Happily, it did not turn out that way. Professor John Kay, who I understand is a leading adviser to the Government of Scotland, wrote that, “nationalist sentiment” will not,

“be assuaged by the transfer of responsibility for housing benefit”.

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There is an awful lot more to be done. He concludes:

“Effective political leadership and a strong economy are the only way to define the resentments expressed in current public opinion”.

I started, and will finish very quickly, to the happiness of the Whips, by saying that I commenced my apprenticeship in Glasgow. I am very lucky to be followed by the noble Lord, Lord McConnell. In that great city, we have enormous industry. There is the Weir Group, which my noble colleague, the noble Lord, Lord Smith of Kelvin, chaired and ran for many years. I think that he has one year more than me as a qualified accountant. You could not find anyone in Britain or in the United Kingdom who would do a better job than he will for Scotland, its industry and its economy.

Five minutes ago, we had a huge group of young Royal Navy ratings up in the Gallery. Barr and Stroud is a world leader in naval equipment; once again, it is in Glasgow. We also have British Aerospace, or BAE, and the shipyards. My noble friend Lord Stephen came with me to Babcock International in Renfrew—world leaders in energy, microwelding and nuclear security. Those four firms are world leaders and they are in Scotland. They will provide the foundations and the seed corn for any development or devolution that will be discussed in my lifetime or further on.

I am very grateful to your Lordships for giving me five minutes.

5.59 pm

Lord McConnell of Glenscorrodale (Lab): My Lords, the result of the Scottish referendum was clear enough to resolve the issue of Scotland’s place within the United Kingdom for at least a generation, but it was also close enough to make all of us in positions of responsibility, elected or otherwise, sit up and listen to the message that it sent. Probably the most used phrase in Scotland over recent months has, I suspect, also been used across many of the towns of the north of England and elsewhere in the UK: “They just don’t get it”. That is a telling reminder for us of the disconnect that exists today between the Government, Parliament and the people that they are there to serve. In recent years there have been bonuses paid that appear to have been completely unjustifiable, scandals covered up at the British Broadcasting Corporation, the ongoing scandal over many years of expenses for Members of Parliament, and the “jobs for the boys” culture that appears to exist in and around British institutions. The feeling that they—the metropolitan elite in one form or another—are in it for themselves ran deep in Scotland in August and September. Those voting yes were not all nationalists, but they did all want to kick the establishment and the established order.

Lord Foulkes of Cumnock: Does my noble friend not agree that there have been some problems in Holyrood just as much as in Westminster?

Lord McConnell of Glenscorrodale: Yes, but I do not think that the issue there in any way reflects the perception in the country, not just in Scotland, of

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what happens between people in positions of responsibility and in established institutions in London and the metropolitan centre.

It is a matter of real regret for me that the fantastic atmosphere, very similar to that described by my noble friend Lady Royall, that existed in Glasgow and the rest of Scotland in July during the Commonwealth Games dissipated so quickly and turned into such bitterness and bile. It is also a matter of regret for me that it took Dan Snow, Bob Geldof and others to positively express what was good about the United Kingdom and worth keeping, in a way that most of the politicians seemed unable to do. It is a matter of deep regret for me that so many of what I would describe as UK politicians seem unable to see and praise, even from time to time, the good that has happened in the devolved Assemblies and Parliaments since they were created. That resonates with the people because it adds to that perception of being out of touch and at a distance. It is also a matter of regret for me that, in an unnecessary panic, commitments were made about additional powers for the Scottish Parliament that will be a challenge to keep. However, we are where we are, and keep those commitments we must.

I believe very strongly that the Smith commission must drive its work based on the following principles: the principle of subsidiarity, by which decisions should be made at the most local level possible; the principle of mutual respect between the two Parliaments and between the two Governments; and the principle of fiscal responsibility, but also fiscal opportunity for the Scottish Parliament so that it can make decisions that might spark off entrepreneurial activity and other developments in Scotland, in addition to having responsibility for the expenditure that it has made so far and will make in the future. The Smith commission should absolutely commit itself to doing nothing that would damage the UK single market. It should also have firmly in its thoughts the need to redistribute across the UK from rich areas to those that have more needs.

I believe strongly that the unionist parties will need to move their current policy positions. A settlement based on any of the current submissions will not be sufficient to create stability and allow the debate in Scotland to move on to using powers rather than more powers. The final settlement will require somewhere between half and two-thirds of expenditure being the responsibility of the Scottish Parliament through tax-varying or tax-setting powers. I believe that those powers should be not just for income tax; they should be partly income-related, partly business-related and partly sales-related. There must be the power to vary rates of tax up and down but not to assign revenues. If these additional powers are to be devolved to Holyrood, Holyrood itself must reform to ensure that government and decisions there have more accountability, and more checks and balances, than they appear to have at the moment.

With regard to the situation in the UK, coming out of the referendum it is vital that the UK looks at votes for 16 and 17 year-olds. The issue of English consent—not necessarily English votes—for English laws will have

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to be addressed in due course. Reform of this House, based on more equal representation for the regions of this country, will be essential. Individual matters such as the recall of MPs and the future of the territorial Secretaries of State will need to be addressed. I would have preferred it if these issues had been addressed in a constitutional convention, and I hope that that option might still be on the table.

Finally, I really wish that the Prime Minister, instead of standing on the steps of No. 10 the day after the referendum, had come to Scotland and said thanks. It would have been the right thing to do: to come to Scotland and say to people, “We are grateful that you voted the right way and we will be back. We mean it. We meant it when we said that we would change and improve this relationship, and in future our Ministers, both government and opposition, will come to Scotland and other parts of the kingdom not just when there is a problem and a vote is taking place. We will come all year round and will engage with you, and we will govern for the whole United Kingdom”. If the Government would do that, the whole kingdom would be a happier place.

6.06 pm

The Earl of Glasgow (LD): My Lords, I very much agree with the last point made by the noble Lord, Lord McConnell, but I suspect that some of your Lordships may never fully appreciate how close we were to the break-up of the United Kingdom last month. Those of us Scots who believe passionately in the union were having sleepless nights in the weeks running up to the day of the referendum. I really believed that the nationalists were going to win. Alex Salmond had masterminded a brilliant campaign. He had persuaded a large number of Scots that it was unpatriotic to vote for anything other than independence. His followers had whipped up my normally canny countrymen into a frenzy of excitement, promising us a new, fairer, more caring and more prosperous Scotland—and never mind the collateral damage and mess left behind; that was just Westminster scaremongering. He even engineered the question to be put to the voters. Those of us who were desperate to keep the United Kingdom were obliged to vote no, and those who wanted to see it broken up were asked to vote yes.

On the day of the vote, I really believed that the nationalists were going to win. More importantly, Alex Salmond and Nicola Sturgeon did, too. When they lost, they did not believe it, nor did their supporters. Clearly, it could have been explained only by some sort of Westminster stitch-up. At the last moment, Mr Cameron had made an agreement with the owners of all the big businesses in Scotland that they would announce that their companies would leave Scotland if there were a yes vote, and this had frightened a large number of Scots into voting no. Furthermore, the three unionist parties in Westminster had got together in a state of panic and bribed the Scots into voting no with unspecified promises of further devolution. Thus the no vote had been secured only by a number of last-minute dirty tricks. These arguments are still being expressed by angry nationalists in newspapers all over Scotland.

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If dirty tricks had been employed in the campaign, it was those of the nationalists that had been the most effective. Large numbers of small businesses in Scotland were scared to declare their voting intentions in advance for fear of reprisals if the nationalists won. In certain parts of Scotland, life had been made very uncomfortable for those Scots with English sympathies or connections. By comparison, the Better Together campaign seemed mild, unthreatening and relatively ineffective. It came alive only at the very last minute, when people like Gordon Brown and Jim Murphy started to put the case for the union with some passion. David Cameron may have helped, but I am not sure about that.

In any case, Alex Salmond and Nicola Sturgeon may now have accepted the verdict of the referendum, but they certainly do not believe that this is the end of the story. They now regard the referendum as no more than a further step towards total independence at a later date. After all, they got 45% of the Scottish vote and that is why the threat of Scotland breaking away from the union is far from over. You English must remember that the nationalists govern Scotland and that, unless the Labour Party can get its act together fairly quickly, they are likely to go on governing Scotland for the foreseeable future.

A lot now depends on the deliberations and conclusions of the Smith commission but, here again, the nationalists hold all the cards. If the commission recommends that significant new powers should be devolved to the Scottish Parliament, these will be accepted by nationalists as useful stepping stones to full independence. If they are denied the sort of new powers that they seek, they will cry out that Westminster has broken its promises to the Scottish people and that the referendum was lost only through Westminster lies and subterfuge. They will then feel justified in demanding a new referendum or something like it. It is heads they win, tails we lose. The nationalists are not going to give up, as my noble friend Lord Lyell has already pointed out.

The noble Lord, Lord Smith, and his commission therefore have a difficult and delicate task to perform. They are going to have to keep reminding the nationalists that they lost a referendum fought largely on nationalist terms and that Scotland will remain part of the United Kingdom for the foreseeable future, whether they like it or not. That issue is no longer negotiable.

Against the wishes of our Government I have one plea, directed mostly to those English politicians who understandably seek to deny Scots MPs the right to vote on purely English matters in Westminster, but who also believe as passionately in the preservation of the union as some of we Scots do. It is: please let the West Lothian question remain unanswered, however unfair you may think it is. This Westminster Parliament is a British Parliament representing England, Scotland, Wales and Northern Island. It is not an English Parliament, as the Scottish Nationalists wish their supporters to regard it. Nothing could provide them with better ammunition than putting Scottish MPs into the position of being second-class Members in a British Parliament. Such a move would greatly strengthen their case for independence. Can those of you seeking a purely English Parliament please shut up? Talk of English independence is food and drink to the ears of Scottish nationalists. It plays it straight into their hands.

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Alex Salmond, Nicola Sturgeon and an army of Scottish nationalists are not going to go away. They remain a continual threat to the union and we must give them no opportunity to open up this whole independence issue again. Personally, I am dreading the forthcoming referendum on Europe.

6.12 pm

Lord Blencathra (Con): My Lords, I wish to concentrate on the English question—or the West Lothian question, as it was originally called when the great parliamentarian Tam Dalyell first asked it in 1977. I am afraid that the question will have to be answered sooner or later.

First, however, I support the proposals in the White Paper by the parties on further devolution but I believe that they need to go further. The Conservative Party has additional devolution proposals. I think those are the minimum that we can do and for this reason: if we do not go as far as we sensibly and safely can, there will be a demand in the next Parliament by the SNP for another referendum. The noble and learned Lord, Lord Hope of Craighead, was right as if the SNP takes more seats in the general election of 2015 and increases its numbers above 69 in the 2016 Scottish Parliament elections, another referendum is more than likely. It is probably inevitable, especially if the SNP can point out that there are some matters that were capable of devolution and we failed to devolve them. I am afraid that this matter will not have been settled for a generation, or a lifetime, as has been suggested and as we hope. It will come back again and again until the yes vote for independence finally wins.

The Barnett formula has completely outlived its usefulness and should be scrapped, as the noble Lord, Lord Barnett, has repeatedly suggested. Indeed, he has called it a “terrible mistake” and a “national embarrassment”. However, the Prime Minister made a promise to retain it and it would be fatal to renege on that promise now. I hope that the formula will decline in importance if Scotland raises more of its own expenditure. If Scotland is to get the additional powers, which it must get, and continues to get £1,600 per head of population more than England, then it is vital that England is treated fairly, which it is not at the moment. We must therefore have English votes for English laws.

Some will say, as we have just heard, that we would then create two classes of MP but we have had that for 14 years in the Commons. We have had 59 Members of Parliament from Scotland being able to vote on all matters, including issues that are English-only and nothing to do with Scotland. English MPs do not have that reciprocal right to vote on a host of Scottish matters. That has unbalanced Parliament. It is morally wrong and needs to be changed. The McKay commission stated quite firmly that:

“The constitutional principle that should be adopted for England (and England-and-Wales) is that decisions at the United Kingdom level with a separate and distinct effect for England (or for England-and-Wales) should normally be taken only with the consent of a majority of MPs … in England (or England-and-Wales)”,

as the case may be.

I consider it one of our fundamental democratic and parliamentary principles that if, as a Member of Parliament, we vote for higher taxation, student tuition

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fees or whatever, then we have to be accountable to our electorate in our constituencies. We have to go back there at the weekend, look them in the eye and face the consequences of our actions but that has not been the case for Scottish Members of Parliament voting on English matters for the last 14 years.

When he was Secretary of State for Health in England, the noble Lord, Lord Reid, pushed through the NHS foundation trusts with the help of Scottish MPs. Health is a devolved matter in Scotland; so is education. I think that the policy of the noble Lord, Lord Reid, on foundation trusts was jolly good but it was pushed through by a Scottish Member of Parliament with Scottish MPs’ support, when the Scottish Government and their MSPs were making it abundantly clear that they would never adopt that policy in a million years in Scotland. That cannot be right.

The list of matters devolved to the Scottish Parliament includes agriculture, forestry and fisheries, education and training, environment, health and social services, housing, law and order, local government, sport and the arts, tourism and so on. On all these matters, English MPs have no say whatever since only MSPs decide on them. When I was an MP, I did not want a say in them but it is wrong for Scottish MPs to vote on these matters when they apply to England, since they have the freedom to do as they like and are not accountable to an English electorate. What a wonderful life that must be: to have power without accountability, voting through policies applying to England knowing full well that you will not face angry constituents in your surgeries at the weekend. That is why, for the last 14 years, English Members of Parliament were second-class citizens in the House of Commons Chamber, where everyone should be an equal. We already have a two-tier House of Commons and that inequity cannot continue.

There is an answer to Tam Dalyell’s West Lothian question. It is to implement English votes for English laws. England does not want piecemeal regional devolution. The noble Lord, Lord Prescott, tried regional devolution in the north-east and it was rejected by 78% of the electorate. I say to him that it was rejected not because the powers were grossly inadequate but because the majority of people, while feeling detached from Westminster, trusted it a lot more than they did politicians in Newcastle—or, in our case in Cumbria, politicians in Manchester and Liverpool—to divvy up the money fairly. The McKay commission pointed out that giving extra powers to local government in England and its northern cities, which I support as it may be part of a future solution, does not answer the fundamental question of the governance of England itself.

