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Lords Chamber

Volume 590: debated on Wednesday 17 June 1998

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House Of Lords

Wednesday, 17th June 1998.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Southwell.


What progress has been made towards resolving the situation whereby foreign fishing vessels from European Union countries (so-called "quota-hoppers") are entitled to catch fish reserved for United Kingdom fishermen within the European Union quota system.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food
(Lord Donoughue)

My Lords, the Government have drawn up a package of measures designed to ensure that all British-registered fishing vessels, including foreign-owned ones, have a genuine economic link with populations in the United Kingdom dependent upon fisheries and related industries. We are currently pressing the Commission for confirmation that those proposals are compatible with Community law. Once we have that confirmation, an announcement will be made on the way forward.

My Lords, I am grateful to the noble Lord for that reply; he sent me the package last February. As today is the first anniversary of the now famous exchange of letters between the Prime Minister and the President of the Commission on this subject, can the Government explain why they gave the firm impression, more than a year ago, that they could settle this pressing problem very quickly and without delay?

My Lords, as the noble Lord knows, this is a complicated issue. At the time we did not indicate that it was subject to rapid settlement. We first consulted the industry. Not surprisingly, the industry had diverse views. Having established the position based upon our consultation with the industry, at the beginning of this year we submitted our proposals to the Commission. The Commission considered them and came back to us on points of detail. We believe that we are close to an agreement.

However, I should say to the noble Lord, who supported the previous administration, that he and they will now understand why it is important to get the matter right and not do as they did in 1988 with their Merchant Shipping Act: that is, get it wrong. That Act was overturned; the vessels were re-registered and the Government were left with a potentially large charge.

My Lords, I acknowledge the difficulties involved in the fishing dispute and the need to protect British interests. But did the Government note the remark made by the head of the National Farmers Union that the reason progress is being made on BSE is because of the more co-operative attitude of this Government towards Europe? Will the Government on no account return to the discredited policies of the previous administration, which sought to blackmail the European Commission into concessions against our own national interests?

My Lords, I thank the noble Lord for that intervention, with which I agree totally. It was apparent to those of us who went to Brussels from last May onwards that the hostile atmosphere created by the previous administration had been extremely unhelpful in the settlement of these matters. We believe that a more constructive atmosphere now exists, but that does not eliminate genuine conflicts of national interest. They must be resolved and that is the process that is now under way.

My Lords, unlike the spokesman for the Liberal Democrats, who does not seem to know the difference between farming and fishing, perhaps I can refer to the fishing dispute. As my noble friend Lord Campbell of Croy said, it is now a year since the exchange of letters which was supposed to sort out the issue. Are the Government aware that a year is 12 months and, if this was a horse at Ascot, it would still be running?

In January the proposals were put to the Commission. The Government chaired the Council of Ministers. They have now ceased to chair the Council of Ministers, so in six months they have done nothing. They have not delivered a single one of the promises that they made to the fishing industry when they said that this was an easy problem, that it was only the incompetence of the Tories that prevented it from being solved and that the Labour Party would solve it in the blink of an eye. When will the eye stop blinking and the fishermen see a solution?

My Lords, I note the irritation of the noble Lord opposite, though his mention of Ascot was unfortunate. I have felt for some time that in future the noble Lord might choose a different week in which to table Questions of this nature.

One year is not long if we are to get this right, as I believe we will. Eighteen years was an extremely long time in which to get it wrong. In 1982 the previous government, in agreeing to the common fisheries policy, did nothing to protect us from quota-hoppers. When the Spaniards joined in 1985 we did nothing to negotiate protection for ourselves. It was under the previous government that the quota-hoppers were allowed to acquire licences, often for nothing. In 1988 they introduced that unfortunate Bill, which was overturned. In 1996 they put forward a ludicrous protocol which secured no support whatever in Europe. If we get it right in one year, in terms of the previous administration that will be a rapid settlement.

My Lords, on 14th May the noble Lord, Lord Whitty, stated that the Government were awaiting the Commission's final opinion on the British proposals and that he expected it to be received shortly. Can he now explain to us when the Government expect that final reply to arrive?

My Lords, I think the word used previously was very appropriate. I have been around just long enough not to give precise dates on which I might later be hung. However, I can assure the noble Lord that my right honourable friend Jack Cunningham recently reminded Commissioner Bonino that we really do expect a settlement. We have no indications to suggest that the settlement will not be helpful.

My Lords, will my noble friend accept congratulations from me on the splendid rebuff he made to the noble Lord, Lord Mackay, in which he also gave the whole history of fishing since 1972 when the Conservatives sold us down the river? However, he might have added that last Thursday they had the opportunity to insist on an amendment which they had carried at Report stage about fishing but they did not do so. Does not the fact that they did not do so show that they really are not serious about this matter?

My Lords, my noble friend's interventions are always interesting and often helpful. I can only say that I take note of what he said.

Road Fuel Gas: Duty

2.44 p.m.

Whether they will reduce fuel duty on natural gas as a road fuel.

My Lords, there are no plans to reduce the duty rate for gas used as road fuel. This includes liquified petroleum gas and compressed natural gas. The freezing of the rate since November 1996 represents a reduction in real terms which, taken in conjunction with increases in duties on other road fuels, recognises the environmental benefits associated with road fuel gases. The widened duty differential with conventional fuels offers a clear incentive for high mileage fleets, vans and buses to convert to cleaner gas power and will help offset the cost to motorists of vehicle conversion.

My Lords, I thank the Minister for that reply and declare an interest as president of the Natural Gas Vehicle Association. Does he not agree that unless the duty is reduced to the EU minimum, as Germany has undertaken, on natural gas as a road fuel, it is unlikely that a large number of vehicles will convert to natural gas, with all the environmental benefits that that would bring?

My Lords, it is certainly true that a number of European countries, notably the Netherlands, have lower fuel duties for natural gas. Perhaps the noble Lord would take back to his association the suggestion that if it wants to sell more compressed natural gas, one necessary prerequisite would be to increase the network of pumps available to sell it.

My Lords, can the noble Lord indicate whether the Government have carried out any studies to show what would be the reduction in undesirable emissions if there were further encouragement of the use of natural gas in vehicles? If they have not carried out such studies, will they please do so?

My Lords, the Government do not doubt that there would be a decrease in pollutant emissions if there were increased use of natural gas. Indeed, they have been in talks with the Natural Gas Vehicle Association and have had access to studies which have been produced by experts in the field. There is no doubt that there would be a reduction. The question is: what is the most direct and cost-effective way forward? I would suggest to the noble Lord that he should consider whether or not the reduction of vehicle excise duties for lorries and buses, as announced in the July 1997 Budget, is not a more direct route to reducing pollutant emissions.

My Lords, why on earth should a reduction in excise duties for all vehicles encourage the increased use of fuel of one specialist type? That seems to be totally illogical.

My Lords, I am sorry that my answer was elliptical. What I meant was a rebate of vehicle excise duties for those converting to natural gas and liquified propane gas.

My Lords, as the Government quite rightly wish to reduce the amount of air pollution caused by road vehicles, and as the noble Lord acknowledges that greater use of natural gas would do that, how is it that he maintains that it would not be convenient or in the public interest to reduce the duty on vehicles using natural gas?

My Lords, I did not maintain that it would not be in the public interest. I said that we are reducing the duty in real terms by not increasing it in cash terms and that the differential between gas and other fuels is increasing as the duty for other fuels increases. I was arguing that a more targeted response in terms of vehicle excise duty is more effective. If I may add to the point made by the noble Earl, Lord Onslow, in addition to the rebate for gas powered vehicles, there is a complete remission of vehicle excise duty for those vehicles such as ambulances, fire vehicles and so on which are particularly suited to gas because they refuel at depots rather than on the open road.

My Lords, is the Minister aware that even if the duty on liquid petroleum gas was at the minimum level permitted by the European Union, the saving on running costs because of that remission of duty would still not be sufficient to pay for the very high initial capital cost required for conversion to LPG for each vehicle? Do the Government have in mind other incentives to try to persuade people to make the change, bearing in mind the great improvement, particularly in metropolitan atmospheres, that could result if the owners of fleet vehicles were persuaded to change?

My Lords, I have already indicated the two ways in which the Government encourage the use of gas for road vehicles; namely, through the vehicle excise duty and the freezing of fuel duty. If the noble Lord has any other suggestions we shall be glad to listen to them.

My Lords, is the Minister aware that there is another way of encouraging the use of these and other experimental fuels? The Government could convert their own large fleet, much of which is in metropolitan London, to the new fuels. Do they have any plans to do that?

My Lords, last week or the week before I answered extensively a Question on this subject. The Government car service is not a very large fleet. There is a policy of converting to dual use, both gas and petrol, as the vehicles are replaced over the next four years.

My Lords, in order to send the right signals, if the Minister decided to reduce the duty rate to the EU minimum, can he say how much duty the Government would forgo?

My Lords, I should have an answer to that question, but I do not. I shall write to the noble Earl.

Building Societies: Special Deposits

2.52 p.m.

What representations they have received from building societies about being required to place special deposits with the Bank of England from 1st June.

My Lords, the Bank of England Act requires banks and building societies to place cash ratio deposits with the Bank of England in order to fund the unrecovered running costs associated with its monetary policy and financial stability activities. Only institutions with more than £400 million eligible liabilities will have to place cash ratio deposits with the bank; so about two-thirds of all building societies will be exempt.

