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Amendment 51

Moved by Lord Foulkes of Cumnock

51: Clause 27, page 19, line 43, at end insert-

"( ) Before commencing discussions with representatives of foreign governments or inter-governmental organisations, Scottish Ministers are required to obtain consent to the discussions from a Minister of the Crown."

Lord Foulkes of Cumnock: My Lords, we suddenly seemed to be making rapid progress there, so we should now take a little time to contemplate an interesting issue before we get on to the important matters of finance that I am glad to see the noble Lord, Lord Sassoon, is here to deal with. Perhaps I may give him advance notice that under one particular item, I might feel it necessary to raise the issue of whether or not the problems that Rangers Football Club currently faces would have been affected in any way if these changes to the law in Scotland had been implemented by now. That is a matter for later in our discussions, but I thought it might be helpful if I intimated that to him now.

Some of my more fainthearted friends, whom I will not name, advised me to withdraw the amendment; they thought it went a little too far. I must confess that it is not the most felicitous of amendments that I have drafted during the course of this Committee stage. My friends and colleagues, anxious for my well-being, warned me against a possible cybernat offensive if I moved the amendment. Perhaps I may tell them that that offensive has already taken place just by the very fact of tabling the amendment. I must say that if the provisions for ageism had already been brought in by the Government opposite-and they have not yet been implemented-some of the remarks could have been actionable. That is not to mention some of the other things that were said.

Perhaps I may therefore take this opportunity to remind people outwith Parliament of the purpose of the Committee stage of a Bill, which, as I understand it, is for the tabling of amendments-not necessarily to move them and vote on them-to provide debates around particular issues. We have had probing amendments, amendments put forward for debate and withdrawn, and amendments that have not been moved. That is the right thing that should happen.

I want to make three preliminary points on this amendment. I have tabled other amendments, which I intend to withdraw, putting "Devolved" in front of "Government" in every part of the Bill-the "Devolved Government". The reason I tabled those amendments was to have an opportunity to debate the difference

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between devolution and independence-there is a complete difference. Some people try to conflate them-the nationalists, Salmond in particular, try to conflate it for their political purposes-but there is a major, substantive difference, a complete difference. It does not matter how much devolution we have, we still remain part of the United Kingdom. Sovereignty is still with the United Kingdom. Once Scotland makes the crucial decision to become independent, it is irrevocable. We would no longer be part of the United Kingdom. That is a major change, and we need to keep reminding people beyond this Chamber of that.

That is my first preliminary point. The second is that we need to get our courage. I am very glad to have seen the recent launch, reported in the Scotsman today, of the rainbow coalition between the different parties in Scotland. It is about time that the unionists, the federalists and the devolutionists got together. Incidentally, I should like to hear more from the federalists-traditionally, the Liberal Democrats-about the federal solution, which, as I have said before, is, in my view, the long-term stable solution for the constitution of the United Kingdom.

I am slightly fed up with the accusation from some of the nationalists that it is somehow wrong if we join forces with the Liberal Democrats and the Conservatives in a joint campaign-the phrase "the toxic Tories" has been used deliberately. There is a smear campaign to try to divide us; that is the purpose. I disagree with the Tories on 99 per cent of what they do, but even a Tory is not wrong always. They can be right from time to time, and when they are right, we should embrace them, work with them and encompass them in our activity.

Lord Forsyth of Drumlean: My Lords, is not new Labour a monument to that principle?

Lord Foulkes of Cumnock: I did not hear that; my noble friend Lord Maxton was talking.

Lord Forsyth of Drumlean: I said: is not new Labour a monument to that principle?

Lord Foulkes of Cumnock: It is a monument? That is a good question for a start. That has implications in itself. As my former Secretary of State will recall, I was always asked if I was new Labour or old Labour and I used to say, "slightly shop-soiled Labour".

Salmond and the nationalists relied on Annabel Goldie and her Tory group for support for their budget every year for the four years when I was in the Scottish Parliament. They did not see it as wrong to have that kind of coalition. Let us work together where we agree with each other and let us not to be ashamed of it.

5.30 pm

My third preliminary point is: do not be afraid of the cybernats and do not be afraid of Salmond. I keep hearing from people south of the border who have suddenly discovered this man Salmond, this great Messiah. That trend is at its peak at the moment and he is showered with accolades. Ironically, he was nominated

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the United Kingdom politician of the year. He seemed very proud of that; I do not think he saw the irony in it. He has been showered with awards, by even Mr Murdoch, who is one of his new-found friends, his latest best friend. I have known him a long time-not Murdoch, Salmond. Some people here, especially my noble and learned friend Lord Boyd of Duncansby and the noble and learned Lord, Lord Wallace, will recall that when Donald Dewar was First Minister and Alex Salmond was leader of the Opposition, he did not land a punch on Donald Dewar. Donald Dewar was head and shoulders above him. Salmond was fighting and getting nowhere, drowning not waving. Then he withdrew from Scotland and left Swinney to tackle Donald Dewar; he returned to Scotland only when, sadly for all of us, Donald Dewar died, and Salmond saw the opportunity again.

Through a combination of guile, luck, ability and cunning, he has been able to get where he is today. But do not be afraid of him. If we believe, as I think we do, that our cause is right, we can stand up to him and defeat him. He is already showing signs of weakness. Even Donald Trump has changed his view about Alex Salmond. It is clear now that Salmond's judgment in urging Fred Goodwin to take over ABN Amro was less than clever. On his lack of action on sectarianism in not following up the initiative of my noble friend Lord McConnell but letting it drift and then suddenly discovering that it was a problem, he has been found out. But, above all, he has been found out when the spotlight of the real issues of independence has been focused on him. He has melted under the heat of that spotlight on whether Scotland would keep the pound and the Bank of England would have its role or whether it would join the euro, and he has been shown to be wanting on EU membership, on national debt and a whole range of things. So we are ready for the fight. I commend the Secretary of State for Scotland on having said that the referendum could and should be held sooner rather than later. Let us take that fight to Alex Salmond.

Now, as far as the amendment is concerned-[Laughter.]

Lord Sewel: Ten minutes!

Lord Foulkes of Cumnock: They were my preliminary remarks.

Lord Lyell: Before the noble Lord moves on, would he suggest that the First Minister might take over the Scottish rugby team as coach?

Lord Foulkes of Cumnock: Well, he tried to get on television to talk about rugby, purporting to be an expert on it, and blamed the BBC for withdrawing his invitation. In fact, the BBC did not invite him; he invited himself and then the BBC said, "We don't have a place for you, we're afraid, because we've got people who actually know about rugby to talk about it". It would be better to have someone who knows about rugby to manage the Scotland rugby team, but I have no doubt that the First Minister would think that he could do it.

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I return to the amendment. When I was a Minister in the Department for International Development, I travelled the world, inevitably. It was part of my responsibility to go to the poorer countries of the world to see the problems and what we could do about them.

Lord Martin of Springburn: Just for the sake of facts, I should point out that my noble friend travelled the world before he became a Minister. [Laughter.]

Lord Maxton: That is a bit unfair.

Lord Foulkes of Cumnock: I thought that the noble Lord, Lord Martin, was a friend of mine-I shall see him afterwards. But he is absolutely right. That was because I was an opposition spokesman on foreign affairs, defence and international development for 13 years.

It is important for the purpose of the argument and for this amendment to deal with when I was a Minister representing Her Majesty's Government. Even then, my private secretary had to submit proposals for travel. It was co-ordinated by the Foreign Office and there was some logic in that. But for three Ministers from different departments suddenly to turn up in the same capital at the same time, with each not knowing that the other would be there, could cause chaos and make us look inefficient and stupid. There needs to be some co-ordination; it is a practical matter.

Of course, the First Minister thinks that he is too grand. He thinks that he can do whatever he likes because he wants to pretend that Scotland is effectively independent at the moment and, therefore, there is no accountability to the United Kingdom Government for anything. At the very least, he should consult the Foreign Office before he and other Ministers go overseas to make sure that there is not a clash.

Lord Maclennan of Rogart: I am grateful to my "noble friend" for giving way. Does he think that if his amendment had been in place it might have beneficially affected the understanding of the al-Megrahi case?

Lord Foulkes of Cumnock: That is a very interesting point. I had not thought about it. It needs some time to be thought about. Perhaps, by the time we get to the end of this debate, my former honourable friend could answer his own question, because he is a barrister and has more understanding and knowledge of these matters than me.

At the very least, I accept the suggestion of my noble friend Lord Browne-I shall name him now-that perhaps my amendment has gone a little too far by proposing that Scottish Ministers should get the approval of the UK Government, but at least they should consult them. At least, the Foreign Office should know when Scottish Ministers go overseas and give them help. After all, I found that the Foreign Office could give even Ministers in the Department for International Development advice, guidance and help in relation to our travel overseas.

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I worry about the pretence of independence. It was the noble Lord, Lord Steel of Aikwood, who said that Scotland is in danger of sleepwalking into separation and he is absolutely right. We in this House get attacked as old fogeys-all this ageism-and as being non-elected. It does not matter that, for 40 years, I was an elected member either as a councillor, an MP or an MSP-they have forgotten all about that-but now, in here, we have no right, according to some of the cybernats, to talk about it. Perhaps we do not have a right in that sense, but we have a responsibility to warn people about sleepwalking into separation. The pretence that there is no difference between devolution and independence, that we are effectively already there and just have to take that little further step, is not helpful.

I urge us all in this argument-I have used just one example-to be bold. We should not be defensive about this union. This has been the most successful political and economic union anywhere in the world and we should be proud of it.

Lady Saltoun of Abernethy: My Lords, the amendment of noble Lord, Lord Foulkes, says,

Should he not be specific about which Minister? Would it not be better to say the Secretary of State for Foreign Affairs?

Lord Foulkes of Cumnock: The noble Lady, Lady Saltoun of Abernethy, is absolutely right. The amendment was written rather hastily. It could benefit from that redrafting and it could benefit from the redrafting that my noble friend Lord Browne suggested to me privately-it is not private anymore, I know. If we were to discuss it further on Report and I was to table it again, it would certainly incorporate changes of that kind.

Lord Maxton: My Lords, perhaps I may marginally disagree with my noble friend's answer to the noble Lady. There may very well be different Ministers for different occasions. If, for instance, we were dealing with fishing and the Scottish Minister wanted to travel as part of a delegation or whatever, it might be different. It would not necessarily be the Foreign Office he would be dealing with; it might be the Minister for Agriculture and Fisheries. Therefore, my noble friend may very well be right in proposing the words "Minister of the Crown", because it could depend on which function was being undertaken.

Baroness Liddell of Coatdyke: My Lords, it was not my intention to intervene on this amendment but I could not quite resist it. On a couple of occasions this afternoon I have felt great sympathy for my namesake, Alice Liddell, who wandered through the looking glass, particularly when we were discussing the variation in speed limits on border roads. However, I began to feel that too when listening to some of the remarks of my noble friend Lord Foulkes-not least his point about Rangers Football Club. I think I shall try to make a point of being elsewhere when we come to that bit of the debate.

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However, there is a serious point behind what my noble friend has alluded to in his amendment, although I am glad that he has drawn attention to the fact that its wording might not be as effective as it might be. Despite the enormous elephant in the room of the debate in Scotland about the future of secession or separation, we have to remember that this legislation is about the operation of Scotland within a devolved arrangement-in other words, within the United Kingdom. There is an important point about the consistency of foreign policy and how that foreign policy is articulated in other parts of the world.

I have been at the receiving end of Scottish Ministers popping up in other parts of the world and, frankly, it is a matter of walking on eggs. There are some very serious issues confronting us at the moment, not least in relation to Syria. We have just seen the difficulties in Libya and we also have to bear in mind that it was Mr Salmond who called the intervention in Kosovo an act of "unpardonable folly". That kind of mixed message on British foreign policy does not help anyone, particularly those who are in international delegations seeking to convince the world to go in a particular direction. It would be a sign of the maturity of the devolved settlement if the Scottish Government were prepared to enter into a mature debate with the Foreign Office over areas where there are issues of interest in relation to foreign affairs. The Scottish Government, particularly under my noble friend Lord McConnell, have done a considerable amount in Malawi. That is an excellent example of intervention, particularly given Scotland's history in relation to Malawi and the very strong ties between Scotland-particularly the University of Glasgow-and Malawi. These initiatives are of great value, but freelance activity is not helpful to the dissemination of British foreign policy.

I am hoping from the tenor of what my noble friend has said that it is his intention to withdraw the amendment. However, I do not think that the sentiment should be completely lost that there is a sound reason for a degree of co-ordination and, indeed, for a co-ordinated foreign policy. Every one of us in this place and in the House of Commons who travels abroad representing Parliament has a self-denying ordinance not to criticise our Government or our country. It would be quite helpful if some of the devolved Administrations within this country also acknowledged that convention.

5.45 pm

Lord Martin of Springburn: I say to the noble Lord, Lord Foulkes, that I was only kidding, so I hope he does not go after me following this debate. I remember when we, including the noble Lord, Lord Maxton, entered the other place when we were freshly elected. When the rest of us were having difficulty finding our way around this big Palace of Westminster with all its nooks and crannies, the noble Lord managed to get to the Falkland Islands at just about the same time as the commandos. Therefore, travel has been part of his parliamentary life.

I think that we have to be careful. I do not canvass any more because I am a Cross-Bencher but I am already hearing from reliable sources that people on the doorstep are getting concerned about what Alex Salmond is saying he wants for Scotland. For example,

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Faslane is in my previous constituency, in which I was mainly brought up. There are a lot of employees at Faslane from Springburn, the Robroyston area and Bishopbriggs, where I live at the moment, and they are expressing concern about the possible closure of that facility. Therefore, men and women are talking about the First Minister's grand ideas. However, the worst thing we can do is to attack the First Minister or anyone else on a personal basis. I agree with Johann Lamont, who said, "I will share a platform with anyone who is willing to fight for the United Kingdom and support the Scottish Parliament". That is the road that we should be going down.