Some have suggested that the number of Scottish MPs should be reduced, as in the Stormont solution, on the basis that half the Scottish MPs’ workload is now the responsibility of MSPs. However even if there were only 40, 30, 20 or 10 Members in the United Kingdom Parliament from Scotland, they would still be voting on English matters. That fundamental injustice would need to be resolved.

Finally, having English votes for English laws is not too complicated to implement. The clerks in the Commons, as in this place, are experts at detecting hybrid Bills or amendments. They can easily identify a

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Bill which is UK-wide or for England only. It is not rocket science, as the McKay commission pointed out. There is overwhelming demand in England for such a change. I found that my English constituents in that magnificent border area were very tolerant and patient people, despite 600 years of border reiving—or probably because of it. They were very happy for Scotland to get additional powers but their view now is that 4 million electors in Scotland have had their say and it is time for the 40 million people in England to get fair treatment. I think that I am one of only 10 noble Lords participating today who has served as an English Member of Parliament. I say to your Lordships that we ignore the views building up in England at our peril. We should legislate for English laws and do it urgently, in tandem with any further legislation on devolution for Scotland.

6.20 pm

Lord McFall of Alcluith (Lab): My Lords, in the referendum, no has won the battle, but it has not won the war of words. Those words were pretty ugly, divisive and depressing throughout the referendum campaign. What we saw was an intolerant streak, demonstrated in the social and political debates; so much anger, venom and sneering contempt directed by individuals and groups at one another. The social media mirrored this throughout the referendum.

To have a decent debate you have to have a good tone at the top. That is where the First Minister and his deputy were lacking. They were lacking in the area of business. I was engaged with businesses for many months on this issue and they were afraid to put their heads above the parapet. I was engaged with academia, and that was a mirror image. The only one who stood out against that was Dr Louise Richardson of St Andrews University. In a personal call with Alex Salmond, she told him, no, she was going her own way. We also saw that with the SNP-inspired demonstration against the BBC for Nick Robinson asking a hard question—the sort of hard question that he asks politicians in Westminster day in and day out. Alex Salmond took exception to that.

What has happened is that Westminster has become a toxic term as a result of this debate. Both Alex Salmond and, indeed, Nigel Farage in his own way, have enhanced that toxicity. What does that mean? That means that Westminster is to be very much involved in ensuring that we progress this devolution debate. We need to ensure that we correct our politics and ask the question: how do we contain and how do we eliminate the disturbances that we have seen? There is something unnerving in the air—witness the social and political fragmentation. Westminster needs to reassert its authority and produce a confident voice in this debate; one that respects the constituent parts.

EVEL has been mentioned. If we go down this line as a primary consideration, we will not achieve that. Let us reflect on the situation. The English voice is alive and well in the mother of Parliaments: 650 constituencies with 533 English ones. That voice is alive. England remains the dominant nation. There is no need, as Vernon Bogdanor, the Prime Minister’s Oxford tutor, says, to beat the drum or blow the bugle. If we beat the drum and blow the bugle too much, that

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will strain the devolution settlement to breaking point—as will the 100% tax devolution to the Scottish Parliament. This is a slow way to independence. Why? If there is 100% tax devolution, Scottish MPs will not vote on the Finance Bill or indeed debate it as we do here. There will be no Scottish Chancellor and, given that the Prime Minister is the First Lord of the Treasury, there will be no Prime Minister from Scotland.

There is another way of getting independence. Members of Parliament and parliamentarians here have to realise that. If Westminster is to maintain its voice, there has to be no dereliction of duty by the Prime Minister in the future. A dereliction of duty was undertaken with the Edinburgh agreement. There was a casual treatment of the Edinburgh agreement by the Prime Minister. It was way in the future, so the timing, giving a two-year timescale, was given away—just like that. Also, the wording of the question was given away. The wording, style and tone of a question are crucial in determining the value and quality of the answer received. As one who campaigned, I can tell the House that it is very hard to enthuse people if one is proposing a negative. That should have been looked at at the very beginning. The constitutional debate since 1999 has been all about process; what further powers can be devolved to the Scottish Parliament or the Welsh Assembly? There has been little focus on the effectiveness of the delivery of politics. The concept of devolution as a process of events needs to be re-examined.

I have some very close friends who voted yes. I challenged them on why they were voting yes. I put it to them about the currency union, “Do you agree with Jim Sillars about stupidity on stilts?”. “Yes”. I asked about Trident and NATO. “Can you get rid of Trident while simultaneously getting in to a nuclear club? Do you think that is consistent?”. “No”. “What about EU admission? Do you think there will be problems about that? Will there be automatic entry?”. “No. There will be problems, but we are voting yes”. One highly sophisticated friend said to me that he voted yes and hoped that the result would be no. That illustrates the disconnection that there was. When I asked them why they were voting yes, they said it was for a fairer, more socially just society. But there was no means to deliver that. There is a disconnect and we must appreciate that here.

Arsène Wenger, in the Times this morning, made the point that we are moving from a thinking society to an emotional one. We are losing our sense of perspective on events because of the requirement for instant reactions and opinions. As Nobel laureate Daniel Kahneman said in his bestselling book, instead of thinking fast, we should start to think slow. We have thought fast in the past and we have got ourselves into deep problems. We need a constitutional convention or a royal commission; one which is thought out; one where there is citizen engagement; one where we have to think out the purpose and the terms of reference. A constitutional convention or a royal commission is the way forward. We should do it slowly so that we get wise decisions out of it—wise decisions which can secure a union that is not safe yet and wise decisions which, through reconciliation and good disagreement, can secure the peace.

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6.27 pm

Lord Kerr of Kinlochard (CB): My Lords, I agree with almost all the points that the noble Lord, Lord McFall, has just made. A great deal of wisdom has been on offer in this debate so far, but I am a little uneasy that we are looking back too much, with a little too much retrospection and recrimination. The noble Lord, Lord Hennessy, got it right when he said that the fundamental thing that was wrong with the 7 am Downing Street statement was that that was a time for binding up the wounds. It was not a time for inflicting a new wound and making a link that had never been mentioned when the promise was made.

The first thing that we should do in this debate is send a message of congratulations to Ms Sturgeon in Edinburgh, the next First Minister of Scotland and the first woman to hold that position—clearly a doughty fighter and a worthy successor to Alex Salmond. I disagree with almost everything that she stands for, but I think that it is extremely important that we have a civilised debate. I would like us to send a message to her. I am very pleased to see the Leader in her place, and I hope that she will consider advising the Prime Minister to send this message: we in this House believe that our debates would be greatly improved if the voice of the 37%—only 37%, to correct the noble Earl, Lord Arran—who voted in Scotland for independence was heard in our debates. It seems to me that it is very easy for us always to be attacking the Scottish National Party. The Scottish National Party should be here. I have never understood the logic of the position that it is possible for them to take seats in the House of Commons but not in the House of Lords. It is in their interests, it is in our interests and a warm invitation should be extended straight away to Ms Sturgeon to change her party’s position and agree that the party should be represented here.

I want to make two points, risk two unfashionable paradoxes and make one proposal. My first point has been made already—the ATM point, as made by the noble Lord, Lord Empey. I think that “no representation without taxation” is a good rule. Any parliament that is responsible for expenditure but does not have to raise the money is always going to be irresponsible about expenditure. I am strongly in favour of the Strathclyde proposal on the devolution of taxing power.

Paradox one: why is the European Parliament always so determined to increase expenditure more than the member states are prepared to allow? For the same reason: it has no power to raise revenue. Most other Governments believe that the taxing power for the EU, raising the 1% of GDP that is the EU budget, would be better than a levy or a Barnett formula, which occasionally leads to a review and, if a review has been postponed and resisted for very long, can lead to a very large correction that can provoke tantrums and kerfuffles. The tax would seem to be more logical, but if one proposes that to the British Government, they draw back their skirts in horror. Yet the logic on Strasbourg and on Holyrood should be the same. Just as we are all to be content to see more taxing power even than in the 2012 Act given to Scotland, so we should think again about whether the Government are right to have decided to make no contribution whatever

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to the review of the revenue side of the EU budget that Prime Minister Mario Monti has been asked to undertake, and which we have decided we will not contribute to. That is a very unfashionable analogy, but I think I have just about got away with it.

My second point is of course about EVEL. The correct answer to the West Lothian question in today’s political circumstances is: “Get over it”. It is a problem that has existed for a very long time and it does not need a solution now. A quick off-the-cuff solution of the kind that could emerge from Mr Hague’s commission seems to be just the way to reopen the wounds of the Scots that we should now be trying to bind up.

The European analogy is perhaps relevant again, so I might try to get away with it a second time. For three years the French have argued for a two-tier Parliament in Strasbourg. With perfect Cartesian logic, they have pointed out that, since the British have decided not to join monetary union, the so-called fiscal union or the banking union, it is pretty odd that the British should be voting on eurozone laws in all three areas. The British Government have—completely correctly, in my view—resisted that, pointing to the folly of deliberately widening the Channel and to the importance of retaining the single market. So we have hotly opposed what the French have suggested, and it seems that we have won.

I had the privilege yesterday of being in Brussels with the noble Lord, Lord Boswell, in his capacity as chairman of the Select Committee, and it is a pleasure to see him in his place. We discovered that nowhere in the European Parliament is there any eurozone-only structure. We discovered, although of course we knew already, that Mr Juncker, the President of the Commission whom we decided to insult and oppose, has decided that all EU laws must reflect the interest of all EU members, and has given the noble Lord, Lord Hill of Oareford, responsibility for the laws of the banking union that we would not join. Now that is magnanimity and statesmanship, and in my view that is what was lacking the morning after the referendum.

That was my second paradox; I now come to my little proposal. Actually, this proposal has been made already. I am a very strong believer in the royal commission or the constitutional convention, but I think that there is a House of Lords angle to this, rather as the noble Lord, Lord Steel of Aikwood, was suggesting—some sort of solution whereby the devolved Parliaments indirectly elect representatives here. That would be a very good way of cementing the union for which the Scots have voted. Promises must be kept, of course, so let us press ahead with the commission of the noble Lord, Lord Smith—I wish him good luck—but one should go very slowly on EVEL and, as the noble Lord, Lord Maclennan, suggested, one should be thinking now of the correct form of convention or royal commission.

6.35 pm

Lord Dobbs (Con): My Lords, the last time that I had the pleasure of being squeezed between the formidable frames of the noble Lords, Lord Kerr of Kinlochard and Lord Foulkes of Cumnock, was in the debate on the EU Referendum Bill. That was a bracing experience, and I am sure that this one will be just as much fun.

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That wonderful novelist and Scotsman Walter Scott once wrote that there is no path that leads through the Highlands that has not at some time or other offered a little danger for an Englishman. He added that the clans may squabble among themselves, but in the end they will always unite against those who wear breeches on their bottoms and have purses in their pouches. Those of us who are enthusiastically English—or indeed Welsh, or Irish—might be forgiven for feeling that we have escaped that moment of danger and reached our goal, with a referendum result that has reaffirmed our union. But like so many Members of this House today, I wonder. The moment of greatest danger may yet lie ahead.

I want to salute Scotland and its people. When I was there campaigning, there was not a single voter that I met of any political hue who did not take the task in front of them with extraordinary seriousness. For Scotland, the referendum was a triumph, the turnout Herculean—almost Romanian—in proportions, and the result, thankfully, was decisive. Yet, on that long march back home, we picked up a few pebbles in our boots.

Financially, things will not be easy. The Barnett formula will live on, even when its own creator says that it should be dragged off to the knackers’ yard. The English will still be expected to pay, and the poor Welsh will undoubtedly still complain of injustice. Fiscally, with the threat of different income tax regimes either side of the border, how will companies and individuals resist the temptation to move perhaps only a handful of miles to greener pastures? If there is to be different provision on a wide scale, not just in health and education but in social services, how will we stop families border-hopping in search of the best outcome?

Perhaps the most difficult challenge of all, though, will be political. The West Lothian question has now become the “West-Minster” question. How do we guarantee fairness to English voters to ensure that they are not treated as second-class citizens? Many commitments have already been given. All those vows that were made shortly before the referendum were clearly a result of high principle rather than low panic, but the hounds still snap persistently at our haunches. How on the one hand do we satisfy the legitimate expectations of Scotland without, on the other, arousing the largely dormant demands of the English?

We should never underestimate the natural pride of the Scots. After all, why else—and I may never be forgiven for saying this—is Judy Murray still in “Strictly”? Not for the strength of her Scottish reels, I fear, but, I suggest, because of the depth of her Scottish roots. Yet we ignore the English, their sense of fair play and their tolerance at our peril.

I have one fundamental anxiety about this bright new world that lurks just around the corner. If, after the election next May, the English wake up to discover that they are being governed by a party, or particularly by a coalition of parties, that they themselves rejected in decisive numbers, in those new circumstances it could be the English who start questioning the union. If that coalition were to be held in place or even imposed on the English through the support of MPs from an overrepresented and devo-maxed Scotland, our union boat could be rocked to tipping point.

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6.40 pm

Lord Foulkes of Cumnock: My Lords, I am pleased to follow the noble Lord, Lord Dobbs, in spite of what he said. I hope that he will forgive me if I return to the opening speech by the noble Baroness, the Leader of the House, for whom I have the greatest of respect. I fear that in parts of her speech she gave away the fact that Whitehall seems to have learnt nothing from the referendum. I do not think that she and Whitehall realise how near to disaster we were. We were at the edge of a precipice and we nearly went over it. We only avoided it because, thankfully, the silent majority in Scotland saw what was at the bottom of the precipice and came back and voted no. Otherwise we would have gone over that precipice, with all of the United Kingdom’s institutions behind us, into total disaster. We really need to learn from that. This was a vote against separation, it was not a vote for the status quo. Paradoxically, the losing side are energised by what has happened and we, the winners—2 million of us—have been forced to come back, like King Edward, to think again. If we do not come up with a sensible, credible and, above all, stable alternative, we will be back to the precipice sooner rather than later. We must find a long-term solution.

I will look carefully at two aspects. First, on Scotland and the Smith commission, I agree with my noble friend Lord McConnell. Its decisions I hope will be based on principles and not on party horse-trading. Two key principles are that the powers to be devolved should be devolved for a purpose, that is sensible and appropriate to be carried out at the Scottish level, benefiting the Scots but not harming citizens of the United Kingdom; and that we need not what the nationalists call full fiscal economy, but what I call fiscal responsibility. As others have said, we should devise a way for them to be responsible for raising the money that they spend. That will not be easy. Some have pointed to the difficulties and others have pointed to the way forward. Surely with all the expertise that we have in the Treasury and elsewhere, something can be worked out. I look forward to the third Scotland Act. This is becoming a Shakespearean drama—but I must not go down that line or we will end up with “Macbeth”, and we all know how that ended: not very well.

