in its place and to have to decide whether or not to withdraw the line of credit.

Secondly, I am not sure whether I heard an answer to the question from the noble Lord, Lord Higgins, about the role of the World Bank and the new facility. I thought that we were trying to get away from the idea of having the World Bank issue liquidity and were trying to get it to maintain its position as a development financing agency. There seems to have been a change of heart.

Lord McIntosh of Haringey: My Lords, perhaps I may answer my noble friend's second question first. If I gave any suggestion in an answer that we were proposing a change in the role of the World Bank, I did so mistakenly. I do not think that I did so. There have been questions on that point, but I was not conscious of indicating that we expected the World Bank to develop its role in that direction. I think that I gave the same answer when we debated the European Central Bank.

With regard to lines of credit, I do not underestimate the difficulty of dealing with a country which changes its policies once a line of credit is available. The very fact that lines of credit will be followed up by further financing and that that further financing is contingent on continuing with policies which will have to be satisfactory to the IMF is some satisfaction against the kind of dangers that my noble friend fears.

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Scotland Bill

5.2 p.m.

Consideration of amendments on Report resumed on Clause 90.

[Amendment No. 174A not moved.]

Lord McCluskey moved Amendment No.175:

Page 42, line 35, leave out from ("ground") to end of line 38.

The noble and learned Lord said: My Lords, in moving Amendment No. 175, I should like to speak also to Amendments Nos. 176 and 177. They are all interconnected. We last discussed these matters at 1.20 in the morning. This afternoon we are debating them in the wake of discussing other matters of great economic importance.

All these amendments relate to the removal of the most senior judges in Scotland (once this Act comes into force). Again, I emphasise that my amendments are concerned to try to continue to secure the independence of the judiciary, especially its independence from the new executive, including the First Minister who, under the provisions of the Bill, is, in other matters, to have the sole power of appointment.

The reasons why these amendments are important have already been explained to the House both at Second Reading and in Committee. They have also been explained to the Government in correspondence. Indeed, I sent the Lord Advocate a copy of what I called a "briefing note", which I wrote just in case I was unable to be present when the matter came up for discussion today. The reasons underlying the amendments are well understood.

With regard to the removal of judges, when the Lord Advocate replied to the debate in Committee, he suggested that it was "inconceivable" that the First Minister would seek to remove a judge other than upon sound advice. With the greatest respect, that is somewhat circular and extremely naive. It simply begs the question: who decides whether the advice is sound? The answer is that the First Minister decides whether the advice is sound. It is naive to suppose that he is somehow inhibited by receipt of advice in relation to the matter.

The Lord Advocate also then said that it was "unimaginable" that the First Minister would seek the removal of a judge without taking certain steps, although the steps were not prescribed in the Act. He went on to use the expression "beyond belief". Again, those views fly in the face of all experience. Leaving aside the numerous countries where the independence of the judiciary is a sick joke--and there are many of those--there have been recent and profoundly disturbing attempts to interfere with the independence of judges in mature democracies, including the United States and parts of Canada. Concerns have also been expressed about Australia. We would be totally naive to suppose that our new politicians in Scotland will be immune to such temptations--not least because criticisms of judges' decisions are now the meat and drink of our daily newspapers, and populist politicians

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of whom we have always had our fair share in Scotland are likely to start calling for the removal of judges whose decisions have been criticised in the press, however unfounded the criticisms and however distorted the reporting of the decisions for which the judges have been responsible.

There is a great basis of agreement here and I should like to spell it out as briefly as I can. First, judges who are unfit for office must be able to be removed.

Secondly, there must be some statutory machinery to enable a judge to be removed if, after his unfitness for office has been established, he declines to resign--or even, indeed, if it is considered appropriate that he should be formally sacked, which might be entirely appropriate if he has been found guilty of a serious crime or of an offence involving moral turpitude.

Thirdly, we are all agreed that it is entirely appropriate that there must be formal machinery for the removal and that should be parliamentary. Therefore, the Scottish parliament should have powers such as are contained in subsections (6), (7) and (8) of Clause 90.

Fourthly, we are surely all agreed that the decision as to whether or not a judge of the Court of Session is unfit for office is not one that can be taken by the political executive. We must be agreed about that because it is fundamental to the independence of the judiciary. The Government agree, as can be seen from the Official Report when, in Committee, the Lord Advocate made his position quite plain. He said that the Bill contains minimum requirements, and,

    "The Scottish parliament can and should build on these".--[Official Report, 6/10/98; col. 422.]
In other words, the Lord Advocate envisaged that something more must be done. We must separate the responsibility for deciding upon fitness and unfitness from the formal mechanism for removal. It follows that the decision as to fitness or unfitness must be taken by a body which is independent of the political executive.