I am glad that this amendment is going to be withdrawn by the noble Lord, Lord Foulkes. We would be kidding ourselves if we expected the First Minister and the senior members of the Executive in a Scottish Parliament, who have certain rights that the United Kingdom Parliament gave them, to go almost cap in hand to a Minister of the Crown to get permission-I think the term is "consent" but the meaning is the same-to go abroad and speak to officials. We have to be realistic. We have all-party groups. There has been concern in both Houses that four or five people can gather under one roof and say that they are an all-party group. We have all-party groups covering subjects such as horse-racing, dog-racing and many other things, but many of them are linked with a country. That reminds me that I had better declare an interest as a member of the British-Italian group-something of which I am proud. It would be strange if the First Minister of Scotland had to get consent from a Minister of the Crown, yet the All-Party British-Italian Parliamentary Group could send a delegation to Italy or go to see the ambassador, who is the official representative of Italy's Government in London.

It should also be remembered that there have been devolved Parliaments in Canada for many years. In fact, the constitution of Canada was held by both Houses only recently. However, no one would deny the right of the representatives of the Canadian provincial Governments-if that is the right description-or indeed the Speakers from those Governments to visit their opposite numbers here without going to Ottawa and saying to the Prime Minister or the appropriate Minister of the Crown, "We want to go to the United Kingdom". They would not dream of doing that. The same would apply to Australia.

Therefore, although many of us disagree with what the First Minister is saying, there is a danger of us saying to Scottish Ministers that we are putting shackles on them before they can go anywhere abroad, yet any of our number in this House or the other House, or jointly, can go without asking anyone's permission. There was a joke about a Member of Parliament who had a habit of travelling, and when the students were getting arrested in Tiananmen Square in front of the tanks, so did that Member of Parliament. His constituents did not say, "What was he doing in Tiananmen Square? He should have been here in Liverpool or in Westminster". I make that point not to attack that Member of Parliament, who is dead-God rest his soul.

I make the point that if one person in this House or another place can take it upon himself to go to a country abroad and no one would say a word about

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them doing so, why are we going to put that pressure on the properly elected representatives in the Scottish Parliament? I hear parliamentarians saying that the Executive is too powerful. It rolls off the tongue. I know the amendment is going to be dropped, but if we bear in mind that this amendment belongs to the House, why is the noble Lord, Lord Foulkes, saying he is going to drop it? It is the property of this House. If we pass this amendment, we would be giving an awesome power to Ministers of the Crown, who we often say have too much power as it is.

Lord Maclennan of Rogart: I am very grateful to the noble Lord for moving this amendment because it has enabled there to be a discussion about the potential role of devolved government in the protection of interests in overseas discussions. I very much agree with what the noble Baroness, Lady Liddell of Coatdyke, said. I cannot believe that it is helpful, in seeking agreement across borders on issues that might affect us, for British representatives to be unable to speak with one voice at the official negotiating level.

The proper time for those discussions is prior to the engagement in the international debate. It is not meant to put a ban on representation by individuals who have some democratic authority. The amendment may well be defective in that respect, as the noble Lord has recognised. However, let us consider the situation in reverse. If we, as a British Government, were under the impression that we had to deal not just with the Spanish Government on fisheries policy but with a Catalan Government as well, it would hugely complicate our negotiations. I am bound to say that so long as the nation state remains, we should be dealing internationally and not with devolved Governments.

The representation of points of view is quite a different matter. It would have been helpful-to answer the question that was thrown back at me-if there had been a full dialogue between the Scottish Government and the United Kingdom Government about the al-Megrahi case. I am not sure that there was not, in fact, such a dialogue; it as remained rather obscure, but it is certainly important to Britain's position vis-à-vis some of our allies that we were not thought to be in complete ignorance of the Scottish Government's position. It led to some deterioration of understanding between the United States and the United Kingdom that there was no absolute clarity about who was essentially to take responsibility for the release and return of al-Megrahi to his homeland.

Lord Morgan: I will make one or two remarks as a non-Scottish person, although the purpose of this amendment in part appears to be to give the Scottish National Party a good kicking. That is a very desirable objective in many ways. Coming from Wales, I am very glad that we do not have a party with the bitter Anglophobia that is frequently revealed by the Scottish National Party. In Wales, we concentrate on other things, such as beating other countries at rugby and speaking our own language.

In wishing to criticise the Scottish National Party, I am very much in sympathy with what the noble Lord, Lord Maclennan, has just said. We must be

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careful not to give the impression of imposing a uniform pattern on the ongoing process of devolution. It is about difference; it is about differentiation; it is about pluralism-and it is very difficult to impose any kind of check on that. I recall that Mr Gladstone famously said, "You cannot put a stop to the onward march of a nation". That can apply to nations within the British Isles as well.

The question was raised by various noble Lords about what kind of foreign representations we were proposing to monitor or have Foreign Office checks on. There are already, of course, as other noble Lords have said, enormous ranges of foreign contacts, particularly with the European Union. It would be very difficult to distinguish between foreign contacts that needed control from Big Brother at Westminster and other kinds of contact where that was not appropriate. The real point is that there is a kind of mistaken assumption that a devolved Scottish Government-whether it be devo-max or even going beyond that, if that actually took effect-would somehow impinge on the sovereignty of the British Parliament.

The word "sovereignty" was used by my noble friend. Views of sovereignty have moved on a great deal since it was brandished by Dicey at the end of the 19th century as a kind of inalienable set of powers that, if they were diminished, would inevitably disappear. There are all sorts of ways in which the sovereignty of this Parliament is fundamentally affected and transformed. At the present time, human rights legislation has done that, our contact with Europe has done that, and devolution has certainly done that. In the famous phrase, this is a process and not an ongoing policy that comes to an end.

If you look at the concept of sovereignty within the context of some other countries, you have a very different view of sovereignty. It emerges as a much more flexible concept; it is not like a cake that you take a piece out of and that piece never reappears. Look at the länder of Germany, which pursue an enormous range of contacts on industrial, economic, agricultural and social matters with other countries, enormously to their success. It has been a feature of the success of Germany, particularly the länder such as Baden-Württemberg, that their economic prospects have flourished because they have been allowed to be independent in this way and not controlled by a central Government. This is the purpose of devolution, and I think this is more likely to be about the success of devolution than about differentiation. In wishing to criticise the severity and extremism of the Scottish National Party, we must be careful that the extended implications of devolution are not criticised as well, because they are enormously valuable for the well-being of our country.

Lord Forsyth of Drumlean: My Lords, I have two brief points to make. I very much agree with what the noble Baroness, Lady Liddell, had to say on these matters and I will not repeat the arguments. I would just like to pick up the point made by my noble friend Lord Maclennan. One of the big low points in my political life was seeing the saltires flying in Libya when al-Megrahi landed there. The noble Lord, Lord

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Foulkes, has been kind enough to say that perhaps his amendment is not the most felicitously drafted. Its substance, however, is that Ministers in the Scottish Parliament can of course make representations and meet delegations and travel abroad, but they should not pursue an independent foreign policy.

Until now, we have enjoyed a Civil Service that has kept Ministers in check and within the bounds of their responsibilities. I say with regret that there is a certain amount of evidence that that is not happening in Scotland at the moment. The Scottish National Party is perfectly entitled to have a policy that states that Scotland should withdraw from NATO. Why it has that policy, I do not know; everyone else is queuing up to join NATO. However, it is not entitled to advance and advocate the policy within the confines of the devolved Parliament, because foreign and defence policies are not the business of that Parliament.

6 pm

If we cannot rely on the sense of responsibility of the elected Members, we must have rules to deal with that. In the old days, the rules that worked particularly well were those on financial accountability that lay with the accounting officer of the department concerned. The response of the noble Lord who was a Cabinet Secretary to some of the complaints that were made by all the parties about the behaviour of the Civil Service in Scotland was disappointing to say the least.

I think that the noble Lord, Lord Foulkes, tabled the amendment out of sheer frustration. He is on to a good point, but unfortunately it is a bit of a blunderbuss. It has served to give us a good opportunity to debate these issues. However, it is very important, if we are to have a devolved Parliament, that it sticks to its last, does not create confusion and does not have a leader who thinks that it is his job to pursue competing policies. I am all in favour of competition, but competition between Parliaments on foreign policy is going a bit far.

Lord Kerr of Kinlochard: My Lords, I will privately reveal that I have not been briefed by the noble Lord, Lord Browne of Ladyton, on why the amendment goes too far; I worked it out for myself. The idea of seeking consent seems to be a little insulting. Co-ordination is what we are talking about. The idea of writing into law a requirement for co-ordination seems very odd. I admit that the Foreign Office that I worked in completely failed to co-ordinate the travel plans of Ministers of both political persuasions. It is very difficult for the Foreign Office to attempt the task, and it is universally ignored by the rest of Whitehall. The person who can achieve the task is the ambassador who is lucky enough to have a couple of ministerial visitors. If he tells A or A's office that B will be in the House at a certain time, A will decide that his plans require him to come at another time. In my experience, the collegiate atmosphere of any British Government has meant that it is perfectly easy to separate visits one from another. Therefore, this is unnecessary.

The innuendo was made that the Scottish nationalists are going around arguing with other NATO Governments against NATO. I have not seen any evidence of that. I would be surprised if it were true.

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Lord Forsyth of Drumlean: Perhaps the noble Lord would care to read the Scottish nationalists' manifesto.

Lord Kerr of Kinlochard: Yes, but the innuendo today was that they must not be allowed to talk to foreign Governments because they would try to persuade them in some way to leave NATO. That is a big jump. Of course it is in the Scottish National Party manifesto; we have all read it. However, again in this debate, I have been worried by the splendid attack of the noble Lord, Lord Foulkes. He said that he is up for the fight. It is easy to have this kind of fight when the opponent is not in the ring. We ought to be careful about insulting somebody who is not here. I am happy to be insulted because I am here. However, the fight should be conducted out there on the hustings. Here, we should try to avoid insult and innuendo.

Lord Maxton: To be fair-and not even to be fair-the fact is that the Scottish nationalists are not here through their choice, not through the choice of the House. If they wanted to be here, putting their case, they could be-instead of relying on the one Welsh nationalist in the House.

Lord Kerr of Kinlochard: It may well be true that it is their choice. If so, it is a great mistake. I hope it is the view of all in this House that it would be very good if they were here. While they are not here, we should try to avoid insult. It does not do us any good when our debates are reported in Scotland.

Lord Forsyth of Drumlean: I did not say anything that was insulting, and I do not do innuendo. I am quite direct. I said that the First Minister should not use his position to make the case against Britain being in NATO. There is nothing insulting about that. Nor is it an innuendo. Equally, the First Minister, who is paid from my taxes, should not go around the world arguing against our nuclear deterrent. He should concentrate on his duties as First Minister. There is nothing insulting about that, and there is no innuendo.

Lord Kerr of Kinlochard: I am sorry but I am not aware that the First Minister is going around the world arguing that people should leave NATO or that Britain should leave NATO. I am sure that he is saying that, if elected, he would choose to leave NATO. The innuendo is the implication that he is undercutting the policy of the British Government policy by saying that Britain should leave NATO. I do not think that he is doing that. I do not know what he is doing; he does not have somebody here to tell us, which is a pity.

I intervened on the amendment to ask the Minister whether there has been any proposal from the Scottish National Party for the inclusion in the Scotland Bill at this point-because Clause 27 is where it would fit-of a provision that would clarify or increase the role that it should play in EU negotiations, in the delegation that comes from these islands or in the preparation of the positions that the delegation will advance. I ask that because I do not know the answer. Last summer, as I recall, the Scottish Government indicated that they wanted something of the sort. I do not know

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what they want. I would like to see the proposal, if it is around. Are the Government sitting on a suggestion from Edinburgh that has not found its place in the Bill because they did not agree with it? If the Scots came forward with something at this stage, would the Government insert a clause in the Bill?

It is worth addressing the question of whether, as you give a bit more devolution, you should give a larger role in the preparation of a position for certain councils. I do not know whether that would extend to the presence of a representative such as a Minister from the Scottish Government in the ministerial team. I remember days when that was the case. When we first joined the EU in the 1970s, we were always represented in the Fisheries Council by a Minister from the Ministry of Agriculture, Fisheries and Food, and by a Minister from the Scottish Office, operating in tandem. I will not comment on whether that was a good arrangement. The noble Lord, Lord Williamson, will have a better memory of it than I.

The German Länder are represented in the back row of many councils that deal with domestic affairs; they do not have a speaking part. I would not recommend that anybody look at Belgium, but if we do, we see that in many councils the Walloon and Flemish Ministers attend alternate meetings. That is ideal for those negotiating from a different point of view from that of the Belgian Government, because it means that the Minister never knows what happened in the previous council and it is possible to score some runs at his expense.

When devolution happened, a concordat was prepared in London and negotiated with Edinburgh that laid down detailed rules on what kind of issues the Scots should be consulted on in full. I do not know how well that has worked; I have been away. If it is not working well, it could be looked at again; there is no issue of principle there. As we devolve a little more, maybe we ought to devolve a slightly bigger role in the preparation of such things.

These are my questions for the Minister. Has anybody asked? Has anybody specified what is wanted? What would the Government's attitude be?

Lord Maclennan of Rogart: I was a Minister who attended the Agriculture and Fisheries Council in the 1970s, although I did not belong to the Ministry of Agriculture; I was representing the consumer interest. I recall a number of Ministers coming to these councils but they all belonged to the same Government. Prior to our participation in these debates, we had clarified what our objectives were in common and we did not seek to confuse the other members of the council by putting forward entirely different points of view. That is the risk of having people who are seeking to separate one part of the United Kingdom from another.