We received six representations from the building societies sector. A summary of all representations was included in the Government's response to consultation on cash ratio deposits published in April 1988. I have placed in the Library a copy of the response to consultation from the Building Societies' Association.

My Lords, I thank my noble friend for that reply. Will he confirm that this new requirement will cost the larger building societies many millions of pounds annually, which will have to be borne by the depositors and mortgage holders? Will he also confirm that the building societies have made representations that other financial deposit takers, such as insurance companies, contribute to the costs of the Bank of England thereby spreading the burden? Will my noble friend inform the House why such other organisations have not been invited to take part in the new scheme?

My Lords, my noble friend is right in that the larger building societies will have to contribute to the cash ratio deposits for the first time. I am sure he will recognise that as so many of them act as banks as well as building societies, it would be very difficult to discriminate between them. He is also right in saying that the building societies believe that alternative methods of funding the Bank of England should be examined. I believe that that has been done. They wrote to the Economic Secretary to the Treasury on 22nd April and said,

"The overall outcome of the consultation, which has resulted in the exemption of small banks and building societies from the CRD scheme, will be viewed favourably by most societies".

My Lords, the scheme is going to cost the building societies more money, particularly the large ones and that is going to affect the rate of return for depositors in building societies. In addition, it will add to the burden of borrowers. Does the Minister agree that it is a big mistake to charge the building societies, when they are trying to keep down the borrowing rate, because of the Government's disastrous policy as regards the base rate?

My Lords, the noble Lord is being very selective in his argument. Building societies and banks are active in the mortgage market. It would be invidious to discriminate in that respect. In any case, the total burden of cash ratio deposits will fall. Between 1997 and 1998 the cost increased from £147 million to £182 million, assuming an interest rate of 7 per cent. The new cost, at the rate which has been announced under the Bank of England Act, will be only £129 million. I suggest that the effect on mortgages in total is likely to be positive rather than negative.

My Lords, perhaps I am widening the Question somewhat, but does the Minister agree that there must be concern that the recent increase in mortgage interest rates by the building societies and the new bank building societies is more likely to increase the likelihood of a hard landing for the economy as we move through the year?

My Lords, the noble Lord is widening the Question more than slightly.

My Lords, is it not increasingly apparent that there is a serious lack of co-ordination between the Government's monetary and fiscal policy? Can the Minister tell us whether the Treasury or the Bank of England is now responsible for controlling the money supply? In that context, does the Minister envisage that in future the deposits will be used to that end?

My Lords, the Government are in charge of both monetary and fiscal policy. They chose to delegate to the Bank of England responsibility for short-term interest rates, but that does not mean any derogation of authority or responsibility.

Nuclear Weapons: Elimination

2.56 p.m.

Whether they will now urge the nuclear states to take serious steps towards the elimination of nuclear weapons in order to avoid further proliferation.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office
(Baroness Symons of Vernham Dean)

My Lords, all states are aware of our commitment to a world free of nuclear weapons. The five nuclear weapon states have all signed the Comprehensive Test Ban Treaty. We and the French have ratified it, and we continue to urge others to follow our lead. The five are committed to enter into negotiations on a fissile material cut-off treaty as the next step towards our goal.

We have to stop nuclear proliferation to attain our ultimate goal of a world free from nuclear weapons. The Comprehensive Test Ban Treaty was an important step in the right direction. By testing, India and Pakistan have moved the other way.

We condemn these tests and urge both countries to sign unconditionally and move to ratify the Comprehensive Test Ban Treaty; enter negotiations on a fissile material cut-off treaty and accede to the non-proliferation treaty.

My Lords, I am most grateful to the Minister for that reply. I am particularly grateful to my noble friend for reaffirming our manifesto undertaking on the global elimination of nuclear weapons. Does she agree that, to take further the Government's action, it would be useful if they were to encourage other members of the Security Council to envisage the same goal of the global elimination of nuclear weapons so that we can begin to make real progress in the matter?

My Lords, all five nuclear weapon states are also permanent members of the Security Council. They are committed to nuclear disarmament; to a comprehensive ban on testing; and to combating the proliferation of nuclear weapons. Developments over the past few years have shown us that real progress is more likely to result from detailed negotiations for specific agreements than from work on an all-encompassing plan. We regard negotiations on a fissile material cut-off treaty as the next step in the process. Nationally and on behalf of the European Union, we have formally urged all parties to the non-proliferation treaty to press for the re-establishment in the Conference on Disarmament of an ad hoc committee on the fissile material cut-off treaty.

My Lords, does the Minister agree that if we and the other declared nuclear weapons states had not only taken seriously the report of the Canberra Commission, which was published nearly two years ago and which made a clear and unequivocal commitment to the eventual total elimination of nuclear weapons, but had also taken the immediate practical steps which the commission recommended to demonstrate that, the unfortunate recent proliferation in the Indian sub-continent might not have occurred?

My Lords, that is a hypothetical question. The reasons for what happened recently in India and Pakistan are not that straightforward. We have had an opportunity to discuss that in your Lordships' House in the past couple of weeks and many of your Lordships acknowledged that regional matters are among the reasons why those countries felt it necessary, unfortunately and much to our dismay, to take the steps that they did.

My Lords, has the Minister seen the report in today's newspapers that China, one of the countries originally possessing nuclear weapons, may be in the process of supplying very sophisticated systems, notably, "telemetry" systems, to both Iran and Libya so that those two countries can develop nuclear weapons? Is it not an underlying fact that, sadly, the proliferation of nuclear weapons throughout the world is relatively likely over the next generation? Should not the Comprehensive Test Ban Treaty or the fissile material treaty be looked at again in order to consider how, in the real world, such proliferation can be avoided?

My Lords, the noble Lord raises an interesting point. What I have said about the nuclear weapons states' actions and positions on the nuclear test ban treaty covers China also. However, it is not all bad news, as the noble Lord's question seemed to imply. South Africa, the Ukraine, Belorussia and Kazakhstan have all given up their nuclear arsenals, and Argentina and Brazil have shown a far more enlightened approach in this respect. We have to be cautious and extremely vigilant.

I note what the noble Lord said about China. I have no knowledge of the specific point which the noble Lord raised in respect of a newspaper report today. I have not seen such a report. However, I must point out to the House that it is not all bad news and that some parts of the world are moving voluntarily towards not proceeding with their nuclear weapons development programmes.

My Lords, does the Minister agree that speedy success in the present negotiations would help to discourage others who may now be on the periphery of developing nuclear weapons from doing so?

My Lords, we do everything that we can. The House knows that this is a central theme of the Government's policy. It was a central theme in our manifesto commitments. Through whatever means we can—through the United Nations, the European Union and G8—the Government are taking what steps they can to urge those who have not signed up to these important treaties to do so.

My Lords, further to what my noble friend has said, does she agree that the two treaties that she has mentioned are not the ultimate objective, but the next step, because until then there will be individual instances of proliferation? You cannot stop an avalanche one rock at a time.

My Lords, we must be clear about the ultimate objective, and I hope that I have made it clear. Indeed, I believe that the Government's election manifesto made it clear. I also hope that I have made it clear to the House that the Government have a strategy on this issue, which is not necessarily one of going for an entire comprehensive all-in-one position. The Government are proceeding with consideration of the current discussions in Geneva on fissile material. I hope that I have made it absolutely clear to the House that that is the strategy that we are pursuing.

My Lords, on 1st June, the Minister informed the House that five members of the Security Council were meeting in Geneva that week to discuss the implications of the nuclear testing by India and Pakistan. What was the outcome of that discussion? Perhaps I may remind the Minister that she also mentioned then that the G8 Foreign Ministers were also meeting in London to discuss the dialogue with India and Pakistan. What further developments have there been in that respect?

My Lords, the United Nations Security Council has encouraged all states to prevent the export of equipment, materials or technology that could assist programmes in India and Pakistan in relation to nuclear weapons or ballistic missiles capable of delivering such weapons. The Group of 8 has condemned the tests and agreed to work for postponement in consideration of loans not needed to meet basic human needs from the World Bank and other international financial institutions. The House may like to know that the General Affairs Council declarations of 25th May and 8th June set out the steps that the EU wishes to see India and Pakistan take to halt their arms race and to reduce tension. European member states have agreed to work for a deferral of consideration of loans from international financial institutions.

My Lords, does my noble friend agree that it is not a matter of whether we are in favour of a comprehensive approach or a pragmatic approach, but that the pragmatic approach, if successful, is the evidence of the commitment to the comprehensive approach? If we are to achieve progress in the world as a whole, there is a credibility problem. Unless the major nuclear powers, including ourselves, can demonstrate all the time that we are, above all, committed to the elimination of nuclear weapons, it will be difficult to gain convincing support across the world because we shall be telling people to do as we say rather than as we do.

My Lords, I agree that it is important that we demonstrate that we are serious about our aim of nuclear disarmament. I think that we have demonstrated that by decommissioning our free-fall bomb, as we did at the end of March this year. I do not think that there is any doubt in this House or elsewhere about the commitment to nuclear disarmament of Her Majesty's Government. In trying to attain that goal, we must have a strategy. I hope that I have been clear in setting out for the House the Government's steps towards successfully achieving that strategy.


