8.30 pm

Baroness McIntosh of Pickering: Did I understand my noble friend to say that this House and the other place will be able to debate the annual reports on the fiscal framework, which will have been adopted by the Scottish Parliament, but will not be allowed to debate the fiscal framework itself now? That seems rather bizarre.

Lord Dunlop: I think that we are debating the fiscal framework at this moment. As to whether there will be debates on the annual reports, it will up to each House to decide what debates it wants to have on them and what scrutiny it wants to give. Given the interest in the subject, I anticipate that there will be detailed scrutiny.

Lord Forsyth of Drumlean: I am sorry, but my point to my noble friend is this. The Scottish Parliament will decide whether it is going to give legislative consent to this Bill, which will have the effect of making the Bill reach the statute book. It has the opportunity of discussing the fiscal framework because we now have one.

Lord Higgins: And of approving it.

Lord Forsyth of Drumlean: Yes, it has the opportunity of approving it, whereas the House of Commons has not had the opportunity to do that. What possible justification can there be for not giving the elected Members of the House of Commons the opportunity to consider the fiscal framework, which has implications for the whole of the United Kingdom, when the Scottish Government have quite rightly insisted that they would not give legislative consent without the Members of the Scottish Parliament having an opportunity to consider it? I honestly think that my noble friend has to concede that there has to be an opportunity for the House of Commons to be treated in exactly the same way as the Scottish Parliament.

Lord Dunlop: That is a matter for the House of Commons; it is not a matter for the House of Lords. The House of Commons has decided to pass the Bill through its stages, in full knowledge of what the state of play was on the fiscal framework.

Lord Higgins: It had absolutely no knowledge of what the state of play was on the fiscal framework and it ought to have an opportunity to debate it.

Lord Dunlop: That really is a matter for the House of Commons, and not for this House of Lords. That House has to decide how it wants to deal with these matters and has done so.

29 Feb 2016 : Column 666

Lord Forsyth of Drumlean: Will my noble friend allow me one more time?

Lord Dunlop: I will give way one more time but throughout the passage of the Bill, I think that I have taken every intervention and I really need to make progress.

Lord Forsyth of Drumlean: We are all extremely grateful to my noble friend and very sympathetic to the position in which he finds himself. However, he says that it is a matter for the House of Commons. If we were to pass my amendment then it would go back to the House of Commons, so it is a matter for the House of Lords whether the House of Commons will get the chance to consider it.

Lord Dunlop: For the reasons that I have explained, the Scottish Parliament is giving its legislative consent to the Bill and this House is being asked to approve the provisions of the Bill, so we are absolutely on the same footing.

Turning to the review of the fiscal framework, this is an agreement between Governments and it will be operated by Governments. Ultimately, therefore, the formal review should be conducted by Governments. However, as I have said, there is plenty of room for independent contributions. We have built an independent report into the review process for the first time for Scotland’s fiscal framework and, as I have said, I hope that the House of Lords Economic Affairs Committee will contribute its views on how this report should be structured. In addition, there is nothing to prevent other independent voices giving their views to either Government at any stage.

Let me reassure the House on one final aspect of Amendment 57AA. It is already our stated intention to have an independent report for the end of 2021. My expectation is that report will be published, although it will be for the Government of the day to determine that.

Finally, I turn to Amendment 57AC, tabled my noble friend Lord Forsyth. I fully support the principle behind this amendment, as Governments should be accountable for all the public money that is spent, in whatever context. However, the Scottish Parliament already has an important scrutiny role over more than £30 billion-worth of spending. I therefore think it is primarily for the Scottish Parliament to monitor how the Scottish Government use the funds they will have to implement devolution following the Smith commission. I hope and expect that it will fulfil this role vigorously.

To reassure the House, I point to the scrutiny afforded to implementation of the Scottish rate of income tax following the Scotland Act 2012. The Scottish Parliament has taken on a significant role here, holding the Scottish Government to account. However, this does not mean that the UK Government and this Parliament are without a role. As I have said, we have committed to report annually to Parliament on the operation of the framework. I know those reports will receive full scrutiny. I therefore ask my noble friend to withdraw his amendment.

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Lord Forsyth of Drumlean: My Lords, we have had a lengthy debate in which we have covered a lot of ground. However, a number of questions remain unanswered, which makes the case for both Houses to have an opportunity to consider the fiscal framework. I am extremely grateful to the many eminent and distinguished Members of the House who took part in the debate. I will not list them all as we need to get on, but I find it difficult to resist making one point to the noble Lord, Lord McFall. He said that the Scottish Parliament will be in the same position in terms of its powers as it was in 1707, and I will leave the House to speculate on who is playing the role of Queen Anne in that respect. It is, I might gently suggest, a slightly ridiculous position, although the big difference with 1707 is that it was not then dominated by one political party.

When I used to go to European Council meetings, I would always take the advice of the noble Lord, Lord Kerr, when he was in charge of UKRep. I am tempted to take his advice and withdraw Amendment 56ZA, but give notice that I will divide the House on Amendment 68.

Lord Higgins: I entirely take the point which is made about the later amendment, but I merely suggest to my noble friend that the vote will become detached from the debate which we have had now. We could go over the whole process again on the other amendment but that does not seem a very sensible way of proceeding. I would have thought, given the debate, we are much better really taking a decision now.

Lord Forsyth of Drumlean: I always listen very carefully to my noble friend. I therefore beg leave to test the opinion of the House.

8.38 pm

Division on Amendment 56ZA

Contents 29; Not-Contents 145.

Amendment 56ZA disagreed.

Division No.  2

CONTENTS

Berkeley, L.

Bichard, L.

Caithness, E.

Cormack, L.

Empey, L.

Fairfax of Cameron, L.

Forsyth of Drumlean, L.

Gardner of Parkes, B.

Higgins, L.

Hollick, L.

Hope of Craighead, L.

Howard of Rising, L. [Teller]

Kerr of Kinlochard, L.

Kinnoull, E.

McCluskey, L.

MacGregor of Pulham Market, L.

McIntosh of Pickering, B.

Mawson, L.

Montrose, D.

Morgan, L.

Northbrook, L.

Oppenheim-Barnes, B.

Rogan, L.

Sterling of Plaistow, L.

Trenchard, V.

Trimble, L. [Teller]

Turnbull, L.

Wheatcroft, B.

Wilson of Tillyorn, L.

NOT CONTENTS

Adams of Craigielea, B.

Ahmad of Wimbledon, L.

29 Feb 2016 : Column 668

Altmann, B.

Anelay of St Johns, B.

Arbuthnot of Edrom, L.

Ashton of Hyde, L.

Astor of Hever, L.

Bates, L.

Best, L.

Borwick, L.

Bottomley of Nettlestone, B.

Brabazon of Tara, L.

Bradley, L.

Brady, B.

Bridges of Headley, L.

Brookman, L.

Browning, B.

Callanan, L.

Campbell of Pittenweem, L.

Carrington of Fulham, L.

Chalker of Wallasey, B.

Chisholm of Owlpen, B.

Clark of Windermere, L.

Colwyn, L.

Cope of Berkeley, L.

Cotter, L.

Courtown, E.

Crathorne, L.

Cumberlege, B.

Dannatt, L.

Davies of Stamford, L.

De Mauley, L.

Dunlop, L.

Dykes, L.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Evans of Bowes Park, B.

Faulks, L.

Fearn, L.

Finn, B.

Fookes, B.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Gardiner of Kimble, L. [Teller]

Garel-Jones, L.

Geddes, L.

Goldie, B.

Goodlad, L.

Grantchester, L.

Hague of Richmond, L.

Harding of Winscombe, B.

Harris of Peckham, L.

Hayward, L.

Helic, B.

Hodgson of Abinger, B.

Hodgson of Astley Abbotts, L.

Holmes of Richmond, L.

Home, E.

Horam, L.

Howe, E.

Jenkin of Kennington, B.

Jones of Whitchurch, B.

Judd, L.

Keen of Elie, L.

Kilclooney, L.

