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Lord Richard: My Lords, my noble friend has, in making this Statement to the House, expressed the view that we must respect the decision of the Irish people. She is absolutely right: we must respect their decision. The Irish Government, as I understand it, have asked for time to consider what should be done. Can my noble friend help me to this extent? Do the Irish Government have any view as to whether the ratification processes in those other member states that have not yet ratified the treaty should be postponed, held up or completed; or have they—as I suppose they sensibly have—remained silent on this point? The issue, for us, is very simple. Having got this far with this Bill, is it seriously suggested that, because one member state has produced a view on the Bill that does not fit in with the views of other countries that have so far expressed views on it, the whole procedure of this House—and this Parliament—should be negated? It is a fanciful argument. To put it in the quasi-democratic terms of the noble Baroness, it is really a travesty of the position.

Baroness Ashton of Upholland: My Lords, the Irish Government have made it clear that they believe that other member states should continue with their processes. Indeed, as I have indicated, that is what I believe we should do. This is about parliamentary sovereignty and the rights of each member state. We have had many discussions, in the course of our debates, about the desire of noble Lords, on both sides of the House, to ensure that we take our own decisions. This is a decision for us to complete. It is for our Prime Minister to attend the European Council, being clear about what that decision is.

Lord Roper: My Lords, I hope that the noble and learned Lord, Lord Howe, with whom I have been debating these issues in this House and another place for something like 36 years, will accept that there have, at various times, been divisions in all political parties on the issue of referenda, but that my noble friends on these Benches have been fairly adamant in opposing referenda. Does the Minister accept that a certain amount of clarity is needed on these issues as soon as possible? While, in the Statement, she said that the meeting of the European Council on Thursday and Friday would not be able to take final decisions on the matter, it would be of great advantage if it could give some sort of timetable for the process by which the matter could be taken forward.

Baroness Ashton of Upholland: My Lords, I cannot pre-empt the discussions that will take place at the European Council. Suffice to say that my right honourable friend the Prime Minister will make a Statement, as always after a European Council meeting. If noble Lords wish to hear that Statement—which I sincerely hope noble Lords do—it will be repeated by me next week.

Lord Rowlands: My Lords, will my noble friend assure the House that the Government will oppose most strongly any attempts to introduce some of the provisions of the treaty through non-treaty means?

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Baroness Ashton of Upholland: My Lords, I will not pre-empt the discussions that will take place. I understand my noble friend’s point that European Union members need to respect what has happened with the Irish vote, and therefore respect the implications for the treaty. I am sure, however, that they will want to discuss some of the issues; for example, the effectiveness of meetings, and so on. We will have to see what they come back with. My noble friend is right: as the treaty will not become law, anything requiring law to make sure that it happens will not happen.

Lord Lawson of Blaby: My Lords, is it not the case that what has happened is much more important than just one country deciding to be out of line? It is the one country that has consulted its people. That has immense significance. If noble Lords do not realise this, they do not begin to get at the problem. Remarkably, the people of Ireland voted against the clearly expressed wishes of all the major political parties in Ireland. It was very similar in France. I was in France a few years ago for the referendum on what was virtually the same treaty. Again, the French people voted “no”. They, again, showed that they do not trust their leaders on this issue. There is a serious failure of trust. One way to begin to redeem that—and I know that this is a radical suggestion—would be for politicians around the Union to start telling people the truth. It is not being told at present.

I give one example and ask the noble Baroness to comment on it. We have heard a lot about the treaty being necessary as a consequence of enlargement. Nobody could have been more in favour of the enlargement of the European Union than me, and it has been an enormous success. The idea that the constitution, or the Lisbon treaty, contains nothing more than what is necessary to cope with the enlargement of the Union is manifest nonsense. There are fundamental provisions in that treaty which have nothing to do with enlargement. That is the sort of thing that people do not like. Is it not the case that, if people are not told the truth, the European adventure is going to come to much harder times than it has already been through?

Baroness Ashton of Upholland: My Lords, the noble Lord went through a series of different issues there. The first was to do with whether the leadership should do more to talk about what the European Union is all about, and what the benefits of enlargement are. I agree with the noble Lord about that. There is a job to be done; it is something that I have been taken to task for, not least by the Liberal Democrats, many times over the course of debates. We need to make sure that people understand Europe better. I agree with the noble Lord.

Then the noble Lord switched his argument to say that it is all about what is in the treaty, and that people do not realise what is hidden away. We have to assume that the Irish people, in making their decision, considered carefully what is in the treaty, and decided on that basis. It takes nothing away from the fact that in this country, in our parliamentary democracy, 1,300 legislators have had the opportunity to deliberate in great detail over what is in this treaty, and to reach a conclusion. Thus far, they have reached the conclusions.

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Baroness Royall of Blaisdon: My Lords, it has been agreed by the usual channels that immediately we have concluded the dinner break business we will recommence the Report stage of the Health and Social Care Bill. We will not adjourn at pleasure.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2008

7.17 pm

Lord Davies of Oldham rose to move, That the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2008 laid before the House on 8 May be approved.