3.6 p.m.

My Lords, at a convenient moment after 3.30 p.m. today, my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Cardiff Summit. I should like to take this opportunity to remind the House that the Companion indicates that discussion on a Statement should be confined to brief comments and questions for clarification and that noble Lords who speak at length do so at the expense of others.

Sea Fisheries (Shellfish) (Amendment) Bill Hl

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.

Moved, That the order of commitment be discharged.—( The Earl of Lindsay.)

On Question, Motion agreed to.

Scotland Bill

3.8 p.m.

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Scotland Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

My Lords, I beg to move that this Bill be now read a second time.

This Bill, which establishes a Scottish parliament and a Scottish executive, is part of the process of creating a new Union—a union not based on uniformity, but one which recognises and celebrates the diversity of the United Kingdom.

Through this Bill we seek to establish an enduring, fair and stable settlement—one which recognises the essential value of devolution: the ability to provide local solutions to local problems against a framework of locally defined priorities. We are also about building a more decentralised, plural society in which real power is dispersed and the political process becomes more accessible to our citizens and in turn more inclusive.

We are equally determined that these advantages should be obtained while securing and strengthening the Union that is the United Kingdom—a union that is more than the sum of its constituent parts. On 1st May last year the Government were elected on a mandate to enact legislation as soon as possible to allow people in Scotland to vote in a referendum on proposals for a Scottish parliament. We kept that promise. The referendums Bill was published within two weeks, our proposals were set out in the White Paper published on 24th July and the referendum was held on 11th September. Once we had the overwhelming support for our proposals we kept our word and introduced legislation to implement them before the end of 1997. The Bill has now completed its four-month passage through another place which allowed no less than 80 hours of debate on the Floor of the House according to a timetable agreed by all parties. There is no question that the Bill has not received the scrutiny it merits.

We may be at the beginning of our deliberations in this House, but the journey has been a long one with quite a few alarms and diversions on the way. Many have played a part in bringing us to where we are today. It is appropriate to mention the invaluable work done in the period leading up to the last general election by the Scottish Constitutional Convention. The convention brought together different political parties and interests across Scotland and gave us a sure foundation upon which to base our legislative proposals. It is right to pay tribute to two Members of this House who worked long and hard as the joint chairs of the convention: the noble Lord, Lord Steel of Aikwood, and my noble friend Lord Ewing of Kirkford. I am well aware of the extent to which within my own party my noble friend has been the advocate for and guardian of the convention's proposals. I trust that both noble Lords are well satisfied that the Bill before us today gives legislative effect to the convention's plans.

I have said that the journey has been a long one, and not all parties in this House have travelled by the same route to reach our common destination. That destination is a parliament that will work, and work well, for the benefit of Scotland, the United Kingdom and the Union.

Perhaps I may say a few words about the Official Opposition. At the time of the referendum the party opposite took a different view from that of the Government. I recognise and applaud the way in which, in a mature and deliberate way, they have accepted the democratically expressed will of the Scottish people and are now committed to securing a parliament that works and is a success. I congratulate them on that. I look forward to that constructive approach continuing through the weeks that lie ahead of us. All parties in this House have the common aim of ensuring the success of the devolution settlement. But there are those who have a vested interest in undermining the settlement and doing what they can to make sure it is not a success. They do so out of a desire to break the Union and set off down the path to separatism. That is not some devolution-plus; it is the very denial and antithesis of devolution which itself values both unity and diversity. We can perhaps show in the way we debate this Bill how the Parliament of the United Kingdom can welcome both the diversity of devolution and the continuing unity and strength of the Union.

In this House in the weeks to come we must not forget what has gone before. This Bill was a central plank of the Government's manifesto encapsulated in the White Paper, endorsed in the referendum and now approved in another place by a majority of Members representing constituencies in all parts of the United Kingdom. The proposals before us thus come with a triple democratic endorsement. Nobody claims that the Bill as it stands is perfectly crafted. It is quite proper—indeed, it is the duty of this House—to scrutinise this Bill. This House can, and I am sure will, make a valuable contribution to improving the Bill. But there is a world of difference between legitimate scrutiny and obstruction. Given the acceptance by all parties of the democratic endorsement that the Bill has already received, I do not expect that there will be obstruction. I stress that the main features of the settlement are simply non-negotiable, but there is nevertheless scope for this House to express its wishes in other areas, and this Government will listen and reflect upon what is said.

We presented the White Paper in this House almost 11 months ago. We said that the devolution scheme laid out in it was right for Scotland and the United Kingdom. The people of Scotland agreed with us. The overwhelming referendum votes in favour of a parliament with law-making and tax-varying powers demonstrated a new confidence. It showed that Scots wanted to live in a country with significant autonomy but that they also wanted to remain with a strong and stable United Kingdom.

The people put their trust in the Government and we have repaid it. The Scotland Bill gives effect to all the commitments to legislate which we made in the White Paper. The Bill reads rather differently from the White Paper. That is the nature of legislation. However, the guide to the Bill which we have published shows precisely how the proposals in the White Paper have been carried through into legalisation. The key point is that the White Paper is all here in the Bill. We are committed to establishing a substantial and powerful parliament in Scotland. This Bill will deliver that commitment.

I shall now explain the key elements of the Bill. Clause 1 provides that there shall be a Scottish parliament and goes on to provide for how its members are to be elected. We said in the White Paper that the electoral system would enable us to build a parliament based on fairness. That is what we have achieved in Clauses 1 to 17 of the Bill. The principal features of the system will be: the parliamentary term will be fixed at four years, although there is provision for elections before that period in exceptional circumstances; electors will be able to vote twice in the elections to the Scottish parliament, once for a constituency member and once for a regional member; regional members will be drawn from a list submitted by a registered political party or individuals standing in their own right; and regional members will be returned on a corrective basis which reflects the proportion of votes cast for the party or individual while taking account of seats already gained in the constituency ballot. These arrangements will ensure both a strong constituency link and a closer relationship between votes cast and seats won.

I should like to highlight the provision which will allow independent candidates to stand as regional members. This is an advance on the proposals in the White Paper. It reflects our commitment to open the doors of the parliament as wide as possible and allow in new blood, possibly from outwith the so-called political establishment. I hope that many able people will seize the opportunity provided by the Bill.

The provision of separate constituencies for the Shetland and Orkney Islands also reflects our firm commitment to making this a parliament for all of Scotland. We want to ensure that we have an inclusive parliament which represents the diversity of Scotland. There have been suggestions that the parliament will be dominated by the central belt. That is simply not so. The system will ensure that the more remote areas of Scotland will be properly represented in the parliament. In absolute terms there will be about the same number of members from the Highlands and Islands and the South of Scotland as from the Lothians and Glasgow. The electoral system will ensure that all the voices of Scotland will be heard.

We promised that the parliament would have wide-ranging legislative powers. That is what we have delivered. Clause 27 of the Bill gives the Scottish parliament the power to make laws for Scotland while acknowledging the position of the United Kingdom Parliament. Clauses 28, 29 and Schedule 5 effectively set out the legislative competence of the Scottish parliament and list the matters which will be reserved to Westminster.

This approach will help to achieve clarity and stability and by allowing for amendment of the list of reserved matters by agreement between Westminster and Edinburgh will provide flexibility for the longer term.

Everything that is not reserved is devolved. This will give the Scottish parliament the power to make laws for the Scottish people over a wide range of matters. These powers will be exercised by members elected by and directly accountable to the people of Scotland.

The Bill also provides for all powers under existing Westminster legislation to be transferred to the Scottish executive where these concern matters which are not reserved; and for certain specified powers in reserved areas also to be devolved to ministers of the Scottish executive by order, a draft of which will be made available shortly.

The Scottish parliament will be specifically entitled to make laws about Scots private law and Scots criminal law, even although they may affect reserved matters. This will allow the parliament to maintain and develop the distinctive traditions of Scots law. The legitimate interests of the United Kingdom in any direct impact of changes in the civil law of Scotland on legislation concerning reserved matters will be protected.

The Bill ensures a fair and open system for resolving any disputes about the vires of the parliament. The Law Officers of either the UK Government or the Scottish executive will be able to refer a Scottish Bill to the Judicial Committee of the Privy Council if they have any doubts about its vires. The Judicial Committee will for these purposes be composed of those who are or have been Lords of Appeal in Ordinary or who otherwise hold or have held high judicial office in the United Kingdom.

This is, I believe, an important advance on the proposal in the White Paper which would have restricted membership to the 12 Lords of Appeal in Ordinary. It will mean that there will be a bigger pool of potential members to draw upon, with judicial experience from throughout the UK.

The Bill will also enable public authorities with a remit which covers devolved and reserved matters to continue to operate broadly as now while giving the Scottish parliament and ministers important rights to be consulted on and to question their activities in relation to devolved matters in Scotland.

I turn now to Part II of the Bill. The Scottish executive will be headed by a first minister appointed by the Queen following nomination by the parliament. It will also consist of Scottish ministers and the Lord Advocate and Solicitor General for Scotland. The first minister will be able to appoint junior Scottish ministers to assist Scottish ministers in their duties.

The executive will be a powerful body able to exercise executive functions in devolved areas. The Government also intend to give it wide-ranging powers to act in reserved areas within Scotland by means of executive devolution under Clause 59.