King of Bridgwater, L.

Kirkhill, L.

Kirkwood of Kirkhope, L.

Liddle, L.

Lingfield, L.

Livermore, L.

Livingston of Parkhead, L.

Ludford, B.

Lupton, L.

McAvoy, L.

McFall of Alcluith, L.

McGregor-Smith, B.

MacKenzie of Culkein, L.

Magan of Castletown, L.

Masham of Ilton, B.

Maude of Horsham, L.

Maxton, L.

Mobarik, B.

Morris of Bolton, B.

Murphy of Torfaen, L.

Nash, L.

Neville-Jones, B.

Newlove, B.

Norton of Louth, L.

O'Cathain, B.

O'Neill of Gatley, L.

O'Shaughnessy, L.

Perry of Southwark, B.

Polak, L.

Popat, L.

Porter of Spalding, L.

Prescott, L.

Prior of Brampton, L.

Redfern, B.

Ribeiro, L.

Risby, L.

Royall of Blaisdon, B.

Sanderson of Bowden, L.

Sawyer, L.

Scott of Bybrook, B.

Seccombe, B.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharples, B.

Sheehan, B.

Sheikh, L.

Sherbourne of Didsbury, L.

Shields, B.

Shipley, L.

Shutt of Greetland, L.

Skelmersdale, L.

Smith of Basildon, B.

Smith of Hindhead, L.

Spicer, L.

Stedman-Scott, B.

Stephen, L.

Stowell of Beeston, B.

Taylor of Bolton, B.

Taylor of Holbeach, L. [Teller]

Teverson, L.

Thomas of Gresford, L.

Trefgarne, L.

True, L.

Tugendhat, L.

Tunnicliffe, L.

Tyler, L.

Verma, B.

Wall of New Barnet, B.

Wallace of Tankerness, L.

Walmsley, B.

Wei, L.

Wilcox, B.

Willetts, L.

Williams of Trafford, B.

Young of Cookham, L.

Younger of Leckie, V.

29 Feb 2016 : Column 669

8.50 pm

Clause 13: Power of Scottish Parliament to set rates of income tax

Amendment 56A

Moved by Lord Dunlop

56A: Clause 13, page 16, line 14, at end insert—

“(17) Regulations under this section must be made by statutory instrument.”

Lord Dunlop: My Lords, I shall speak also to Amendments 56K, 56L, 71AB and 71AC which are tabled in my name. Amendments 71B and 71C have been replaced by Amendments 71AB and 71AC.

Amendments 56K and 71AB set out clearly, consistent with the existing legal framework, new borrowing powers for the Scottish Government. In line with the Smith agreement, the fiscal framework sets out agreement to change the powers available to the Scottish Government for both resource and capital borrowing.

For resource borrowing, a new power will be granted in this amendment to enable the Scottish Government to borrow should their tax revenues decline as a result of an economic shock which adversely or solely affects Scotland. The Scottish Government will be able to borrow up to £600 million per year. To ensure sustainable public finances, the total aggregate amount of resource borrowing debt will be set at £1.75 billion. In addition, the administrative limit on borrowing for forecast error will be increased to £300 million to reflect the volatility of the taxes as well as the welfare responsibilities that are being devolved.

For capital borrowing, we have agreed an increase in the maximum capital borrowing that Scottish Ministers can make. The limit will be increased to £3 billion. Additionally, the annual limit will also be increased. Scottish Ministers will be able to borrow up to 15% of the maximum limit—that is, £450 million a year.

Taken together, the borrowing powers that are increased by this amendment will boost the capacity of the Scottish Government to manage the additional risks to their budget from devolution and to expand their capacity to invest in Scotland.

Amendments 56L and 71AC address independent fiscal scrutiny in Scotland and the UK. Section 96 of the Scotland Act 1998 requires Scottish Ministers to provide information to the Treasury on the forecast when requested. However, since 2010, the OBR produces the UK’s official economic and fiscal forecasts. To produce comprehensive and detailed economic and fiscal forecasts for the UK, the OBR needs to produce forecasts for the taxes and spending measures devolved to Scotland. Access to Scottish government information is necessary to produce the Scottish forecasts that feed into the wider UK forecasts.

To date, the OBR has worked closely with the Scotland Office and the Scottish Fiscal Commission to ensure that all relevant information is brought to bear in producing its forecasts for devolved taxes. However, the OECD recommends that independent fiscal institutions have a legislative guarantee that they will be able to access all government information

29 Feb 2016 : Column 670

relevant to their forecasts. Adhering to this principle contributes to the institution being able to remain fully independent from Governments.

The recent Ramsden review of the OBR responded to this by recommending that the Government should use opportunities to amend relevant devolving legislation to ensure that the OBR has appropriate access to information, explanation and assistance to carry out its functions. The passage of the Scotland Bill provides an excellent opportunity to amend the Scotland Act 1998 and secure in statute the mutually beneficial information-sharing relationship between the Scottish Government, public bodies and the OBR.

Clause 13 contains the provisions extending further income tax powers to the Scottish Parliament and those relating to the manner and timing of the commencement of those powers. As currently drafted, the Bill allows for the commencement of the powers by way of a Treasury order but does not, as would be usual and was the case in the 2012 Act, stipulate that the order itself must be made by way of a statutory instrument. Amendment 56A adds the stipulation that the order be made by way of a statutory instrument. Making the order by way of such an instrument ensures that the order is a public document, numbered, printed and published by the Treasury Solicitor’s Department and laid before Parliament in a manner that facilitates anyone who is interested being able to find it relatively easily.

It was never the Government’s intention that the order be made other than by way of a statutory instrument. The Government have tried wherever possible to use the 2012 Act as a template for the current Bill. The clause draws on the wording of the 2012 Act income tax clause. However, while the 2012 Act included a general provision stipulating that all orders be made by way of a statutory instrument, the current Bill does not, so it has been identified that this specific provision is required. The oversight was brought to parliamentary counsel’s attention by the House of Lords Delegated Powers Committee, and the committee’s report and our response to it set that out in more detail. Both are available to noble Lords. I beg to move.

Lord Sanderson of Bowden (Con): My Lords, I strongly support Amendment 56L, produced by my noble friend. I consider the work of an independent fiscal commission to be vital for the future not just of the Scottish Parliament but of the whole United Kingdom in this new arrangement where so many powers are being devolved. I said at Second Reading that I believed the OBR was a great initiative of the coalition Government, and it was. I am pleased to see in Amendment 56L that, if the amendment is passed, the OBR will have access to the sort of information that it needs to help the Scottish Fiscal Commission come to the right conclusions. I am still smarting from the reports that came out from the SNP just before the referendum that oil was going to be $112 a barrel. If a Government in Scotland are to do their own forecasting and that is the sort of answer that we will receive, no one, but no one, will believe them.

The amendment moves the OBR and the Scottish Fiscal Commission closer together. I have seen a very useful letter from the Chief Secretary to the Treasury

29 Feb 2016 : Column 671

to, I think, the committee in the other place. This is what he said about what the committee had said:

“There is a clear consensus”—

that is, a consensus in the Scottish Parliament—

“that forecasting should be done by a body independent of government. We agree with the conclusions of the Finance Committee of the Scottish Parliament and recommend that an enhanced Scottish Fiscal Commission be made responsible for forecasting in Scotland”.

My question for the Minister is: how far has the Scottish Parliament gone in legislating in this matter? May I have an assurance that those words will come true and we will have a proper Scottish Fiscal Commission? A commission, of course, is only as good as its membership. Let us hope that its membership is very understanding and knowledgeable, because I believe this to be crucial to the future success of the new arrangements.

Lord McCluskey (CB): My Lords, I am sorry that the Government were unable to adopt something more along the lines of my Amendment 67. The purpose of that amendment was to ensure that there was an independent Scottish Fiscal Commission, and the provisions in it were designed to achieve exactly that. However, I recognise that I could not possibly win a vote if I sought to move that amendment and divide the House.