We must also look at the English democratic deficit. Not the West Lothian question; the English democratic deficit. I remind noble Lords that before devolution, when we had peculiarly Scottish legislation decided here at Westminster, it was voted on for nearly 300 years by a large majority of English MPs. If we can thole that for 300 years, surely the English can thole the problem for a few months or years more. To try to solve it by changes to the Standing Orders—as others have said, creating two classes of MPs—is the wrong way of going about it. Others have said, and noble Lords have heard me say time and again in this Chamber, that we need a coherent and comprehensive look at our constitution through a convention or a royal commission. I think that we should move towards a federal, or quasi-federal, system. I said this when the Liberals were being quiet about their policy. I am not saying that there should be an English Parliament, or

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English regions, or a bit of both; that is for the commission to decide, as it consults widely and listens to people.

I am pleased that the noble Lords, Lord Maclennan and Lord Hennessy, in their excellent contributions, said the same thing—if the three party leaders can come up with a vow overnight, surely they can come up with an agreement in a week to set up a constitutional commission. It could be up and running now. That would make the English feel happier that we are addressing the question and we are under way. I hope that each of us, in our own party, will try to twist the arms of our leaders. I have been twisting the arm of my noble friend Lady Royall—she made a brilliant speech, all of which I agree with—that the Labour Party should go ahead with this and encourage the other parties to go ahead with it as soon as possible.

Such a convention could and should also look at the reform of this place and move towards what Ed Miliband described at the party conference as,

“a senate of the nations and regions”—

SONAR. I like the French system of choosing the senate, where grands électeurs—all the elected representatives in each of the départements—choose their senators. There are many other suggestions that can be put to the constitutional commission.

No one supported the status quo in the referendum. I did not hear anyone argue in favour of that. Unless we heed the call and realise the disaster that has been avoided, we will find ourselves facing another referendum. I hope that I will not shock my noble friend Lady Liddell of Coatdyke, the Secretary of State emeritus, but if we do face that, and if there have been no changes at the United Kingdom level, even I would be tempted to vote yes in that referendum. That is an indication of the problem that we face. We should all be warned that we need to change. We need radical change. The status quo is not an option.

6.46 pm

Lord Tope (LD): My Lords, I detected some surprise when the Leader of the House said in her opening remarks that England is the most decentralised part of the United Kingdom. However, she is right. It is the most decentralised part of the United Kingdom as well as, by some measure, the largest. That is really a comment about the state of the other three countries of the United Kingdom. I have heard it said many times that Scotland has become far more centralised under its own Parliament than when it was ruled from Westminster. The fact remains that the four countries of the United Kingdom, and therefore the United Kingdom as a whole, are the most centralised countries in the European Union. What we will do about that, particularly in relation to England, is for me the real English question.

I accept, because it has been placed so high on the agenda, that the West Lothian question must be addressed. I have a lot of sympathy with my noble friend Lord Glasgow, who said that we have lived with this for 30, or even 300, years, let us leave it alone. However, it is on the agenda and we must deal with it. If we think that a solution can be found by some rearrangement

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within the UK Parliament, or even worse the creation of an English Parliament, we are fooling ourselves. That does absolutely nothing to deal with the question of the centralisation of power in England and the need to devolve power in England. If that is all that we Westminster politicians can come up with in this debate, then many of the people of England will be deeply disappointed. Addressing the question of devolution within England is the real and major English question, of which the West Lothian question is a part, but only a part.

The Leader seemed to be suggesting that the Localism Act, on which I and many noble Lords spent many happy hours, was all that was needed to devolve power in England. I accept that, if properly and effectively implemented, it would have been a good start to devolving some power to some communities in England. It was particularly unfortunate that it coincided with the time of the greatest budget cuts that local government has ever known. We were encouraging local government and local communities to devolve at just the time when the resources needed to do so were being taken away very quickly and in very large measure, which was very unfortunate.

At this point, I should declare an interest as a vice-president of the Local Government Association. We still need to address the question of devolution to English communities, not just to local government, although we should remember that local government is made up of the elected represented representatives of local communities and has an important part to play. Even before the budget cuts, local government was working increasingly closely with other parts of the public sector and, especially, with the private sector. When we look at the devolution of power in England, it has to be to the whole community. We have to look at the public sector as a whole, not just one part of it, albeit an important part, called local government, and it has to involve the private sector in a new partnership relationship. City deals and the regional growth fund have been a very good start, but they are still central government giving money—very welcome and necessary money—and largesse to local government. We need to start to address the issue of local government in its representative role being able to raise more money and being responsible for the charging rate as well as receiving a greater share of the proceeds.

In the short time that remains to me, I shall say something about London because I think I am the only avowedly London politician who dares to speak in what appears to be a rather anti-London debate. I have had 40-plus years as a London politician, and in all that time I have heard my noble friend Lord Greaves telling me about the evils of the domination of London. I have tried over and over again to explain to him that there is a world of difference between government in London and the government of London. As I have been a London borough councillor for 40 years, I have to say to him that London or, as we in London usually call it, Whitehall, is frankly as far distant from the London Borough of Sutton as it ever is from Pendle or Newcastle. That is the issue, not the number of miles involved—the right to govern oneself. The dominance of London within the United Kingdom,

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certainly within England, is at least as important for London as it is for the rest of England and the rest of the United Kingdom.

One of the most encouraging things coming out of the debate about devolution within England is the joining together of Core Cities, which was originally formed to combat the influence of London, with the Greater London Authority and London Councils to recognise their shared interest in bringing about much greater devolution, not only to cities and the so-called city regions but within the United Kingdom. Every week, learned and erudite reports are being published—there are three more coming out in the next few months—about not whether to devolve but how to devolve real power and real fund-raising opportunities to local communities. The demand is there, the expectation is there, and it is now for government and all political parties to respond to that expectation.

6.53 pm

Lord Birt (CB): My Lords, patriotism is a positive force rooted in pride of place, common endeavour and shared culture, perspectives and values. Nationalism, on the other hand, can be a destructive force, and no one expressed that to me more keenly than Eric Hobsbawm, the late, esteemed Marxist historian. Eric was a near neighbour of mine in mid-Wales, and he and I would oft-times hike the glorious hills of Brecon and Radnor together. In the 1930s, as most will know, Eric as a child had to flee Berlin and the Nazis, and he had been forced to move once more in his life, in the 1980s, from north to mid-Wales to escape the poisonous nationalistic hostility that had confronted him in Snowdonia.

Lord Elis-Thomas (PC): I am sorry to intervene on the esteemed noble Lord, but as the Member of Parliament at the time and as the Assembly Member for Meirionnydd, I can assure him that his version of events borders on an imaginative treatise that I will never be able to subscribe to.

Lord Birt: I can only say that, on our long walks together, he felt extremely passionate about it and it caused him to move home. He had lots of chapter and verse to support his feelings.

Though many on the yes side of the Scottish referendum campaign behaved with propriety and conviction, others acted dishonestly and with menace. The noble Baroness, Lady Liddell, brought that out extremely forcefully. The evasion about the critical issues in the referendum campaign—the currency, a central bank, the NHS or membership of the EU and NATO—was without precedent in any election or referendum campaign that I ever experienced.

There was no better example of menace, among the many, than the singling out by the First Minister of Nick Robinson and the BBC. At a very difficult moment in the campaign for the yes side, towards the end after a series of highly unwelcome interventions from business leaders, the First Minister held a press conference for foreign correspondents, extraordinarily packing it with fevered and noisy supporters. To distract from his difficulties—as usual playing the man and not the ball—the First Minister orchestrated an argy-bargy

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with Nick Robinson, the BBC’s political editor, a correspondent universally respected for his insight, independence and integrity.

Following Mr Robinson’s report of that conference, there was a demonstration against the BBC and its political editor, as the noble Lord, Lord McFall, mentioned. Some thousands of yes supporters gathered outside the headquarters of BBC Scotland, an intimidating and frightening experience for BBC staff. The First Minister was, however, to describe this demonstration as “joyous and peaceful”. Nick Robinson could only continue to report the final stages of the campaign with a bodyguard at his side.

The next challenge for the United Kingdom is a resurgence of English nationalism. What Eric Hobsbawm made me deeply conscious of on our walks was how nationalism evades the essential discourse between left and right about wealth creation, social justice and income distribution. For nationalists, there are always easy targets: immigrants are stealing your jobs; the Jews your money; the white farmers your land; the English your oil. Nationalism thrives on economic reverse and volatility.

It is a commonplace at the moment to claim that there is widespread disaffection with the Westminster classes and that the remedy is therefore to tear up our constitution and to devolve power here, there and everywhere. We should be very careful. The modern state is indeed a terrible tangle. It is indeed vital to ensure that real responsibility and power are lodged at the appropriate place, whether globally or at national, regional or local level. I agree with all noble Lords who said that we need to tease away at identifying the right balance between centralisation and devolution or decentralisation. We must, of course, honour our promise to Scotland, but we should take our time about everything else and answer the questions properly.

In particular, we should be extremely cautious of so-called English votes for English laws. It is indeed anomalous, as I am sure everybody agrees, that Scottish MPs vote on English matters, but perhaps, as the noble Lord, Lord Kerr, suggested, it is an anomaly that we should simply live with, for England is by population 84% of the United Kingdom. It is one thing to create special arrangements for three national regions representing respectively 8%, 5% and 3% of the population, but it is quite another to make special arrangements for 84% of the population. That would simply drive us further apart.

Let me cite an extreme example to illuminate a point. The noble Lord, Lord Tope, mentioned London. Imagine if London and the south-east, at some point in the future, pressed to be a city state. It is by far the most prosperous region in Europe, not just in the UK. Enormous wealth passes from London to the rest of the UK. Picture the impoverishment that would result in Wales and elsewhere from London’s independence. Picture also the vulnerability of a highly fragmented British Isles. Remember the Romans, the Vikings and the Normans, as well as the Nazis. A united nation shares its wealth and stands shoulder to shoulder when threatened.

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The root of widespread disaffection in the electorate, which has been much mentioned in this debate, is not our constitution but the monumental failure of governance in the last decade or more. Governments the world over, including in the UK, have been fiscally irresponsible. Regulators have failed to protect us against systemic breakdown and the finance sector has failed to act with prudence and probity.

7.01 pm

Lord Higgins (Con): My Lords, 50 years ago, referendums were virtually unknown. Since then they have become increasingly fashionable. This is very often prompted by the argument that referendums are democratic. However, I have always felt that that is not really the case, at least not if you are trying to find the best form of democracy. Referendums tend to produce a situation that is really the dictatorship of the majority. I go along with Edmund Burke in taking the view that the better system is a representative system of parliamentary democracy, in which Members of Parliament are elected as representatives, not as delegates.

I therefore had considerable misgivings about the proposal for a Scottish referendum and I feel bound to say that my worries have been amply justified. We have avoided falling over the cliff to which many noble Lords have referred in terms of the vote going the wrong way but, at the same time, the referendum has made more acute many of the underlying problems which might otherwise have been dealt with in a more considered and leisurely manner. We now have to deal with a whole series of things and I feel it might have been better if we had not had the Scottish referendum at all.

That is water under the bridge but what has come out clearly in this debate is how acrimonious much of the debate in Scotland was. The situation was exacerbated by the panic ahead of the vote following the so-called vows by the party. As far as I can establish, these vows were made with absolutely no consultation whatever with their parties. It was further exacerbated by the immediate reaction of the Prime Minister following the vote, which set down a very tight timetable—a timetable reaffirmed by my noble friend the Leader of the House.

My noble friend did not deal at any great length with the ways in which the West Lothian question, which has been such a feature of this debate, would be dealt with. My own feeling is that it would be a serious mistake to try to deal with the problem by primary legislation. Making changes to the Standing Orders in the other place might be a better way of dealing with it. Perhaps the Speaker of the Commons could simply certify a Bill as being an English Bill, in the same way that he certifies whether a Bill is a money Bill. I suspect that the number of purely English Bills would be far fewer than one might think. Then there might be voluntary abstinence on the part of Scottish Members from voting on particular items where such matters were clearly dealt with in Scotland by the Scottish Parliament and so ought to be matters for English Members in the English Parliament. We should be very cautious about anything formal and certainly not

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establish such a thing as an English Parliament, which would undoubtedly lead to the break-up of the United Kingdom. The same problem would arise if we had two classes of Members of Parliament. That would also tend to lead to further fragmentation.

I turn quickly to the implications of the devolution of further tax-raising powers to the Scottish Parliament. In particular, I hope that the Smith commission will look very carefully at how the system will work if tax is devolved more to Scotland and there is then a situation where the Chancellor of the Exchequer has to deal with the consequences. We want a clear mechanism. I presume the Scottish situation would have to be clarified first and the Chancellor would then decide how he ought to respond. I also have some doubts about the motivation for having greater tax paying and, in particular, income tax changes in Scotland. If it is merely to alter the various rates and allowances, it is not clear why the situation in Scotland should be so different that they need a different set of rates. The difference between the two countries is not so great as to argue for it. If there is to be more devolved control over taxation in Scotland, it may be that the Scottish Parliament and the Scottish people would feel that they would get some benefit from it. The Government’s White Paper makes it clear that whatever changes are made in the devolution of taxation to Scotland ought not to result in a change in the balance of the allocation of resources between the two countries. If this goes ahead, I feel that there will be considerable disappointment in Scotland at the effect that controlling income tax rates and allowances actually gives.

Finally, because time is running out, I turn to the question of the balance between the two economies and, in particular, the Barnett formula. My noble friend Lord Lang of Monkton, in his splendid speech, spelt out very clearly all the problems associated with the so-called Barnett formula and, in particular, the allocation of the block grant. The present situation is not fair on England and the block grant probably needs to be adjusted. This point came out to some extent in the course of the referendum campaign. One must wish the Smith commission well on a very difficult range of issues. It will have to decide how to reconcile the devolution of tax powers to Scotland with the overall macroeconomic management of the economy by the Chancellor of the Exchequer on behalf of the United Kingdom as a whole.

7.09 pm

Baroness Quin: My Lords, like others I welcome the fact that this debate is taking place after a no victory in the referendum in September. I also welcome the fact that the debate has been marked by the maiden contribution from my noble friend Lord Lennie, who gave us a very entertaining and thoughtful speech. As a fellow north-easterner, I am very pleased to welcome him to the House and echo his kind words about that special and historic town of Tynemouth, where I was born and lived for a number of years.