The executive will be fully accountable to the parliament. No one will be able to hold office as first minister, a Scottish minister or a junior Scottish minister unless their candidature has been approved by the parliament. They will be required to resign in the event of a vote of no confidence.

The Bill provides that the Lord Advocate and Solicitor-General should be members of the Scottish executive. It also envisages the appointment of a Scottish Law Officer to the UK Government to occupy the new post of Advocate General for Scotland. It also protects the independence of the Lord Advocate in relation to the prosecution of crimes and investigation of deaths, and gives him and the Solicitor-General the right to decline to answer questions in parliament about individual criminal cases in certain circumstances.

Taken together with the electoral arrangements the provisions for the administration pave the way to a new era of partnership between the executive and legislative branches of the state in Scotland. The nature of the arrangements will, we believe, promote consensus and good government. 'There will need to be more give and take; more listening; and more co-operation. I believe that this new and fresh approach to politics will bring real benefits to the people of Scotland.

And let me mention here another central feature of the constitution—the judiciary. Unlike in the 1970s we believe it is right that responsibility for the judicial and court system should be devolved, and the Bill provides this. At the same time it is important that safeguards to protect the position of the judiciary should be built in. The Bill therefore provides that judges and tribunal members cannot be summoned to give evidence to the parliament.

While Clause 89 confirms that Scotland's two most senior judges will, as now, be recommended for appointment by the Prime Minister but chosen from nominations made by the first minister, the first minister will recommend the appointment of other senior Scottish judges. Dismissal of a judge will be possible if two-thirds of the members of the parliament vote in favour of it, subject to careful safeguards on the exercise of this power.

The Government promised in the White Paper that the Parliament would be established on a sound financial basis. Clauses 61 to 68 fulfil that commitment. They set out the financial arrangements for the parliament and the executive. The centrepiece is the provision for a Scottish Consolidated Fund into which the UK Government will make payments.

The Government have published a paper setting out the principles which will govern determination of the block budgets for the Scottish parliament and the national assembly for Wales. It explained that the tried and tested arrangements associated with the Barnett formula will continue to operate under devolution, with only minor adjustments. Like the Barnett formula itself under successive administrations over the past 20 years, the formula by which the Scottish parliament's budget will be calculated will be an administrative arrangement which does not need to be prescribed in legislation.

The Bill will transfer to the Scottish parliament the maximum freedom to determine its own expenditure priorities and will ensure that those who make the decisions are accountable to the Scottish people who will be affected by them.

Subject to the outcome of the referendum the Government promised to give the Scottish parliament a limited power to vary the basic rate of UK income tax in Scotland by up to 3p. Clauses 69 to 75 fulfil that commitment.

These clauses and the power itself have been the subject of very considerable debate, and rightly so. The powers, if exercised to the full, would allow the parliament to increase or decrease its income by something over £400 million per annum at today's prices. This is, of course, only about 3 per cent. of the current Scottish block but is nevertheless a substantial sum. In our view, and clearly that of the people of Scotland, too, it represents an important fiscal flexibility which is entirely appropriate for the sort of mature parliament which we are establishing.

As the White Paper foreshadowed, the conduct of relations with the European Union is necessarily reserved to the United Kingdom Government because the United Kingdom is the member state. But the Bill gives the parliament and the Scottish executive the full powers they need to observe and implement European Community obligations in so far as they relate to the devolved areas. The parliament will be able to scrutinise relevant EU proposals and legislate to give effect to Community obligations for Scotland. And Schedule 5 also provides that the Scottish executive will be able to play a role alongside the United Kingdom Government in negotiations. The Bill therefore does everything that is needed to give effect to our proposals on Europe as set out in the White Paper.

Much has been made in another place of the omission from the Bill of a right in law setting out exactly when ministers of the Scottish executive will participate in meetings of the European Council of Ministers and other negotiations. I have explained that the Bill contains enabling provisions to make clear that they may take part in such negotiations. But the UK is the member state; we must have a common UK position and a single UK delegation. The emphasis in negotiations will continue to be on working as a UK team; the delegations will be led by a UK lead minister who will retain overall responsibility for the negotiations, the same as now.

European negotiations are often fast moving and the emphasis must be on flexibility in deciding who best should speak for the UK in councils in the light of the business under discussion.

We envisage that these matters will be covered by concordats between Edinburgh and London, but we are firmly of the view that it would neither be sensible nor appropriate to try to prescribe the detail of who should speak when on the face of the legislation. The Bill contains the necessary provision to enable Scottish ministers to take part in negotiations when relevant, but it must be in the context of arrangements which will provide for sensible co-operation between the UK and Scottish administrations.

A central theme of the White Paper was that, while the devolved parliament and executive would have a considerable degree of autonomy, Scotland would remain an integral part of the United Kingdom. Indeed, the White Paper made it clear that good communication systems between the UK Government and the Scottish executive will be vital. Without them devolution will be less effective, and both administrations would suffer as a result.

So it is in the interests of both sides that constructive, day-to-day working relationships are established between departments right from the outset at both ministerial and official level. It is also important that the relationships should be flexible and dynamic. We are, after all, in the UK context, entering uncharted territory. The United Kingdom will remain firmly intact, but devolution to Edinburgh, Cardiff and Belfast will change for ever the way in which it operates. It is important that the working relationships between all four capital cities are able to adapt as the new institutions bed down over the next few years.

Inter-departmental concordats, or mutual understandings, will be an important part of this non-statutory machinery of co-operation. They will make it clear that relations between Edinburgh and London will be based on consultation, consent and co-operation within the framework established by the Scotland Bill. Corcordats will be sensible administrative tools on which working relationships will be based. They will not, as was claimed by some in another place, be a backdoor device for either giving more power to Holyrood than is provided for in the Bill, or clawing back powers that will have been devolved. They are quite simply a means of ensuring good, effective, day-to-day working arrangements between the two administrations.

No provision for concordats is required or made in the Scotland Bill. As with negotiations over Europe, legislation in this area could actually hinder relationships which will evolve naturally. It would be counterproductive to give them the degree of inflexibility that inevitably flows from statutory prescription.

The Scotland Bill is a substantial as well as a far-reaching piece of legislation, running to 117 clauses and 8 schedules. In recognition of the complexity of the Bill and its interaction with so many other enactments, I am making additional information available to Members. I have already placed in the Library of the House copies of the guide to the Bill. I shall also place in the Library shortly a compilation of extracts from enactments which the Scotland Bill proposes to amend. Before the beginning of the Committee stage, I shall also be publishing comprehensive notes on clauses.

I commend the Bill to the House. It is a bold, innovative piece of legislation. It is also part of our far-reaching constitutional programme designed to bring the processes of government closer to the people. The elements of this programme are well known. We are establishing a parliament in Edinburgh together with assemblies for Wales and Northern Ireland, an elected assembly and mayor for London, the incorporation of the European Convention on Human Rights and a more constructive approach to the European Union. These all demonstrate this Government's commitment to the modernisation of the United Kingdom. Our aim is a more pluralist, outward-looking democracy which is confident in itself and in tune with the modern world. We want to build a system of government which people can access easily, feel part of and take part in. We want a more inclusive politics—to bring a wider range of people into the political process.

In 1999, a Scottish parliament will sit in Edinburgh for the first time in 292 years. Yet this will be a very different body from that which united with the English Parliament in 1707. It will be a thoroughly modern, forward looking parliament. It will be a parliament fashioned in Scotland, for Scotland, and able to build a better Scotland.

We are on the threshold of completing the unfinished business of which John Smith spoke, and of giving effect to the settled will of the Scottish people. Let this project be his lasting political legacy to the United Kingdom and to Scotland.

Moved, That the Bill be now read a second time.—( Lord Sewel.)

3.36 p.m.

My Lords, I am sure that the whole House is grateful to the noble Lord, Lord Sewel, for his introduction and arguments in favour of the Bill. I found it interesting that there was no word of explanation as to why your Lordships are being asked to give a second reading to the Bill, which I understand is the flagship of the Government's programme, so late in the Session. At the turn of the year, when I looked at my new diary, I thought that we would start the Bill shortly after Easter and that we would now be in Committee. I cannot yet understand why the Government are taking the Bill at such a leisurely pace. We could have had the Second Reading a fortnight ago and the Commons could certainly have finished its Report stage very much more quickly. One day a week is slow going in the other place.

I must say to the Minister and to his colleagues in Government that I do not want to hear any complaints here or in the press via the usual spin doctors that we are dragging our feet on this Bill. Starting now, there is simply no chance of finishing a Bill of this magnitude by the Summer Recess. It is the Government's business management, in both Houses, which is responsible for that.

We have an important job to do here, both next month in Committee and in the spill-over period on Report and Third Reading, because it is vital we ensure that this Bill delivers a sensible and stable devolution package. It is the delivery of that stable and sensible package which will be our ambition on these Benches as we probe, question and suggest amendments.

It is no secret that I am a reluctant convert to devolution. The reason for my conversion is simple. It is not the argument which I listened to again from the noble Lord, Lord Sewel, but it is that I am a democrat. My fellow Scots made it abundantly clear at elections and in the referendum that they want a devolved parliament and government within the United Kingdom.