The noble Lord said: My Lords, the draft order before us today is made under Section 63 of the Scotland Act. Section 63 allows for the transfer to Scottish Ministers— that is, members of the Scottish Executive—of functions that are exercisable,

This is commonly known as executive devolution. Since 1999, 15 orders have been made under this section. These orders demonstrate the Government’s pragmatic approach to devolution, and the flexibility contained within the Scotland Act. In certain circumstances there will be a case for functions to be exercised by the Scottish Ministers, where the subject matter remains the responsibility of this Parliament. Each case is examined on its merits to ensure that functions are exercised at the appropriate level.

The primary purpose of the order is to ensure compliance with a European Community directive, specifically the directive on integrated pollution prevention and control. This introduced a requirement for an integrated means of controlling emissions from industrial installations to air, water and land across Europe. The directive requires member states to ensure that energy is being used efficiently in the operation of certain industrial installations. Some aspects of that requirement fall within the subject matter of the Energy Act 1976, and so are reserved matters under the Scotland Act.

The functions being transferred under the order will enable Scottish Ministers to make regulations that allow the Scottish Environment Protection Agency to enforce this energy efficiency requirement. The bulk of the directive relates to devolved matters which are currently being enforced by the Scottish Environment Protection Agency on behalf of the Scottish Ministers. As such, it is only sensible that SEPA is able to enforce the energy efficiency requirements, alongside all the other elements of the directive, in Scotland. It would also be administratively cumbersome for businesses to deal with energy efficiency under separate regulations. This order will allow regulations to be made to cover all aspects of the directive by the Scottish Ministers.

In order to operate an industrial installation falling within the scope of the directive, operators must obtain a pollution prevention control permit covering the devolved aspects from the Scottish Environment Protection Agency. Under the order, Scottish Ministers will be able to give SEPA the legal authority needed to add energy efficiency as a prescriptive condition in the

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pollution prevention and control permit. Allowing Scottish Ministers to exercise this narrow function in no way alters the legislative competence of the Scottish Parliament.

I trust that the House will agree that the order is a sensible use of the powers in the Scotland Act and demonstrates the Government’s commitment to using these powers in the best interests of the people of Scotland. Improving energy efficiency can help businesses to make significant savings in the long term and is an opportunity for them to help tackle the challenges presented by climate change. I beg to move.

Moved, That the draft order laid before the House on 8 May be approved. 20th report from the Joint Committee on Statutory Instruments.—(Lord Davies of Oldham.)

The Duke of Montrose: My Lords, I thank the Minister for his explanation of the application of the order but I found it a little hard to follow. Certainly what he has said has helped me, but it was slightly complicated. The measure seems to focus largely on energy efficiency but to come under the integrated pollution prevention and control directive.

I notice, too, that the order’s application is directed at a Community obligation—presumably it is the EU Community—and that it states that the powers may be exercised concurrently by a Minister of the Crown. Again, if these activities involve Community obligations which apply at UK level and the Scottish Administration are found not to be fulfilling all the requirements, does the wording mean that if a Minister of the Crown wished to exercise powers he would have to go back to the Scottish Executive for something similar to a Sewel motion—the noble Lord, Lord Sewel is in his place—before proceeding? It is a question of how much power is devolved under this order and what the attitude of the Scottish Executive will be.

Can the Minister give a further indication of where the measures are likely to apply? He said this was to do with emissions from factory chimneys and so on. Is that the only area in which the measures would apply? Are emissions from factory chimneys concerned with energy efficiency? I would have thought that pollution measures were less concerned with worries about energy and more to do with the pollutants escaping through chimneys.

If the measure is to do with achieving energy efficiency, what will the effect be on the obligations put on energy supply companies and local authorities to finance energy efficiency measures in the domestic market? Will this mean that different criteria will be set up? Will this create more complications and separate obligations for companies operating north and south of the border?

Is the aim of the order to assist the effectiveness of the Scottish Administration in producing adequate compliance with the Climate Change Bill even though the Scottish Executive have full powers over anything to do with that? Again, the UK is tied under an EU obligation and obviously we should do anything that can be done to assist the Scottish Executive to fulfil their part of it, even though they are solely responsible for how much they wish to fulfil.

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Is there any urgency in this measure and, if so, what? If the order is to do with energy efficiency, it seems a little strange to put this through now, when we are in the early stages of the Energy Bill in this House. Even though at present there is not much in the Bill that the order might affect, there is a strong lobby asking for the Energy Bill to include a feed-in tariff for independent generators. On a domestic scale, this could be seen as a form of energy efficiency. Perhaps the measure is solely directed at factory-level emissions, but it would be helpful to have a little more clarification.

Lord Maclennan of Rogart: My Lords, this is not a controversial measure. Indeed, it follows a number of precedents under the Pollution Prevention and Control Act 1999—so much so that the Minister mentioned 15 other orders which have preceded it. That in itself might raise the question of whether there is a case to be considered by the Calman commission for adjusting the relationship between this Parliament and the Scottish Parliament—this Government and the Scottish Government—in respect of some of the matters governing energy.