The noble Lord has inquired of my noble and learned friend as to the Government's position. It would be very interesting to know what he considers should be the position.

Lord Kerr of Kinlochard: I draw a distinction between the situation with a degree of devolved authority-maybe a little more if this Scotland Bill becomes law-and

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the position of an independent Scotland. That is a totally different question. I would think it extremely unlikely that a delegation consisting of representatives of the London Government and the Edinburgh Government negotiating in Brussels in a situation of devolution but not independence for Scotland could not work out in advance and in private what was the best line and who would make which point. I do not think it very likely that the representatives from Edinburgh would see it as their task to undercut the United Kingdom interest because that would-while devolution persists-also undercut the Scottish interest.

Lord Sewel: One of the difficulties in relation to Europe and getting a common view-almost parity between UK Ministers and Scottish Ministers-would be around fisheries policy. The position of the SNP Administration in Scotland is that-and God knows how it can be done; I do not think it can-Scotland would leave the common fisheries policy. That creates a totally different negotiating framework in that policy area from a Government who say, "We are staying in but we have to reform and modify the common fisheries policy".

Lord Williamson of Horton: My Lords, as I attended 108 meetings of the Agriculture and Fisheries Council I must just very briefly intervene. Of course, it was very common in the council that a Minister from the Scottish Office-a Scottish member of the UK Government-led for the United Kingdom. This was quite right, because of the huge fishing interest of Scotland. That was perfectly reasonable. I do not remember any case where there was anything complicated about that.

I should add that some other member states did something quite different. For example, a representative of the regional government in Belgium spoke for Belgium on a number of occasions, and I think on one or two occasions a representative from a German Länd spoke for the German delegation in the council. That was not the British position but the position of two other member states.

Lord Stephen: Before the noble Lord sits down, perhaps I may point out that indeed that has happened: a Member of the Scottish Parliament has represented and has led for the United Kingdom at a European committee. Therefore, the pattern that the noble Lord has described is unusual but it has happened.

6.15 pm

Lord Wigley: My Lords, I apologise profusely to the noble Lord, Lord Foulkes, for missing the opening of the debate. I was quite distraught, actually. There was a ministerial meeting on another matter. I had looked forward to being here for this debate.

I only rise because my name was mentioned and my presence here without opening my mouth would be looked at askance. I do not want to go into the fighting with regard to the profile taken by the SNP Government; I want to follow the question of when it is legitimate for a devolved Government to try to have their own voice. Clearly there are opportunities to deal with other countries-for example, in education, in

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getting students from other countries to come to your universities-where the circumstances may be different in Scotland or Wales, and those opportunities can be taken. Likewise, with regard to industrial development, Wales did very well indeed in combining with the motor regions, including Baden-Württemberg, and there is industrial benefit to be had from the bilateral relationships.

Sometimes it can get a little bit more complicated. The former First Minister of Wales, Rhodri Morgan, led a delegation to Patagonia, where there is of course a Welsh community. The interests of the Welsh community in Patagonia, if one considers them in the context of some recent developments, may not be exactly the same as the interests perceived in this Chamber. Therefore, a balance has to be struck. I do not think that anyone would say for a moment that the First Minister of Wales should not have those links with Patagonia; it is a question of how the thing is then undertaken.

We have also seen it working the other way round. Because of the existence of the National Assembly-and I suspect this is true in Scotland with the Scottish Parliament-there are opportunities for people coming from overseas to link up with people with whom they can do business on a bilateral basis. That is not a problem at all in terms of the UK.

The last two or three contributions have touched on the European Union, and that of course is where problems can arise. In Wales we have had the opportunity to lead the UK delegation from the National Assembly in matters such as the sheep-meat regime, which was led by Elin Jones, the Minister for Rural Affairs; Wales has also led in minority-language meetings. There are opportunities like that. However, the problem arises-and we do not do ourselves any favours if we hide away from it-that there will be some circumstances where the interests of Scotland or Wales may not be identical to the interests, as perceived from London, of the UK as a whole. Fisheries may be one; I am not close enough to that to know. Colleagues from Scotland are much closer to that.

It may be that even on party-political balances-we in Wales have a Labour Government now; there is a Conservative-Liberal Democrat Government here-the perception will be different and the profile that people want to project to the outside world may be different because of that. The question is: how can the line be drawn within a devolved settlement that is reasonable in all circumstances? That is what we need to address, to get the balance right there, rather than perhaps fearing that the thing can go to an extreme that causes difficulties for all concerned.

Lord Wallace of Tankerness: My Lords-

Lord Boyd of Duncansby: I can quite understand the noble and learned Lord's wish to progress matters.

I am not entirely clear where to start. The amendment before this House is that:

"Before commencing discussions with representatives of foreign governments or inter-governmental organisations, Scottish Ministers are required to obtain consent to the discussions from a Minister of the Crown".

It seems that we have ranged a little beyond that.

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Perhaps I should start by declaring that I have had discussions with my noble friend Lord Foulkes of Cumnock. He is at liberty to tell the House what these were. I did not actually warn him about cybernats. I should perhaps advise him that he should not read what they say because they will just make him upset-and at his age he really ought to be careful.

I will try to pick up some of the points that have been made, and make one or two of my own. First, it seems desirable to ensure that there is good co-operation between the UK Government and Scottish Ministers when they are engaged overseas. That has not always happened, and even when the Scottish Ministers were of the same political persuasion as the UK Government it did not always happen. I am not saying that there were any undue difficulties, but sometimes the co-operation broke down. I must however say that, personally, I was always grateful for advice from the Foreign Office. My noble and learned friend Lord Goldsmith, when he was Attorney-General, and I represented the United Kingdom at a conference in China between the European Union and the ASEAN countries on the issue of serious crime. I was due to chair a session of the conference which included the Attorney-General of Burma. I was unclear as to what role I should take in relation to the introduction of the Attorney-General of Burma, and I remember being very grateful for the advice that I got from the Foreign Office on that.

Secondly, it is right that both Governments respect the jurisdiction of the other, and that we recognise the frustration where it is felt that Scottish Ministers go beyond their responsibilities, particularly where it appears that they are pursuing a broader political strategy. However, Scottish Ministers have legitimate areas of activity which involve interaction with foreign Governments and intergovernmental organisations. They have responsibility for implementing directives of the European Union in the devolved area. They need to address vital European Union interests, not just in terms of directives but in terms of policy, and in doing so they interact not just with foreign Governments but with other devolved Administrations. The noble Lord, Lord Morgan, referred to the experience of the German Länder, and the way in which they go about their business.

Ministers also have responsibility for promoting trade, tourism and investment, and that of course necessarily brings them into contact with foreign Ministers and Governments. They also take an active part in intergovernmental organisations and conferences. I recently participated in a conference at the London School of Economics on what was called sub-state diplomacy. I found that quite instructive in finding out the way in which devolved Administrations work, not just in Europe but in other places; learning how Quebec, under both nationalist and liberal Governments, had promoted Quebec, and looking at the experience of Catalonia and the Belgian states in Europe.

It seems unrealistic, if I may say so, to suggest that each time Scottish Ministers were to speak to Ministers of other Administrations they should first get the consent of the Government. First of all, if you are at a conference and you are approached by a Minister of another Government it is not always possible to get that consent. Do you say "I'm very sorry, I can't speak

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to you because I need to get consent from the relevant Minister"? As we have heard from the noble Lord, Lord Kerr of Kinlochard, sometimes not even the Foreign Office is able to co-ordinate.

With respect I also ask: what exactly are we attempting to do in this amendment? What sanction do we impose on Scottish Ministers if they do not get consent? We risk giving the Scottish Ministers a tool with which they can claim, yet again, that they do not have the respect of the UK Government, and that they are being gagged while they go about what they consider their legitimate business. That is not just a question of consent. If my noble friend is thinking of coming back with an amendment that they should advise or consult before they do that, the same question arises. What sanction does my noble friend suggest should be visited on a Scottish Minister who does not consult, get consent or obtain whatever other permission is required by this amendment?

We should think long and hard. I endorse a lot of what the noble Lord, Lord Martin of Springburn, said, because he made much the same point in his interesting comment, which of course comes from his long experience, mainly in the other place but also here. We should listen very carefully to these voices before we go down this road.

Lord Wallace of Tankerness: My Lords, it has been useful to have this discussion on foreign relations and the devolved Administration and devolved Parliament in Scotland. I share a lot of the analysis of the noble and learned Lord, Lord Boyd of Duncansby, that in fact what this amendment proposes is largely unrealistic. He questions the sanction; we can readily anticipate how it would be spun if indeed it was accepted. Indeed, the noble Lord, Lord Foulkes, accepted himself that the amendment was flawed. That said, the noble Baroness, Lady Liddell of Coatdyke, indicated that certain sentiments were associated with this that we should not lose sight of and quite properly referred to the initiative pursued by the noble Lord, Lord McConnell of Glenscorrodale, when he was First Minister, in promoting Scotland's links with Malawi. That was done in full consultation and co-operation with the United Kingdom Government and has been widely applauded and respected. It shows that it is possible to have that kind of relationship. Indeed, as the noble and learned Lord, Lord Boyd, indicated, there are legitimate areas of responsibility that fall on the devolved Government in Scotland involving interaction with foreign Governments.

It is important, therefore, that the Committee should be aware that there is a memorandum of understanding or concordat on international relations, which deals with devolved Administration engagement with other Governments and which is therefore relevant to the Scottish Government's interaction with foreign Governments. Two areas are identified that are of relevance here. Bilaterally, the Scottish Government may, in co-operation with the Foreign and Commonwealth Office, make arrangements or agreements with foreign Governments or international organisations on devolved matters,

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Indeed, I can think of educational agreements that have been reached. It also says:

"The Scottish Government is, however, obliged to consult the FCO in advance about any contact, correspondence, or proposal that is novel or contentious, might create a contingent international liability or may have implications for international relations".

On international organisations it is sometimes appropriate-and this is recognised in the concordat or memorandum of understanding-for,

In these circumstances,

This brings us to the issue that was raised by the noble Lord, Lord Kerr of Kinlochard, and that was spoken to by a number of other noble Lords following his intervention. He asked what the position is. The Scottish Government-his memory served him well-have put forward a proposal to have a statutory right to attend and speak at all Council meetings that relate to devolved matters. It was one of the six proposals that the Scottish Government put forward in the summer of last year. My colleagues in the UK Government are considering this request along with the other requests from the Scottish Government and will respond, but it should be clear that a statutory right to attend would inevitably have an impact on Welsh and Northern Irish representation.

Perhaps we may therefore look at what happens in practice. At present, Scottish Ministers can and do attend Council meetings when devolved matters are under discussion and do so as part of a United Kingdom delegation. My noble friend Lord Stephen indicated that there have been occasions, although perhaps not many, when a Minister from the Scottish Executive, as it then was-and still is-has led. Indeed, on more than one occasion he represented the United Kingdom, albeit as a Liberal Democrat Minister in a coalition Government representing the United Kingdom. When I was the Justice Minister in Scotland, I sat alongside Mr Blunkett when he was Home Secretary. At an appropriate point when Mr Blunkett thought that the matter under discussion was more relevant to Scotland than it was to England, I spoke on behalf of the United Kingdom.

The crucial point is that we spoke to an agreed United Kingdom line. The noble Lord, Lord Wigley, is right that on issues such as fisheries there often can be great tensions, but every effort is made ahead of the Fisheries Council to ensure that there is a United Kingdom line to which whoever speaks is expected to, and does, follow.

6.30 pm

Lord Wigley: I understand the practicalities and that it is desirable, if at all possible, to have a united line, but does the Minister not understand that there may be a genuine difference of aspiration and that the needs of Scotland may be different from the perceived needs of the United Kingdom? Does that not put the representative from a Scottish Government in a difficult

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position? They will either speak against the interests of Scotland, which they represent, or speak up for Scotland and go against the agreement.

Lord Wallace of Tankerness: My Lords, that is the stuff of the negotiation that takes places ahead of these Council meetings. It is important that there is that good co-operation. It would not be sustainable for someone in the United Kingdom Government seat at the table to articulate a policy contrary to the United Kingdom view. Obviously, one can imagine that if a Minister from the devolved Administration did not like it, he would not be jumping to be at the meeting speaking on behalf of the United Kingdom Government.

However, these negotiations take place and I recognise enough noble Lords here from my days in the Commons who took part in the fisheries debates. The noble Lord, Lord Sewel, was the Fisheries Minister and knows full well what the run-up to the December Council meeting in particular, and others, can be like. There is a negotiation to take place and a line has to be agreed in advance, not just between the United Kingdom Government and the Scottish Government but between the Welsh and Northern Irish Administrations as well.

The Duke of Montrose: Perhaps my noble and learned friend will tell me if I am wrong, but my impression is that currently the Scottish Administration feel that they should have the right to send the representative Minister in fisheries negotiations.

Lord Wallace of Tankerness: As I indicated, the request was for a statutory right to attend. In a hypothetical situation, even if they were to be the UK Minister, they would still have to articulate what had been agreed at a quadrilateral meeting as the United Kingdom line. It is important that we recognise that for the most part this process works and has worked well. It is sometimes not the perception that one gets, but a lot of hard work and effort is put into it.

It is also the case that, when Scottish Ministers hold meetings overseas, the United Kingdom's diplomatic missions overseas offer them the same level of support as they would to United Kingdom Government Ministers and delegations. I certainly can vouch for that. Indeed, that was my understanding shortly after I took office as the Deputy First Minister in the Scottish Executive in 1999. The then First Minister, the late Donald Dewar, indicated to me that the then Foreign Secretary, the late Robin Cook, had made it very clear that he wished Scottish Ministers visiting foreign countries to be accorded the full facilities. Certainly, it was always my experience that the help was very considerable.