The debate in Scotland has raged for some time and has ranged over the status quo, devolution and independence. One of the principal arguments used against the status quo by the advocates of devolution—there was a hint of it in the Minister's speech today—has been that if we do not respond to the desire of the Scottish people for some limited change we will drive them into the hands of the Scottish National Party. That view is well illustrated by Mr. George Robertson, now Secretary of State for Defence, who when he was shadow Secretary of State for Scotland, said:
"Devolution will kill nationalism stone dead".
Perhaps I might repeat that for your Lordships:
"Devolution will kill nationalism stone dead".
Mr. Donald Dewar, when introducing the White Paper in the other place on 24th July, said in response to SNP leader Alex Salmond:
"I believe, however, that the reform package that we have announced today, implemented with good will and spirit, will make his [Alex Salmond's] task a bit more difficult".—[Official Report, Commons 24/7/97; col. 1049.]
On the same day, in my response in your Lordships' House to the noble Lord, Lord Sewel, I said that,
"the Government believe that what they are doing here will strengthen the Union. I earnestly hope that they are right. However,…'I hae ma doots'".—[Official Report, 24/7/97; col. 1535.]
I did not think for one moment that those doots would be confirmed quite as speedily. But, in poll after poll, the demand for independence, far from fading away, has grown and grown. In the most recent ICM poll in the Scotsman, 52 per cent. said they wanted independence. In last week's poll in what I still like to think of as the Glasgow Herald, in response to a question as to how people will vote for the Scottish parliament, the SNP lead Labour by a staggering 44 per cent. to 36 per cent. That is some burial; some own goal. The noble Lord, Lord Sewel, and his colleagues must feel as bad as poor Tom Boyd did when he saw the ball fly over his head into the back of the Scottish net. At least he can be forgiven. His was just one of those unfortunate incidents which occur in a fast-moving game in a crowded goal mouth. Not so Labour's own goal.

It is a temptation to say, "I told you so", and I shall not resist it. I did tell the Government so. But we cannot sit back, watch and enjoy Labour being force-fed humble SNP pie. We must try to stop that happening. We must try to keep this Kingdom united, yet at the same time we must deliver what the Scots want—a workable, devolved government. In many ways, we must prove our forebodings wrong.

Against that background, we shall look carefully and critically at all aspects of the Bill. I wish to highlight a few of them this afternoon: the electoral system, the financial arrangements, the legal and constitutional framework, the issues to be devolved and those to be retained here at Westminster, the number and role of Scottish MPs, the so-called West Lothian question.

I shall start with the easiest matter, at least for me; which is the legal and constitutional issues. It is easy for me because they will be dealt with by my noble and learned friends Lord Mackay of Drumadoon and Lord Fraser of Carmyllie. Therefore, I shall not say any more about them. I should not use the expression because the lawyers will not like it, but why should I have such eminent noble and learned friends and still try to do the barking myself?

As regards the electoral system, I am unashamedly in favour of the first-past-the-post system. Through one-member constituencies, first-past-the-post provides a clear one-to-one relationship between the citizen and his Member of Parliament. It allows the electorate to punish a party which has lost touch with its own supporters. More often than not, it delivers a clear result with one party winning. It makes for stable and directly answerable government.

I know that I shall be told that my party has suffered grievously because of that system and that some form of proportional representation would be to our advantage. I understand that. I see that—if I may use that dreadful expression—at this moment in time, that may be true. But electoral systems should not be chosen for one moment in time. They should stand the test of time. Our system has done that. In comparison with many countries which have chosen one of the many variations of PR, we can boast a long thread of democratic government uninterrupted by many of the horrors visited on our less fortunate friends on the Continent.

That pass may already have been sold as regards the Scottish parliament, but we shall certainly wish to look carefully at the many varieties of fiddled voting systems we are offered here. For example, I am extremely concerned about the power that the closed list system chosen for the second top-up ballot gives to the party political machine—a power taken away from the electorate completely. I shall want to know why the closed list system has been chosen and why we cannot have one of the more open list systems. I hope that, unlike on the Welsh Bill, the Liberal Democrats will get up off their knees, humbly begging for crumbs at the Government's table, and will stand up for the more open system which I thought they believed in.

I am concerned also at the possible manipulation which could occur between the first and second vote. The principle of the second vote and its list is to top up the first-past-the-post seats to bring the seats gained into close proportionality with the votes cast in the second ballot. If a party does extremely well in the first-past-the-post section, it will find that it will have very few of the top-up seats.

One way round that would be for a party which does well in the first-past-the-post seats not to stand in the second vote but to allow an alter ego party to stand, one which does not stand for any of the first-past-the-post seats and thus has no seats. That alter ego party can clean up the second vote and the whole object of proportionality can be defeated.

In case anyone thinks that that is just a product of my fevered mind, I should tell your Lordships that the idea comes from Mr. Michael Dyer of Aberdeen University and has been taken up by Mr. Ian Davidson, the Labour MP for Glasgow Pollok, who, interestingly enough, was judged to be of sufficiently high quality to be a Member of the other place but not of sufficiently high quality even to be allowed by the Labour Party to have a possible attempt at the Scottish parliament.

Perhaps I may illustrate my concerns with the City of Glasgow results at the last election. Labour would gain all 10 seats in the first-past-the-post system, as it did. In the seven top-up seats, using the system in the Bill, it would gain only a further two seats. My party would gain one seat, the SNP would gain three and the Liberal Democrats would gain one. If the Labour Party decided not to stand in the second ballot but the co-operative party registered, as indeed it could, to stand in that second ballot, Labour voters in Glasgow would have no difficulty in understanding what was going on. I suspect that they would approve of the ploy. They would vote heavily for the co-operative party in that second ballot. In that event, the top-up seats would fall six to the co-operative party, one to the SNP and none to the Conservatives or Liberal Democrats. Therefore, Labour and its co-operative allies would enter the Scottish parliament with 16 seats from Glasgow, four seats to the good. We shall explore ways of preventing that happening.

I turn now to finance. We shall wish to explore the continuation of the Barnett formula and the impact of the comprehensive spending review on the Scottish block. None of us expects financial distributions to be set in concrete. But there are enormous dangers that the now triennial negotiations between the UK Government and the Scottish government will become a focus for discontent and disruption within the Union.

Interestingly enough, this morning in the Glasgow Herald, there is a report on an academic study in which those problems emerge. It is an academic study by, among others, Professor Colin Munro of Edinburgh University. Many of the study's seven co-authors used their contributions to highlight the growing likelihood that rows over money will regularly put Scotland in conflict with Westminster. Therefore, our duty, consistent with the principal objective that I have set for the Opposition in this Bill, is to find ways to minimise that potential dispute.

We shall want to explore also the question of the extra 3p in the pound. On whom will it be levied? That is an issue which is still fairly uncertain. In the words of the Institute of Chartered Accountants of Scotland, the seven clauses which relate to the tax-raising powers are overly complex, poorly drafted and costly to implement.

How does the 3p in the pound relate to the £450 million which is also pledged? That is a kind of double pledge for the Scottish parliament. What will happen if the 3p does not raise that amount of money? How will the difference be raised? That is not a difficult question but it seems to be impossible for the Government to answer it because they have so far failed to do so. However, I shall try to help them.

The financial relationship between the Scottish parliament and local government finance, council tax, business tax and capping will all need exploration and clarification.

I turn now to what is to be devolved and what is to be reserved. This Bill tackles that matter in a totally different way from the Welsh Bill. As the Minister said, here we have a list of those issues which are reserved. I believe that that is a neater way in which to approach the matter. However, it does not mean that on each issue the Government have made a clear and unambiguous decision. I have no problem as regards where Scottish law should fall and where health, education and local government should fall. Those matters should be dealt with by the Scottish parliament. Equally, I have no problem about foreign affairs, Europe, defence and trade and industry. Those matters should be reserved. But there are grey areas which we shall wish to explore.

For example—and the Minister failed to convince me again today—before the CAP and the CFP, I should have had no great problem with agriculture and fishing being devolved. But today, with so much of our agriculture and fishing policy determined at a European level—and we had a good illustration of that at Question Time today—I believe that Scottish agriculture and fishing should not be separated from that of the rest of the United Kingdom and should possibly remain the responsibility of the UK Government, who are and will remain the government negotiating at Brussels. Ministers conducting the negotiations should be answerable to Scottish Members of Parliament and, through them, to those involved in those two important industries. If they are devolved the Ministers in this Parliament will not be answerable and yet they will do the negotiating, while the Ministers in the Scottish parliament who will be answerable will not be involved in any of the negotiations because they will not—and I emphasise the word "not"—be able to represent those industries where it matters; namely, at meetings of the Council of Ministers of the member states of the Union.

I have explored this aspect in some detail during the proceedings on the Welsh Bill, but have received no satisfactory answer from Welsh Ministers. I am still waiting for just one example of where a member state of the Community, on an issue encompassing the whole member state, is represented at that negotiating table by a Minister from a provincial parliament—either a German Länder or one of the provinces of Spain. I await that promised letter. As I said, not a single example has been given in all the times that this issue has been raised across this Dispatch Box.

Equally, and still on countryside matters, I am not really convinced that the Forestry Commission, which is a UK body, will gain by being split into three and being answerable to three different masters.