The other point is that in substance, Amendment 56L does the job as well as one could reasonably expect it to. I am happy to support it in the circumstances and I will not move Amendment 67, but I have one modest question. The point is that subsection (1) of the new clause says:

“The Office for Budget Responsibility has a right of access at any reasonable time”.

Note the word “reasonable”. The next line says that it is entitled to ask for information,

“which it may reasonably require”.

New subsection (2) says,

“which the Office reasonably thinks necessary for that purpose”.

I am not sure how that operates, because it was well understood in law that the word “reasonable” was so elastic that it was not precise enough—for example, to found a conviction for not doing the reasonable thing if that is what the statute required you to do. Therefore I am not sure how this is to be policed. If the Office for Budget Responsibility asks for information in the way that is qualified by the word “reasonably” in this new clause, and if the Scottish Government do not agree with its assessment of reasonableness, how is that dispute to be resolved?

9 pm

Lord Higgins: My Lords, I have added my name to my noble friend’s Amendment 56A. It would simply insert, at the end of page 16, line 14, the words:

“must be made by statutory instrument”.

That amendment and the other amendments which stand in my name all arise from the 15th report of the Delegated Powers and Regulatory Reform Committee. I will quote as briefly as possible from the report, but the committee said:

29 Feb 2016 : Column 672

“The Scotland Office have provided a delegated powers memorandum. We were disappointed with the quality of this document. In a number of cases, the explanation given in the memorandum failed to deal adequately with important aspects of the power, and most of the matters to which we are drawing attention in this Report arise from the fact that the explanation of the power in the memorandum is inadequate”.

I will not go on quoting from the Select Committee, but that is the general tone of what it said. In particular, it made a number of detailed criticisms which I have sought to cover by the additional amendments that I have tabled. I would be grateful if my noble friend would be kind enough to say whether he supports the other amendments, all of which seek to implement what was said in the committee’s report.

The committee goes on to deal in a little more detail with the subject matter of Amendment 56A. It said:

“To our surprise, there is nothing on the face of the Bill requiring the regulations to be made by statutory instrument. Since it is the invariable practice … we assume this is a mistake”.

I therefore seek in these amendments to cover the various points that the Delegated Powers and Regulatory Reform Committee made in its extremely helpful analysis. It would be helpful to know if my noble friend will accept the other amendments as well as Amendment 56A, which appears in both his name and my own.

On Thursday, the committee produced a further report that included remarks it received from the Government, including an apology for the inadequate way in which the proposal was first presented. We could go through each of the amendments in detail but perhaps my noble friend will simply indicate whether he agrees that we need to make the changes that I have put down on the Marshalled List and which implement the committee’s report.

Lord Kerr of Kinlochard: I welcome Amendment 56K, which covers borrowing, on which I have tabled Amendment 57. I think that Amendment 56K is a great deal better than my amendment and I congratulate the Government on producing it. For me, it was important that we had on the statute book a clear indication that there would be additional borrowing powers—that seems to be a necessary concomitant of tax devolution—that all borrowing would be in accordance with Treasury rules and that it would be subject to ceilings. All three elements are well met in the Government’s amendment.

It seems clear that the UK will be standing behind borrowing in the markets by the Scottish Government—that is, borrowing in line with the statutory requirements of being within the limits and in accordance with the Treasury rules. That has to be clear, otherwise borrowing in the markets will be more expensive for the Scottish Government and therefore for all of us, since it will be part of the UK borrowing programme. I would be grateful if the noble Lord could confirm that my reading of that is correct.

The borrowing section of the fiscal framework document all seems to make sense and the increased limits seem appropriate, except possibly the biggest single increase. There are two elements that cause me a little bit of concern and I would be grateful for the Minister’s views. One is the annual limit of £600 million for borrowing in response to a Scotland-specific economic shock. Paragraph 66 of the framework document says:

29 Feb 2016 : Column 673

“A Scotland-specific economic shock is triggered when onshore Scottish GDP”—

I think that it means GDP growth—

“is below 1% in absolute terms on a rolling 4 quarter basis, and 1 percentage point below UK GDP growth over the same period”.

I pause on the word “onshore”. I am not quite clear when the added value of the North Sea comes into GDP. Is it when it comes onshore? Can the noble Lord elucidate? Would an oil price shock, such as the one that we have just seen, be regarded as a Scotland-specific shock? If not, I see a possibility of debate and dissent down the line.

Secondly, the document tells us that when a Scotland-specific shock is triggered, it may be triggered from outturn data or from forecasts. It says:

“In the event that forecast data shows an economic shock but outturn data does not, no retrospective revisions will be applied to borrowing powers”.

I agree with that sentence.

I slightly worry about this. It is odd to define a Scotland-specific shock by its effect on GDP rather than by its own characteristics. If you do that, given that GDP is always subject to revision for a number of years—a point made by the noble Lord, Lord Darling, in our Committee stage debate on borrowing—it seems that, again, you have the possibility of some debate. That is dealt with in a way by using a rolling four-quarter basis for calculating whether Scottish GDP is growing at less than 1% in absolute terms and 1% below UK GDP. Even so, is the Minister quite sure that the best way of defining a Scotland-specific shock is by its subsequent observed effect on GDP rather than by some intrinsic characteristic?

The Earl of Kinnoull: My Lords, I rise to speak to Amendment 57ZA, which is purely a probing amendment that would have appeared in Committee if we had had the fiscal framework. It is designed to allow a bit more discussion about one or two issues.

The borrowing framework within the fiscal framework will of course be precedential and will be a template, no doubt, for other deals with other devolved bits of the United Kingdom. I put it to the Minister that there are great prizes here to be had for clarity and for going into quite exhaustive detail in what can be a difficult area. I should say that before I drafted my wording, which is purely indicative, I had of course not read Amendments 56K and 56L. I echo the words of the noble Lord, Lord Kerr, in that regard. I had to read the fiscal framework on a mobile phone, which is not ideal, at Bristol airport.

I want to discuss two points, the first of which is, can we go into a bit more detail, and where is the extra detail contained? Is it in a memorandum of understanding; has it yet to be decided upon? Such details cannot be simply brushed aside; otherwise, you simply store up arguments and problems for later on.

One issue that occurs to me is how you tot up the level of outstandings. In the capital markets, it is quite normal that the issue price of something is quite different from the principal amount. For a zero-coupon bond, it will be a heck of a lot less. What would one record in those circumstances against the limits, and where is that recorded? I have referred to the multicurrency issue. There is some help on multicurrency review—

29 Feb 2016 : Column 674

I did not pick that up on my mobile phone in Bristol airport—but it would be helpful to understand what the deal is on multicurrencies.

I have to say that I found some things a bit confusing. This issue is not dealt with in my amendment, but I refer the Minister to paragraph 68 of the document, which states, rather teasingly:

“The Governments agreed that the Scottish Government should have the option of refinancing, on the same terms, any debt due to be repaid in a year of a Scotland-specific economic shock”.

It seems to me that refinancing should be on similar terms, having regard to whatever interest rates are. I would love to have some help there, because almost certainly, the terms would not be the same when it comes to refinancing.

Also, paragraph 70 states:

“On request from the Scottish Government, the resource borrowing limits may be temporarily increased”.

There is no real help on the quantum of such an increase, on what “temporarily” means, or on whether the UK Government have a veto over that. It would be very helpful if the Minister commented on those issues.

The big issue, for me, is whether or not the UK is guaranteeing Scottish debt. With a 300-plus year record of repaying every one of its obligations in full and on time, the UK, as a united kingdom, has a unique opportunity to access capital markets at very favourable rates. I do not think that that would apply to an independent Scotland—certainly not in the early years. I would have thought it would be very helpful to Scotland if there was an express guarantee of some sort from the UK; I expressed it in the American format of “full faith and credit”. That would help Scotland. It is a free gift of the UK, given that the rating agencies will count Scottish debt straight into their view of how much indebtedness we have. I would very much like to hear from the Minister on that issue.