We in the United Kingdom are bound by certain obligations which require that the body must be a tribunal which is independent and impartial and is established by law. Those are all matters that are plain.

From that basis of agreement, I believe that it follows inevitably that when we are enacting, as we are, a new constitutional settlement, which devolves to an entirely new creation--the Scottish executive and the Scottish parliament--the overall responsibility for the judiciary, it must establish by law the necessary machinery for ensuring that no judge can be removed from office unless his unfitness, if it is in dispute, has been established to the satisfaction of a properly constituted independent tribunal.

The Bill does not do that. I acknowledge that it deals in a satisfactory way with the machinery for formal removal, but it does not create any machinery at all for determining fitness or unfitness before the First Minister places before the parliament a Motion seeking the judge's removal. The Bill, as drafted, requires him only to specify the particular ground of unfitness. It does not require him to prove it or to refer the matter for proof or examination by any independent body.

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These questions as to the fitness or unfitness of judges are not easy questions, as the recent case involving Sheriff Stewart showed. That case was before your Lordships' House, ultimately, following a petition for judicial review. It was decided in this House on 22nd January. The noble and learned Lord, Lord Jauncey of Tullichettle, who, I believe, is with us today, delivered the leading speech in relation to that case. It sets forth the history of legislation in relation to the removal of sheriffs, who are not the most senior judges in Scotland. But it has been impossible to remove a sheriff since 1877 in Scotland without an independent inquiry by senior judges into his fitness for office.

In the context of that provision, which is Section 12 of the Sheriff Courts (Scotland) Act 1971, the noble and learned Lord, Lord Hutton, added to the leading speech. He said,

    "The appellant"--
that was Sheriff Stewart--

    "also submitted that a power to remove a sheriff from office by reason of inability to perform his judicial functions arising from a defect of character or personality endangered the independence of the judiciary and would give rise to a risk that a judge might be removed from office because there was disapproval of the way in which he decided the cases coming before him".
His Lordship continued,

    "I do not accept that submission and am of opinion that the independence of the judiciary is fully protected by the requirement in Section 12 that the two most senior judges in Scotland, the Lord President and the Lord Justice Clerk, must first undertake an investigation into the fitness for office of the sheriff and then report that he is unfit for office before the Secretary of State can remove the sheriff from office".

That has been the position for 120 years. Even sheriffs cannot be removed without an independent investigation by the senior judges.

The principle behind these amendments has the support of, among others, the Lord President of the Court of Session and all the Scottish judges. The Lord President wrote on behalf of the judges to the Secretary of State on 4th June,

    "We have ... concluded that it is necessary to build into the Clause the necessary constitutional safeguard of an appropriate inquiry body since otherwise the Bill will not provide the protection of judicial independence, which is necessary".
It was proposed that there should be Lords of Appeal or retired Senators of the College of Justice to constitute the tribunal.

That has the support of the Faculty of Advocates. The submission made by the Faculty of Advocates to the Government said that:

    "the tenure of judges should remain such that they cannot be removed from office other than on the basis of fitness or misconduct, and that this should be expressly stated in the legislation".
The faculty went on to say that it was of the view that,

    "it is necessary to have some means of determining the fitness of judges that is independent of the political process".
A provision was then sought on the lines of Section 12 of the Sheriff Courts (Scotland) Act 1971.

The Law Society of Scotland, in a letter to me dated 6th October 1988, says that it also supports the principle behind this Bill. It refers to the Latimer House

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guidelines. I need not refer to them in great detail but, essentially, following a meeting in Harare, the Commonwealth heads of government are considering, and will be asked to adopt, proposals drafted at Latimer House in June of this year to the effect that a judge who was at

    "risk of removal ... must have the right to be fully informed of the charges; to be represented at a hearing, to make a full defence and to be judged by an independent and impartial tribunal".
These proposals are to be presented to the next meeting of the Commonwealth heads of government.

It is obvious that one of the persons not attending such a meeting will be the First Minister of the new Scottish executive. The Prime Minister of the United Kingdom will attend as a head of government. Presumably, he will have to undertake to provide for some such mechanism. So it is important that that should be done now.

I also have support expressed to me in a letter from Lord Murray, who was the Lord Advocate when the Scotland Bill was before this House in 1978. He strongly supports the position I and the Faculty of Advocates have taken. I would also refer your Lordships to Article 6 of the European Convention on Human Rights, which is incorporated into our own Human Rights Bill. That provides,

    "In the determination of his civil rights and obligation or of any criminal charges against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".