I spent most of the summer campaigning for Better Together in the borders region of Scotland, which is not far from my home just south of the border in Northumberland. It was an exhilarating and troubling

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experience—exhilarating because it was a real pleasure to work alongside young volunteers in the borders regional office. It was the first time in many years of political campaigning that I have taken my leafleting and canvassing instructions from 19 and 20 year-olds, but they were extremely able and inspiring young people, to whom I pay a very warm tribute.

At the same time, there were many troubling elements of the campaign, referred to particularly by my noble friend Lady Liddell. Even in the borders, where it was clear that the no vote was in a strong majority, people were nervous about putting no posters up in their window or no stickers in their car. There was an intimidatory side of nationalism which really troubled me throughout the whole of that campaign; that is something that we have to think very carefully about when we move forward in the period that lies ahead.

In my experience, people voted no not because of the last-minute promise of powers, although they are important and I support them. They voted no for two reasons. First, Scots are well aware of the interdependent nature of the UK economy in terms of trade, business and currency; but the other reason, which I think was just as strong, was their recognition of the close family links and bonds that unite us across the United Kingdom and make people in the borders and elsewhere in Scotland feel British as well as Scottish and not wanting to destroy those links for the future.

My conclusion from the work that I did during the campaign was really that our first priority should be to ensure that the UK as a whole works better together for the future. Indeed, crossing, as I did, the border every day, I would certainly like to promote some cross-border infrastructure projects, which would be very necessary—in particular, the long overdue dualling of the A1 between Newcastle and Edinburgh, which I seem to have berated every Government about for the last 30 years, yet we still have not made the progress that we would like. There are also train links, which are very topical at the moment with all the talk about HS2 and HS3; so far, they do not seem to benefit hugely the north-east and Scottish link. Perhaps that could also be looked at. Furthermore, we should try to make the devolution settlement that we have at the moment work better, perhaps by having a better dialogue between the different bodies. I thought about this when supporting what the Welsh Government did in terms of plastic bags. We in England may at long last be going down that route, but surely it would have been good to have had more dialogue about it between the devolved authorities. When it is a good idea, perhaps we can work together and perhaps in a more timely way than has been done so far.

Unsurprisingly, a lot of this debate has been devoted to the so-called English question. I am not at all attracted to the kind of pan-England or all-England solution that has been mentioned, particularly that of English votes for English issues. Even if Scotland, Wales and Northern Ireland did not exist, there would be a very great centralisation problem in England, which would need to be addressed. We should keep that firmly in our minds. I feel that very strongly in the north-east. In many ways, I think that we would feel as marginalised in an English Parliament as we would in

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a UK Parliament—perhaps particularly so because our voting patterns are much closer to voting patterns in Scotland and Wales than they are to certain parts of England.

Devolution is not just about nationality; it is also about taking decisions at an appropriate level. I remember when I was Prisons Minister for a short time, in 1997, when we put forward the devolution legislation. In the course of my work, I spent two days with the Scottish prison service; at the end of that, I felt that it would rather be Scottish Prisons Minister than England and Wales Prisons Minister, simply because the scale on which the Scottish Minister operated meant that it was possible to get prison governors and the people involved in the prison system around a table to hammer out a policy on an appropriate scale. We must keep thinking of the appropriateness of decision-making when we approach this devolution issue in England.

We should not hurry. We should deliver on our promises to Scotland—that is vital, because we have made those promises—but then we should think carefully, either via a royal commission or a constitutional convention, and not impose a top-down solution. While I personally favour regional government in the north-east and hope that it can come back on to the agenda as my noble friend Lord Prescott outlined, I none the less think that England will need different solutions for different areas. Simply trying to draw something up within Whitehall and Westminster is not good enough. We have to think carefully about how we involve people as we move ahead.

7.16 pm

Lord Thomas of Gresford: My Lords, it was a great pleasure to hear the noble Baroness, Lady Quin, deal with the most outstanding achievement of the Welsh Labour Government, and that is to put a charge of 5p on plastic bags.

Home rule is a Liberal invention. Mr Gladstone said in Aberdeen in September 1871:

“This United Kingdom which we have endeavoured to make a united kingdom in heart as well as in law, will, we trust, remain a united kingdom. If the doctrines of Home Rule are to be established in Ireland, I protest on your behalf that you will be just as well entitled to it in Scotland. Moreover I protest on behalf of Wales, in which I have lived a good deal and where there are 800,000 people who to this day, such is their sentiment of nationality, speak hardly anything but their own Celtic tongue—I protest on behalf of Wales that they are entitled to Home Rule there”.

Mr Lloyd George echoed those sentiments in 1891, calling for “Home Rule all round”. Jo Grimond believed that power was not to come top-down, as the noble Baroness said, but to spring up from the people. He wrote:

“I find it difficult to see how, if the case for Scottish and Welsh self-government is accepted at all, any powers can be reserved to the UK government except foreign affairs, defence, and the wider issues of economic policy linked to a common currency and common trade policies”.

This was the model in the Hooson Bill for a Welsh Parliament in 1967, which I drafted myself.

Home Rule is not independence. We in Wales agree with Mr Gladstone that this is a United Kingdom of the heart, as much as of political economy. The first impact of the Scottish referendum on Wales was to

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reduce the support for independence for Wales from 7% to 3%. This was according to a BBC random poll of over a 1,000 adult respondents between September 19 and 22. This is not in the least surprising. Welsh nationalism has always been focused more on cultural identity, tinged perhaps with a little bit of arson, rather than political power. The Scottish referendum campaigns revealed only too starkly the impact that independence was likely to have upon the economy in the relocation of banks and of industry, upon the pound in the pocket, upon relationships world-wide, upon defence obligations and upon jobs.

It was argued by the yes campaign that Scotland paid more in taxes than it received; it would easily be more than self-sufficient, and they could afford to go their own way without detriment to the people. This calculation, dubious in itself, was in any event dependent upon the total success of all their claims in negotiations with the rest of the United Kingdom. That assumed a hearty goodwill and a desire on the part of the taxpayers of England, Wales and Northern Ireland to underwrite the economy and banking system of an independent country north of a newly defined border. It was a fantasy.

Wales is not Scotland. We raise in taxes only 70% of the money we spend. It is not because we are weak or poor in ability or ingenuity; it is because our basic industries of coal, slate and steel are exhausted. Wales shares its wealth, as the noble Lord, Lord Birt, said. We did not call it Welsh coal when it was mined.

However, today, according to key economic indicators published by the Office for National Statistics last July, we are the poorest part of the United Kingdom. We had hoped that a devolved Government would lift us economically, but it has not happened. Public services in education and health are falling behind England. It is clear that a devolved Government in Wales requires some form of equalisation funding.

The Barnett formula, while generous to Scotland, as the noble Lord, Lord Lang, pointed out, underfunds Wales, according to the Holtham commission, to the tune of some £300 million a year. We need fair funding: a needs-based formula which would restore parity to our communities and our public services. As an immediate stop-gap, the Holtham commission recommended a “Barnett flaw”. If anybody wants to know what that is, perhaps they would like to buy me a drink afterwards and I will explain.

In the medium term, a formula must be devised which takes into account an ageing population in Wales, the additional health burdens which mark a post-industrial society, but above all the need to revive and develop the Welsh economy and create jobs. I remain wholly committed to devolution. There are signs of progress. The coalition agreement in paragraph 24 recognised the concerns of the Holtham commission and undertook to establish a process similar to the Calman commission in Scotland. This resulted in the Silk commission and we are currently putting through this House part 1 of its proposals, which will chiefly introduce borrowing and taxation powers. It is a sad commentary that the Government in Wales refuse to hold the referendum which would bring those taxation powers into operation.

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We also have it in our Liberal Democrat manifesto to implement part 2 of the Silk commission, which will move Wales to the reserved powers model called for—

Lord Elis-Thomas: Did I hear the noble Lord right? Did he accuse the Government of Wales of refusing to hold a referendum on taxation powers? How can a Government possibly hold a referendum on something which has not yet been passed by this House?

Lord Thomas of Gresford: I am sorry, I did not quite catch what the noble Lord said.

Lord Elis-Thomas: I am grateful to the noble Lord for allowing me to intervene again. I heard him imply that the Welsh Government had refused to hold a referendum on tax-varying powers in Wales. How is it that a Welsh Government, or any other Government, for that matter, can hold a referendum on a matter which has not yet been legislated?

Lord Thomas of Gresford: That is the stated policy of the First Minister of Wales, as the noble Lord knows perfectly well.

We have in our own manifesto the intention to implement part 2 of the Silk commission, which will move Wales to the reserved powers model that was called for by Jo Grimond and which operates at the moment both in Scotland and Northern Ireland. We hope that normal political processes will operate to install in the Assembly a Government which will use the levers that they are being given to deliver the infrastructure upon which an expanding economy depends: outstanding education in accordance with Welsh traditions and a healthy NHS. Let us see if Scotland can match us then.

7.24 pm

Earl of Stair (CB): “Should Scotland be an independent country?” is the straightforward question which was put to the people of Scotland and voted for on 18 September. The result, by 55% to 45%, was a clear statement of the settled will of the people, with the largest turnout in recent times. It will, I hope, be respected.

Scotland should stay united with the remainder of the country. Whether the result would have been any different without “The Vow”, and all the other last-minute promises and speeches, we will never know. I can only say that the majority of people that I spoke to in a mostly rural area were adamant that they had made their minds up several months before September, and many had already voted by post.

Irrespective of the result, there would always be approximately 50% of the population who would be dissatisfied with the result. This prediction has sadly proved to be correct. Those supporting independence have always been more vocal, and we should be in absolutely no doubt that the passion for independence is as strong as ever before. Add to this the new leadership of the SNP and the claimed increased membership, and I would urge the Government in this House and the other place not to be complacent about the present result.

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However, I feel that I should not only acknowledge the SNP and the work that it did on the campaign that it conducted, which was extremely well organised, but also pay compliment to many individual members of the other political parties—MPs, Peers, and MSPs—who worked so hard for the no campaign, sometimes, as we have heard already, under extremely unpleasant circumstances. Sadly, at the regional and lower levels of campaigning, the issues started getting confused, and deep divisions were created between families and friends.

What started as a clear question became further confused when the Westminster leaders began to realise that what had been considered to be an unlikely yes result was in fact a very real danger to the 300 year-old United Kingdom. That a referendum in the United Kingdom should provoke foreign Governments and businesses to comment should have been a further warning. I met an ITN cameraman who had arrived in Scotland to cover the referendum day. He was deeply surprised by what he found in comparison to the briefings that he had been receiving in London.

I agree with the noble Lords, Lord Steel and Lord McConnell, that the Prime Minister made a terrible mistake on 19 September, when rather than quietly accepting the result and making every effort to reunify the United Kingdom, he chose to open two new issues that have completely distracted from the referendum result. The West Lothian question and devolution for cities and regions in England and the remainder of the United Kingdom should never have been raised until the Scottish referendum had been dealt with and put finally to bed. It would have been a very good idea if, rather than standing on the steps of Downing Street, he had gone to Edinburgh and made a statement there.

We now have the Smith commission, which will produce recommendations for further devolution. This will almost certainly involve devolving further financial control, tax-raising powers and many other recommendations. Many of these are being put forward by independence supporters and could lead to virtual independence by the back door. I hope that there will be very careful consideration of the recommendations and the debate will not become a political mêlée in the lead-up to the general election.

Whatever is concluded from the Smith commission, the organisation that started life some 15 years ago as the Scottish Executive has evolved to a Government and is soon to be an even more powerful Executive. Because of this, I would like to raise a question. When the Scotland Bill was debated in this Chamber many years ago, there were numerous exchanges between the late Lord Mackay of Ardbrecknish and the noble Lord, Lord Sewel, on the necessity for a second Chamber in the Scottish Parliament. It was deemed not to be necessary. This has proved not to be correct. I believe the following is still in the Westminster Government’s power, but may require primary legislation—I am sure that the Minister will correct me. With the inevitable greater powers, will the Scottish Parliament be reorganised to allow for a second Chamber, or at least have the committee system reorganised to prevent the party in

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power from scrutinising its own legislation, particularly in the light of further financial and other powers being transferred?

I conclude with two brief statements. First, the clear majority wish to remain in the union and this must not, under any circumstances, be forgotten. Secondly, the obligations that have been mentioned before to the vows must be fulfilled, but not at any cost that we will all later regret.

7.29 pm

Lord Cormack (Con): My Lords, we are having a fascinating debate, as we always do on these topics, and we have heard some remarkable speeches, including a very notable maiden speech.

There is a danger of losing sight of the fact that it was a very positive result. If in the general election next year one party had 10%-plus more votes than the other, the papers would be writing about landslides. That is the context. We also have to remember, as someone pointed out earlier, that the percentage of the Scottish electorate who actually voted for independence was 37%. The figures are just under 45% of those who voted and 37% of the electorate. However, that should give us no cause for complacency.

We have heard various views and I want to turn to England in a minute, but one thing that has run through this debate is that everyone believes that the pledges that were made must be honoured. I happen to believe that some of those pledges were unnecessary and that some of them were made as there was a lurch from complacency to panic based on one rogue poll. Nevertheless, we must not devalue the political currency or the credibility of the United Kingdom by reneging on those pledges.

I agree very much with those, including the noble Earl, Lord Stair, who say that it was a pity that in the immediate aftermath of the referendum a commitment was made to accelerate the examination of the wider implications and to fix an English timetable. I was in the other place when we debated devolution in the early 1970s. I did not vote for it because I feared—and I said so at the time—that some of the things that have happened would come to pass. However, that is all over; we cannot go back. We have the Scottish Parliament and we must sustain it, but the West Lothian question has been around for 37 years and it does not need to be solved in 37 days.

Concerning the acronym EVEL, I would say, “Speak no evil, see no evil, hear no evil”. “English votes for English laws” is a phrase that comes trippingly off the tongue, but it does not recognise the fact that almost 85% of the population of the United Kingdom is in England. We are not able to have a normal federation in this country, nor do I want to drift down that road. However, the 85% have to exercise a degree of magnanimity in order to maintain the union. Although, when new powers have been devolved, there has been a case for fewer Scottish MPs—there is a precedent for that both in Ireland and in Scotland itself—I do not believe that there is a case for having two classes of MP at the other end of the corridor. I think that would be a retrograde step and it would indeed be playing to English nationalism.