9.15 pm

Lord McAvoy (Lab): I shall speak to Amendment 57A which seeks to create a new clause to ensure that the process leading to the annual settlement between the Treasury and Scottish Ministers of the block grant to the Scottish Consolidated Fund is both transparent and accountable. It could have related to some of the earlier amendments which sought more transparency.

After eight months of negotiations behind closed doors of the Joint Exchequer Committee, the Scottish and UK Governments have now reached agreement on the revised fiscal framework. We gave the Scottish Government our full support in their efforts to get a fair deal for Scotland and we are glad that an agreement has been reached, albeit belatedly. It may not be perfect and the timing may not be perfect but it is essential that this Bill meets the requirements of the Scottish Parliament in terms of consideration, in terms of the calling of the election and in terms of leaving this House. We wanted an agreement on the fiscal framework and both the UK and Scottish Governments have done their best to achieve one.

However, we now need clarity on when the new powers will be available and what the SNP Government and the other major parties in Scotland plan to do with them. The Secretary of State for Scotland has said that the new powers over income tax will be

29 Feb 2016 : Column 675

available by April 2017. We want as many new powers as possible, including those over airport duty, 50% of VAT revenues and social security, to be available by the same date in time for the first budget of the new Scottish Parliament.

The Labour Party moved this amendment in the House of Commons and since that time it has continued to advocate that a more open and transparent means of communication should have taken place. Documents have not been disclosed because we were told that this would constitute providing a running commentary. We understand that of necessity the process had to be carried out to achieve success, but it was marred on some occasions by negotiating positions being leaked to the press.

The amendment has taken on new significance since the publication of the fiscal framework, which suggests that the calculation of the block grant adjustment will take place on a transitional basis over the next five years and that at the end of the transitional period an independent review will take place. We believe in the discipline of transparency. Making the discussions and results of meetings transparent will help the Scottish and UK Governments. There is nothing like the discipline of public opinion and it will help both Governments to come to satisfactory conclusions.

Lord Dunlop: My Lords, again a number of points have been raised and I shall try to address each in turn. If I do not address them now I will be happy to write to noble Lords.

The noble Lord, Lord Kerr, said that his amendment sought to include annual limits on the borrowing and debt that can be undertaken by the Scottish Government. As he acknowledged, the Governments have now agreed the fiscal framework and, as a result, the Government are now bringing forward amendments to the Bill which will put the new borrowing arrangements into effect. I am grateful to the noble Lord for his view that the Government’s amendment addresses the intent of his own amendment. The noble Lord also raised a number of specific questions, and if I may I will write to him about them.

The amendments spoken to by the noble Earl, Lord Kinnoull, raise a number of specific points that I shall seek to address. On the need for separate limits for capital and resource borrowing, the agreement already sets separate limits and the UK Government are therefore proposing to amend the Scotland Bill accordingly. As is clear, the Scottish Government’s aggregate borrowing limit for capital spending is being increased from £2.2 billion to £3 billion, while the aggregate borrowing limit for resource spending is being increased from £500 million to £1.75 billion, reflecting the additional risks that the Scottish Government will take on. On the definition of how these limits are calculated, I can confirm that they are based on the principal, with interest payments not included.

On the issue of currency, the amendments proposed to the Scotland Bill by the Government require the Scottish Government to borrow in sterling to fund additional capital spending. As the Scottish Government can only borrow from the National Loans Fund for current spending, this will also therefore be in sterling.

29 Feb 2016 : Column 676

On the issue of responsibility, I reiterate that the Scottish Government are responsible for all of their borrowing. But while the UK Government do not explicitly stand behind Scottish Government borrowing, the borrowing limits have been set at a level that the Scottish Government should be able to manage. I would like to remind the House of what the Chancellor of the Exchequer said when giving evidence to the Treasury Select Committee last Session:

“the UK stands behind its citizens wherever they live. The fiscal credibility of the UK is one of our most precious assets and we have had lots of debates in this Parliament about how we preserve that credibility. Of course we would not allow Scotland to go bust, but in order for that situation not to arise we will have to agree fiscal rules, independently verified, that make sure that that does not happen, so that we never reach that situation where the sovereign backstop has to be deployed”.

Again the noble Earl raised a number of specific points on which I will write to him.

The noble and learned Lord, Lord McCluskey, did not move his amendment but a number of points were raised. My noble friend Lord Sanderson asked about independent forecasts. I can confirm that as part of the fiscal framework agreement, amendments will be made to the Scottish Fiscal Commission Bill that is currently going through the Scottish Parliament, and there is no reason to think that the Scottish Government will not act with anything other than good faith in that regard. The noble and learned Lord, Lord McCluskey, also raised a specific point about the OBR’s right of access and asked whether there is any uncertainty in that. I think that there is a good understanding between the Governments about the information exchange that is required and I do not anticipate this being an area of great dispute between the two Governments. The provisions in this Bill will be underpinned by a memorandum of understanding as to how in operational terms this will work in practice.

I turn now to the amendments tabled by my noble friend Lord Higgins. Smith set out that extensive new tax powers should be devolved to the Scottish Parliament and Part 2 of this Bill does exactly that. Amendment 56B deals with whether we need two consequential powers in the Bill with regard to the income tax clauses. As has been referred to, this was covered in the Government’s response to the Delegated Powers Committee report which is now available online.

Perhaps I may explain the Government’s approach in this regard. The powers are separate and different, and both are required. Clause 15(8) allows the Treasury to make consequential amendments that arise in connection with changes made to the Scotland Act 1998 and the Income Tax Act 2007 by Clauses 13 and 14. The power in Clause 13, amending Section 80G of the Scotland Act 2012, allows the Treasury to make consequential amendments that are needed in consequence of or in connection with the exercise of the new income tax powers by the Scottish Parliament through a Scottish rate resolution. Income tax powers within this Bill are more extensive than those in the 2012 Act, so it is entirely natural that the changes made by Clauses 13 and 14 to the structure and terminology of the Income Tax Act 2007 that facilitate this devolution may give rise to the need for consequential amendments elsewhere in the taxes Acts.

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I now turn to Amendments 56D, 56E, 56H and 56J which deal with whether all SIs should be via the affirmative procedure. This is not an issue unique to the Scotland Bill; the approach is common across legislation. The Government agree that substantial changes to primary legislation should be made using the affirmative procedure. However, non-textual and minor technical changes should be possible under the negative resolution procedure. This minimises the burden on the House and also on government resources.

On Amendments 56C and 56G, which would deny the Treasury the power to amend by order the Scotland Bill, or Act itself, there will be a length of time between the Bill receiving Royal Assent and the Scottish Parliament exercising the new powers conferred by this Bill for the first time. The gap will be longer in some cases than in others. Income tax will be the shortest. We expect this to come into effect in 2017, then APD in 2018 and finally the aggregates levy. In the case of the aggregates levy, the length of time is uncertain as it will depend on resolution of the levy’s legal challenges.

There may be circumstances where changes are made to the UK structure of those taxes in the intervening period which would require amendment to the Bill in the period between Royal Assent and the commencement of devolved powers. For example, given the outstanding litigation on the aggregates levy, we must have flexibility to respond to future judgments to ensure the levy and the powers that we are devolving remain fully lawful. Similarly, there may be future enactments relating to the taxes which would need amendment. Any amendments to an enactment will be subject to the affirmative resolution procedure. On that basis, the Government cannot accept the amendments tabled by my noble friend.

Turning to the amendment moved by the noble Lord, Lord McAvoy, the Government have listened very carefully to concerns, such as those raised in the context of Amendment 57A, on the transparency of how we operate the Barnett formula. In our response to the Lords Economic Affairs Committee’s valuable report on this Bill, the Government committed to look into what more we could do. We are currently doing that and I hope to be able to report progress to the House in due course. This is not an issue just for Scotland; it impacts across the UK, so we have not tied this work to the Scotland Bill alone.