When I look at my old department, the Department of Social Security, I can see why the contributory benefits have to be kept on a UK-wide basis, but I am not so sure about the non-contributory benefits—cold weather allowance, disability living allowance and child benefit. Why should they not be devolved? After all, it was the Labour Party which, winter after winter, made a great song and dance about the fact that we should consider Scotland differently from the rest of the UK because it has a colder and wetter climate. However, judging by this June, I am not entirely convinced that that holds true.

I have one more example in this category in the moral field; namely, why is abortion not devolved? I can see no good reason why it should not be, especially when I see that euthanasia is devolved. After all, in the words of Donald Dewar, the parliament is to be,
"a grown-up Parliament with grown-up responsibilities".
My last main point relates to the relationship between Scotland and England after devolution. When the Treaty of Union was negotiated back at the beginning of the 18th century, it was acknowledged that there was a disparity in size between the two partners and that Scotland's representation at Westminster should be greater than proportional. That position has rightly remained and, in some respects, has actually grown. Scotland has 72 Members in the House of Commons, and the average electorate in Scotland is 55,000 as opposed to 69,000 in England.

That disparity will be indefensible after devolution. Scottish MPs will see most of their workload and responsibility shift to that Scottish parliament, and the arguments in favour of roughly equal electoral numbers north and south of the Border will become unanswerable. Some argue that we ought to go further. But I do not, for exactly the same reason as the negotiators concluded 300 years ago.

Not only is this equitable; it will also reduce the chance, although not completely, of the so-called West Lothian question becoming an issue between us. With fewer Scottish MPs it is less likely that the political complexion of the UK and thus of the Government of England—for that is actually what we are talking about—on all these devolved issues would be at variance with the electoral result in England.

As we start these new arrangements, it is my belief that we should also have new, equal electoral quotas and that the number of Scottish Members should be reduced to, say, 58 for the next election. I understand that that view is shared by the Government, but they do not want it to come into effect until after the next election.

Just as that reduction would go some way to solving an English problem, it would, as the Bill is written, create a Scottish problem. As the Bill is framed, the number of seats in the Scottish parliament is determined by the number of seats at Westminster—reduce the one and you reduce the other. I can think of nothing worse than, in the first session of the new Scottish parliament, for Westminster to reduce the number of Scottish MPs and say automatically to the 129 MSPs, "Sorry, 21 of you will need to fall on your swords". I trust that the Government will do something about that during the course of the Bill's passage in this House. If they do not, I hope that we shall.

These five issues, the electoral system, finance and taxation, devolved and reserved powers, the West Lothian question and the legal and constitutional interplay between this Parliament, the Scottish parliament and the judiciary, along with a number of other issues, both large and small, will give us many interesting hours in Committee. Indeed, not only will that process be interesting; it will also, I trust, be productive. I thought I heard the Minister say—at least I hope so—that the Government want to be constructive during the Bill's passage through your Lordships' House. Therefore, I hope that the Government will look at our amendments, and indeed those from any other part of the House, with some sympathy and understanding.

The Minister actually said that the Government would,
"listen and reflect on what is said".
I hope that we have a little more reflection than we have had on the Welsh Bill where the only person who has achieved any success is my noble friend Lord Balfour, who has had the tiniest of amendments accepted by the Government. In every other case, it has been the Welsh equivalent of "No, no, no". I know that my fellow Scotsmen will do a little better than that, but I trust that the Government will be prepared to listen to the arguments and, where necessary, accept them and agree to amendments.

Like the noble Lord, Lord Sewel, I believe that we can all work together during the proceedings on the Bill for what are, despite our disagreements on some issues and despite the fact that we have disagreed on this particular issue in the past, shared aims. I believe that those aims are shared by all parties in this House, and I am quite sure that that also includes those on the Cross Benches; namely, to create a viable, working parliament in Scotland which serves Scotland but, at the same time, very firmly retains her place in the United Kingdom. That will be the objective of Her Majesty's Official Opposition in this House during the weeks ahead.

3.56 p.m.

My Lords, I seem to be fated to follow my old and noble friend Lord Mackay of Ardbrecknish in these debates. He began by telling the House that he was a convert to the cause of devolution—some convert! I have no doubt that the right reverend Prelate will agree with me that in our experience converts are usually more enthusiastic than those who are original believers. However, I failed to detect any sign of enthusiasm in the speech that we have just heard. I believe that the noble Lord is a convert by the head but not yet by the heart. Let us hope that our deliberations during these debates will bring him to full conversion in the recognition that what we are doing is not only sensible but long overdue.

Indeed, listening to the noble Lord's speech, I could not help but recall the words of Mr. Gladstone that:
"Liberalism is trust of the people tempered by prudence [while] Conservatism is distrust of the people tempered by fear".
There was a strong element of fear running through much of what the noble Lord said. Having accepted the overwhelming vote of the Scottish people in the referendum last autumn and the May wipe-out of the Conservative Party—nul point, as they would say in the Eurovision Song Contest—as far as concerns the Scottish election results, there is still a reluctance to accept that what we are doing today is fundamentally and absolutely correct and that we must proceed with it with all possible dispatch.

During the past few weeks we have been commemorating the hundredth anniversary of the death of Mr. Gladstone. Therefore, it is right that I should begin from these Benches with a quote from a speech that he made in 1887 when he said:
"It is the recognition of the distinctive qualities and the separate parts of great countries and empires which constitutes the true basis of union, and to attempt to centralise them by destroying those local peculiarities is the shallowest philosophy and the worst of all political blunders".
That was the political blunder of the Conservative Party in Scotland over the past few years, for which it paid a very heavy price.

I thank the Minister both for the clarity of his introduction to the Bill and also for the kind words that he said about the work of the Scottish Constitutional Convention. I am sure that the noble Lord, Lord Ewing, will agree with me that both he and I were really just the decorative figures at the head of the convention—well, at least he was—and that the real work was done by the executive and its sub-committees which toiled not over three or four but over five or six years to produce the blueprint upon which the Government are now legislating. I pay tribute to them.

I listened to a great number of the debates in the House of Commons during the passage of the Bill in the other place. Those parts I did not hear myself I read in the Official Report. I must quarrel with the complaint of the noble Lord, Lord Mackay, as regards the business management of this Bill. In the other place both the Government and my party were perfectly agreeable to the proposal that this Bill should be sent upstairs to a committee for detailed, line-by-line analysis. However, at the wish of the Conservative Party, it was discussed on the Floor of the House during tedious days on a voluntary timetable. As a result some parts of the Bill were not examined at all. Therefore I believe that there is at least some obligation on the part of the Official Opposition to recognise that the late arrival of the Bill here is due in part to following their wishes as well as to any slowness on the part of the Government.

Listening to those debates I was struck by one peculiarity; namely, that the Bill was debated in the other place without any representatives of the Official Opposition who came from Scotland. Mr. Michael Ancram at least knew what he was talking about because he had been a Scottish Office Minister even though he now represents an English seat. However, most of the other contributions from the Official Opposition were lamentable. We had Members who assured us they had grannies in Auchtermuchty, or uncles with shooting estates in the Highlands. The more intellectual of them had visited the Edinburgh festival. We were treated to endless speeches of a nonsensical variety.

I wondered at the enthusiasm of some of those Members to participate in debates on a Bill which had little effect on them. However, towards the end of the debates we discovered the secret; namely, they had been promised that if they made good speeches on Opposition amendments they would get a "shot" at moving an amendment at the Dispatch Box. Sweeteners of that kind would not work in this place. One can hardly envisage the noble Lord, Lord Campbell of Croy, or the noble Lord, Lord Monro of Langholm, queuing up to stand at the Dispatch Box in this House. We shall have the advantage in this House when we reach the Committee and Report stages of the Bill in having home grown Scottish Peers who know what they are talking about and who will bring constructive criticism to our proceedings. That will be a great advantage.

We have a job to do and that is to examine this Bill. Members of my party will table between half a dozen and a dozen amendments, all of which will have the effect either of improving the Bill in accordance with undertakings given by the Government in the other place or of reducing the list of reserve powers. That is a matter on which I may find myself at last in some agreement with the noble Lord, Lord Mackay of Ardbrecknish.

There is one difference perhaps in vocabulary between my party and the Government, and that is in describing what they call the creation of the Scottish parliament and which I prefer to describe as the restoration of the Scottish parliament. I say "restoration" for a good historical reason, not because I want to restore the kind of parliament that we had before 1707 but to emphasise an important point. The debates that took place in Scotland in the period leading up to the Act of Union were not discussions for and against the principle of the Union—as is widely assumed—hut discussions on whether in the course of that Union (which was broadly agreed 100 years after the Union of the Crowns) the Scottish parliament should be retained as the internal legislative body in Scotland. That argument was lost through bribery and persuasion of various kinds.

The SNP as a party is historically incorrect when it tries to present the debates of 1707 as arguments for or against the Union. Fletcher of Saltoun, whom that party often quotes, said wisely,
"That London should draw the riches and government of the three kingdoms to the south east corner of this island is in some degree as unnatural as for one city to possess the riches and government of the world".
He had never even heard of the Millennium Dome! He was very much ahead of his time. As I argued in the debate on the referendum Bill, the 1707 Act of Union has never been politically accepted in Scotland among the population at large right from the year after it was passed. The noble Lord talked about unfinished business. Many noble Lords are talking about unfinished business from the Parliament Act of 1911 as regards reform of this House. But Mr. Asquith's Government were wholly committed to introduce a Bill to establish a parliament for Scotland. Indeed in 1914 a Liberal Bill passed through the House of Commons. Incidentally that Bill would have given women the right to vote too, so advanced were we in those days north of the Border. However, the outbreak of the First World War put a stop to all of that and my party never regained power. However, since 1914 there have been 19 Scottish parliament Bills. This is the 20th and it is the best. It is time we got on with it.