It is also important to remember that, when representing devolved issues, the devolved Administrations can play a valuable role in promoting commerce, industry and culture. When Scottish Development International, a part of the Scottish Administration, arranges visits with a ministerial involvement, it works to try to bring jobs, employment and investment to Scotland and the United Kingdom, something which would be beneficial to the United Kingdom as a whole.

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The noble Lord, Lord Morgan, and the noble and learned Lord, Lord Boyd, referred to the Länder. Certainly, one of the strengths of devolution is that, whereas perhaps in the past the United Kingdom Government could not readily relate to or have engagement with Catalonia or Saxony, that is a level of engagement that Welsh Ministers, Scottish Ministers and Northern Ireland Ministers are able to have, which benefits the United Kingdom as a whole.

I fear that this amendment would introduce a statutory requirement which-I have already indicated that I share the analysis of the noble and learned Lord, Lord Boyd-would not work. As I have also indicated, there is a memorandum of understanding, or concordat, in place to ensure that any engagement with Scottish Ministers is conducted in a constructive way. I hope that that will reassure Members of your Lordships' House. The noble Lord, Lord Foulkes, has facilitated an opportunity to discuss these issues and I hope that he will follow through on what he indicated and will withdraw his amendment in the light of these assurances. This has been a useful debate.

Lord Foulkes of Cumnock: My Lords, I am very grateful to the Minister for a helpful reply. As he said, it has been a good debate, notwithstanding the manifest flaw in my drafting of the amendment, for which I take full responsibility. Now that the Minister has drawn our attention, or reminded those of us who have seen it and been involved with it previously, to the concordat on international relations, it might be useful to draw it again to the attention of the Scottish Government in the gentle, kindly way in which he is used to doing.

Perhaps I may say to my noble and learned friend Lord Boyd that even people of my age-even people at the age of my noble friend Lord Maxton and upwards-can come up with ideas occasionally. He was worried about sanctions. Let me underline that I am not suggesting this but, for example, if any expenditure incurred by a devolved Administration were ultra vires-in other words, they were doing things for which they had no responsibility whatever-sanctions could be available.

I should like to say how much I appreciated the intervention of my noble friend-perhaps I may call him that-Lord Wigley. Perhaps I can put it this way: we are not used to quite such sensible nationalists in our parts. I thought that his contribution was very diplomatic, sensible and helpful to the debate.

Now we come to the noble Lord, Lord Kerr of Kinlochard, who I suspect, from what I know of him and from his contribution, is not quite used to the hurly-burly of Scottish politics. He will know-if he does not, I will tell him-that all of us here involved in the hurly-burly of Scottish politics are willing to make our arguments in any ring that is made available. The noble Lord, Lord Forsyth, suggested one the other week. The noble Lord, Lord Steel, and I have discussed it.

Lord Steel of Aikwood: The noble Lord is underestimating the noble Lord, Lord Kerr. When he was ambassador in America and I was on a visit to Washington, he invited me to stay. He added to his invitation, "You'll have had your tea".

A noble Lord: He is a Glaswegian.

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Lord Foulkes of Cumnock: I knew that he was not from Edinburgh but I did not realise that that stretched to all parts of Scotland. I know what a distinguished diplomatic career the noble Lord, Lord Kerr, has had but, with due respect, although there are not any Scottish nationalists here-there is a Welsh nationalist-as my noble friend Lord Maxton said, the invitation has been made to them. Some people within the SNP, notably Mr Peter Wishart MP, would like them to accept. I hope that they will and I urge them to accept the offer to have SNP Peers. Just because they have not accepted, that should not gag this House from debating this matter. We are part of the British constitution and the legislation of this country. It would be wrong to inhibit us because they do not take up the offer.

I thought that the noble Lord, Lord Forsyth, made a good point about the role of the Civil Service in encouraging the SNP in some of their policies in relation to the break-up of Britain. I urge him to take a look at my Amendment 73, because it will give him another opportunity to debate this issue in more detail, particularly some of the astonishing actions of Sir Peter Housden.

I have the greatest respect for my noble friend Lord Morgan, who is a most distinguished Labour historian. I accept his admonition to be careful in this. I would also ask him to have a wee look at what some of the more extreme nationalists are saying. To use the old phrase, some of my best friends are nationalists. I even had some at my famous birthday party, which my noble friend Lord Browne revealed in a previous debate, and I get on with them very well. But we should look at some of the outpourings of the more extreme nationalists. They talk about "English colonialism" as if Scotland has been colonised by England. They liken Scotland to India or some African states and say, "We must throw off the yoke", when all of us know that many of the colonialists were in fact Scots, not English.

Lord Morgan: I am sorry to interrupt the entertaining remarks of my noble friend. I am glad that he made the point that we do not have that kind of bitter Anglophobia, but there is a danger of throwing out the nationalism of the SNP with the national sentiment of Keir Hardie and the founders of our party. We are the pluralist party, and that is very important.

Lord Foulkes of Cumnock: I accept that. My title, as my noble friend Lord Morgan knows, is "of Cumnock". Keir Hardie lived there and is buried there. That is why I chose it as my title. One of his planks was home rule. There are some others that I do not agree with quite as much, but with home rule I certainly do.

Lord Morgan: Temperance.

Lord Foulkes of Cumnock: Indeed. Temperance is one other. I accept what my noble friend said. I shall move on because the noble Lord, Lord Forsyth, will raise important matters for discussion in relation to finance that we want to participate in.

The noble Lord, Lord Maclennan, raised a very interesting question with regard to Al Megrahi. My noble and learned friend Lord Boyd knows much

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more about it than any of us here and I do not want to go into the detail. Like the noble Lord, Lord Forsyth, I did not like seeing the saltires waved when Megrahi arrived at the airport in Tripoli. I thought that the way in which the Justice Minister in Scotland dealt with it was entirely wrong. However, to suggest, as some people have, that it was Tony Blair who told Alex Salmond and Kenny MacAskill to release Al Megrahi is just manifest nonsense. Even if he had, which he did not, can you imagine them doing his bidding on this? However, I accept the point made by the noble Lord, Lord Maclennan. It is important in relation to co-ordination between the various parts of the United Kingdom.

I want to say to my friend the noble Lord, Lord Martin, that I forgive him for his disarming intervention, which I really enjoyed. He and I have been good friends for a long time. We were talking about membership of NATO in relation to policy differences. There is also the question of the deployment of Trident. I do not know if I am giving away a secret when I say that the Joint Committee on the National Security Strategy will shortly be publishing a report which might be of interest to noble Lords. I also thought that his suggestion in relation to Canada might have some advantages. We could look at precedents with regard to protocols between provinces and federal Governments as we move towards a more quasi-federal or federal solution here in the United Kingdom.

Last and certainly not least I turn to my noble friend Lady Liddell, the Secretary of State emeritus, who as always made a most helpful contribution. She reminded us that the Malawi co-operation was in fact agreed with the Department for International Development. Interestingly, I was one of the Ministers in DfID when it was agreed. When the devolved Assemblies and Parliaments work in areas that are complementary to the work of the United Kingdom, we help each other and it is really enriching. I can see the Whip making an interesting face at me, so finally I must say that I shall withdraw the amendment.

Amendment 51 withdrawn.

Clause 27 agreed.

6.45 pm

Clause 28 : Taxation: introductory

Amendment 51ZA

Moved by Lord Forsyth of Drumlean

51ZA: Clause 28, page 20, line 29, at end insert ", and

(c) section 29(2)(f)"

Lord Forsyth of Drumlean: My Lords, I shall try to be brief. The issue is covered by a number of other amendments grouped with this one. I was absolutely astonished when I reached page 2 of the Scottish edition of the Sunday Times this week. There was an article by Jason Allardyce which informed me that the First Minister, as a result of negotiation, had been able to get extra powers to raise income tax in Scotland and arrange extra borrowing. No mention was made

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of this orphan Bill and the fact that this is the product of the Calman commission. So far as I know we have still not had a formal response so we have not heard from the Scottish Parliament whether it is prepared to give legislative consent to it. That tells you everything you need to know about the gymnastic qualities and abilities of our glorious First Minister.

One of the things that is sad about this sad little Bill is that it is actually hugely radical in what it proposes. It will give enormous powers to the Scottish Parliament. It is devo-max, and as we have had reason to discover in our debates earlier today, it is devo-max on issues such as speed limits and so on to the point of absurdity. In this part we are dealing with the heart of huge changes that are being made, but which do not seem to be part of the debate in Scotland. Indeed, we are in an absurd position where the debate is about what further policies could be added when this Bill provides for them. Picking up on a point made by the noble Lord, Lord Foulkes, in one of his interesting newsletter blogs to his civil servant colleagues, I think that the Permanent Secretary in the Scottish Government described it as,

and no longer of relevance.

I have to apologise to my noble and learned friend. As always I had fantastic help from the Public Bill Office, but I do not think these amendments are brilliantly drafted. What I want to do is in effect get rid of the provisions that give the Scottish Parliament the ability to invent completely new taxes. Not only are we going to have a Scottish income tax, but completely new taxes can also be invented. They can invent a window tax and they can have a local income tax. My noble friend Lord Sassoon is shaking his head; I will happily give way as it might save some time if he is going to tell me that that is wrong. The only thing that stands in the way of those taxes being implemented is an Order in Council which has to be approved by both Houses of Parliament.

I am not going to start on another history lesson, but I thought that the whole point of this place-perhaps not this House but certainly the other place; and this place until 1911-is that it is not possible to raise taxes without the consent of Parliament. This provision in the Bill muddles that principle by allowing the Scottish Parliament to decide on a new tax-let us call it a local income tax, a window tax or something of that kind- and all it would require is the agreement of the Executive in London, which then has to put the proposals to both Houses of Parliament.

When it comes to the politics of this, is that really a proper check and balance on the ability to raise taxes on the people? It seems it would be politically extremely difficult in circumstances where, say, an SNP Administration decided to introduce a local income tax for either House to be able to oppose that with any political credibility. It is one thing to say, as those who argue for devo-max do, that the Scottish Parliament should be able to get all the revenues raised in Scotland and be responsible for expenditure; but it is quite another to provide for the invention of new taxes and for the only control on them to be an Order in Council, which is then subject to a resolution by both Houses.

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In short, I do not believe that this clause should be in the Bill. I am very interested as to what new taxes the Government have in mind might be introduced by the Scottish Parliament, which it would fall upon the people of Scotland to pay. I am told that if you do an opinion poll in Scotland, there is great support for new powers-if you ask the people, "Would you like the Scottish Parliament to have new powers", you will find there is a lot of support for that. However, if you ask the people of Scotland, "Would you like the Scottish Parliament to be able to invent new taxes, which would fall upon you?", I wonder whether there would be the same level of support. If you asked them, "Would you like the Scottish Parliament to be able to invent and implement new taxes which you do not know about and which have not been discussed?", I am not sure that that would command support. I find it extraordinary that this hugely radical change in the powers of the Scottish Parliament has not even been discussed in the Scottish media. I would wager that only a handful of people in Scotland are aware of it and of the implications.

This whole clause is not only unnecessary, it is constitutionally improper and I cannot for the life of me think why it should be there. I look forward to my noble friend telling me what problem this clause is meant to remedy and why it should be here. My amendment would simply prevent this happening without proper accountability. I think this is one of the most radical parts of the Bill and seems to be completely undesirable. I do not know whether Calman recommended it or not but I would be very surprised if such an open-ended provision was recommended, given that the Calman commission was so careful in its analysis. I will just forewarn my noble and learned friend of one thing. I am sure that in his briefing he will have lots of sentences that say, "This fulfils our manifesto commitment to implement the Calman proposal". Well, there are other recommendations in Calman that are not in the Bill and which the Government have set their face against. So I would be careful about using that particular argument. I beg to move.

The Deputy Chairman of Committees (Lord Brougham and Vaux): I advise the Committee that if Amendment 51A in this group is agreed to, I cannot call Amendment 51B due to pre-emption

Lord Sewel: My Lords, I rise to speak to Amendment 51A, which is in my name. The noble Lord, Lord Forsyth of Drumlean, is absolutely right when he draws our attention to the central constitutional importance of the clause. We are dealing with a fundamental constitutional issue-the power to create taxes, which is a defining characteristic of a sovereign parliament. At the moment, the new Section 80B proposed for the 1998 Act reads:

"Her Majesty may by Order in Council amend this Part so as to ... specify, as an additional devolved tax, a tax of any description".

Through this amendment, I want to ensure that any change in the tax powers of the Scottish Parliament will be subject to the scrutiny that you have with the primary legislative process rather than that which applies to secondary legislation. The Order in Council route is totally inadequate to secure the degree of

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political scrutiny that is appropriate and necessary. The granting of a power to enhance the taxing powers of a devolved parliament is not something that should be done lightly, casually or trivially. It should be done only through the process of primary legislation to ensure the absolute, measured, considered and examined scrutiny of any proposal. The order route is inadequate because we do not amend Orders in Council-this House is, rightly, reluctant to vote down orders and they see a very abbreviated form of parliamentary scrutiny.

Lord Forsyth of Drumlean: Is it not an oddity that this House is not meant to consider taxation at all and yet the Bill provides for this House to approve the order?

Lord Sewel: Yes, and also, if we look at the way in which this has developed, I do not know how we come to this order solution. If you go back to 1997, the tax-varying powers then were subject to a separate question in a referendum and were incorporated in the Scotland Act as primary legislation. The Government today are bringing forward a whole series of tax-raising powers to be given to the Scottish Parliament in primary legislation. Why is it suddenly decided that any new taxes that are not specified in the Bill are going not to be subject to primary legislation but only to what I consider to be the absolutely unacceptable method of secondary legislation and Orders in Council?