In the mean time, let me reassure noble Lords that the Government have already set out changes to the devolved Administrations’ Barnett-calculated block grant allocations at every spending review, as well as twice a year—at Budgets and Autumn Statements, as required. In November, at the spending review and Autumn Statement, tables were included setting out the overall impact on the block grant of that important event. Alongside this, the Treasury has also recently published an updated version of its Statement of Funding Policy, copies of which have been placed in the House Library. This document outlines the principles underlying the calculation of the block grant. On that basis, I would ask noble Lords not to press their amendments.

Amendment 56A agreed.

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Clause 15: Consequential amendments: income tax

Amendments 56B to 56E not moved.

Amendment 56F

Moved by Lord McAvoy

56F: After Schedule 1, insert the following new Schedule—

“ScheduleThe Joint Committee on Welfare DevolutionMembership

1 The Joint Committee on Welfare Devolution shall comprise the Secretary of State, who is to be the chair of the Committee, and the following other members—

(a) the Scottish Minister who is responsible to the Scottish Parliament for welfare policy and payments, who is to be the deputy chair of the Committee;

(b) the Member of the House of Commons who is for the time being the Chair of the Work and Pensions Select Committee of the House of Commons;

(c) the Member of the Scottish Parliament who is for the time being the Chair of the Welfare Reform Committee of the Scottish Parliament;

(d) two Members of Parliament who are not Ministers of the Crown;

(e) two Members of the Scottish Parliament who are not Scottish Ministers; and

(f) two persons representing local government in Scotland.

2 The members of the Joint Committee on Welfare Devolution mentioned in paragraph 1(d) are to be appointed by the Speaker of the House of Commons and the Lord Speaker of the House of Lords.

3 The members of the Joint Committee on Welfare Devolution mentioned in paragraph 1(e) are to be appointed by the Presiding Officer of the Scottish Parliament.

4 The members of the Joint Committee on Welfare Devolution mentioned in paragraph 1(f) are to be appointed by Scottish Ministers after consultation with the Convention of Scottish Local Authorities.

5 In this Schedule, references to the Work and Pensions Select Committee of the House of Commons are—

(a) if the name of that Committee is changed, to be taken (subject to paragraph (b)) to be references to the Committee by its new name;

(b) if the functions of that Committee with respect to welfare policy and payments (or functions substantially corresponding thereto) become functions of a different committee of the House of Commons, to be taken to be references to the committee by whom the functions are for the time being exercisable.

6 In this Schedule, references to the Welfare Reform Committee of the Scottish Parliament are—

(a) if the name of that Committee is changed, to be taken (subject to paragraph (b)) to be references to the Committee by its new name;

(b) if the functions of that Committee at the passing of this Act with respect to welfare policy and payments (or functions substantially corresponding thereto) become functions of a different committee of the Scottish Parliament, to be taken to be references to the committee by whom the functions are for the time being exercisable.

Term of office of Committee members

7 A member may resign from the Committee at any time by giving notice to the Secretary of State.

8 A member may be re-appointed (or further re-appointed) to membership of the Committee.

Committee proceedings

9 The Joint Committee on Welfare Reform may determine its own procedure.

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10 The validity of any proceedings of the Joint Committee on Welfare Reform is not affected by—

(a) any vacancy among, or

(b) any defect in the appointment of any of, the members of the Committee.

11 The Joint Committee on Welfare Reform may appoint a member of the Committee to act at any meeting of the Committee in the absence of both the Secretary of State and the Scottish Minister who is deputy chair of the Committee.

Advisory Panel

12 The Secretary of State and Scottish Ministers acting jointly may make regulations appointing a panel to advise the Joint Committee on Welfare Reform on the transfer, implementation and operation of the powers devolved to the Scottish Parliament by Part 3 of this Act, comprising academics, representatives of the third sector and voluntary organisations, and other relevant stakeholders.

13 The Joint Committee on Welfare Reform must consult any advisory panel appointed under paragraph 12.”

Lord McAvoy: This proposed new schedule on the joint committee on welfare devolution provides for an across-Parliament committee to oversee the transition and implementation of welfare powers transferred under this Bill. The committee would include Members from both Parliaments and would be required to report frequently in the transition phase, and therefore annually. We hope there will be some kind of progress on that, similar to the statement made by the Minister a few minutes ago about listening and implementing ideas. That is always welcome.

9.30 pm

This joint committee on welfare devolution that we propose would comprise the Secretary of State as the chair of the committee, and a list of other members as well. I will not read them all out. The members of the joint committee would be appointed by the Speaker of the House of Commons and the Lord Speaker of the House of Lords, and by various bodies given in the proposed new Schedule. There might be some technical things regarding the name of the committee and what sort of rules would govern its procedures, but the main thrust of this is to examine the transfer, implementation and operation of the powers devolved to the Scottish Parliament by Part 3 of the Bill.

Welfare and the payments within it are too important to just be left to hang, so we hope that some sort of committee—something similar to this—or some implementation of transparency would help. Again, public exposure, scrutiny and transparency all help. We propose that the joint committee publish a report on the transfer and implementation of the powers devolved at least once every three months for the first three years from the date on which this Bill is passed, and on the operation of the powers devolved to the Scottish Parliament at least once in each calendar year starting three years from the date on which this Bill is passed. Welfare is too complicated and important compared to other powers. It is essential that there be some monitoring and transparency on that. We hope the Minister can respond as positively as he did to the last amendment. I beg to move.

Lord Kirkwood of Kirkhope (LD): My Lords, I have three amendments in my name in this group. I am

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pleased to follow the noble Lord, Lord McAvoy. Social security is a very important subject and Part 3 is a very important part of the Bill.

I can dispose of my amendments briefly. At one point during Committee, I considered running a series of amendments that would have sought to take on employability. That is an important part within social protection but separate from social security. I welcome the fact that Clause 29 devolves a certain amount of power in terms of the Work Programme and related contractor-driven service provisions north of the border to Scotland. That is entirely sensible.

My original idea, which I think there is still a case for, is that employability as a subject could have been taken much further than the Smith commission suggested. I have for some time come to the conclusion that the whole of Jobcentre Plus services could be more efficiently and better served from a Scottish base run by the Scottish Government through the Scottish skills department, in a way that could improve on what we have at the moment. I decided against doing that because it was not in the Smith commission. There is a stateable case for doing it but I do not think that this Bill is the right way.

Instead, I decided to try and encourage Ministers to look more flexibly at the powers within Clause 29. Amendment 58 looks at some of the restrictions in claiming reserve benefits. Amendment 59 would try to give more flexibility and power to the Scottish devolved powers in Clause 29 to make them easier to tailor to individual Scottish circumstances.

I should declare an interest. Colleagues probably know that I am a non-executive, non-remunerated director of the Wise Group in Glasgow. I have been in that position for a while. As a result of that experience, I am pretty persuaded that the Scottish conditions, the shorter lines of communications and the set-up north of the border are of a different order to what happens throughout the rest of the United Kingdom and could be better developed in a way that would provide a better service if a maximum amount of flexibility was given. The providers who run the programmes already have a lot of discretion about the services that they deploy. It is all done on the basis of payment by results and the outcomes are all very carefully monitored, so I do not think that we would be giving very much away by encouraging the Clause 29 powers to be developed in as flexible a way as possible.

I suspect that the Minister will be advised that Amendments 58 and 59 would run counter to some of the legislative provisions that set up the Work Programme. I am prepared to accept that, if that is the case, but I think there is at least a series of questions to be asked about what are very important programmes delivering services to low-income households and jobseekers in Scotland in a way that I think could be improved. In parenthesis, I think that worklessness will be less of a problem in Scotland in the future and that low-income working households will have difficulties with poverty which will need to be addressed in a different way, because work incentives are not just about getting people into work but about getting them to progress through work. That is important, too. If the Minister does not mind, it is worth spending just a moment

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trying to give me a rationale on why we should not increase the flexibility available to work providers north of the border once Clause 29 powers are delivered to Scotland.