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The noble Lord, Lord Birt, talked about the difference between patriotism and nationalism. English nationalism could be a very ugly force. It could do great damage and could indeed lead to the break-up of the United Kingdom. I hope very much that there will be considered reflection in high places and that all the calls that have come from this Chamber today for a commission or a convention will be heeded. I personally would favour a royal commission, and I am glad to see the noble Lord, Lord Hennessy, who I thought made a brilliant speech, nodding at that point. There are not trite solutions that are right solutions, and there are not glib answers that are glad answers. It is crucial that we get this right because we have to look to the future.

Half my family is in Scotland. My eldest grand-daughter voted at the age of 16. I do not necessarily agree with the noble Baroness, Lady Liddell, on that, but I know that my grand-daughter and all her classmates took this matter exceptionally seriously. Why did they vote as they did? They did so because they believed that the opportunities and the heritage would be greater if they remained British and part of the United Kingdom. That is something that the campaign lost sight of. How right the noble Lord, Lord McFall, was to talk about how unfortunate we were to put ourselves in the position where, to maintain the United Kingdom, people had to vote no. That should never have been conceded. If there is a referendum in the future, it has to be under the auspices of the United Kingdom Parliament and we have to look very carefully at the question. I hope and believe that that will not be necessary.

I believe profoundly in this United Kingdom and I believe profoundly in the good that it has done. We should not forget that the greatest days of this country were when there was one Parliament for one country. Although those days will not return—I accept that entirely—we should try to recreate the spirit of the United Kingdom. It took us through the war and we will be commemorating the 70th anniversary of its end next year. As we commemorate that and the 50th anniversary of Churchill’s death, let us remember that the United Kingdom together is, as we have said before, so much more than the sum of its constituent parts. In satisfying certain demands within England, we must not forget that magnanimity in victory should always be our English slogan.

7.36 pm

Lord Beecham (Lab): My Lords, I refer to my local government interests contained in the register, and I join other noble Lords in congratulating my noble friend Lord Lennie on a remarkable maiden speech. He has the somewhat dubious distinction of having at one time been a constituent of mine, and I suppose it is possible that he might even have voted for me in the odd council election—or not.

There is a danger when debating devolution of being sucked into discussions about systems, processes and boundaries when what matters is outcomes in localities. I prefer to frame the debate as one about decentralisation in one of the most centralised countries in Europe. I concur with the dissent expressed by the noble Lord, Lord Tope, from the Leader’s view to the

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contrary. The prime duty that we have if we are to acknowledge and deal with varying local needs and local opportunities in the economy, the environment and social provision is to ensure that local government is strengthened and enabled to work effectively with central government and its agencies.

I have long been interested in the problems of the north-east and what became known as regional policy. I served on the regional policy group of my noble friend Lord Prescott in the 1990s and regret that the Labour Government did not adopt its more ambitious proposals. But, perhaps more relevantly, I was also involved with the Local Government Association in developing the concept of Total Place—the idea that councils should lead partnerships in which the totality of public spending for an area could be brought together, with government departments and agencies, local councils and the directorates getting out of their silo-based approach to policy development and service delivery. In that way, they would be much more strategic and effective, with the added potential bonus of generating efficiencies by sharing services. To their credit, the Labour Government adopted the idea, with the Treasury being particularly supportive alongside the DCLG. Sadly, other departments were not similarly engaged and progress was slow, with very little evidence of any enthusiasm for the concept in the last four years.

There have been some welcome initiatives—for example, city deals, which have been mentioned this afternoon—but little in the way of bringing together such programmes as health, welfare, education, including further and higher education, housing, transport and others, which, in addition to economic development, need to be marshalled if the problems of communities are to be effectively addressed.

The creation of combined authorities, with Greater Manchester leading the way—I note that my noble friend Lord Smith of Leigh will be speaking in this debate and no doubt will refer to it—offers a potentially powerful mechanism to drive part of this agenda. Although it seems obvious, for example, that the Highways Agency should be accountable to authorities in the different areas in which it operates, and that it and other public services and agencies should be part of the Total Place partnerships, there are two critical requirements without which decentralisation will fail.

The present Government have deliberately offloaded responsibilities to local authorities, for example in the area of council tax support, without the necessary financial resources. I have described this process as passing the buck without passing the bucks. Moreover, they have deliberately skewed the system of local government finance to impose much larger reductions in grants, and therefore cuts, on predominantly urban authorities. This has led to huge and disproportionate cuts, not only for the north and Midlands but also for inner London boroughs such as Newham, Lambeth and Hackney, and coastal towns such as Great Yarmouth and Blackpool. This has had devastating consequences for essential services. Merely passing tax-raising and tax-collecting powers to local councils will avail little if the tax base is inadequate. The grant system must be based on need. In effect, we need an English version of the Barnett formula, as recommended by the noble Lord, Lord Lang.

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Higher priority needs to be given to infrastructure investment. Compare, for example, the £15 billion spent on Crossrail with the estimated £7 billion that just might be spent, at some point in the dim and very distant future, on the misnamed HS3 project to improve the rail system linking the north-west, Yorkshire and the north-east, with a population roughly the same size as that of London. In addition, there should be national minimum entitlements to key services, not the minimal entitlements to which we are rapidly descending.

We need to redress the profound inequalities which disfigure our society and hamper our efforts to grow the economy in a globalised, competitive world. We need to restore hope to a generation of young people and to communities where too many lives are stunted by poverty, ill health and the sense of being neglected. Power and resources must be restored to democratically elected local government, in partnership with central government. To facilitate these developments and ensure genuine cross-government involvement, we should also restore a regional presence for government itself. In the 1980s, the Conservative Government established regional offices, eventually involving most departments, which became an invaluable two-way conduit for concerns, information and dialogue between localities and the centre. The present Government abolished them, along with the regional development agencies, a piece of politically inspired vandalism which has greatly weakened the intelligence base of individual departments and the Government as a whole, as well as the capacity to harness resources across the board.

The changes I advocate seek to address the real problems we face, not the political gamesmanship of English votes for English laws. It is an agenda of decentralisation and partnership. Call it what you will; call it devolution if you must, but let us get on, with the urgency that the situation demands, with empowering local government and central government to work together—and, yes, with the private sector—in the interests of ensuring that they make the necessary impact on the lives of communities and citizens.

7.42 pm

Baroness O'Neill of Bengarve (CB): My Lords, I begin with two declarations of interest, one of the heart and one of the head. Both are relevant to this debate. From the heart, I have four grandparents, one Irish, one Scots, one Welsh and one English. That means I have a stake in many parts of this debate. I spent a lot of the six months leading up to the referendum with sleepless nights, worrying, not just about what would happen to Scotland, but about the results for Northern Ireland had there been a yes vote. The noble Lord, Lord Empey, has already hinted at these and I suspect the noble Lord, Lord Bew, will tell us more. Thank goodness we will never know what those results would have been, but those people in both Belfast and Dublin who knew the situation best thought that they could well be catastrophic. It is a fragile settlement.

From the head, because I chair the Equality and Human Rights Commission, I have had occasion to look at some aspects of our ragged devolution settlements. They are quite different, but it is worth noting that

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both the Scottish and Northern Irish settlements refer directly to the Human Rights Act, yet we have suggestions from some quarters that that legislation might be repealed. If it were, we do not know whether that means unpicking the Scottish and Northern Irish devolution settlements. I hope not—I think it may just have been overlooked—but that was the implication of what has been proposed.

Some noble Lords may think it has now gone away, but I have another worry, which is about the notion of devo-max. It played a very large part in discussions, over the last couple of years, about what would happen in the event of a no vote, which is what we actually got. It is a very unclear slogan and I suppose it was meant to indicate an aspiration. However, it seems to me that it was well chosen to indicate an illusory and ill defined aspiration. Devolution is the sort of thing that anybody would be pretty ill advised to try to maximise. To me, maximising means that you have got some clear unit and you get as much as possible. What is devo-max and what was it meant to be? As we think forward about devolution we should surely aspire, not to maximise something but to get something coherent and workable in which powers are not devolved without the responsibility to exercise them or without the resources or tax-raising competence to do so or without accountability for how it is done. The overall aim must be to secure devo-coherence for each part of the United Kingdom, not devo-max. My slogan is, therefore, the not very enlightening one: devo-coherent.

I will say a little bit about devolution and delegation. Mere delegation of powers, responsibilities and resources does not constitute a feasible scheme of devolution. Devolution is not the same as delegation for many different reasons, but I will emphasise one which is often overlooked. Powers have often been delegated on the assumption that, at the other end, there are bodies that are delivery agencies of centrally prescribed aims. There is little gain for anybody in devolving powers and then prescribing exactly how they have to be discharged. The supposed gain in democratic accountability that might be achieved by a coherent scheme of devolution would be entirely lost if it was accompanied by a centrally prescribed set of boxes to be ticked, performance indicators to be met and measures that effectively remove all discretion in the use of the supposedly devolved powers. This has corollaries that may not always be welcome. If devolution is about permitting variation and decision-making at a lower level and if variation is allowed then complaints about postcode lotteries when various decisions are made are simply out of bounds. This does not mean that accountability for devolved decisions is out of bounds; on the contrary, it becomes more essential. However, it does mean that the forms of accountability adopted must fit the case and in smaller jurisdictions where, as we say, everybody knows everybody, thinking how to make forms of accountability effective can be quite divisive.

Devolution, variability and parity are aims we should all have. I return to our ragged set of devolution settlements. There is no need for uniformity. Inevitably, the settlements for Scotland, with its ancient legal system, and Northern Ireland with its partly necessary—if considerably dysfunctional—consociational constitutional

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settlement, will need to be varied to take account of realities. However, it is also essential to take account of and respect the unitary status of citizenship in the United Kingdom and to ensure that fundamental rights and protections are there for all, and that advantages and disadvantages are traceable to accountable, devolved decisions and not to asymmetries in the way the overall devolution settlements treat those living in the various jurisdictions. We need to think very hard about the rights of citizens and the sorts of redress for breaches of rights that must be available to all. Like the noble and learned Lord, Lord Hope of Craighead, I believe that common citizenship requires devolved structures that respect the same underlying standards and provide rights of appeal to the Supreme Court for all in every jurisdiction.

We have to accept that Scotland will get ahead in devolution. The promises, the vow, guaranteed that. We probably have to accept that for a time Scotland continues to enjoy more favourable financial terms than the rest of us. Again, we had better swallow that. But we do not have to accept that the status quo is the future. I believe that it will take a constitutional convention and genuine leadership if we are to have a wider and coherent form of devolution.

7.49 pm

Lord Lexden (Con): It is an enormous pleasure to follow a most distinguished member of one of Ulster’s oldest families with strong family links, as we have heard, throughout the United Kingdom. I take the view that the union on which our great country is based gained no more than a reprieve in the recent referendum. I could not disagree more with those who say that the referendum result made the union secure for a generation. We face the extraordinarily difficult task of putting our United Kingdom on a secure, long-term basis for the future to preserve it for the generations that are to come. Above all, we must work to infuse all four constituent parts of our country with a sense of common purpose which they have increasingly lacked as devolved institutions develop separately from one another in three of the four parts. That should be done by revivifying unionism, of which my noble friend Lord Lang of Monkton and others spoke eloquently in the debate in January.

Once upon a time unionism was practised successfully by the Conservative and Unionist Party, particularly in the days when it was known simply as the Unionist Party, a name which it retained in Scotland until 1965. The Conservative Party needs to recover its unionist mission, and fast, just as the leaders of all political parties need to recover a sense of statesmanship, the central point in the truly brilliant speech made by the noble Lord, Lord Hennessy.

I hope that I will be forgiven for dwelling a little on certain aspects of the past, which provide one or two useful points for the present. The extraordinarily difficult constitutional terrain in which we now find ourselves was very familiar to our country’s politicians in the 30 years before the First World War, as they grappled unsuccessfully with the problem of putting the Government of Ireland on a secure long-term basis within the union.

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The Irish home rule proposals brought forward by Mr Gladstone in 1886 to provide for limited devolution to a Parliament in Dublin at once exposed to view the central difficulties of Westminster representation and taxation. Mr Gladstone anticipated Tam Dalyell and Enoch Powell by nearly a century. His notes for the great speech in which he introduced the first home rule Bill in April 1886 contained poignant words of enduring interest. He said:

“Ireland is to have a domestic Legislature for Irish affairs”,

and “cannot come here” for,

“English and Scotch affairs … The one thing follows from the other. There cannot be a domestic Legislature in Ireland dealing with Irish affairs, and Irish Peers and Irish Representatives sitting in Parliament at Westminster to take part in English and Scotch affairs.”.—[

Official Report

, Commons, 8/4/1886; col. 1055.]

Scotch, incidentally, was a widely used alternative to Scottish before it became confined to the most delicious beverage known to man.

Gladstone offered the proposed Dublin Parliament very limited powers of taxation. Reluctantly, he reconsidered his initial plan for the total exclusion of Irish representatives from Westminster. His second home rule Bill in 1893 proposed to cut the number of Irish MPs at Westminster from more than 100 to 40 but without restricting the matters on which they could vote. The same approach was embodied in the third home rule Bill, which Mr Asquith introduced in 1912. Indeed, this was the way in which the issue was settled in 1920 when Northern Ireland’s devolved Parliament was created. Ulster was given 13 MPs, significantly fewer than its population warranted, with a subsequent reduction to 12 when university representation was abolished. The arrangement gained general acquiescence with occasional protests from the Labour Party. It is a point on which we need to reflect.

Significantly, no one in the late 19th century contemplated for long the approach which so many favour in relation to Scotland: arrangements to prevent MPs from Ireland voting at Westminster on matters that were to be devolved to Dublin. Gladstone toyed with the idea but swiftly rejected it. Not for him, not for that generation, was the notion of two categories, two classes of MPs, to be seriously entertained. For my part, I strongly deprecate it as incompatible with a successful union settlement.

It is perhaps a source of some comfort and some relief to recall that the severe constitutional difficulties with which we now wrestle absorbed great political intellects in the past. In the end, they found it impossible to devise a constitutional framework that would satisfactorily reconcile devolution with the existing dispensation at Westminster. Will we in the end be led to the same conclusion? If so, we will find that there is another great figure in the unionist tradition from this period who can help us.

This year marks the centenary of the death of Joe Chamberlain, the radical firebrand who entered into alliance with the Conservatives to preserve the union. He said that it could only be done on a federal basis. There was no other way of reconciling devolution with constitutional harmony and fairness.