I mentioned the 1997 referendum, and we know there are amendments standing in the name of some colleagues dealing with the referendum on taxing powers. I am not in favour of a referendum on taxing powers-although I took a referendum Bill through this House, I am not awfully in favour of referendums. My concern is that taxation and the power to create new taxes are of such fundamental constitutional importance that we run a very grave danger if we devalue the standing of that power and use a way of obtaining them that may be convenient for the Government but is wrong. It must be the job of the United Kingdom Parliament to be able to scrutinise any proposals for new or additional taxes in any part of the United Kingdom, through the proper parliamentary process.

7 pm

Lord Steel of Aikwood: My Lords, the two noble Lords who have spoken on this section have made one point with which I very warmly agree-that we are now coming to the real meat in this Bill. This afternoon we were dealing with what I call "tinkering devolution". This is not tinkering-it is much more serious. I want to draw the attention of the House to the fact that, since the last day we discussed this Bill, there has been a very important development with the Prime Minister's visit to Scotland and the announcement that he made. He said that if we turn down independence in a referendum, the door would be open to better and greater devolution of powers to the Scottish Parliament. One of the problems with Mr Cameron-and, indeed, with Mr Miliband and Mr Clegg, too-is that they were all at primary school in 1979, when a similar promise was made by Sir Alec Douglas-Home. That was never fulfilled, as we oldies well recall.

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My submission to the House today is that the circumstances today are quite different from those in 1979. Alec Douglas-Home was an honourable man, but he was not in a position to influence Prime Minister Margaret Thatcher's hostility to devolution. One reason why the Secretary of State, Michael Moore, is absolutely right to argue for a swift decision on independence is that we could then have two years left in this Parliament with David Cameron as Prime Minister to fulfil his promise, even though Alex Salmond does not like it.

Talking of Alex Salmond, I want to pick up on what the noble Lord, Lord Foulkes said earlier. Those who criticised Mr Salmond for his abusive rhetoric towards a BBC producer a couple of weeks back were, I submit, rather missing the point. I have to admit that I both admire and like Alex Salmond. You could put that down to prejudice stemming from our common youth in Linlithgow, where I first saw him as an angelic choir boy in my father's church. That is not an adjective that I have heard applied to him in recent times. But admiring or liking him does not mean agreeing with him. When I switched on my television on that Saturday afternoon to watch that dreadful Calcutta Cup match, the last thing that I wanted to see was the First Minister popping up to give us his inexpert views. He should be concentrating on governing the country and not looking for camera calls wherever he can. What I admire about him is his chutzpah-but it is also slightly worrying, because there is a touch of "L'État, c'est moi", as Louis XIV of France was reputed to have claimed. We are told by some people that to be anti-SNP is to be anti-Scottish. It is time that they understood that the rest of us actually resent being told that to be pro-Scotland you have to be pro-SNP. That is not the case.

I have been told by other broadcasters that the Salmond rugby experience was not unique for them and that the SNP heavies have made more regular calls and complaint to newsrooms than all the other political parties put together. That runs at times close to intimidation.

Lord Maxton: Does the noble Lord not think that the strangest thing about that whole incident was Alex Salmond complaining that the BBC was somehow biased against him. I suggest that anybody who listens to "Good Morning Scotland" as I do on a fairly regular basis every morning would know that the exact opposite is the truth.

Lord Steel of Aikwood: I was going to go on to say that we are actually seeing a trend towards the attributes of a one-party state, where news bulletins are led by stories of what the dear leader has been doing today. That is a real danger.

There is also the question of vagueness of what independence really means for us financially. Until recently, the official position of the Scottish National Party was in favour of joining the euro, until the problems of the eurozone suggested instead that there was safety in keeping sterling, presumably with all the Bank of England controls. Some independence, that-not for them, apparently, the genuine independence of the Irish punt or the Danish kroner.

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On the subject of Denmark, a former Foreign Minister of that country is a good friend of mine and a fishing companion. There was one occasion when the two of us went fishing in Iceland as a guest of the Prime Minister. My respect for them and their countries does not lead me to wish to see a Scottish Foreign Minister with similar limited global influence. I would rather have Scots such as Robin Cook and Malcolm Rifkind, both of whom I disagreed with but who wielded strength as Foreign Ministers of the United Kingdom. That is the proper role for Scots in future.

I am so glad that the noble Lord, Lord Martin, mentioned Trident, not in the context of defence policy but in that of economic and financial policy. The SNP's little Scotland approach is best seen in its attitude to the Trident missile programme. We Liberals were never in favour of the so-called independent nuclear deterrent in the first place, and we do not wish to see it replaced. The SNP said that it would remove the base from Faslane to have it anywhere so long as it is south of Carlisle. My view is that until we succeed in getting rid of it altogether, it might as well stay where it provides many jobs and helps the Scottish economy.

I still believe that most Scots would like to see maximum devolution consistent with common sense, and I think that the noble Lord, Lord Forsyth, was right in describing opinion polls. That means substantially greater financial powers than in the clauses that we are now discussing. I regard this section of the Bill as only one small step in the right direction. It is not a new view of mine or one occasioned by the rise of the SNP. When I took office as presiding officer of the Scottish Parliament, I argued from day one that no self-respecting Parliament can exist permanently on a grant from another Parliament and that we should move to the point where the Scottish Parliament has the power to raise the money that it spends on all these devolved issues. This Bill is a significant but small step in the right direction.

Lord Forsyth of Drumlean: Can the noble Lord just say what new taxes he thinks the Scottish Parliament might invent using this power?

Lord Steel of Aikwood: I have no idea. The important point is that it should have the power to raise funds as it wishes for all the devolved issues. It is no good going on talking about refining the Barnett formula and changing the grant system. It is up to the Scottish Parliament to devise its own taxation methods and raise the money for its own purposes. That is what I would like to see happen, and this Bill moves us slightly in that direction.

Lord Kerr of Kinlochard: I have a great deal of sympathy with the argument that the noble Lord, Lord Steel, has just expressed. I cannot see the fundamental point of principle that the noble Lord, Lord Sewel, can see. He spoke of this procedure proposed in the Bill as not providing the necessary and appropriate degree of scrutiny. The people who would be taxed are the people of Scotland who elect the Scottish Government. I cannot see any particular point of principle in saying that they may not determine the

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form of their taxation. States in the United States of America have a considerable degree of freedom. Local taxes are different all over the United States. In many cases, they have a balanced budget requirement. The people of Scotland, speaking through their representatives in Scotland, cannot determine the level of the Scottish deficit.

Lord Sewel: The argument that the Scottish Executive should have control over the level of taxation is one thing, but the creation of new taxes is a totally different thing.

Lord Kerr of Kinlochard: I cannot really see that distinction. I would be more worried about the level if the level affected the balance of the deficit of the United Kingdom. The levels would have to be adjusted so that the tax take in Scotland remained the same proportionate to expenditure in Scotland. But as for the creation of a new tax, going by a different form, if the Scots chose to lower taxes in form A and raise them in form Y, provided that they came to the same amount and had the same effect on the United Kingdom Exchequer, that seems to me entirely up to them. I cannot see a point of principle there.

Lord Sewel: The problem of the deficit is really a red herring, because the deficit would be controlled by borrowing powers.

Lord Kerr of Kinlochard: If the deficit is not important to the argument made by the noble Lord, Lord Sewel, what is the answer to mine? It is perfectly possible for the Scots, and reasonable, to decide the form in which they should be taxed.

Lord Forsyth of Drumlean:Perhaps I could help the noble Lord by asking him a question. If his position is that the Scottish Parliament should be free to invent any tax and raise it at any level as part of the devolved settlement, why do we need to bother with having both Houses of Parliament approving it?

Lord Kerr of Kinlochard: I agree that the Bill proposes a very eccentric procedure. I was going to go on to say that, first, on practical grounds, I would hope that no one would set up differential tax systems inside the United Kingdom. Secondly, I would not disagree with the argument of the noble Lord, Lord Forsyth, against the particular procedure for vestigial approval which is laid down here. My argument is on the point of principle of the noble Lord, Lord Sewel. Those who should be in the lead on the forms of taxation in Scotland should be the Scots; that seems to me to be clear.

I am disappointed with this bit of the Bill-

Lord Sewel: The noble Lord has challenged me on a point of principle. The argument surely must be that macroeconomic policy under the devolution settlement is reserved and, within that, it is absolutely right and proper that the United Kingdom Parliament examines any proposals for new taxation on the basis of how it

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impinges upon macroeconomic policy, and whether it is fair and would inflict great harm on any part of the economy of the whole United Kingdom.

Lord Kerr of Kinlochard: Yes, that is reasonable. We certainly agree on the macro point. We disagree on whether there is a point of principle about forms of taxation. I would like to pick up on the other point made by the noble Lord, Lord Steel, about the Prime Minister's speech in Edinburgh. Here, I disagree with the noble Lord, who says that we should proceed to have the referendum as soon as possible, which would give us a couple of years to work out what devo-max means. I do not know why we do not put into this Bill what we think devo-max means, with a sunset clause. I follow the argument that the referendum should have only one question but there is a genuine problem in that the Sir Alec point made by the noble Lord, Lord Steel, certainly applies in Scotland. People up there do not really believe that the London Government intend, once one has had the referendum and if its answer is no to independence, to confer a further substantial degree of devolution.

Lord Forsyth of Drumlean: My Lords-

Lord Kerr of Kinlochard: May I finish my argument? That is not widely believed up there. One could set out the definition that this Parliament believes would be right for further devolution. I do not expect the noble Lord, Lord Forsyth, to agree with me because he does not want any more, but the Government indicated that there would be consideration after the referendum of a further degree of devolution-your Prime Minister said it. I understand why that will not happen unless the referendum says no to independence-that is obvious-but I cannot see why one cannot specify that now.

7.15 pm

Lord Forsyth of Drumlean: Perhaps the noble Lord can help me. He is quite right: I think this is a dreadful Bill which was introduced for political reasons, and that the best thing we could do with it is bin it-drop the whole thing and get on with the referendum. That is my position. However, it is a minority position, and we have the Bill and we are considering it. We are considering a clause on which the noble Lord, Lord Sewel, who after all was the midwife of the Scotland Act and believes in all this stuff, and I are agreed that it is a huge transfer of power. To me, that is devo-max.

I have no idea what the Prime Minister was thinking of when he said that there would be more devolution after it had been decided that Scotland would remain in the United Kingdom. I cannot think of anything that could be added that is not already in this Bill. This clause which we are considering, for example, provides enormous scope to introduce new taxes, so I would say that this is devo-max. The noble Lord is absolutely right that the people of Scotland do not know about it, because nobody is actually reporting it. We are all debating something that is already here in this Bill, and which was actually delivered by the previous Labour Government-with the support of my party,

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which I must say was very foolish. Having said that, what does the noble Lord, Lord Kerr, mean when he says that we should have something added? What would he add to this Bill that would be devo-max? Can he tell me?

Lord Kerr of Kinlochard: That is a very fair challenge and I have no complete answer. In respect of taxation, I would argue that devo-max should be precisely what the noble Lord, Lord Sewel, does not want: that the Edinburgh Parliament should be entitled to decide on the forms of taxation. There would need to be the macroeconomic control, which he and I would need to discuss, but the forms of taxation within a given tax take-or rather within a given deficit control, because that is where the control would be-seems to be something which should be devolved in principle. I have made my point and I do not see the point of principle here. I would argue that the difficulty with devo-max is: who is going to specify it? I cannot see Mr Salmond's interest in specifying devo-max, because he wants independence-

Lord Foulkes of Cumnock: I wonder whether, when the dialogue is complete, other people might answer your question.

Lord Kerr of Kinlochard: Perhaps I should try to finish my remarks.

Lord Steel of Aikwood: If the noble Lord will allow me, surely the point he is making is valid. If the post-referendum decision is not to go independent and we take the Prime Minister at his word that more is on offer, it is possible for all the parties-including the SNP, as the Scottish Government-to join in working out the best form of devolution-plus, as I prefer to call it, which enables the Scottish Parliament to raise the money that it spends.

Lord Kerr of Kinlochard: I entirely agree with the noble Lord. I suppose that my motive, as one who believes in the union and does not wish for Scottish independence, is that it seems that the chances of a vote for Scottish independence would be much reduced if the credibility of the devo-max option had been enhanced by its prior specification. I cannot see who is going to do that and I am rather sorry that we seem to be going to miss the opportunity in this Bill to do it, subject to a sunset clause.

Lord Foulkes of Cumnock: Perhaps I can say a few words on this amendment, as one of the people whom the noble Lord, Lord Kerr, describes as being "up there". I am living in Edinburgh, I am a resident, and I will be voting in whatever referendum we have. I am looking forward to it. I do not think of it as "up there"; it is where I live and what I am part of. This is the amendment on which the noble Lord, Lord Forsyth, and I are going to disagree-at last-because I agree with the noble Lord, Lord Steel. We need full fiscal

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responsibility in Scotland, and we need to move towards that. Some people call it full fiscal autonomy; I call it full fiscal responsibility.

Is it devo-max? As other people have said, I do not know what Salmond means by devo-max. If he means other functions such as welfare or pensions being transferred to Scotland, I am totally against that. It would be catastrophic and cause tremendous problems in breaking up the system that has existed for so long in the United Kingdom. However, full fiscal responsibility is different. Having been in the Scottish Parliament, I know that at the moment it has responsibility for spending the money but not for raising the money. That means that you are irresponsible, and that at any time when you do not have any money you blame Westminster and say that the Barnett formula is not giving you enough. This is the problem that the noble Lord, Lord Kerr, referred to: how do you get to full fiscal responsibility?