I do not think there are as many lawyers present in the House now as there were earlier this evening; otherwise, I might be tempted to press Amendment 60 to a Division because any self-respecting lawyer who looked at the complexity that now exists within this Bill compared with the parent Act of 1998—we are dealing with exceptions, reservations and exempted, as well as accepted, powers—would consider that a consolidation measure was easily justified. I hope that the Minister will note that I have made it easy for him in the amendment by saying that I would settle even for a draft, because trying to do what that amendment seeks to do in six months would be quite a tall order. However, it is a serious point. It would be of considerable assistance to all of us to have such a measure, as this body of law develops. I hope rather than fear that it will develop; that is, I am fearful of that from a complexity point of view but hope for it from a political point of view.

On the previous group of amendments, the Minister rightly said that it was important to try to keep the template of the various sister Acts in some kind of cohesive shape. But in order to do that and to assist that process, a draft consolidation measure would be much appreciated by everybody in future. As I say, if there were enough lawyers in the House, I might even think about pressing this to a Division. I make the point facetiously but I hope that the Minister takes it seriously and gives us some comfort that he will go back to the department and explain how difficult it is for us—never mind members of the public—to understand the complexities of the interrelationships of the Acts that flow as a sequence from the parent 1998 Scotland Act.

Lord Hope of Craighead: My Lords, I support what the noble Lord, Lord Kirkwood, has said. Even with the advantage of the websites, it is very difficult to get an accurate and up-to-date version of amended legislation. If you go to the official website, you usually find that mention is made of amendments which have not yet been incorporated into the legislation as shown on the website. That time lag makes it very difficult for ordinary people to see exactly what the content of the legislation is. I think I am right in saying that when the Law Commissions were set up they had a function to keep an eye on the need for consolidation. If the Minister is not inclined to accept the amendment proposed by the noble Lord, Lord Kirkwood, perhaps he might, through his offices, encourage the Scottish Law Commission to get to work on consolidating these measures in a way that would be useful for anybody working in the Scottish Parliament or who was trying to understand what the current legislation really is.

Lord Forsyth of Drumlean: My Lords, I will speak briefly in support of Amendment 60, tabled by the noble Lord, Lord Kirkwood of Kirkhope. I am sure the Minister will be advised that it is not necessary to include this in the Bill but it would be excellent if he were to give an undertaking at least to produce a draft

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Bill. I am not a lawyer, but I have certainly found it extremely difficult to cope with the piecemeal changes that have been made over the years and to follow the cross-references back to the 1998 Act. The noble Lord has made probably the most sensible suggestion of the evening.

I presume the noble Lord, Lord McAvoy, will not press his amendment to a Division or anything of that kind. The Labour Party is in its debating society mode at present. When the Minister responds to the amendment, which is about setting up this welfare monitoring joint committee, will he answer a question I asked earlier, arising from the fiscal framework? Paragraphs 16 and 17 appear to contradict each other. Paragraph 16 says:

“For welfare, and all other spending unless stated otherwise in this agreement, the chosen method will be the Barnett formula”.

However, paragraph 17 says that,

“whilst achieving the outcome delivered by the Indexed Per Capita (IPC) method for tax and welfare”.

This is very important, because it makes a considerable difference to the amount of money that is available for welfare purposes in Scotland. Will the Minister indicate which I am to believe: paragraph 16, which would involve a substantial cut in the current budget, or paragraph 17, which appears to contradict it?

Lord Dunlop: My Lords, I thank the noble Lords, Lord McAvoy and Lord Kirkwood, for their amendments. I turn to Amendments 56F and 57B, moved and spoken to, respectively, by the noble Lord, Lord McAvoy. We had a good debate in Committee on similar amendments and I hope I was able to provide much detail on the joint working and scrutiny that will govern the transition and implementation of the new welfare powers. The Government are clearly sympathetic to the intent behind the amendments and the importance of a seamless transition that makes sure that the ultimate clients for welfare services are not in any way disadvantaged.

At the heart of the UK and Scottish Government scrutiny and implementation of these welfare powers is the Joint Ministerial Working Group on Welfare which, as I said in Committee, has met four times since February 2015 and will meet again soon after the Scottish parliamentary elections. I have also given the assurance that I will explore how we can make the work of the Joint Ministerial Working Group on Welfare more visible in this place. I am already acting on that promise. Scottish and UK government officials will discuss the issue tomorrow at the next meeting of the joint senior officials group before it is then raised at the next joint ministerial group, which will take place after the Scottish parliamentary elections.

Beyond the range of work I have already outlined, there are other committees, both in the UK and Scottish Parliament, which will have a role in the scrutiny of the new powers being devolved. For example, the Minister for Employment will be appearing in front of the UK Parliament’s Scottish Affairs Committee on 9 March to give evidence on the welfare and employment powers that are being devolved through the Bill. Ministers also often appear before committees in the Scottish Parliament to aid the scrutiny of Scottish government proposals. Most recently, the Secretary of State for

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Scotland appeared before the Scottish Parliament’s Devolution (Further Powers) Committee just seven days ago to discuss issues such as the fiscal framework and the role of the Joint Ministerial Committee on welfare.

9.45 pm

Noble Lords might also like to know that the Department for Work and Pensions established an implementation programme team in April 2015 which is specifically responsible for working with the Scottish Government on the transition and implementation of these powers. The team employs around 20 people and will expand substantially as the plans of the Scottish Government become clear. This will create clear lines of accountability and further reporting within the UK Government.

One issue that the noble Lord, Lord McAvoy, raised in Committee was the engagement with local groups and organisations in Scotland and whether this was, as he said, “perhaps a bit perfunctory”. I will respond directly to this point. Through the development and passage of the Bill, colleagues from the Department for Work and Pensions have worked closely with a range of different organisations in Scotland which represent a wide range of people with different needs, to listen to their concerns and discuss the intent of the welfare and employment provisions. This work has certainly informed some of the amendments to the Bill that were tabled in the other place; for example, the changes to the carer’s benefit powers.

Lord McAvoy: Just in the interests of having all the information, is the Minister in a position to name some of the organisations?

Lord Dunlop: For example, we have worked to build a strong relationship with the Convention of Scottish Local Authorities to ensure that universal credit is implemented and delivered in a way that best reflects the views of Scottish local authorities. Citizens Advice Scotland is another organisation that we have engaged with. This has been a genuinely joint approach to improve delivery in Scotland and is just one example of many.

As I said in Committee, I am sympathetic to the noble Lord’s intention in what his amendment proposes to achieve but we believe that robust, strong and effective mechanisms are already in place. We will absolutely put the customer at the heart of any change and will work with the Scottish Government to ensure that the transition and implementation of powers is simple, clear and effective. This will protect the delivery of existing benefits and customer interests, and ensure a great future for all the people in the UK, including those in Scotland.

Turning to Amendments 58 and 59, spoken to by the noble Lord, Lord Kirkwood, Clause 29 gives the Scottish Parliament legislative competence to establish employment programmes to support disabled people and those at risk of long-term unemployment. It devolves power over support for unemployed people through employment programmes currently centrally contracted by the DWP; this is mainly but not exclusively

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the Work Programme and Work Choice. These two programmes represent virtually all funding across these contracted employment programmes and therefore, in our view, provide the Scottish Government with a significant policy space within which to operate.

The powers are very broad in scope and concurrent with the UK Government’s powers. Any claimant on a reserved benefit at risk of long-term unemployment can be addressed in this way, so the Scottish Government have the ability to create schemes, programmes or grants in this space as the UK Government can. It gives the Scottish Government the ability to better align with the employment support they already provide through the devolved skills system. That is a very substantial package of powers which the Scottish Government can already use. I think the estimated annual spend in this area is some £600 million.

Support for those at risk of long-term unemployment must last for at least a year. The three restrictions seek to define the space which Smith said that the Scottish Government should have in designing new programmes. This creates clear lines of accountability between what the Scottish Government are able to do and what Jobcentre Plus is required to do. It is also important for there to be a clear handover point, so that Jobcentre Plus and Scottish Government programmes do not try to deliver different support to the same claimant at the same time. Jobcentre Plus will continue to deliver smaller-scale support, with the Scottish Government delivering more significant interventions.