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Speaking at the inaugural meeting of his National Radical Union on 17 June 1886, Joe Chamberlain said that in any rearrangement of our constitutional system we are bound to see that new provisions are so devolved as to be applicable to Scotland, Wales and other parts of the United Kingdom as well as Ireland. In the weeks since the Scottish referendum and the announcements of further devolution to Edinburgh, I have found myself wondering more and more whether Joe Chamberlain should perhaps be our guide at this grave hour in our nation’s constitutional history.

7.56 pm

Lord Judd (Lab): My Lords, I regard myself as English and Scottish. I had an English father and a Scottish mother who both were very proud of their nationhood. Therefore, I have always seen the United Kingdom as a marriage between two partners, each with their own vivid background. History, culture and religion—each has its identity. I look at the right reverend Prelates opposite and I am glad to see them here as members of the Church of England. When I look at them I think of the vivid stories told to me by my mother and my grandmother. They spoke about the General Assembly of the Church of Scotland and all that that meant to them, and the character and the verve of the General Assembly and the rest. That was very real too. My grandfather was a minister in the Church of Scotland and secretary of its foreign missions.

I keep very close to my English and my Scottish family. I was surprised and rather shaken by the number of them who told me in very firm terms that they were going to vote yes. They were mostly church people. I confess that they were professional, middle-class people who were mainly in the caring professions and education. When I reasoned with them and said, “Look at all the issues facing both England and Scotland, and Wales and Ireland. Can’t we tackle them more effectively together?”. One cousin, in very firm terms, said, “Frank, that is a very powerful argument but it is too late. We are absolutely exasperated and fed up with the arrogance of the south-east and London, which runs the United Kingdom almost totally from that standpoint and does not recognise our identity”.

We have to recognise that there is a powerful feeling in the people of Scotland of a strong desire to express their nationhood, and their self-confidence in their nationhood. We may have won a vote by 55% to 45%, which is a quite significant result, but we have not finished the argument. What now follows will be crucial. If there is disillusion in what follows, goodness knows what will happen the next time that there is a referendum. I agree with those who argue that it will come sooner rather than later. We must discharge what we have promised, and we must discharge it rapidly and by the timetable that has been announced.

Some of these issues, of course, are not just about Scotland. In many parts of England and Wales there is a feeling of alienation from the political system. There is a feeling of loss of significance and identity, and people are yearning for them. When we know that the body politic, of which we are a part here in Westminster, is held in great disrepute by many people in our country, we have to recognise that it is this

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feeling of loss of personal significance that is very central to it and which lays many people in this country open to appeals from populists and extremists.

We therefore have to get on with the final, comprehensive constitutional settlement. When I look at what has been happening with our constitution in recent years, it seems that it has been a patchwork affair, and very confusing for many people throughout the United Kingdom. It has been dealing with this or that issue, which always has implications for other issues, but there has been no road map, no master plan, no goal, and no sense of destiny or direction. I think that is why a royal commission or other convention is so essential, and quickly, so that we produce a road map which can enable people to look at the interrelated issues and how we are going to take the situation forward convincingly. This is precisely not the time for knee-jerk reactions and populist moves of one kind or another.

That work has to be transparent. It has to engage and involve the widest possible cross-section of the community. I am quite convinced that, unless we have it, we will be facing one constitutional crisis after another. I believe that, given the logic of all that has been happening, with the priority that devolution has been taking in recent years, the logical way is to get on with building a federal United Kingdom. We will have a stronger United Kingdom on a federal basis than we do by trying to insist that it remain upon a unitary basis.

8.02 pm

Lord Shipley (LD): My Lords, as someone who also comes from the north-east of England, I congratulate the noble Lord, Lord Lennie, on his admirable maiden speech.

I am much encouraged by the Government’s achievements in devolving power across the UK since 2010, with the Scotland Act 2012, with the Wales Bill, together with city deals and local growth deals in England, which have enabled local economic areas to lead investment decisions. The referendum result in Scotland is now accelerating that process in England where there is an appetite for greater devolution.

There is, however, a huge difference between Scotland—which already has a parliament and significant devolved powers, and which debated independence for two years—and English regions and subregions, which have no directly elected structures and few devolved powers and have not, with a few honourable exceptions, been thinking much about devolution other than in terms of general ambitions. Defining what is wanted in detail, with clarity about governance and resourcing, place by place, is an essential prerequisite to successful devolution.

There have been a number of think tank reports on devolution within England, together with policy statements by bodies such as the Local Government Association, of which I am a vice-president, Core Cities, the County Councils Network and the London Finance Commission. With the City Growth Commission adding its weight last week and with two further independent commissions reporting over the next three months—the Independent Commission on Economic Growth and the Future of

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Public Services in Non-metropolitan England and the Independent Commission on Local Government Finance—a detailed set of evidence is being assembled.

Scotland voted no in the knowledge that even a no vote would result in extensive new powers following the vow delivered from Westminster a few days before polling day. Newspapers across the north of England followed up on the day after the Scottish referendum result, asking the Government, “Now what is your vow to the North?”. It is a reasonable question, but it invites the reply “Exactly what powers do you want?”.

Thankfully, ResPublica, with Greater Manchester, has produced for that part of England a route map, Devo Max—Devo Manc. Sensibly, it understands the need for incremental devolution leading within a few years to the full devolution of the £22.5 billion annual public sector spend in that area. This is where we need to be headed for all parts of England willing and able to take on greater responsibilities.

This is because there are two major advantages to the UK in devolution within England. First, it will help to drive growth, as many think tanks have demonstrated, particularly through a better fit in skills investment, which responds more directly to the needs of employers, and in planning for housing and transport. Secondly, it will make public services more efficient because they will be better joined up when run at a local level.

We must combat the silo approach of Whitehall departments and the 50 central institutions which channel public spending into England with more than 1,000 funding lines. I am pleased that my own party resolved at our Glasgow conference that it would introduce a devolution-enabling Bill in the new Parliament to permit devolution on demand to councils or groups of councils.

During the passage of the Scotland Act 2012, the UK Government set out three devolution principles. These were that proposals should have broad cross-party support, should be based on evidence and should not be to the detriment of other parts of the UK. I think those principles should apply to those parts of England now wishing to secure devolved powers from Westminster. There are others.

First, on equalisation of resources, however the detail of devo max for Scotland turns out, it will inevitably and rightly give Scotland much greater responsibility for tax raising. In this situation, even without the Barnett formula, tax raised and public spending would be broadly in balance if Scotland keeps the corporation tax raised there. This is a very important matter, not least because it establishes the principle of geographical ring-fencing within the UK.

Some voices in London, not least some mayoral candidates, are suggesting that what is good for Scotland is good for London. There is an increasing demand for London to keep more of the tax raised in London. This has the potential to become a very dangerous trend for the rest of England and for Wales if it is not handled extremely carefully.

In the case of Greater Manchester, for example, the ResPublica report shows that public spending is £22.5 billion yet tax raised is only £17.7 billion. Devolution

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of responsibilities to Greater Manchester would make public spending go further and would increase tax revenues by increasing growth. The ambition is to bring tax and spending further into balance, and that is right, but not all places can do this, and we will still need a system of equalisation which protects those areas less able to increase their tax revenues.

Secondly, the UK must remain responsible for UK-wide policies, such as major infrastructure investment, and for the core policies behind public services and welfare provision.

Thirdly, on governance, with devolved powers come extra responsibilities for delivering growth and greater efficiency and for managing investment and risk. Having a governance structure that is fit for purpose and commands public support will be essential. We will have to build on the structures we have, on city regions and, we hope, county regions and combined authorities. As they grow in their responsibilities, such authorities will need a more secure democratic mandate. I think that must mean direct elections using a system of proportional representation.

In conclusion, the next step has to be a constitutional convention to examine powers, responsibilities, capacity building, governance, tax-raising powers and spending powers for devolution within England. I hope that we will do that.

8.09 pm

Lord Sanderson of Bowden (Con): My Lords, like my noble friend Lord Steel, I must congratulate my own Scottish Borders on returning the highest no vote in mainland Scotland, but there is no doubt that the referendum has created the most divisions throughout Scotland that I have ever witnessed. It will take a very long time to heal the wounds. Splits in communities were very obvious and in many families there was division. As the noble Lord, Lord Foulkes, said, we were very near the precipice. The situation was not helped by the Scottish Government’s White Paper, parts of which were more akin to an election manifesto, when we were really dealing with the most fundamental constitutional change for our country.

Having succeeded in that no vote, we are now faced with producing proposals for enhancing the many existing powers devolved to Scotland, which in the case of tax raising have never been used since inception. I have with me the report of the commission of my noble friend Lord Strathclyde, published in May, and I am glad to see one of its members, my noble friend Lady Mobarik, here in her place. That report stated:

“The sad fact is that, even after 15 years of devolution, it is still far too easy for Scottish Ministers to blame difficult financial decisions on others. This is both unhealthy for the Union and unattractive for Scotland. Closing the fiscal gap through the means of fiscal devolution would create a more responsible Scottish politics and would help to remove this grievance culture from it”.

This is a major task for the Smith commission, but one of its most important tasks.

The extended tax-raising powers must ensure that MSPs are held responsible for raising, particularly through income tax, the requisite amount of money to cover devolved expenditure. It will also allow other

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parts of the UK to vote on their tax and spending issues. This is the only way to get a sustainable solution that fits in with the wider responsibilities of the UK Government. It means that MSPs will have to justify to their constituents the taxes necessary for their schemes and, as the report suggests,

“Scottish versions of the Personal Tax Statements should be issued by HMRC, highlighting taxes under the control of the Scottish Parliament”.

I hope that this can be enshrined in legislation.

On other proposals in the Strathclyde commission report, I would ask the commission to make haste slowly in any changes that involve the universal credit arrangements. It is a difficult and complex area and I would not wish the Government to act hastily and repent at leisure.

I do not wish to comment on the West Lothian question, which others have talked with great knowledge about, but I believe that it has to be settled essentially by the other place.

I turn to the final recommendation of the Strathclyde commission report, which is the creation of,

“A Committee of all the Parliaments and Assemblies of the United Kingdom … to consider the developing role of the United Kingdom, its Parliaments and Assemblies and their respective powers, representation and financing”.

Ever since the devolution Bill was debated in this House, I have been worried about the lop-sided arrangement that was brought about as a result. Some said at that time that it was a slippery slope leading to independence. We now know, 15 years later, how near that possibility came.

Nothing less than what Strathclyde proposes should be acceptable, as a lop-sided house inevitably will in time crash to the ground. If we are to keep the United Kingdom united, whether it is a quasi-federal system or whatever, the matter really needs to be addressed. There is a stirring in England for progress to devolve. The great northern cities are uniting under the banner of the City Growth Commission, headed by the very capable Jim O’Neill, whose aim is to galvanise the north and to start by getting its transport arrangements improved, with a lot of help, I hope, from the Treasury. This is all well and good, but consideration needs to be given to all the major changes taking place in all parts of the United Kingdom. The Strathclyde recommendation is quite clear. The wider effects of the pending Scottish changes should not be underestimated by the rest of the UK and its institutions.

But of one thing I am certain. In keeping the United Kingdom united, we must have the ability to choose a Prime Minister coming from any part of the United Kingdom. In the interests of democracy, that is an essential part of any commission’s deliberations.

8.15 pm

Lord Smith of Leigh (Lab): My Lords, this has been a very wide-ranging debate on all aspects of devolution. I shall start by saying that I am not the noble Lord, Lord Smith, who is struggling to get together by Burns Night the promises made before the referendum—I am sure that he has a very difficult task—but, as my noble friend Lord Beecham said, I am chairman of the Greater Manchester Combined Authority and so

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declare my interest. You can therefore see that my interest in devolution is devolution to cities in England, which is what I shall concentrate on today.

I was surprised by the contribution of the noble Baroness the Leader of the House, who seemed to say that devolution in England was okay and that we had done everything. The aftermath of the referendum in Scotland, as the noble Lord, Lord Shipley, said, has made people question the overcentralisation that still exists across the UK and England in particular. We have seen numerous reports on devolution come out. The noble Lord, Lord Shipley, referred to Devo MaxDevo Manc, which, obviously, we are particularly pleased with, but the other reports have shown what impact some devolution would have. Every political party in this country now seems to be espousing the idea. Senior members of the Government, of both parties, have made their contribution to that. Even the Labour Party now has a policy on devolution that I am sure we can support, so it is an idea whose time has come. I was therefore surprised at what the noble Baroness, Lady Stowell, said.

Of the three aspects of policy that should be devolved to cities, the first is, clearly, economic powers, the second is place(-based) public services and the third is some form of fiscal devolution. I shall not repeat what people have said about the economic powers, but, clearly, skills, transport and housing are key issues that will make a real difference to our cities. That is particularly true of skills. When we have a Skills Funding Agency based in Whitehall, trying to determine what new skills are needed across Greater Manchester, well, it is no wonder that we have so many hairdressers being trained for jobs that do not exist. We need to get hold of that money and we need to be able to commission it locally, working with the private sector and colleges to make sure that we get a better deal.

I have spoken in this House on a number of occasions on public service reform, about which I am passionate. It was begun, as the noble Lord, Lord Beecham, said, under the Labour Government and what they called Total Place. There has been movement under the current Government in the various experiments that they have conducted—we were a pilot area in Greater Manchester for public service reform—but we have not tackled this fundamental problem of a silo-based approach, where each central government department works on its own and does not understand the nature of what is going on.

We often find that it is the same individuals and the same families who need support, because they have very complex needs. We need to understand that and stop trying to sort out the problems of those individuals in different areas with different people involved; we should look at the position as a whole. We have started in Greater Manchester on a “Work Programme plus”. People have different views about the success of the Work Programme, but quite a large number of people were never shifted by the Work Programme because they were too difficult. Using the resources of local authorities and others, we have begun to understand what problems individuals have in getting jobs. Is it homelessness? Is it some kind of mental problem? Do they have drug issues? We ask what the issue is and

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how we can support it, and then we can help them get back into work. We need to stop dealing with failures, as public services often do, and try to look at things across the piece.

As the noble Lord, Lord Shipley, reminded the House, in Greater Manchester public spending is about £22 billion to £22.5 billion and it has been that figure for a time. We have had government austerity and the cuts. The cuts have affected Greater Manchester—public services such as local authorities and the police have taken huge hits in their spending—but, because of rises in welfare and health spending, the total has remained the same. We are not going to tackle it unless we get control of that money altogether. We need to do that much more. We are happy to take what we would regard as a risk and reward situation. We will tell the Government that we will make savings and share them with them—some of the savings can come back and some of it we will do.