I agree with the noble Lord, Lord Steel, and we might both get vilified for this, that David Cameron was right. He was right to say that once Scotland rejects separation, and we must reject it, the door will be open for discussions. There will be a dialogue between Westminster and Holyrood about the new form of devolution. The Secretary of State for Scotland is right that we need that yes/no vote as quickly as possible so we can reject separation and move on to discussing what kind of devolution we want. We could have a referendum with devolution options, but it would be far better if the federalist, unionist and devolutionary parties were to work out an agreed formula for the new enhanced devolution and full fiscal responsibility through a convention-

Lord Forsyth of Drumlean: I am most grateful to the noble Lord for giving way. I am delighted to be able to disagree with him. Could he table an amendment on Report that includes the elements that he thinks would be added after the referendum that would provide more devo-max devolution? I cannot think of anything, and he has already reserved his position on welfare. What would it contain? This is already in the Bill.

Lord Foulkes of Cumnock: When we get to the Minister's reply, I think we will find that it is not already in the Bill in the form that I would like. We need to work out exactly how much is needed to fund the planned expenditure of the Scottish Parliament and to look at ways in which that can be funded through taxes raised by the Scottish Parliament. Some people in Scotland, MSPs and others, including Peter Duncan of the Conservative Party, have come out with a scheme that they call devo-plus. I do not agree with it fully but it deserves looking at. It is one of a number of options that should be looked at for funding Scottish expenditure with income from within Scotland.

Lord Sewel: Way back in the mists of time, I used to construct a series of social surveys. One of them was a series of questions on the powers of local government. We asked people two sets of questions: the first on which powers were at which tier of local government; and the second on whether local government should

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have more powers. The initial answer to the latter question was always yes. Then we asked what powers they wanted to see local government have, and about 90 per cent of them were powers that local government already had. That is the problem with the "more powers" argument: it assumes that people are fully aware of the powers that the Parliament already has. I simply do not think that that is the case.

Lord Foulkes of Cumnock: I wish I had not given way; that intervention was not all that helpful to my argument. If the noble Lord, Lord Steel, David Cameron and I can agree on a way forward, there must be some hope that this rainbow coalition will find out what is best for Scotland and for Britain, and will avoid the dangers of separation and of breaking up the United Kingdom. That is the way forward. I have spoken for quite long enough now.

Lord Lang of Monkton: My Lords, I had not intended to take part in this debate because I have not had the opportunity to do the groundwork in order to understand what my noble friend Lord Forsyth's amendments are all about. The House is greatly in his debt for bringing to our attention the most extraordinary proposal contained in the Bill. Listening to the noble Lord, Lord Steel, I got the impression that he was arguing that we should support the Bill because we know that it is a bad Bill and that the financial provisions will not be adequate for Scottish needs. I am happy to let him intervene and correct that if I am wrong, but if he does so I know that several other people have now argued almost exactly the same point. Personally, I believe that if a Bill is bad you should not pass it, which is why in my Second Reading speech I called for it to be withdrawn. To pass a Bill because you know it is bad seems to be fundamentally wrong.

We know that the Bill will not meet the needs of the Scottish finances because in order to do so it would have to ensure that as the Barnett formula was withdrawn over time, Scottish incomes rose at the same level at least as UK public expenditure has done over the years. Research done by a couple of academics, Professor Hughes Hallett and Professor Scott, discovered that in the eight years to 2008 there was a differential between those two measurements of 0.21 per cent per annum. Over a period of time, Scottish incomes were not rising as fast as UK revenue.

There are countless arguments which could explain why the Bill cannot work and that the finances provided by this 10 per cent tax discretion will be inadequate, but that alone seemed to be a telling one. I noticed that the answer given by the Treasury in previous discussions in another place-I would be grateful if my noble friend Lord Sassoon addressed this matter in his wind-up-was that that had been true over the past eight years but would not be true over the next five years because public expenditure has been heavily reined in. I suspect that incomes in Scotland are also being pretty heavily reined in, particularly because there is a higher preponderance of public servants whose numbers are likely to be reduced and whose incomes are being controlled, and partly because the Scottish economy is in a very much poorer state than the rest of the United Kingdom's.

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One could dilate on a whole load of other reasons why the finances will not work, but the provision in the Bill to create a new tax seems to have been inserted subtly and quietly by the Government because they, too, know that the provision will be inadequate. With the Bill we are not talking about a provision to help Scotland take control of its finances and create a new accountability; in fact it is to demonstrate the complete inadequacy of provisions of this kind for Scottish accountability. That means that it is not a Bill at all but a Trojan horse.

Many noble Lords seem keen to use the failures of the Bill, which they all discern, as a springboard to bring in another Bill to create devo-max, if you like to call it that, more high taxation and other measures. Almost every measure that the Scottish Government might like to control in due course, like pensions responsibility and social welfare, will reveal further inadequacies in the Scottish capacity to provide for them once they are transferred out of the United Kingdom. Noble Lords are creating this springboard towards separation where, under what they call devolution, we shall be independent in Scotland in all but name, and possibly ultimately in name as well. That would create a situation that is not what we are supposed to be debating, so the whole debate is being conducted under a cloud of self-deception in the hope that no one will notice that failure is built into the provisions of the Bill.

My noble friend Lord Forsyth has put his finger on this point extraordinarily effectively, and I am ashamed that I had not noticed it myself when reading the Bill. I ask my noble friend on the Front Bench to address this issue and explain why the provision is there and how he thinks it will be used in future.

Lord Browne of Ladyton: My Lords, I agree with the noble Lord, Lord Lang of Monkton, that we owe a debt of gratitude to both my noble friend and the noble Lord, Lord Forsyth of Drumlean, for the amendments that they have brought forward to this part of the Bill and for the way in which they have put forward the arguments that have opened this debate.

This is the heart of the Bill. It is an important constitutional Bill, as I said in my opening remarks today when the Committee convened. I also said that noble Lords could be forgiven for thinking otherwise, given the management of its passage through the Houses of Parliament. I regret that. To the extent that I have agreed on occasion to days and dates for the management of the Bill, on reflection I now regret doing that because it is such an important constitutional Bill. No Members of the Committee should be mistaken that this is not a Bill of constitutional significance and of potential practical significance for the people of Scotland. However, without the provision that noble Lords seek to delete with their respective amendments, I do not believe that the Bill could be described in these terms at all. What was left of the Bill would be far less significant. Indeed, the Secretary of State for Scotland, Michael Moore, said in his evidence to the Scottish Affairs Select Committee that without this provision, this would be,

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Those are the words that he used and they are recorded not only in the evidence that he has given but quite clearly in volume I of the fourth report of Session 2010-12 of the Commons Scottish Affairs Committee, to which I shall refer later on because it raises a number of other important and serious issues that need to be addressed before we conclude our deliberations on the Bill. He said that it would be a smaller and less impressive Bill, and that view is reflected in the Select Committee's report.

7.30 pm

The noble Lord, Lord Steel, said that this provision and the Bill are small steps towards the sort of devolution that he thinks is necessary not only to keep Scotland in the union-I know that he is a unionist-but also for the Scottish people. I do not agree with that; this is a very significant step. I regret that we have developed what appears to be a ghost debate about these issues. The contribution made most recently by my noble friend Lord Foulkes, in which he appeared to be in agreement with the noble Lord, Lord Steel, and the Prime Minister David Cameron on this issue, clearly demonstrated what is going on in this debate. He is talking about something different from what the noble Lord, Lord Steel, is talking about. I have no clue what the Prime Minister is talking about. The three of them can appear to be in agreement only because there is an utter lack of definition of what each of them was talking about.

To some degree I commend the initiative that has become known as devo-plus but there seems to be a competition to find a suffix to "devo" to come up with something different that will resonate with the Scottish people. Fundamentally, I agree with the noble Lord, Lord Kerr. The answer lies in the Bill. In his opening remarks, the noble Lord, Lord Forsyth of Drumlean, said entirely accurately that there are precious few people in Scotland who understand the significance of the Bill or the potential of this legislation. I have to say that when the Prime Minister visited Scotland recently, he was among those people who did not understand what was already in the Bill. If he had, he would have spent time explaining the potential of the Bill to the people of Scotland, including the opportunity-which already exists in the Bill-for Scotland's ambitions for the control of its fiscal policy. I will explain that in a moment. Instead, he offered the people of Scotland something ill defined for the future, which subsequently had to be explained away in what appeared to be an off-the-cuff remark.

I am a politician so I will make a political point here. This is not the only time that I have seen the Prime Minister not understand a piece of legislation that his Government are taking forward. Indeed, I have seen him do it at the Dispatch Box. It is deeply dangerous to talk in vague terms about these issues and then leave the debate in Scotland to be dominated by those undefined words when there is no shortage of people in Scotland who will define them for him and will define them for their own purposes. That is the compelling reason why we need to stop talking in general terms across the devolution parties about the level of agreement that there appears to be among us, and start putting together an explanation of what we

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collectively want for the Scottish people for the future and talk to that, instead of constantly competing with each other. We can then fill this space, which the ill defined devo-max currently fills.

I am conscious of the time. This debate has perhaps taken longer than many people expected because it stands between them and their dinner. However, there are very important issues here and this may be the most important debate that we have on the Bill. Therefore, I intend to go through the points that I want to make with some degree of care.

In Part 3, Clause 28 creates the framework within the 1998 Act for the devolution of financial powers. Significantly, as well as devolving legislative competence over new specified devolved taxes in relation to land transaction and landfill, Clause 28 provides a mechanism for the devolution of additional taxes by statutory instrument, subject to the affirmative resolution of both Houses of the UK Parliament and the Scottish Parliament. As this has dominated our debate in Committee, it undoubtedly raises an important question about whether devolution of UK-wide taxes should be permitted without primary legislation being brought before and approved by this Parliament. I have to say that I do not think that is necessary and I will go on to explain why. There is a much more significant disagreement between me and the noble Lord, Lord Forsyth, than there is between him and my noble friend Lord Foulkes or anyone else in this Committee. The Bill is right in this regard but it is not properly understood. It can be improved but it will not be improved by taking this clause out. I will explain why.

First, I will deal with my noble friend Lord Maxton's point that the ability to raise taxes defines the characteristics of a sovereign Parliament.

Noble Lords: Lord Sewel.

Lord Browne of Ladyton: I thought my noble friend Lord Maxton said that. I am sorry; it was my noble friend Lord Sewel. If I had had a private conversation with the noble Lord, I might have been able to reveal that beforehand. The noble Lord, Lord Kerr, in part of his contribution that was very helpful, blew that out of the water. States in the United States of America have, within the federal structure, the ability to raise taxes without being sovereign. Across the world, I am sure there are many other examples that I do not know about of devolved Administrations having the power to raise taxes within constitutions that deny them sovereignty. I am certain that I could find them if I had the research facilities available to me.

Lord Forsyth of Drumlean: I will not make a smart-alec point-although I should not say "Smart Alec" in this context in this debate-about other states that can raise taxes. I follow the noble Lord's argument, which I absolutely respect. However, I respectfully suggest that he needs to distinguish between the ability to raise taxes and the ability to create new taxes. The point that his noble friend and I were making is that this clause gives the Scottish Parliament the power to create completely new taxes. His noble friend argued, as I did, that that is distinct from being able to raise taxes. There are states in the US that can set the sales

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tax but, as far as I am aware, do not have the freedom to invent completely new taxes. However, I might be wrong about that.

Lord Browne of Ladyton: Someone had to create the sales tax in the first place. I might be wrong but I do not think that in the United States the creation of a sales tax is a federal function that is then devolved to the states.

Lord Sewel: My Lords-

Lord Browne of Ladyton: May I just answer this point first, if noble Lords will allow me? I am perfectly willing to try to dredge up examples as I stand here, but it would be pointless. I fundamentally disagree, as does the noble Lord, Lord Kerr, that the difference between creating new taxes and raising taxes is as fundamental as the noble Lord, Lord Forsyth, says it is. There is very little meeting of minds between us in this, but there is no meeting of minds even in relation to that.

Lord Sewel: I am grateful to my noble friend for giving way. The comparison to the United States is very ill judged. The United States is a federal system. The United Kingdom is a unitary state with devolved Administrations, which is fundamentally different when you talk about sovereignty.

Lord Browne of Ladyton: We have already had the benefit of a very interesting contribution from my noble friend Lord Morgan, which I will read with care, about the Protean nature of sovereignty. I merely responded to the point that I understood my noble friend Lord Sewel to make-that the defining characteristic of sovereignty relates to taxation. He seems to be conceding the point that it does not. I am sure that if we all read what the noble Lord, Lord Morgan, said this afternoon and perhaps read more extensively what he has probably written on the subject, we will conclude that it does not. I make the point in passing that I do not think taxation is the defining issue of sovereignty.

On the genesis of the power, the noble Lord, Lord Forsyth, asked whether it was recommended by Calman. The true answer to that is that it was not, but the power has its roots in the recommendation of the Calman commission, which concluded:

"The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland".

I am not entirely sure whether that statement has a sufficient shock effect for the noble Lord, Lord Forsyth, as I think he indicated that he would be surprised if Calman recommended that. However, there can be no doubt that the Bill goes further than this. As I said, the power was not recommended by Calman but it has its roots in the recommendation of the Calman commission.

The Bill goes further than the recommendation, not only prescribing a much wider power for the creation of new Scottish taxes, which is the concern of the noble Lord, Lord Forsyth, but allowing for the future devolution of existing UK taxes, as Scottish Financial Enterprise and the Scottish Affairs Select Committee, to which I have previously referred, have pointed out.