A good deal has been written about the meaning of those words in the European convention. "Independent" has been declared to be independent of the executive and also of the parties. Professor Harris writes in the leading work, Law of the European Convention on Human Rights,

    "Clearly, a member of the Executive is not 'independent'".
He goes on to write about the meaning of the words "established by law" and says the intention is that with a view to ensuring its independence,

    "the judicial organisation in a democratic society must not depend on the discretion of the Executive but that it should be regulated by law emanating from parliament".
There is reference to the same concept in the European case of Bryan v. The United Kingdom.

It has been suggested--and it may be suggested again today--that we should simply leave matters to the new executive and to the Scottish parliament to enact appropriate legislation to provide the machinery rendered necessary by Article 6 and by the Latimer House principles. That was suggested by the noble and learned Lord the Lord Advocate at 2 a.m. during the Committee stage. I am not quite sure that he meant what he then said. There are problems about it. They are these.

First, there would be no machinery at all for determining disputed questions of unfitness between the time that the executive came into existence and the Act took effect and enactment by the Scottish parliament of any further necessary legislation. I do not believe that the United Kingdom Government would readily fill the gap in relation to what is a devolved matter.

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Everyone agrees that any such tribunal should consist of, or include, judges who are not too close to the person who is to be investigated. So my Amendment No. 177 faces up to that problem by giving the First Minister the right to select for membership of the tribunal those who are listed in the proposed new subsection (9); namely Lords of Appeal, Peers of Parliament who hold high judicial office, including retired judges or other suitably qualified members of the Judicial Committee of the Privy Council. I doubt very much whether the Scottish executive could confer this right on the First Minister, so it has to be done by this Parliament and not by the devolved parliament.

I have mentioned attacks on the independence of the judiciary. It can take many forms. In Canada there is considerable concern among judges and lawyers generally at attempts by politicians to put pressure on judges by reducing their salaries or cutting their pension entitlement. The Government here have wisely decided to avoid any risk of that happening in the United Kingdom, including Scotland, under the new constitutional dispensation. So Schedule 5 on page 85 of the present Bill says,

    "Determination of the remuneration of-- (a) judges of the Court of Session, (b) sheriffs principal and sheriffs, (c) members of the Lands Tribunal for Scotland, and (d) the Chairman of the Scottish Land Court".
are to be reserved matters. So it seems odd that the devolved administration is not to be entrusted with judicial remuneration, including pensions, but are to be given the power of removal of all those judges without further supervision.

The effect of the Bill is to preserve Section 12. The result is that a sheriff cannot be dismissed from office without an independent inquiry, but a Court of Session judge or the chairman of the Land Court can be so removed. As the noble and learned Lord, Lord Hope of Craighead, pointed out at Committee stage,

    "The hostages to fortune which are created by allowing procedures to evolve [strictly] by experience are very great [indeed].--[Official Report, 6/10/98; col. 422.]
That is particularly so in this field where it is to be hoped that experience will continue to be as limited in the future as it has been in the past.

There is one other point that I want to make about the Government's response on an earlier occasion to the effect that the Scottish executive or parliament are to be trusted. That is not a proposition that I want to challenge. But, oddly enough, the Government themselves do not exhibit any such trust because Clause 90(7)(b) provides that the First Minister cannot make a recommendation for the removal of a judge unless the number of votes in favour of the motion,

    "is not less than two-thirds of the total number of seats for members of the Parliament".
That is a unique provision in this Bill. It is the only one in which the Government say to the new parliament, "You cannot do what you want to do. You can do that only if you have a two-thirds majority of those who have the right to vote". That is an entrenched provision. The logic of it is that the parliament is not being trusted to behave in a proper and ordinary fashion. I can

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understand why that provision came in. It is the one that is referred to in my Amendment No. 175. I cannot see any reason at all why there should not be even a non-entrenched mechanism in the Bill which could be amended in the light of experience, which would enable judges' fitness or unfitness to be adjudicated upon by an independent and impartial tribunal.

My Amendment No. 175 suggests the removal of the provision which I have just quoted about the two-thirds majority for the removal of a judge. My reason for seeking the deletion of that provision is this. If we accept that the adjudication as to unfitness is to be carried out by an independent and impartial tribunal, then the role of parliament is a purely formal one of rubber-stamping the decision that the person to be removed is unfit. He is not entitled in these circumstances to the protection of a heavily weighted majority such as the clause provides for.

In all the circumstances, I would submit that the Government have simply got this wrong. It is a matter of great importance. I cannot see any difficulty in accepting the proposals which I make or some version of them which the Government themselves could redraft. I would not propose to invite the House to accept Amendment No. 175. If the Government indicate that they are willing to accept the principle behind Amendments Nos. 176 and 177, I should be happy to withdraw Amendment No. 175. Otherwise, I shall ask your Lordships in due course to divide in relation to Amendment No. 176. I beg to move.

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