The benefits of such a system have been shown. We know that there will be better economic growth and it will be better distributed across the country. This country is too reliant on London and the south-east and we need to spread wealth across the country. That will happen. Public services will be more efficient and cheaper and actually deliver better outcomes for the people they are meant to support.

We recognise that with devolution comes responsibility. We cannot simply take it on board now. We probably have the most sophisticated government in Greater Manchester because we have been doing it long enough but we know we need to change. I hope on Friday I will get an agreement on some very significant changes in Greater Manchester to take on these new responsibilities to make sure we are accountable to Parliament and to government. We need to do that.

Most of the changes I have suggested do not need to wait for the big constitutional convention. They do not need to wait for massive new legislation. They can be done now. All that is required is the political will to do it.

8.21 pm

Lord Purvis of Tweed: It is a genuine pleasure to follow the noble Lord’s forward-looking and very practical contribution to the debate today. It was very interesting to hear of the broad areas of common ground between him and my noble friend Lord Shipley, pointing out some practical ways forward to noble Lords.

Over the last month since the vote in the referendum I have reflected on two main areas and they have stuck with me. The first is that for many people who voted in the referendum the issue was less what country they wanted to be a citizen of and more about what kind of country they wanted to live in and bring up their children in. It has been something that all parties that believe in the United Kingdom need to continue to reflect on. The noble Lord, Lord Kerr, and others accurately pointed out that of those eligible to vote, 37% voted yes. We can use exactly the same definition when we come to the rather stark figure that 47% voted no. That, for me, is one of the areas where it is quite telling.

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The second area, which is a much more optimistic reflection and one that shapes the rest of my contribution to today’s debate, was the discussions, interaction, listening and taking part in debates with 16 and 17 year-olds in the referendum. It was politically reaffirming but it also struck me that as a group a majority of them voted no. Many of them had their own definition of what a country and a state should look like. They frame what they want the country to be like to give them the best opportunity for the future in this fast-changing and complex world. They defined what a state would be and in many respects they rejected what was on offer by the Scottish Government in the White Paper, which they considered remarkably old-fashioned and in many areas incoherent. We need to challenge the threats ahead of us as a country, which take up much of our time in Parliament both here and in the one where I was proud to serve when I was in the Scottish Parliament. That is why for the year I have been in this place I have tried to take as many opportunities as I can to shape the debate about what happens next.

In June this year I was fortunate enough to have a Question for Short Debate:

“To ask Her Majesty’s Government what plans they have for further reform and decentralisation of the United Kingdom in the event of Scotland voting “no” in the independence referendum in September”.

I have been in this House just a year, as I said, but I served two terms in the Scottish Parliament and five years on the Scottish Parliament’s finance committee. My views have been framed over that period. I was well aware very early on that in 1998 we created a devolved legislative but we did not create a Government in Edinburgh that had fiscal responsibility commensurate with legislative competence. Indeed, in many respects it is that key aspect that we are debating today. It is a coincidence perhaps, but a good one nevertheless, that it was the plenary of the Smith commission—a different Lord Smith—meeting in Edinburgh today discussing taxation: what tax basket would be the responsibility of the Scottish Parliament—addressing the very issues on which the noble Lord, Lord Lang of Monkton, and others have been challenging us. A lot of thinking has been done in this area and there are lessons we can learn. There are strong, long-held principles on fiscal federalism from other countries in the world that are more comparable to the United Kingdom—as my noble friend Lord Tyler indicated with Canada and Australia—than perhaps other European federal nations. There are long-held principles of fiscal federalism that we can learn from in the United Kingdom. We do not always need to listen to the Treasury briefings that say that everything is really difficult and the default answer is no. We need to set political leadership and then the Treasury and others will follow.

Between being in the Scottish Parliament and in this place I wrote a series of proposals looking at these areas in detail. It was a regret to me at the time that when I met the Conservative Party it was holding to a line in the sand for no further powers and when I met the Labour Party a senior member of the party said to me, “We just do not like the choreography of being on the same stage as the Conservatives and you Liberals”. When I tried to propose two years ago a Glasgow agreement of common ground, common language

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and a common platform to go into the referendum campaign with a progressive narrative of what the United Kingdom is and can be, there was rebuff. It is an absolute delight that we are now in a position where all five parties in Scotland are around the table and this Parliament is seized of the positive opportunities ahead of us. We may yet still have a form of Glasgow agreement coming out of the Smith report and I declare an interest as chair of an all-party parliamentary group in this place set up on a cross-party basis trying as parliamentarians to forge that way forward.

Finally, I agree with other Members that one of the ways forward is what I have proposed as a conference of the new union meeting straight after the general election. My final appeal is that this should not be an opportunity to long-grass many of the issues or to rediscover many of the questions. We know what we need to resolve. The difficult part is political parties with vested interests often having to make uncomfortable compromises for their own sake. We have to do it because the figures of 37% and 47% should always stay in our mind. If that is the case, we have that on our shoulder but let us be optimistic and seize the opportunity that has been presented to us.

8.28 pm

Lord Elis-Thomas: My Lords, it is always a delight to follow the noble Lord, Lord Purvis of Tweed, in our devolution debates. When we go back to the later stages of the Wales Bill in the coming weeks I hope he will be able to find time to share his wisdom with us as he has done before. I was particularly pleased to hear what he had to say about his experience in the Scottish Parliament and his emphasis on co-operation across parties. As I am sure Members of this House and certainly the Government know well, this is precisely what has been happening in the National Assembly for Wales. Only last week a resolution was passed unanimously by all the four parties, put down jointly by all four party leaders. The essential part of that is the emphasis on the timescale for getting draft legislation— certainly before the end of the current Westminster parliamentary Session—to implement the further report of the commission so ably chaired by Paul Silk, a former clerk and chief executive of the National Assembly.

In a sense, the process in Wales was ahead of that now taking place in Scotland; but it has also been overtaken by events, in that the process in Scotland is going further. The negotiation that the party leaders in Wales are seeking jointly with the UK Government is precisely to sharpen up the proposals in the Wales Bill. It is also important that, as powers mature in Scotland, we have devolution to the English regions—for example, the north of England—alongside what is happening in Scotland, Wales and Northern Ireland. I speak as someone who is highly reliant on transport starting from Manchester, whether trains or planes.

In the short time available, I shall not venture into the English question as a whole, except to emphasise the point that we already have a clear statement at all times of the territorial extent and application of all our legislation. Wherever there are areas which overlap, we work through legislative consent Motions, both in

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the Scottish Parliament—substantially used, dare I say, by the SNP Government—to ensure that we can co-legislate when that is deemed the best way forward.

I will emphasise the aspects on which the party leaders in Wales are keen to get movement. The leader of the Opposition, the Conservative leader, Andrew RT Davies, is very keen on having the power to determine our electoral arrangements and the size of the Assembly, subject to the use of a super-majority, a two-thirds majority, whenever those decisions are taken.

As I said, there is an emphasis on the need to develop the legislative proposals in what we call Silk 2, but also to ensure that as we get further powers, there is serious co-decision between the UK Government and the Welsh Government, between this Parliament and the National Assembly, whenever we consider a referendum, for example. That is my clear response to what the noble Lord, Lord Thomas of Gresford, said. We must recognise that any decisions taken on holding a referendum on tax-raising powers should reflect the views of the people of Wales, and the UK Government should accommodate that.

It is essential that the discussions taking place between Wales and the UK Government parallel the process that is taking place in Scotland. I join colleagues in saying how good it is to see the SNP Government and the Scottish Greens as part of the post-referendum process.

I get a bit tired of the ideological attacks on a form of nationalism that I certainly never espoused, which does not belong in the 21st century. The civic nationalism of the Ministers who I know in the Scottish Government does not fit the description of my old friend Eric Hobsbawm. Whatever reason he had to leave his home in Croesor, in my former Westminster constituency, I am certain that it was not ethnic cleansing, although he seemed to think that that was the case.

As we look forward to the progress that the coalition Government are leading on devolution across the United Kingdom, for which I thank them, it is an opportunity for us to restate, in this building of all buildings, that in our history the relationships between the nations, regions and peoples of these islands have always been changing. The key thing is to realise that they are relationships. Constitutions are made by relationships, not the other way around.

8.34 pm

Lord Horam (Con): It is probably appropriate in the context of this debate that an Englishman should follow a Welshman and a Welshman should follow a Scotsman. If only we had someone from Northern Ireland, we would have the whole of the United Kingdom encapsulated in the Chamber in one moment.

One of the central points and problems of this debate was raised by the noble Lord, Lord Birt: that 84% of the total population of the United Kingdom is English, with 8% being Scottish, 5% being Welsh and 3% Northern Irish; I hope that that makes 100%. As a result, I have always well understood the desire of the Welsh, the Scots and the Northern Irish for more control over their affairs, rather than the possibility of being swamped by England. I agree that “swamped” is

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a dangerous word in the present context, but I think that the House appreciates what I mean.

We rightly have devolution to Scotland, Wales and Northern Ireland. In those circumstances, there are really only two alternatives to handle it. The first is that England puts up with it. After all, England gets a huge amount from having associated for so long in our history with Scotland, Wales and, for a long time, Ireland as a whole, but now Northern Ireland. Whatever little disadvantages occur to England and English voters, we should not underestimate that that is a big plus. Who can doubt that if Scotland had left us in the independence referendum, it would have been a massive blow not only to the United Kingdom, obviously, but also to England? Let us bear that in mind.

In that context, the English have been pretty good about all this in the 15 years or so since we have had devolution to Scotland, Wales and Northern Ireland. We have rumbled a bit about the West Lothian question; we have agitated a little about the Barnett formula; but it has not been a huge issue in England. We English are rather mild and tolerant people. I think that George Orwell got it about right: we wear our patriotism rather lightly, although it is none the less deeply felt.

Therefore, the question now becomes, as we have gone through the past 15 years or so with the devolution that we have had: will that attitude be sustained with the greater devolution that we are committed to giving to Scotland? There is no doubt or question that we have to deliver on that. We therefore have to consider whether we can, first, make the devolution proposals being considered by the noble Lord, Lord Smith, work, and, secondly, whether we can make some sort of acknowledgement of the English problem work as well. I think that both of them could work. I see no reason in principle why both of those cannot be made to work, even in the limited time available.

The question of income tax and other taxation has been raised. I do not see that as a problem of principle or an economic problem. There was a very good article in the Financial Times the other day saying that, economically, it could quite well work with income tax devolved in the way that my party has suggested to a very full extent.

Equally, on English votes for English laws, with its EVEL acronym, I must say that I am rather a minimalist. If the Standing Orders of the House of Commons could be changed without primary legislation—which I always abhor where we can avoid it—that would be a way forward. Whether we do that or not, I agree with the noble Lord, Lord Forsyth, on this issue, that a better solution would be to have fewer MPs in Scotland and Wales if we have more devolution.

The House will recall the solution that we came to at the time of the division of Ireland in the 1920s, when they went down to 12 or 13 Members of Parliament for the UK Parliament, and, when direct rule was reintroduced, they went back up to 17. If we are to have MPs all treated the same—they should all be treated in the same way, with no fancy nonsense at the edges if you can possibly avoid it—that sort of solution, having fewer MPs in Scotland or Wales, should and, I hope, will be considered by my good friend William

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Hague. Who could be better to do that than him? He is an excellent choice for that role.

I would like that to be considered as part of the ongoing discussions of how we can make some sort of sensible commitment in England to dealing with this whole thing without too much of a consequence. However, there is always the danger—it has been obvious throughout—that this will unravel. Therefore, I come to the conclusion, along with others like the noble Lords, Lord Purvis and Lord Judd, who mentioned this recently, that in the final analysis some sort of federal solution may well have to be considered. I do not mean now; I hope that the present arrangements can be made to work. It certainly has to be considered in a calm atmosphere, as I believe the noble Lord, Lord Hennessy, said. Then we could get it before a general election. Some sort of federal solution with Parliaments all round, with the UK Parliament at the top, I think is the final bulwark. That would be fair to everybody and would be the right way forward if we cannot make the rest of this work. I profoundly hope that we can. I am in politics because I am a proud Brit, and I am proud of all parts of the United Kingdom. We have a hugely successful history and I see no reason why we cannot have a hugely successful future.

8.41 pm

Lord Soley (Lab): It is almost a year since I expressed the view to the noble and learned Lord, Lord Wallace of Tankerness, in this House that we were in acute danger of losing the most successful political and economic union that the world has ever seen. I was worried about that throughout this period, but I recently became confident that the Scottish people would throw us a lifeline; they did, and they did it very solidly. Not only did they throw out the nationalist cause of the SNP but, more importantly, what we need to remember now is that they threw us all, the whole United Kingdom, a lifeline. We need to redesign our constitution for the 21st century.

If your answer to a question now is nationalism, then you are asking yourself a question more appropriate to the 19th century. Nationalism of the sort that is very common both in the SNP and in some other groups—and would be common in England if we awaken the English nationalist cause—is profoundly dangerous. It is particularly dangerous to a successful union, so my message is that we should use the opportunity that the Scottish people have given us to take this forward. I would love to spell out how I think that should go but I do not have time. I will just say that the first question to ask ourselves is: what do we want the union for? There is a detailed answer to that but there are a couple of simple answers. Part of it is about what it has given us for 300 years. It has given us political stability, political progress, economic stability, economic balance and things such as the Industrial Revolution and has thrown out the danger of a return to the authoritarian divine right of kings. That was the positive side.

One message I have for the Government is that, instead of playing around with ideas that encourage English nationalism, such as English votes for English regions, we need to get the message out about what the union is for. There is some criticism that the no campaign

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did not put out a progressive answer about what the union is for. That is a fair comment, although the negative answer was essential because it was vital that the Scottish people understood that, although they could always use the pound—just as the Chinese, the Russians, the Americans or anyone else could do—what you cannot do is use the pound and then have a say in setting the interest rates or determining the regulation of the financial sector or whatever. In other words, you lose independence in the 21st

century unless you recognise that you need the integration between nation states.