While it is perfectly clear that energy efficiency is a reserved matter, it would not be sensible to divide the regulatory role within Scotland between SEPA and a United Kingdom regulatory authority. In light of the new authority of the integrated pollution prevention and control directive, this will remove a potential anomaly. I am conscious that if energy installations are potentially giving rise to pollution which the authorities have to consider in their regulatory role, it would be absurd to put them into the hands of another body south of the border in respect of one possible aspect of the installation.

I welcome what is being done and thank the Minister for the clarity of his exposition.

Lord Sewel: My Lords, I welcome the order. It is an example of the kind of pragmatic, sensible extension of executive devolution that the Scotland Act both envisaged and facilitated. In saying that, surely this underlines and demonstrates the wisdom of the constitutional settlement that was established by the Scotland Act. Perhaps we would all be better off trying to work within that framework rather than trying to bring in new constitutional arrangements.

Lord Davies of Oldham: My Lords, I am grateful to my noble friend Lord Sewel and the Liberal Democrat Front Bench for the clear way in which they have illustrated that which I had rendered opaque in my opening statement. I am grateful to both noble Lords for answering most of the central points of the noble Duke, the Duke of Montrose. He is right in his obvious point that the order mixes up an energy issue with an environment issue. A great deal of the European order, which is to be carried out by member states, will be carried out by the Scottish Environment Protection Agency, which has powers to act in certain respects. In relation to the Energy Act 1976, some aspects are reserved to this Parliament, but we have always adopted a pragmatic approach to the issue of such reserved

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powers. Most reserved powers are central to the debate we had on the limits of devolution, but it was always recognised that for administrative reasons there might be areas where some flexibility would be necessary and for additional matters to be devolved by order to enhance the capacity of the Scottish Administration to carry out their proper obligations.

7.30 pm

The Scottish Administration have a certain range of powers and obligations that their environment protection agency intends to carry out. However, the Administration want to include within them certain areas that are under the Energy Act 1976 and are reserved but will, in administrative terms, be much better if they are specifically devolved to the Scottish Ministers for administrative efficiency. They raise no major issues of principle and powers.

With the order, the Government are merely responding to a European order that, as the noble Duke, the Duke of Montrose, accurately identified, is predominantly concerned with the environment. We are seeking to devolve certain powers under the Energy Act that are otherwise reserved in order that the administrative operation can be more effective, from the point of view of both the Government of Scotland and business in Scotland, which will be responding to one agency regarding the obligations that it has to fulfil in controlling pollution. The noble Duke is right: this imposes an obligation upon industrial and commercial establishments with regard to effective control of their potential pollution. It does not have a great deal to do with the Climate Change Bill that has just gone through the House—except that I sometimes feel that everything is to do with climate change these days. The noble Duke was present often enough to know how wide-ranging that Bill was.

This is a European directive concerned with the control of pollution, and we are seeking to create clarity for Scottish Ministers and Scottish business about the enforcement processes and understanding of what is required to be done.

The Duke of Montrose: My Lords, just to show the depth of my misunderstanding, as far as I can see, if the order is concerned with factory emissions, trying to clean up factory emissions and prevent emissions of certain substances actually decreases the energy efficiency. Does this measure allow the Scottish Executive to say, “We’ll accept a certain decrease of efficiency so that we can say that we have improved pollution”?

Lord Davies of Oldham: My Lords, in so far as the Scottish Executive might be faced with that problem, so is the rest of the United Kingdom—and, as the directive applies across all European states, so are all those states. As the noble Duke knows only too well from his extensive work on the Climate Change Bill, there are costs to the control of pollution. If he is identifying that the order contains an element of potential detriment to Scottish business in terms of additional cost, I cannot deny that. However, if the United Kingdom Parliament retained the powers, the costs would still be borne. In fact, I fear they would be

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greater because there would be two administrative authorities dealing with the issue: the Scottish Ministers, who would have the powers that they exercise at present, and the British Government, with their powers under the Energy Act. The administrative costs would be greater as well, as would the complexity for the industries concerned. The noble Duke ought not to worry greatly about that.

The introduction of energy efficiency measures might have short-term costs—they are bound to because of the cost of the installation of the necessary processes—but they bring long-term benefits. We all recognise, as we did with the Climate Change Bill, that improvements in energy efficiency benefit those who introduce them, and that those who do so early stand to benefit over those who are a little tardy. We ought not to entertain too many anxieties on that score, although I understand entirely the noble Duke’s anxiety.

I am a little less certain about the rather broader issues that the noble Lord, Lord Maclennan, brought in about the question of the Calman commission and its consideration of devolution. It is due to produce an interim report by the end of the year. Whether we are in a position to prejudge what it might say about the 15 orders—16 if this one, which introduces that element of flexibility, is passed by both Houses—and whether it will be critical of that process or laudatory and encouraging of it, is not for me to say from the limited position I occupy at the Dispatch Box on this order. However, I assure the noble Lord, Lord Maclennan, who as ever is well informed on these matters, that it is an issue that the Calman commission will certainly be considering.

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