I believe that, if passed, this Bill will have two important effects. First, I am absolutely convinced that it will improve the economic climate in Scotland. I say that because over recent years I have made three or four visits to Catalonia to talk with the Government there. There is every evidence that since the death of Franco and the recreation of the Parliament of Catalonia an economic boom has been experienced there in the wake of gaining political control over their own affairs. However, it is important to note that that has been achieved because that wise old fox, Mr. Jordi Pajol, the premier of Catalonia, has used the phrase over and over again—he did so when he was my guest in Edinburgh at a seminar two years ago—of non-secessionist nationalism. That is an important phrase. I believe that the determination of the SNP to create a separate entity is not only politically damaging but also economically damaging to Scotland. I believe there is a fair comparison with the Parti Québécois which wins power in the state of Quebec in Canada but which fails all the time to win a majority in favour of separation because people draw back from what is an economic and political nonsense.

I do not rule out the possibility of holding a referendum at some point on independence if there is a demand for it. However, it would be a fundamental mistake for the Scottish parliament to start its life with further constitutional debates and requests to the Scottish people to go to the ballot box yet again. I believe that the economic climate of Scotland will be healthier through having our own political control north of the Border. Secondly, I have absolutely no doubt that it will make government more accountable to the people. It is often not understood by Members south of the Border that the Secretary of State for Scotland at present has ministerial responsibility for the equivalent of nine Whitehall departments. It does not matter whether the Secretary of State is the Archangel Gabriel; no one who is the Minister of Education, the Minister of Agriculture, the Minister of Housing, the Minister responsible for the Police and for other matters can possibly be as on top of his Civil Service as the nine Ministers who share those responsibilities south of the Border. The same is true of the junior Ministers in the Scottish Office. I believe that ministerial control over the policy and administration of departments will be improved in future by having Scottish Ministers who are responsible for individual departments in the Scottish administration.

The same is true as regards the accountability of Ministers to Parliament. Again I find that English Members of the House of Commons often do not understand that while they can table Questions on Monday to the Minister of Housing, on Tuesday to the Minister of Education, on Wednesday to the Minister of Health and so on, the Scottish Members have to wait for our one chance a month to table our one Question on one of these topics to the Minister responsible. Parliamentary accountability of Ministers will be enormously improved as a result of the recreation of the Scottish parliament.

In the other place the Opposition spent an entire day debating the West Lothian question. I fear that that will happen here too. There is no answer to the West Lothian question. So long as we do not have a true federal structure, there will be anomalies. The question that must be addressed is: can we ameliorate these anomalies? We could reduce the number of Scottish Members in the other place as is proposed. We could, for example, have an English Grand Committee which deals with Bills relating purely to England, or have English and Welsh Grand Committee Bills to deal with Bills that do not apply to Scotland, and from which the Scottish Members in the other place are excluded. All of those things can be done, but there is no final answer to the West Lothian question.

The real issue we have to face is the following. Are the anomalies which this Bill creates, and which are inherent in it, greater or fewer than the anomalies that exist now? I have no hesitation in making a plea to your Lordships' House. Here we are talking about a future situation where 73 Scottish Members—out of 650 Members—might interfere in matters which do not affect their constituents. But what happened in relation to the poll tax was that 475 non-Scottish Members imposed it on Scotland. When later it came to imposing it on England, some of those same Members rebelled and said it was a nonsense. They were quite happy to shuffle it off on to their non-constituents, but for their own constituents they said no. The anomaly there is far more outrageous than the tiny anomaly that will be left when we pass this legislation.

Finally, I return to the historic basis of the recreation of this Parliament and the issue of Scottish sovereignty, and to the difference between the English and Scottish constitutional view as to where sovereignty lies. In the previous debate on the referendum I believe I quoted Lord President Cooper's 1953 judgment. I shall not do so again, though no doubt it may crop up in later proceedings. I simply remind the House that, whereas we had Mary "Queen of Scots", Elizabeth was "Queen of England". There were kings and queens "of England"; never kings and queens "of the English". There were never kings and queens "of Scotland"; they were always kings and queens "of the Scots". Why? Because in Scotland there was a more limited monarchy of the people. The monarch was not a lord or owner of the land. That is why sovereignty north of the Border has always lain with the people. That was the basis of the Claim of Right which we all signed in the constitutional convention. It is the fundamental basis on which this legislation rests.

I believe that we shall see a new and lively parliament operating in new ways. It will be a fixed-term parliament. It means that governments will not resign if they are defeated. They will have to go back and think again. That is not a bad idea. It will be in a hemicycle, so the adversarial system will go. We might even have electronic voting instead of trooping through Lobbies. We shall have an electoral system which will not lose, as the noble Lord, Lord Mackay, suggested it might, the advantage of the constituency relationship of a Member. The additional members system is copied directly from the system that we inflicted upon Germany after the war and has proved very successful there. There is no reason why it should not prove more successful in Scotland. It will mean a more co-operative style of politics. I very much look forward to a new system of legislation, where pre-legislation committees will be more important. That will be an innovation; we do not have it fully in Westminster Parliament.

This is an exciting time. People in Scotland who were excited at the time of the referendum will be excited again when the parliament comes into being. It is our job to get on with the legislation, and so ensure that government—which we have always recognised should be of, by and for the people—is near the people as well.

The Cardiff Summit

4.12 p.m.

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the meeting of the European Council which he chaired in Cardiff on 15th and 16th June. My right honourable friends the Foreign Secretary and the Chancellor of the Exchequer, and my honourable friends the Minister of State at the Foreign Office and the Economic Secretary, were also present. Copies of the conclusions have been placed in the Libraries of both Houses. The Statement is as follows:

"I should begin by thanking the City Council and the people of Cardiff for their warm welcome and hospitality. I congratulate them wholeheartedly on the arrangements for the summit, which were universally admired. Cardiff itself looked marvellous and did great credit to Wales and this country.

"This European Council had four main themes: economic reform and employment; enlargement and the necessary accompanying policy reforms; the future development of the EU; and foreign policy issues, notably Kosovo. We also discussed a range of other questions which touch the lives of ordinary people: the environment, crime and drugs, the millennium bug. The Finance Ministers issued a statement on the world economy, a copy of which is attached to the conclusions.

"We had an important and valuable debate on the economic reform programme needed in Europe if the single currency is to succeed. There were four aspects to this: first, employment. At Luxembourg last November, the European Council agreed a set of employment guidelines aimed at promoting a skilled, trained and adaptable workforce and flexible labour markets responsive to economic change. Under the UK presidency, all 15 member states have submitted national action plans putting these guidelines into effect. We agreed at Cardiff that the next steps were concrete measures on life-long learning, with a particular emphasis on older workers; strengthening equal opportunities; promoting new ways of organising work; revising tax and benefits systems to improve incentives to work; and developing a culture of entrepreneurship. The need now is to implement the national plans. The guidelines themselves will be revised in December.

"Secondly, the European Council endorsed broad economic guidelines to co-ordinate national economic policies. These incorporate commitments on macro-economic stability but also commitments on structural reforms of the labour, product and capital markets—essential if member states are to promote growth and employment and remain competitive in the face of globalisation. The guidelines also emphasise the need for reform to remove regulatory burdens on businesses. We established a process to exchange best practice and monitor progress to ensure that these commitments are lived up to.

"Thirdly, the single market. Good progress has been made on strengthening the single market during the last six months, for example through agreements on telecoms and gas liberalisation injecting genuine competition into these markets. The European Council agreed that the Commission should work on an extended scoreboard containing indicators of effective market integration and price differentials, as a tool for benchmarking progress in creating a genuine single market. The existing scoreboard has already helped implementation of single market measures by member states to improve from 73 per cent. to 82 per cent. in the last six months. We invited the Commission to table an action plan to improve the single market in financial services, and emphasised the need to promote competition and reduce distortions such as state aids. These are important commitments. Perfecting the single European market is vital for trade and investment.

"The fourth area was the need to promote competitiveness and entrepreneurship. We were all fully agreed on the vital role of small companies in creating new jobs and wealth; and on the need for action to produce the best possible environment to encourage entrepreneurs. This means in particular increasing access to capital and cutting unnecessary regulation. Action in these areas was agreed.

"Fundamental economic reform is essential if member states are to be able to compete and create jobs in the global market-place, and therefore essential for EMU. The measures agreed at Cardiff represent a new strategy to achieve this. I would draw the House's attention to two points: the degree to which this strategy reflects British thinking about competitiveness and the direction of reform, and the unanimity across Europe that this is the right way forward.

"Our second major theme was enlargement and the policy reform needed for this. Enlargement negotiations and the accession process were successfully launched in March. The Commission also tabled then a package of proposals on the reform of EU policies and their financing—the so-called Agenda 2000. These proposals would, for example, reform the common agricultural policy and save the consumer at least £1 billion per year in lower prices. The European Council agreed a deadline of March 1999 for reaching agreement on the package, with final adoption before the European Parliament elections next June.