The amendment of the noble Lord, Lord Kirkwood, would remove the limitations that assistance should be for persons claiming reserved benefits and be for at least a year. These limitations are necessary safeguards to ensure that those who need support over and above that provided by the enhanced Jobcentre Plus offer receive assistance for an intense period. Smith was clear that Jobcentre Plus and the conditionality regime “will remain reserved”. As I have said, there needs to be a clear handover point so that Jobcentre Plus and the Scottish Government’s programmes are not overlapping in that sense.

It is vital that the Jobcentre Plus work coaches have the right tools to support claimants into work and smaller-scale employment programmes at their disposal, such as mandatory work activity or locally commissioned support via the flexible support fund. If responsibility is split, the result could be people spending longer on benefits and employment support and if we remove these restrictions, it will in the Government’s view create a confused, muddled system of support which claimants and third sector organisations would struggle to understand or navigate. That would be a much worse system and have unintended consequences. We have sought to strike the right balance: enabling the Scottish Government to provide employment support for people who are at risk of long-term unemployment, and giving the Scottish Government the opportunity to take clear responsibility over a substantial portion of the claimant journey.

Finally, I turn to Amendment 60, which concerns “Consolidation of the Scotland Act 1998”. We addressed points in Committee about the scope of the powers in the Bill related to welfare. Once the Bill is passed, it

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will be available on legislation.gov.uk, alongside the Scotland Act 1998 and the Scotland Act 2012. In the Government’s view, it would not be a good use of Parliament’s time to bring forward another Bill simply to repeat what is included in previous Scotland Acts. The dynamic nature of the devolution settlement means that the two Governments work together on Section 30 orders, which adjust the terms of Schedule 5 from time to time, so any consolidated version would quickly be out of date. That is no bad thing; it is testimony to the devolution settlement working responsively.

However, the points made by the noble Lord, Lord Kirkwood, raise an interesting question about knowledge of the devolution settlement more generally. I think that the noble Lord, Lord Smith, referred to it in his personal recommendations. The Government very much support the objective and have taken steps to improve the knowledge in UK government departments and beyond. For example, in March 2015 the UK Government published a leaflet explaining the changes to devolution in Scotland. The Secretary of State has also undertaken visits to local authorities and is keen to ensure that they know what powers are coming to the Scottish Parliament. The Scotland Office communications directorate’s work will also seek to make clear the Scottish Government’s existing powers—powers coming into force from the Scotland Act 2012 and those being delivered by the Scotland Bill. Its work raises awareness not just of the debate on what powers may or may not be devolved in future but on where the existing powers are today. With that, I ask the noble Lord to withdraw his amendment.

Lord Forsyth of Drumlean: Before my noble friend sits down, could he possibly answer the question I asked him about the welfare funding and the two paragraphs in the fiscal framework? If he does not have that information now, perhaps he could write to me.

Lord Dunlop: We have agreed that welfare will be funded through the Barnett formula and that tax deductions will be calculated through the comparable model. However, during the transition period, we will reconcile both to index per capita.

Lord Forsyth of Drumlean: Perhaps my noble friend could help me. Does that mean that if the Barnett formula model resulted in a shortfall in the resources available in Scotland for welfare, it would be topped up?

Lord Dunlop: It means that if you look across the total Scottish budget, it would deliver the outcome that we discussed earlier. It is up to the Scottish Government to decide how to use the resources within that: it is not ring-fenced within that total figure.

Lord McAvoy: We welcome the further response about involving the principles that we have included in previous Bills around transparency, involving people and all the rest of it. We are reasonably happy with that and I beg leave to withdraw the amendment.

Amendment 56F withdrawn.

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Clause 19: Devolved taxes: further provision

Amendments 56G to 56J not moved.

Amendments 56K and 56L

Moved by Lord Dunlop

56K: After Clause 19, insert the following new Clause—

“Borrowing

(1) The Scotland Act 1998 is amended as follows.

(2) Section 66(1) (borrowing by the Scottish Ministers from the Secretary of State) is amended as follows.

(3) At the end of paragraph (b) omit “and”.

(4) In paragraph (c)—

(a) after “devolved taxes,” omit “or”;

(b) after “Scottish rate resolution,” insert “or from amounts payable under section 64A,”.

(5) After paragraph (c) insert—

“(d) any sums which in accordance with rules determined by the Treasury are required by them to meet current expenditure because of an excess of welfare payments over forecast welfare payments, and

(e) any sums which in accordance with rules made by the Treasury are required by them to meet current expenditure because of a Scotland-specific negative economic shock.”

(6) After that subsection insert—

“(1ZA) In subsection (1)(d) “welfare payments” means—

(a) payments under any provision relating to matters within exceptions 1 to 10 in Section F1 of Part 2 of Schedule 5 or exception 1 in Section H3 of that Part, and

(b) payments attributable to regulations made by the Scottish Ministers by virtue of section 27 or 28 of the Scotland Act 2016 (powers in relation to universal credit).”

(7) In section 67(2) and (3A) (lending under section 66(1)) for “£500 million” substitute “£1.75 billion”.

(8) In section 67A (lending for capital expenditure) in subsections (1) and (3) for “£2.2 billion” substitute “£3 billion”.

(9) The Treasury may by regulations make transitional or saving provision in connection with the coming into force of the amendments made by this section.

(10) Regulations under subsection (9) must be made by statutory instrument.

(11) A statutory instrument containing regulations under subsection (9), if made without a draft having been approved by a resolution of the House of Commons, is subject to annulment in pursuance of a resolution of the House of Commons.”

56L: After Clause 19, insert the following new Clause—

“Provision of information to the Office for Budget Responsibility

(1) The Scotland Act 1998 is amended as follows.

(2) After section 96 (provision of information to the Treasury) insert—

“96A Provision of information to the Office for Budget Responsibility

(1) The Office for Budget Responsibility has a right of access at any reasonable time to all Scottish public finances information which it may reasonably require for the purpose of the performance of its duty under section 4 of the Budget Responsibility and National Audit Act 2011 (duty to examine and report on the sustainability of the public finances).

(2) The Office is entitled to require from any person holding or accountable for any Scottish public finances information any assistance or explanation which the Office reasonably thinks necessary for that purpose.

(3) “Scottish public finances information” means information held by the Scottish Ministers or by any Scottish public authority specified in regulations made by the Secretary of State.

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(4) This section is subject to any enactment or rule of law which operates to prohibit or restrict the disclosure of information or the giving of any assistance or explanation.”

(3) In Schedule 7 (procedure for subordinate legislation), in paragraph 1(2) insert at the appropriate place—

“Section 96A

Type C”.”

Amendments 56K and 56L agreed.

Amendments 57 to 57B not moved.

Clause 29: Employment support

Amendments 58 and 59 not moved.

Amendment 60 not moved.

Clause 68: Power to make consequential, transitional and saving provision

Amendment 61

Moved by Lord Hope of Craighead

61: Clause 68, page 74, line 32, leave out “1, 3, 4, 5 or 6” and insert “3”

Lord Hope of Craighead: My Lords, I have Amendments 61, 62, 63, 64 and 65 in this group. I tabled these amendments in Committee and renewed them for Report just to preserve my position in case amendments were not forthcoming from the Government. Clause 68 deals with the, “Power to make consequential, transitional and saving provision” and is of the type commonly referred a Henry VIII clause.

I made a number of criticisms of this clause in Committee, which I do not need to repeat. Having now studied the amendments which the Government have brought forward in this group, I am satisfied that the majority of the points that I raised have been met. I do not therefore propose to insist in any of the amendments which are in my name in this group. I wait to hear the explanation from the Government for the amendments they are putting forward, but my impression is that they are a commendable reaction to the points made by the Delegated Powers and Regulatory Reform Committee.

It is a pity that the clause was drafted in the very loose form in which it was. Perhaps there is a lesson here that, in future, such clauses should be more precisely related to the requirements of the particular Bill, not put forward in the general form in which they were when this Bill was introduced. Having said that, I do not propose to insist on the amendment, or the other amendments in my name in this group.