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However, there is also no doubt that the breadth of this provision answers a specific call for the further flexible development of the devolution settlement. That is why it is so important to the Bill and of such great significance and cannot be dismissed as a small step. I say that with all due respect to the noble Lord, Lord Steel. It is a very significant step in the devolution settlement. I agree with the noble Lord, Lord Forsyth, that it is a pity that this measure has not been accorded due significance in public debates by those who should have known about it.

The significance of the Calman commission's recommendations as a whole lies in providing a framework for the continued development of devolution in a legitimate and managed way. I support that. However, I argue that if we agree with the principle of greater financial accountability for the Scottish Government-we on these Benches broadly agree with that; I do not think there is much discontent about that on our Benches-the decision over whether additional taxes should be devolved in the future comes down to a decision about the practical impact of such a devolution for Scotland and for the United Kingdom as a whole. To that extent I agree with the noble Lord, Lord Kerr.

Thus, this is not in my view an issue of constitutional principle. The issue of constitutional principle is whether we agree to the devolution of taxes, which is what the Bill is specifically about. Thereafter, it is a matter of the practical requirements of such a power. I hope that noble Lords who think they disagree with me will bear with me as I think that I will answer the point that is milling round in their heads about why this argument is deficient. It is for this reason that we have tabled Amendment 51B, which would place a duty on the Secretary of State to seek parliamentary approval for draft regulations on the conditions that must be met by any proposed tax for it to be devolved and the specific consultative procedure that must be followed by the Scottish and UK Governments. It has become a habit in this Committee for noble Lords to say that the drafting of measures may be deficient. The drafting of the relevant amendment may indeed be deficient, but this is the best that I could do. If the Committee and the Government are inclined to support it, we can make it much better between now and Report.

I believe that much of the concern expressed by my noble friend Lord Sewel and others about the wide-ranging nature of the power in new Section 80A could be allayed if the Government set out in more specific detail the criteria that will be expected of any new candidate for devolution and a clear process by which those criteria will be applied. I regret that we have got this far without that becoming apparent for the reasons that I am about to go into. The big problem is that Parliament is being asked to approve the allocation of a significant and wide-ranging power to the Executive with practically no information about how this will be used in practice and the safeguards that will exist to constrain it.

Indeed, the Select Committee, to which I have already referred, understood this well. It concluded in its report that it was,

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In his evidence, the Secretary of State for Scotland, Michael Moore, set out extensive and broad criteria that he said would need to be applied to any tax for it to overcome the hurdles necessary for devolution.

The Select Committee went on to ask the Government,

We should bear in mind that the committee is talking about the other place. I commend the report of the Scottish Affairs Select Committee more generally to noble Lords. I do not know how many of them have had the opportunity to read it, but I commend it. I particularly commend paragraphs 92 to 96, although I do not intend to read them out at this time of night, and the evidence of the Secretary of State, Michael Moore, because it reveals significantly the basis of a mechanism for dealing with this issue.

Noble Lords should not underestimate the importance of the power provided by Clause 28, and I do not think that they will do so after this debate. It provides a real and tangible mechanism for the continued strengthening of the devolution settlement and the devolution of further powers. In many ways it is the antithesis of the further undefined devolution that has been alluded to by the Prime Minister of late and, indeed, by the First Minister in his flirtation with the concept of devo-max, whatever that might be.

7.45 pm

Lord Forsyth of Drumlean: I hope that the noble Lord might help me. Is he saying that he thinks this clause is too broad in its scope and that there should be some kind of constraint by way of criteria as to which taxes could be invented? As it stands, a wealth tax, a further tax on inheritance or a roof tax could be implemented, although a poll tax is probably less likely. Is he saying that, speaking for the Opposition, he favours some kind of procedure that would constrain the ambitions of a devolved Administration in this respect, or is he saying that this measure goes to the heart of the whole Bill and that it constitutes devo-max?

Lord Browne of Ladyton: I am not saying that this is devo-max; I am saying that this is the Bill. The Bill is a very significant piece of legislation and a remarkable advance in the potential devolution in Scotland. However, as the noble Lord has pointed out, it is misunderstood and has not been properly explained. Broadly, it is not supported or championed in the observations of those who have brought it to this Parliament. More specifically, it has not been championed by the Prime Minister, who has suggested in fact that it is just a small step and that greater steps can be taken in future.

The people who drafted the Bill and are responsible for it may not have intended to do this, but they have given us the answer to the challenge for the future post the referendum on the issue of separation. They may not know that they have given us the answer but they have. Now they need to build the other part of the mechanism that allows this Parliament-the sovereign Parliament-to play its proper role in deciding what the criteria are in advance of specific proposals of the

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sort of devolution that can take place. In other ways, they should spell out, as Michael Moore did in his evidence to the Select Committee, the criteria that need to be applied and would need to be met before a tax-either a new one or a part of the United Kingdom's existing taxation-could be devolved.

We need to amend the Bill to provide that mechanism. I believe that it can be provided by regulation, which is why the amendment has been drafted in the way that it has. At the risk of boring noble Lords, particularly the noble Lord, Lord Forsyth, I do not think it is an issue of principle, once we establish the principle, as we will by passing the Bill, that taxation can be devolved in this way to the Scottish Parliament. It is a mechanism to make sure that that is done properly and in a way in which the various parts of this deal take their proper responsibilities. That is the bit that we are missing because this Parliament is entitled to be confident that any devolved taxes will be used for the benefit of the Scottish people and the union. It is for this reason that we believe the Government have a duty to enshrine conditions to this effect in some form of legislation-regulations would be quite sufficient. This would provide a clear regulatory framework that can be approved by this Parliament and then used flexibly in the future in the context of a changing settlement between the United Kingdom Parliament and the Scottish Parliament -between the United Kingdom and the people of Scotland.

I say to the noble Lord, Lord Sassoon, whom I welcome to our Committee's deliberations-I do not know how much previous experience he has had of Scottish political matters, but over the next few hours he is in for a crash course-that the Scottish Affairs Select Committee raised these issues in its report on the Bill almost a year ago today. I therefore hope that having had the benefit of a year to consider the matter further-and I am sure the noble Lord has been thinking of nothing else-at the very least he will be able to provide this House with some sort of detailed explanation of the mechanism and criteria to be applied on the use of this power. If he cannot do so, it would be helpful if he provided us with at least some hypothetical examples of taxes that could meet such criteria.

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, one thing on which I think we are all agreed is that we are getting to the heart of the Bill. There is a range of views about how significant the changes are in Clause 28, but we all recognise the importance of what we are discussing.

The Government are quite clear that the Bill delivers substantial new powers to the Scottish Parliament-powers that have been included as a result of careful and detailed consideration. I want to focus on what is in the Bill, not on what hypothetically might be in it. The Government have been clear that any consideration of further powers to be devolved is for after a referendum on independence. Let us therefore concentrate for now on what we have in front of us.

I should also say at the outset that as an intruder from outside Scotland and a Briton from elsewhere, as the noble Lord, Lord Browne of Ladyton, suggested, my observation is that to date devolution in Scotland, of which the Bill is part of a continuing process, has

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been delivered as a result of lengthy discussion, analysis of evidence and cross-party consensus. That was how the settlement was delivered in 1997 and that is how the measures in the Bill have been developed. I am grateful for the noble Lord's confirmation at the outset that he believes that the tax-raising powers granted in this clause are appropriate.

Lord Forsyth of Drumlean: The tax-creating powers in the Bill, as the noble Lord acknowledged, were not recommended by Calman. A phrase, "specified taxes", was put in there to deal with the uncertainties over an aggregates tax. No one has been consulted or is aware-as far as I can see, and that is what my amendment relates to-that the Bill provides for the creation of completely new taxes. I do not know where that came from. It is certainly not part of the Calman recommendations and has not been subject to any extensive discussion or consultation. Indeed, my noble friend Lord Lang, the former Secretary of State for Scotland, said that he was not aware of the issue until he looked at the Bill in detail-and he is one of the best-informed people in Scotland on this matter.

Lord Sassoon: If my noble friend would bear with me, we will get to this point and to other points he has made. If he wishes to repeat the points he has made previously, he can do so ad nauseam. However, I say to him respectfully that we have got the point loud and clear, and I will come on to it. As the noble Lord, Lord Browne, pointed out, the genesis of this power is in Calman. It is a power that has been debated and approved of by committees in another place in this Parliament, as well as in the Scottish Parliament-but I will come back to that. My noble friend completely mischaracterises the debate so far over this power to create new taxes.

We are discussing a number of amendments to an important clause, and I should therefore make sure that we are clear about the architecture of it before I come back to the heart of the arguments. Clause 28 inserts new Sections 80A and 80B into the Scotland Act. New Section 80A provides an overview of the new taxation provisions. New Section 80B introduces a power to add new devolved taxes to those devolved by Clauses 33 and 35, and makes certain consequential provisions applicable to devolved taxes.

Amendment 51A, tabled by the noble Lord, Lord Sewel, would remove new Section 80B. The amendment of my noble friend Lord Forsyth of Drumlean seeks to remove devolved taxes altogether from the legislative competence of the Scottish Parliament, thereby preventing it from legislating on all tax matters besides local taxes. The amendment tabled by the noble Lord, Lord Browne of Ladyton, and the noble and learned Lord, Lord Davidson of Glen Clova, would provide approval of the criteria and procedures under which new taxes will be considered for devolution by this Parliament before the power could be used.

I propose to outline briefly why the financial aspects of the Bill introduced in new Section 80A, and which I stress my noble friend Lord Forsyth's amendment seeks to remove, will raise the accountability of the Scottish Parliament and benefit both Scotland and the UK as a result. I very much note what my noble friend

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Lord Steel of Aikwood said about the importance of accountability. After I have dealt with those issues, I shall address in more detail new Section 80B, the subject of the amendment of the noble Lord, Lord Sewel, and the arrangements that we propose for the approval of new taxes-the subject of the amendment in the name of the noble Lord, Lord Browne, and on which he seeks assurances. That is a critical element of the construct to which other speakers in this debate did not give proper weight.

New Section 80A introduces the finance clauses in the Bill. It grants significant positive new powers to Scotland, and I should outline the measures in the clauses and why they represent such an important and beneficial step for both Scotland and the UK as a whole. The Scotland Act 1998 specifies that tax policy, aside from local taxes, is outside the Scottish Parliament's legislative competence. The changes made by the Bill that are introduced in new Section 80A will amend the Scotland Act to enable the Scottish Parliament to legislate on certain devolved areas of tax policy. The changes will give the Scottish Parliament a real stake in Scottish economic performance because a significant proportion of the budget for public services in Scotland will come directly from taxes set and raised in Scotland. Some speakers have suggested that it would be appropriate to go much further, but we are taking a significant step here. It will enable the full devolution of stamp duty, land tax and landfill tax and enable the Scottish Parliament to legislate for a Scottish rate of income tax.

Lord Maxton: My Lords, I am not very clear about the Scottish rate of income tax. I am a Scot; I live in Scotland-that is where my home is-but I am paid a pension by Parliament which comes from Cardiff. How does that become part of that? It is paid directly into my bank; as far as I know, they do not need to know where I live; so how do I get income tax variation for Scotland alone?

Lord Sassoon: If the noble Lord will forgive me, we are coming to income tax under the next clause. I am sure that we will come back to that extensively and properly later. This is the enabling clause that enables the setting of the Scottish rate as well as the focus of the amendment on the power of the Scottish Parliament, with the agreement of this Parliament, and subject to safeguards-to which I shall come-to introduce new taxes.

I hope that the Committee will agree with me and the Government that these changes will enable the Scottish Parliament and the Scottish Government to respond better to the evolving needs of Scottish society and the Scottish economy; and that they will increase the Scottish Parliament's accountability, as its decisions on public services will be directly related to decisions on Scottish taxes.

I see that the noble Lord, Lord Foulkes of Cumnock, is nodding in agreement; I hope that that will continue right through this section of the Bill. No, he is saying that it will not; no doubt we will come back to football clubs and other matters later, but we agree so far.

Thirdly, these changes will bring decision-making over the issues that affect them closer to the Scottish people, which we believe is appropriate. New Section

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80B will create the power for the Scottish Parliament to introduce new taxes, subject to the agreement of both Houses in this Parliament. The noble Lord, Lord Sewel, was quite right to draw attention to the approval process. He seems to want to draw it even more tightly but, on the other hand, he points out-partially in answer to my noble friend Lord Forsyth, who seems to think the approval process to be woefully inadequate-that the clause states that it must have the agreement of both Houses in Parliament, which is not necessarily the case with all taxes as it stands at the moment.

Lord Forsyth of Drumlean: On that point, perhaps my noble friend could deal with the argument here. If I may say so, he has put it as if it is not a major constitutional point. As a Member of the House of Commons, I was taught that the main purpose of the House of Commons was to vote means of supply; that is its main function. Therefore, the creation of new taxes is a matter which is dealt with thoroughly by primary legislation through a Finance Bill, which enjoys certain privileges. Those matters do not come to this House because this House has no part to play in matters of taxation, following the efforts of the previous Liberal Administration.

It seems to me to be a hugely novel concept that the House of Lords should be involved in approving the creation of a new tax. Can my noble friend explain why that is included in the Bill?

Lord Sassoon: My Lords, again, I will get there in the logical flow of the argument, if my noble friend will permit me. He does not make new points; I have them on board; I will try to address them, but I think we should go through the logical steps of exactly what the construct will be, because this is a critical question. I do not dismiss it.

Why is it so important? The power will enable the whole of an existing tax to be devolved and allows for the creation of a completely new devolved tax. That is clear. It is a power recommended by Calman but which the Government are not in a position to devolve at this time so, to that extent, it is necessary to implement Calman.

Lord Sewel: Does the noble Lord accept that there are fundamental differences between using orders and using primary legislation? One of those fundamental differences is that an order cannot be amended. I should have thought that, on the creation of new taxes, it is likely that Parliament might wish to amend such an order when it comes before it.