I would say to the noble Baroness who opened for the Government—in a way, I am sorry about that speech because it focused so much on the question of English votes for English regions—that she is in acute danger of actually aggravating the situation. It is a gift to separatists—English separatists, Welsh separatists, Scottish separatists and Northern Irish separatists. If she does not believe me, she can watch some of the heads nodding when I say this and when others have said it. It plays into the hands of separatists. If that is not a good enough reason for her, let her please get the Prime Minister to read and reread the speech by the noble Lord, Lord Empey. When I got involved in Northern Ireland politics in the 1970s and 1980s, we looked back to what we did in 1922 and saw what a disastrous mistake it was. In effect, we created a statelet which wanted to be part of the United Kingdom, and in name it was part of the United Kingdom, but in fact it was something very different and very separate, with disastrous consequences. If you go down the road of just thinking that we have to have English votes for English regions, you emphasise that separatism.

We have to go down the road of devolution. I, personally, like the city regions that have come to the fore from the Chancellor of the Exchequer. I think that that is a good and positive road to go down. However, if you go down this road of English votes for English regions, look at what you do for England: you awaken English nationalism and threaten the union. If the Prime Minister does not understand that, he is making a truly fatal mistake. It is very important that we look at that.

Devolution is vital not just because Alex Salmond and others were able to play on the idea of Westminster being remote. It is not just remote from parts of Scotland; it is remote from the south-west of England, from the north-west of England, from the north-east of England and, at times, it has been remote from Essex and Surrey. There is a problem about the feeling of distance. Alex Salmond should not be allowed to get away with this either, because Shetland feels remote from Holyrood; so does Orkney, so does the north-west of Scotland and so does the north-east of Scotland. One of the dangers of this, which the SNP and others do not understand at times, is that when countries break up they often disintegrate rather than separating into neat little blocks. Shetland has a very strong view about this. Its inhabitants do not regard their oil as Scotland’s oil; it is Shetland’s oil up there. If anybody goes up there and asks them, they will make it very clear. The dangers in this are very deep.

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We need to reconnect with people and to do so by devolving power. This is a problem not just for Britain but around the world, yet Britain has been incredibly successful at doing constitutions. The German constitution, which is one of the most successful in the world, was virtually written by Britain and there are many others. We have been incredibly successful over 300 years of doing this but, at the moment, we are in danger of losing the plot by focusing on one or two issues, such as English votes for English regions. We have to break out of that and recognise that we have to find a form of devolution that works throughout the United Kingdom, while recognising that the union is important because it gives us political and economic strength across the piece.

I wrote to the Prime Minister shortly before the referendum and asked him to look at having a constitutional conference—whether we won or lost that referendum, incidentally. I still think that is the right road to go down. I do not mind whether it is a royal commission but I say to the noble Baroness, so that she may convey it to the Prime Minister, that we do not need simplistic political solutions at the moment. We need statesmanship and we look to the Prime Minister for it. At the moment, we are not getting it.

8.47 pm

Lord Stephen (LD): My Lords, I compliment the noble Lord, Lord Soley, on his insightful contribution. I share his deep concern about the dangers that we faced at one point of this referendum: of losing so much of what the union has been over the last 300 years.

This has been a very good debate and there have been some very wise comments, particularly on the nature, appeal and real dangers of nationalism. Nationalism has the ability, in the right place and at the right time, to whip up passion and fervour among those who feel disconnected, disengaged or disfranchised. I think that the noble Baroness, Lady Liddell, was the first to point out that there was a very nasty edge to this referendum campaign. I spoke in a previous debate about the treatment, for example, of JK Rowling or that of the mother of a disabled child—who dared to say that she intended to vote no—by the First Minister’s media adviser. You could see it on the streets as well. What did it for me was seeing not the treatment of Jim Murphy but rather the ugly heckling and barging of an elderly woman who dared to approach him, simply to ask a question about the campaign. That is not the sort of Scotland that I ever want to see again.

I have no doubt that if the yes vote had won, there would have been a carnival of triumphalism. George Square and its fountains would have been occupied for days. The no voters are very different. There was a sigh of huge relief across Scotland after weeks of agony about the outcome but no triumphalism there. Instead, there was sensible and constrained silence except, sadly, as several noble Lords such as my noble friend Lord Steel and the noble Lord, Lord McConnell, have pointed out, from the steps of No. 10 Downing Street. Rather than the Prime Minister’s essentially partisan speech which was trying to gain party advantage that morning, he and the other party leaders should have travelled to Scotland together to give substance to

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their pledge, show respect for the decision of the people of Scotland and help to unite and heal. There is still time for that to be done.

I have considerable confidence in the ability of the noble Lord, Lord Smith, and his team to deliver a radical set of proposals for significant new powers on both tax and policy to Scotland. It is worth pointing out that, for the first time, the Scottish National Party is participating in the process of delivering a stronger, more powerful Scottish Parliament. It turned its back on the Scottish Constitutional Convention and the Calman commission but now it is part of the Smith commission, which is a good thing. I wish all members of that commission well in their endeavours. I have considerable confidence in their ability to deliver home rule for Scotland—home rule of the kind for which my noble friend Lord Tyler and I, along with many others in this Chamber, have always campaigned.

There is a kind of federalism which is beginning to develop momentum for the rest of the UK. I have heard many noble Lords, such as the noble Lord, Lord Foulkes, talk about federalism in a passionate way, which bodes well for future debate on this issue. However, I have considerable concern about the issue of shaping the future of the rest of the UK. I do not care whether it is a commission or a convention, frankly, or whether it is royal or not. What I care about is that it should be rapid, radical and federal.

By “rapid” I do not mean that it has to be decided in the next 100 days or by Burns night, or whenever the deadline might be. Quite clearly, Scotland has to come first and that is the vow. However, it does mean getting on with it for the rest of the UK. By “radical”, I do not mean that I want to force a particular solution on England; it means that giving more powers to local government in England is simply not nearly enough. By federalism, moreover, I do not mean a single, fixed solution but more the federalism of the kind emphasised by my noble friend Lord Tyler and the noble and learned Lord, Lord Hope of Craighead. It is the sort of approach that can be taken in Australia, South Africa, Canada or Spain. There are so many examples around the modern democratic world but it appears not to be able to be grasped here in the United Kingdom.

Lord Cormack: But there is no federation where one country within that federation has 85% of its population.

Lord Stephen: Exactly, which is why we must devolve within England; this is exactly the point that I hope to come on to. We can have different approaches in devolving power across England. We need a coherent structure for that, but we can be very flexible inside that structure. Canada is a very good example. However, the current focus on a purely English solution—a sort of English nationalism—is for me simply not good enough. I believe in devolution, not simply because Scotland is a nation and is the only part of the United Kingdom that deserves these powers, but because decentralising power is a good thing. It makes for better decision-making. A decentralised United Kingdom would in my view be a better democracy for us all.

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If the referendum in Scotland leads to this—to a better more decentralised democracy for all of the United Kingdom—then there could be no better tribute to those who quietly but passionately voted no. Those who trusted the Westminster party leaders and had faith in something better are the people who have created this opportunity. It is now our responsibility together, across the political divide, to deliver. The very future of our united nation depends on it.

8.55 pm

Lord Bew (CB): My Lords, the noble Baroness, Lady O’Neill, has already made this point very strongly. There is one respect in which the referendum result in Scotland has been stabilising for the rest of the United Kingdom, and that is with respect to the experiment in Northern Ireland. There is no possible way, if Scotland had elected to leave the United Kingdom, it could have been stabilising in its implications for Northern Ireland. As a strong supporter of the settlement embodied in the Belfast agreement, along with the noble Lord, Lord Empey, who worked so hard both to see the Belfast agreement pass in a referendum and also to maintain the institutions in the first few difficult years, I am delighted by that really excellent outcome.

In more general terms, however, the mainstream English political mind has had a problem for a century, which is that it tends to be too sentimental about devolution as the answer to problems in the United Kingdom. It may be absolutely necessary—and I have already said that I believe it is absolutely necessary for Northern Ireland, and I accept, in the context in which we live, for Scotland and Wales—but nor has it worked in the way that it was expected to work and we must face up to this. There is a reason for that, I think. For much of the century people believed that, if only we had achieved devolution as a settlement for Ireland, we would have avoided all the violence and the separation of Ireland from the rest of the United Kingdom, but this fine magical solution, because of short-sighted behaviour of some major political players, was not made available to us.

However, the Scottish experience of the last few years raises a major question about that. Scottish nationalism, which I accept is a serious force, does not have anything like the deep historical roots of Irish nationalism, yet it came to the point where 45% of Scots, after a sustained period of devolution, were prepared to vote for separation. Anybody, therefore, who thinks that had we had devolution for Ireland earlier in the century that would automatically have switched off the separatist urge is, I think, deluded. None the less, the idea is there and we think about it in a sentimental way.

Often the poor performance of the devolved regions—look, for example, at the performance of Wales in terms of its educational structures in international tests—does not receive the attention that it should. We say, again and again, “Local people making local decisions—it is going to work and it is going to be better”. Actually, not all the figures, if you look at the educational culture of the devolved regions at any level, would for example suggest that that is necessarily the case. In this debate, many noble Lords whose opinions I greatly respect—

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Lord McConnell of Glenscorrodale: Perhaps the noble Lord would address this point. There is a feeling in Scotland that at least part of that accumulation of support for independence is due to increased confidence. That is partly because Scotland’s performance economically today compared to the rest of the United Kingdom is significantly better than when the Parliament was established. Population decline has been reversed and a number of other improvements in Scottish society have been made. That confidence is perhaps part of the reason why people feel they can take on the additional powers of independence.

Lord Bew: I accept the noble Lord’s point, but the same point could be made about Irish nationalism, which also becomes more intense at certain points when there is more self-confidence as a result of good economic performance. Indeed, in the period leading up to Ireland’s break with the United Kingdom, the First World War was a tremendous boon for Irish farmers and most people in Ireland were farmers. So I accept the point.

On the issue of the federalist moment, which so many have conjured up this evening, I have no intellectual objection to it and I understand its appeal, but I just want to express one point of scepticism. In 1910, all the major parties and all the major players had a serious interest in separatism, with Winston Churchill at the heart of it. Why? Because they could see the Irish home rule crisis about to come and they could see the threat of civil war. They could see the danger that the unwritten rules of the British constitution were going to be absolutely torn apart. Federalism was the wonderful, magical way in which all these contradictions could be resolved, everyone could be happily secured in their identity and the Irish could be given the substance of what they wanted. If we could not do it then, when the political class on all sides thought that this was the right way to go, are we likely to be able to do it now, when the pressures are nothing like so great? It may be so, but—this is not a judgment on the concept of federalism; it is a judgment on just what it requires to get people to move in that direction—I am not sure that we are quite there at this point.

The noble Lord, Lord Forsyth, has already made the point about the reduction of MPs in Westminster from the devolved regions being the obvious solution to the West Lothian question. When I met the McKay commission, I made exactly the same point as the noble Lord, Lord Lexden, that this was the approach adopted with respect to Ireland. It is the obvious and logical way of approaching that question. However, we are now in a situation where the McKay commission has decided to go a different way.

I just want to say a couple of words about that commission, because noble Lords are afraid of too speedy a reaction. Sir William McKay, a former Clerk of the House of Commons who deeply respects its traditions, has produced an answer to this difficulty that does not create two fundamentally different classes of MPs, which is the great danger at stake, but allows a greater register of English opinion. If we are in the situation where the West Lothian question will not go away—currently, it is the Conservative Party that is most active on this; in the 1960s, it was the Labour

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Party, which was furious that a Labour Government with a majority of only five or six had to put up with 12 Ulster Unionist MPs and Labour MPs could not ask questions about what was going on in County Antrim—today it is a different party that finds the West Lothian question hard to endure. However, if we are in a position where we have to act on this matter, a report of this sort may not have the answer but deserves some serious consideration.

Above all, the characteristic of that report, as we might expect from William McKay, is what the union requires to survive: it is dominated by the language of civility. That is the sine qua non for the survival of the UK as we approach these problems.

9.02 pm

Lord Forsyth of Drumlean: My Lords, it is a great pleasure to follow the noble Lord, Lord Bew. The great weakness in the McKay report was that it addressed only the West Lothian question and not the much bigger one of the imbalance that arises because of the Barnett formula. I am sure he would agree with that.

Anyone listening to Nicola Sturgeon, who is the sort of First Minister designate in Scotland, on the “Today” programme this morning demanding a Scottish veto on any European referendum result could be forgiven for thinking that the nationalists had not been comprehensively defeated on a massive turnout on 18 September. Not content with one referendum on Europe, she wants to have four. Alex Salmond was absolutely convinced that he was going to win the campaign, where he used the patronage of the Scottish Government ruthlessly—and, by the way, is still doing so, ringing people up and saying he is going to get them because they did not support his side of the argument. Intimidation reared its ugly head at every level, inspired by these nationalists, causing unionists to be fearful about acknowledging their support for their cause.

In the end, Alex Salmond failed because of economic uncertainty. His support, however, came from an electorate, as the noble Lord, Lord McConnell, pointed out, utterly disillusioned with the political system and still hurting from the consequences of the financial crash of 2008. The nationalists, just like Mr Farage and UKIP in the south, offered hope and easy answers, and many hard-pressed voters thought that things could not get worse for them and they could risk taking a chance on separation. The separatists exploited the consequences of poorly thought-out constitutional change and complacency and lethargy in their opponents, as the noble Lord, Lord McFall, pointed out earlier. The Prime Minister allowed Alex Salmond to choose the question, the timing and even the franchise for the referendum, despite it being the United Kingdom’s constitutional responsibility. The result was that we had a two-year long campaign during which all the levers of the Scottish Government were used to advance the nationalist cause and promote a grievance culture. The question on the ballot paper demanded a negative answer to maintain the status quo. Instead of, “Should Scotland remain part of the United Kingdom?”, Salmond insisted on, “Should Scotland be an independent country?”. As my noble friend Lord Cormack pointed out, the unionists were thus forced to campaign for a

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no vote while enduring attacks from Salmond that the campaign was negative. Of course campaigning for a negative is negative. He deliberately set it up that way.

He promised that this referendum would be a once-in-a-generation event. He said that because he thought that he would win it. His word has proved to be worthless; it turns out that he had the lifetime of a butterfly in mind. He resigned as First Minister in defeat, leaving his left-wing successor—she is left wing—to renege on the nationalist promise and refusing to rule out a further referendum. It is clear that a vote for the SNP is now a vote for divisive, disruptive and damaging neverendums. Salmond himself will almost certainly fight the general election, hoping to win a seat at Westminster, in the Parliament he so despises, and lead a ragbag of disruptive latter-day Parnellites. That is his plan.