10 pm

Lord Stephen (LD): My Lords, this is all complex, although perhaps not as overwhelmingly complex as the fiscal framework itself. However, I am very pleased that the Government have brought forward amendments to respond to the views of the Delegated Powers and Regulatory Reform Committee. At this late hour, I do not intend going into all the detail, but it is interesting to note that, instead of—as the noble and learned

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Lord, Lord Hope, my noble and learned friend Lord Wallace of Tankerness and I proposed—deleting words and cutting back on these very wide and open powers to Ministers to change primary and secondary legislation here, in Northern Ireland and in other parts of the UK, the Government have introduced extra words to try to restrict those very wide powers. The restrictions are welcome; I would still have preferred such wide powers for Ministers—given inadvertently, I think—to be removed.

Doubtless, however, due to the political imperative, at this hour we will all accept the Government’s approach and amendments. I close by thanking the noble and learned Lord, Lord Hope, for raising the issue and the Law Society of Scotland for the hard work that it has done on the detailed wording that it provided to us in presenting our amendments. I hope that, through constructive opposition to the Government, we have a set of measures brought forward by them that respond to the correct concerns voiced about the nature of the Bill as drafted. I look forward to the Minister’s explanation, so that we can make sure that all the points of concern have been covered.

Lord Forsyth of Drumlean: My Lords, I wanted to delete this clause entirely in Committee, and was persuaded that the approach being taken by the noble and learned Lord, Lord Hope, was perhaps more forensic and justified. I agree with the noble Lord, Lord Stephen, that half a loaf is better than no loaf. This is a very useful example, both in the original draft and the slightly grudging response from the Government, which we can discuss when we come to debate the Strathclyde review and the Government’s attitude towards the use of secondary legislation.

Our previous debate, when we spent 10 minutes arguing whether the House of Commons ought to be able to discuss the fiscal framework, to my mind underlined an Executive who are increasingly treating Parliament as the ornamental part of the constitution. That is very regrettable.

I thank my noble friend for at least moving as far as he has, but I would not want him to think that the Bill as it stands is in any way acceptable. I hope that on a future occasion we will have more opportunity to discuss the increasing use of secondary legislation. If it is not a Henry VIII clause, perhaps it is now a Queen Anne clause, in deference to the noble Lord, Lord McAvoy, who thinks that this is putting the Scottish Parliament in the same position as it was in 1707.

Lord McFall of Alcluith: Yet again, the noble Lord has got it wrong—it was me who said that. However, let us finish on a positive note tonight. First, I would like to thank the Delegated Powers Committee for its report, because it was very clear at the beginning that the Scotland Office provided a delegated powers memorandum, the explanation of which was inadequate. As a result of that, I thank the noble and learned Lord, Lord Hope, for tabling these amendments, and the noble Lord, Lord Norton of Louth, who made an excellent speech last time on the Henry VIII powers.

The Law Society of Scotland was mentioned, and Michael Clancy has been sitting in the box for many weeks, although he is not there tonight. He has been

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helping us—and I well remember taking over the shadow Home Affairs responsibility in the 1990s for the Labour Party, when Michael was helping one and all political parties. So I thank him, too.

As the noble Lord, Lord Forsyth, said, it is better to have half a loaf than none. It is important to say that the Government have not outlined totally why the consequential powers are required in Parts 1, 4, 5 and 6, in every other respect. Perhaps the Minister will at this stage give your Lordships’ House some indication of the type of saving powers that the Government expect to propose. As the noble and learned Lord, Lord Hope, said in Committee, if we are going to keep faith with what we are trying to achieve, the Government have to go that step further. With those comments, I commend the work that noble Lords have done and the response that the Government have given to the suggestions.

The Advocate-General for Scotland (Lord Keen of Elie) (Con): I am obliged to your Lordships and particularly grateful to the noble and learned Lord, Lord Hope of Craighead, for his contributions on this matter. As will be appreciated, the powers in question can be used only in consequence of provisions in the Bill. The power to make consequential, transitional and saving provisions of this type are not exceptional or unusual in primary legislation of this ilk. Indeed, Section 105, together with Section 113, of the Scotland Act 1998 provided a similar power. The Scotland Act 2012 also contained consequential powers.

When consequential amendments were identified as necessary during the course of preparation of the Bill, they have been included in the Bill. For instance, Clause 10 makes provision in consequence of the clauses relating to elections. However, given the nature of the Bill, involving significant devolution of legislative and executive powers, it is difficult to anticipate the full extent of the consequential changes required when the provisions are commenced to put them on the face of the Bill. Therefore, it is possible that, following Royal Assent, legislation may be needed to amend and deal with the consequent provisions of the Act. In those circumstances, the Government considered it both necessary and appropriate to include this provision in the Bill.

However, following the views of the Regulatory Reform and Delegated Powers Committee, and those expressed in this House in Committee, we have brought forward an amendment to Clause 68. The effect of the amendment is that the power to amend future enactments, future prerogative instruments, any other future instruments or documents and Welsh and Northern Irish legislation, whenever made, will apply only to Part 3 of the Bill, the only part of the Bill dealing with welfare provisions. Amendments 62A, 62C, 65A and 65B limit the scope of the consequential, transitional and saving power as it applies to Parts 1, 4, 5 and 6 of the Bill. I hope that reassures noble Lords on the proper scope of these provisions.

Amendment 71A provides that Clauses 3 to 12 do not commence automatically two months after Royal Assent, but instead come into force on such a day as the Secretary of State may appoint by regulations. We have identified some consequential and savings

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provisions that may be required, and they require careful co-ordination with commencement of Clauses 3 to 12. They are largely concerned with electoral law. Commencement by regulations will facilitate such co-ordination. We do not expect to delay commencement for too long after the Scottish parliamentary elections have taken place in May 2016. In these circumstances, I invite noble Lords not to move their amendments and to accept the Government’s amendments.

Amendment 61 withdrawn.

Amendments 61A and 62 not moved.

Amendment 62A

Moved by Lord Dunlop

62A: Clause 68, page 74, line 37, leave out “(whenever passed or made)”

Amendment 62A agreed.

Amendment 62B not moved.

Amendment 62C

Moved by Lord Dunlop

62C: Clause 68, page 74, line 40, at end insert—

“( ) For the purposes of making provision in connection with, or with the coming into force of, a provision of Part 3, subsection (2) applies to an enactment, instrument or document whenever passed or made.

“( ) Otherwise, subsection (2) applies to—

(a) an Act of Parliament passed before or in the same session as this Act;

(b) an Act of the Scottish Parliament passed, or an instrument or document made, before the end of the session in which this Act is passed.”

Amendment 62C agreed.

Amendments 62D to 65 not moved.

Amendments 65A and 65B

Moved by Lord Dunlop

65A: Clause 68, page 75, line 14, after ““enactment”” insert “— (a)”

65B: Clause 68, page 75, line 14, after “Parliament,” insert “and

(b) for the purposes of making provision in connection with, or with the coming into force of, a provision of Part 3, also includes”

Amendments 65A and 65B agreed.

Amendments 65C and 65D not moved.

Amendment 66 had been withdrawn from the Marshalled List.

Amendments 67 and 67A not moved.

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Clause 69: Commencement

Amendments 68 to 68B not moved.

Amendments 69 to 71 had been withdrawn from the Marshalled List.

Amendment 71A

Moved by Lord Dunlop

71A: Clause 69, page 75, line 37, at end insert—

“( ) sections 3 to 12;”

Amendment 71A agreed.

Amendment 71AA not moved.

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Amendments 71B and 71C had been retabled as manuscript Amendments 71AB and 71AC.

Amendments 71AB and 71AC

Moved by Lord Dunlop

71AB: Clause 69, page 75, line 43, at beginning insert “Section (Borrowing) and”

71AC: Page 75, line 43, at beginning insert “Section (Provision of information to the Office for Budget Responsibility) and”

Amendments 71AB and 71AC agreed.

Amendment 72 had been withdrawn from the Marshalled List.

House adjourned at 10.14 pm.