Lord Sassoon:Again, perhaps I may be permitted to go through the complete steps needed to introduce any new tax.

The Government believe that we have a proportionate and appropriate package. We need to take all the measures in the round. In this case, to address the specific question of the role of your Lordships' House-I will not be drawn into taking all the points out of order, but the question of the role of the House of Lords is important-it is because the power addresses

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the constitutional question of who should be able to set a tax, not the rate of the tax nor the structure. The question of the introduction of the new tax is indeed one in which this House should have a role, which is included in the Bill and the clause.

Lord Forsyth of Drumlean: I apologise for interrupting my noble friend again, but this is central. For the sake of argument, let us say that this power is used by the Scottish Parliament to introduce a mansion tax or a wealth tax. Is my noble friend saying that this House could consider and reject it and that that is practical politics? It seems to me that part of the 1911 settlement was that this House did not get involved in those matters. In a sense, I am here arguing for more power for the Scottish Parliament, not less, because I think that this has not been thought through.

Lord Sassoon: The answer is yes and yes to my noble friend. The introduction of new taxes is a constitutional change to the United Kingdom and a power which will be introduced. I will go through the steps one by one, because we have not debated them all fully so far this evening. One of the steps is for the order to be approved by both Houses of Parliament; the Government believe that to be appropriate. So that is a yes. There may be questions about whether orders can be amended and other questions, but emphatically it is our intention that the order to implement a new tax has to be approved in both Houses. That is clear. My noble friend may look surprised, but that is the case. I hope that that gives him significant comfort.

Lord Cormack: I am most grateful to my noble friend for giving way, but it would be invalid under the Parliament Act for this House to express a view and vote on taxes within the United Kingdom.

Lord Sassoon: My Lords, I am not a constitutional lawyer, but those who drafted the Bill, who are quite clear about the centrality of this to the new constitutional settlement embodied here, are clear that it is a proper power to be exercised in the way intended under the Bill.

If noble Lords will forgive me, I would like to go through all the steps. As I said, this is a construct with a number of elements to it and we should look at it in the round. It comes to the heart of the issue that was principally raised in detail by the noble Lord, Lord Sewel.

There is a technical issue relating to the noble Lord's amendment which we should get out of the way: the amendment would also impact on the provisions which allow for devolution of taxes on disposals to landfill and on transfers of land. The effect would be to prevent the Scottish Government collecting and managing such taxes or entering into agency arrangements with others to collect and manage the taxes for them. This would be critical if the Scottish Government were to be able to exercise their new tax powers effectively. I park that on one side but it is not an unimportant question.

I now turn to the central question of the power to devolve new taxes. I shall go through this in a way that I hope will give noble Lords some assurances that sufficient and proportionate safeguards are in place to

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ensure that this power is exercised to the benefit of the UK as a whole. I should also like to explain its importance in raising the accountability of the Scottish Parliament. There are those who are clearly concerned that the power goes too far but there are others who believe that the power does not go far enough. In the middle, we have the noble Lord, Lord Browne of Ladyton, who wants more assurance on the criteria.

First, I come back to the central authority that would be needed for new devolved taxes to be added. They would need to be added by Order in Council, which would be subject to the type A procedure set out in Schedule 7 to the Scotland Act. It is clear that this requires that no recommendation can be made to Her Majesty in Council until a draft has been laid before, and approved by, both Houses of Parliament and by the Scottish Parliament. Therefore, there will be thorough scrutiny of any proposals under this power, including the opportunity for Members of this House to debate fully any such proposals.

What did not get so much attention in this debate were the criteria to be adopted when looking at any new tax. This was a point on which the noble Lord, Lord Browne, focused his remarks but other speakers seem not to have taken full account of these criteria. They are laid out clearly in the Command Paper that accompanies the Bill. I believe that they set a clear framework of guidelines as to how the Government will consider the impact of any new tax proposed by the Scottish Parliament and hence decide whether to devolve it. For the avoidance of doubt, perhaps I may read out the criteria. They will include the potential for the new tax to create or incentivise economic distortions and arbitrage within the UK; the potential that the new tax might create for tax avoidance across the UK; the impact of the proposed tax on compliance burdens across the UK; and the compatibility of the new tax with EU legislation and rules, such as those covering state aid, the single market and the Human Rights Act. Therefore, there will be a considerable screening process before the Government decide to propose any new devolved tax.

I stress that the foremost consideration here is the need to ensure that any proposed tax will not impose a disproportionately negative impact on UK macroeconomic policy or impede to any degree the single UK market. Taxes will be judged against their potential to create or incentivise economic distortions or to generate avoidance or an impact on compliance burdens across the UK. It is those criteria that will give the Scottish Parliament the flexibility to adopt the policies that it considers to be best for Scotland, while preventing adverse effects on the rest of the UK.

8.15 pm

Lord Forsyth of Drumlean: Perhaps I may ask my noble friend to consider the politics of this, as opposed to what the rule book says. I suggest that we look at the difficulty that the Government have at the moment in deciding whether to legislate on a referendum. That is clearly a matter for Westminster and not for the Scottish Parliament but the Government are doing cartwheels trying to find a way to use Section 30 because they do not want to be seen to be dictating to Scotland. If the Scottish Parliament, with this power,

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decides to create completely new taxes-perhaps putting up the top rate of tax to 60 per cent or removing the exemption for unearned income or whatever-does my noble friend really think that it will be practical politics for this House or even the other place to say that that is not going to happen because under criterion 4C it will influence macroeconomic policy? That is not real politics. A genie is being let out of the bottle here and we should not deceive ourselves about how radical this is as a proposal. I hope that my noble friend will address this for what it is and not for how it is presented.

Lord Sassoon: My Lords, my noble friend's examples concern changing the rates of existing taxes rather than new taxes. However, I think that it will work fine. With the process that has led up to these clauses in the Bill, Calman has looked at potential taxes for devolution. There has already been considerable discussion in Scotland and between Scotland and the UK Government. When it comes to the potential for new taxes to be added, I have explained the criteria which the UK Government have set down. On procedure, we are working closely with the Scottish Government to clarify the process that requests for new taxes will go through before they are brought before both Houses of Parliament. We have an administrative process to be agreed by the Joint Exchequer Committee, which brings together Ministers from both Governments. Therefore, I see a process here-

Lord Foulkes of Cumnock: With all these discussions that have taken place, can the Minister tell the Committee whether the Scottish Government have accepted these provisions in the Bill?

Lord Sassoon: Of course we await legislative consent, but there have been many detailed discussions; there have been the reports of committees in both Parliaments and the noble Lord knows perfectly well-better than I-where things stand. As to the question of what fits the criteria, I am not going to speculate about what future taxes might come forward, but one has the useful case study about the Scottish land transaction tax which fits the criteria very well. That points out precisely how other measures could come forward in future.

Lord Forsyth of Drumlean: The Minister said this is following Calman: it is not following Calman at all. As the noble Lord, Lord Browne, pointed out, Calman recommended a power to deal with specified taxes. Why is the Bill completely open-ended on the subject of new taxes? If there are particular taxes that would fall within the criteria, why not say what they are rather than leave it open-ended? My noble friend criticised me for giving an example of existing taxes; I could think of other examples. Suppose Mr Salmond invents a new tax on oil and gas landed in Scotland, for example. One could think of all kinds of taxes, but to present this as arising from Calman is completely wrong. Calman suggested a limited ability in respect of those taxes which it was not appropriate to do at the moment for various technical reasons. The two

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I would think of are air passenger duty, which is actually not included in the Bill, and the aggregates tax. This, however, is much, much broader and more far-reaching. Why are we going for such an open-ended position?

Lord Sassoon: My Lords, recommendation 3.3 of the Calman report states:

"The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland".

In Calman, certain taxes were specified. In this Bill, we are building on that and building in a procedure which is proportionate and would require the agreement of both Parliaments in future to deal with specified taxes-taxes that might be specified in future. I have explained to the Committee what the criteria are. We have an amendment that sought to tease out what they are and I explained them. The critical one relates to the macroeconomic effect. It is entirely right that we take the Calman recommendation and think about how there might be new taxes to be specified in future. It is not some open-ended invitation for the Scottish Parliament to introduce things. There are very clear safeguards, including an appropriate parliamentary procedure in London.

Lord Browne of Ladyton: I intervene with some trepidation in this fashion because I made clear in my remarks in this debate that I seek to support this Bill. However, the noble Lord is making it more difficult for me to support this Bill for a few reasons which I will explain, because I want to pose a significant question to him. First, he said in his introductory remarks-which I passed over but I come back to-that these matters were specifically debated and passed by the other place. He should be careful about deploying that argument, given the paucity of debate there was on any of these provisions in the other place because they were timetabled. Quite large chunks of this Bill were never scrutinised at all.

Secondly, he has repeatedly characterised my amendment-which I will not press this evening-as seeking further and better explanation. It is actually not: it is seeking a part of a construct which translates what he has said on criteria and mechanism-which he says is good and is in the White Paper and the Command Paper, and was in the evidence of the Secretary of State-into regulations that this House and this Parliament can debate and decide upon. That is different.

Thirdly, he encourages us to believe that the construct of co-operation between the Scottish and UK Governments that has been put in place is already starting to address some of these issues. The joint Exchequer committee that he refers to has met once, on 27 September, which was after the Second Reading debate in this House. This was an issue that I raised on Second Reading; his noble and learned friend the Advocate General for Scotland sent me a detailed letter about what happened about these co-operative processes, but they are not functioning at all. They are barely functioning and no significant progress is being made in relation to the co-operative work that is

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necessary. The Minister shakes his head. Perhaps he will address the two issues that I have raised in this intervention. The first was about criteria and process translated into regulation. The second was a question: what is happening between the United Kingdom Government and the Scottish Government about preparing for the devolution of this power?

Lord Sassoon: I think that the noble Lord made at least three points. The first concerned the degree of scrutiny in another place. It highlights the very valuable, indeed essential, role that this House customarily plays. It is no different with this Bill. Of course, there was committee scrutiny as well as scrutiny in the formal stages of the Bill.

Lord Browne of Ladyton: My Lords-

Lord Sassoon: Perhaps I may answer the questions that the noble Lord has already raised.

Lord Browne of Ladyton: I refer to scrutiny and point out, again with some diffidence to the noble Lord, that this is a constitutional Bill. Everything that happened in relation to the Bill happened on the Floor of the other place. The Bill went into Committee there. It was timetabled by the Government and many of these provisions were not debated.

Lord Sassoon: My Lords, I will not stand here and criticise or question the way that another place goes about its business. We are now giving the Bill-and this clause in particular-appropriate scrutiny, and I will take as long as I need to give appropriate answers to the questions that were raised.

Lord McFall of Alcluith: I refer to the contributions made already. Under the Bill, could the Scottish Parliament reduce corporation tax and increase taxes on oil and gas?

Lord Sassoon: If the Scottish Government came forward with new tax proposals, they would have to meet the criteria that I laid out, which would include provisions on the macroeconomic effect. Clear criteria are set out and it would not be sensible for the Scottish Government to come forward with tax proposals that did not meet the criteria. The noble Lord, Lord Browne, asked whether the criteria should be enshrined in some way. It strikes an appropriate balance to have them clearly set out in the Command Paper.

Lord Sewel: My Lords-

Lord Sassoon: I will give way in a moment. Perhaps I may try to answer some other questions first. The criteria are clearly set out and it is appropriate-

Lord Sewel: On this point, the noble Lord, Lord Forsyth, mentioned on a number of occasions the real politics of the Bill. Following my noble friend Lord McFall, perhaps I may ask the Minister whether he is

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aware of the phrase, "It's Scotland's oil", and of how potent that would be in any debate if the Scottish Government brought forward an oil tax.

Lord Sassoon: My Lords, I am not sure that it is profitable to speculate about what, at some time in the future, a Scottish Government might come forward with. I have set out that there are clear criteria that the UK Government will use to screen proposals. It is very important that the criteria are clear to the Scottish Government-and they are. Secondly-I will give way in a moment to the noble Lord, Lord McFall-it is also appropriate that they are set out, as they are, in a Command Paper, which will give flexibility as circumstances change. The criteria are fundamental and clear.

Lord McFall of Alcluith: Perhaps I may intervene again. I do not have a clue about what the Minister's answer to my question was. Corporation tax has been a big issue in Northern Ireland and Scotland. It is a contemporary issue in Scotland. I put it to the Minister again: could the Scottish Government come forward with proposals to reduce corporation tax and increase oil and gas taxes? I ask for a simple yes or no answer.

Lord Sassoon: The answer is a very simple yes. They could come forward with such a proposal, and the Government would judge it against the criteria. If it met the criteria, it would then go through the procedure of the two Houses of Parliament.

8.30 pm

Lord Foulkes of Cumnock: I have a summary of the majority and the minority reports of the Scotland Bill Committee of the Scottish Parliament. The Minister will know that the majority report recommended that,

I spoke with Linda Fabiani MSP just a couple of weeks ago and asked when this report was going to the Scottish Parliament, and she said not until after we have made a decision down here.

We have got deadlock on this. The Scottish Parliament will not consider this report until we have dealt with this, and we know that it is going to recommend something different. Surely, in view of all the criticism that we have had from both sides, and now from the opposition Front Bench, the Government would be well advised at this very minute to take this whole Bill away-we are going to look at it again next month-and reconsider this whole matter, after discussions with the Scottish Executive about how it will be dealt with in Scotland. Otherwise we will be in a stalemate.

Lord Sassoon: I thought that my agreement with the noble Lord, Lord Foulkes of Cumnock, would not last terribly long. This is a general point, which he could raise on every clause of this Bill. With all due respect, I really do not know what it has to do with this clause in particular.

Lord Foulkes of Cumnock: Why-

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