"A crucial part of the negotiations will concern the EU's future financing. There has been a good deal of press speculation about the position of the German and other governments over their net contributions to the budget. No doubt member states will continue to make their case for change in one direction or another. For our part, I made it clear that I will maintain the UK budget rebate, which cannot be changed without the agreement of the Government and this House.

"As part of our enlargement debate, we discussed Turkey. The UK presidency has worked hard to restore positive EU/Turkey relations following the down-turn at the end of 1997. The Cardiff conclusions re-emphasised that Turkey's candidature to join the EU must be treated on the same basis as those of other candidate countries and endorsed a new strategy towards Turkey. The Commission has now said it will come forward with proposals for financing to overcome the existing impasse in this area. It is too soon to say definitively, but I believe this will help put this important relationship back on the rails and provide a basis for future progress.

"On the foreign policy side, we issued a strong declaration on Kosovo, condemning the use of indiscriminate violence by the Federal Republic of Yugoslavia and Serbian security forces. If President Milosevic does not take steps to comply with our demands on dialogue, refugees, international monitoring and an end to violence, he should be in no doubt about our united resolve. We wait to see whether his discussions with President Yeltsin yesterday lead to the necessary changes on the ground. Meanwhile NATO planning and UN Security Council consultation continue.

"We also discussed our serious concern about the Middle East peace process, where the EU remains supportive of US efforts. We called on India and Pakistan to take early steps to adhere to the international non-proliferation regime. We expressed support for Indonesia, provided a credible economic reform programme is followed, and underlined the need for an acceptable solution to the problems of East Timor, including the early release of political prisoners.

"The European Council gave its support to the Northern Ireland Peace Agreement, and agreed that the EU should continue its active role in promoting peace and prosperity there.

"We also discussed the environment and crime and drugs. We agreed on the need to implement the Amsterdam Treaty provisions on integrating environmental protection into EU policies. My right honourable friend the Deputy Prime Minister has begun this process during the UK presidency by bringing the work of the Transport and Environment Councils together, and ensuring that the next three presidencies are committed to an agreed programme. I am also delighted that one hour ago the Environment Council in Luxembourg concluded the EU's burden-sharing arrangements to implement the legal obligation agreed at Kyoto for greenhouse gas emissions. This is an important step towards a cleaner world.

"In Cardiff we welcomed the excellent progress made in implementing the action plan on organised crime. We endorsed the key elements of the EU drugs strategy for the period 2000 to 2004 and asked the Council and Commission to develop a comprehensive plan for action.

"Heads of Government also had a wide-ranging discussion of the future development of the EU. We face big challenges: the introduction of the euro; enlargement; tackling unemployment and social exclusion; combating organised crime; giving the Union an effective voice in the world. There was agreement among EU leaders that, if the Union is to meet these challenges in a way that has the confidence of our citizens, it must ensure that people feel less remote from the political processes and institutions of the EU; that they can support European solutions to shared problems without fear of losing their national identity. This means increasing the democratic legitimacy of the European political process and making a reality of subsidiarity—being ready to co-operate where that is the right way of solving common problems, while reassuring our peoples that Europe will not encroach on national or regional freedom of action in areas where the state or indeed local authorities can best take responsibility.

"There was widespread acceptance that the solutions do not simply lie in more centralised decision-making and that we need to find a more effective relationship between Europe's institutions and our national governments and parliaments. We now have to take those principles and make them the centrepiece of future European reform. The informal Heads of Government meeting in Austria in October will begin that process.

"We also agreed that, once the Amsterdam Treaty is ratified, we will move on to the institutional issues not resolved at Amsterdam—notably the size of the Commission and vote re-weighting. Finally, we asked the Commission and Council to pursue work on improving their efficiency and organisation and to report on progress in the next presidency.

"I was also delighted to welcome Nelson Mandela to Cardiff, to join my European colleagues in paying tribute to his extraordinary leadership in South Africa, and to take the opportunity to discuss with him the prospects for completion of an EU/South Africa co-operation agreement. We are agreed now to complete the negotiations by the early autumn. I understand that only 1 per cent. of the issues still remain to be resolved.

"I believe the Cardiff European Council marked a solid step forward towards a more effective and better accepted European Union. We agreed, without rows or drama, on a series of substantive points to equip our countries and peoples better for the future.

"At the start of the UK presidency I outlined five objectives: building support for a third way in Europe—economic reform, combining economic dynamism with social justice; launching EMU; getting enlargement off to a good start; taking forward common action on crime, drugs and the environment; demonstrating that Europe could be a force for good in its relations with the outside world. These objectives have been met. As important as anything else for Britain, after years of negative and destructive posturing that isolated Britain in Europe but did not advance our interests, we have re-established strong, positive relations with our EU partners. Those relations, not before time, are transformed and for the better.
"That is good for Britain, for Europe and for Britain in Europe. Cardiff was the proof of that."
My Lords, that concludes the Statement.

4.24 p.m.

My Lords, the whole House will, as usual, be grateful to the Leader of the House for repeating the Statement. It is in many ways a Statement of which I suspect many of us hoped for great things. After all, it marks the end of the British presidency.

Perhaps I may ask the Leader of the House whether he regards the last six months as a success. In answering that question he may want to bear in mind a number of matters. For example, first, a growing number of commentators are worried that the economic events in the east will spread westwards and that we may shortly have to face economic difficulties, both in Europe and America. Secondly, he will bear in mind that the number of trouble spots around the globe is proliferating and those trouble spots are both potential and actual. They include, self-evidently, parts of central, southern and eastern Europe, right on the borders of the European Union. Thirdly, he should bear in mind that proliferation of nuclear weapons is now a serious reality and that civil nuclear power stations in eastern and central Europe are an increasing cause for concern; and, finally, that the European Union faces the problem of endemic unemployment and the need, in the interests of political as well as economic stability, to ensure that that endemic problem is attacked.

Will the Leader of the House also accept, in answering that question, that we on this side of the House are pleased to see that the communiqué acknowledges the importance of those matters and, indeed, in 97 paragraphs and two appendices, catalogues a good few of them? Will he also accept that in particular we welcome the continued commitment to enlargement, to fighting organised crime, to budgetary discipline, to the completion of the single market, to job creation, to the environment, to small business, to reform of the CAP, to market access for Third World economies, to subsidiarity and to the expressions of good will for the resolution of virtually every regional crisis we can think of?

But what has the British presidency actually brought to a conclusion? As I so often follow the advice of the Leader of the House, I looked beyond the Statement to the communiqué. All we have in the communiqué is expressions of good will and assurances that progress is being made. The Prime Minister said the:
"people's agenda was jobs, the economy, crime and the environment".
What has happened on those fronts? On jobs, in this country the Government seem to have adopted the former European Union agenda: the social chapter, the minimum wage, more public spending and more union power. Is it surprising that today, with what I can only describe as delicious irony, the Government have announced the first rise in unemployment for 26 months? Can the Leader of the House advise us as to why the European Union proposes to reverse the problem of unemployment by the adoption of what are after all rather old-fashioned methods? All the communiqué talks about is action plans which will "require further evaluation". Can the noble Lord tell us of one decision, as opposed to merely a report on progress, which will create one more job as a result of the Government's six months of hard work?

On the economy, of course we welcome the assurance on the Budget rebate and look forward to supporting the Government in their battles which will no doubt come to pass on that front. Does the Leader of the House think that the fudged criteria which enabled the 11 joiners to sign up to EMU is a sound basis for stability? That is, after all, a quality much hoped for in the communiqué. Does the noble Lord really think that in, say four years, the economies of the 15 will have converged, or will they have diverged?

Should we take it from the Prime Minister's remarks in Cardiff that he is now in favour of joining EMU as soon as he thinks that he can get away with it, by getting a yes vote in a referendum? May we have an assurance that the Treasury will not try to shadow currency movements in Europe meanwhile?

Can the Leader of the House say what are the Government's plans for tax harmonisation with our European partners? Is it the Government's aim to work for and achieve that? If so, on what basis?

On crime, we welcome the commitment in the communiqué, but I see that the European Union is again waiting for reports—this time from the United Nations. I hope that the urgency of the language will be mirrored in action.

On the environment we welcome the announcement that is in the Prime Minister's Statement, but clearly not in the communiqué, of what is happening in Luxembourg in adhering to the Kyoto agreement. The language of the communiqué covers a remarkable paucity of achievement with fine sentiments. Friends of the Earth called the summit's work
"not much greener than a multi-storey car park."
Does the Leader of the House agree?

We see nothing of substance on enlargement. Does the noble Viscount agree with the Finnish Prime Minister that enlargement has become more problematical in the past six months, not less? However, I agree with the Leader of the House that the communiqué"s language on Turkey is a great deal more reassuring.

As the European Union is clearly against independence for Kosovo, what will the Government do if there happens to be an overwhelming majority vote from Kosovos for independence? Perhaps that is the great question that we should never raise, but it is one that ought to be envisaged and addressed.

I could find no mention of NATO in the communiqué although the Prime Minister rightly mentioned it in his Statement. I hope that the Leader of the House will be able to reassure us that the entire European Union, whether or not members of NATO, supports the actions that NATO is taking.

The communiqué covers a pretty poor performance over the past six months. Is it any wonder that the European Parliament voted down a Motion praising the British presidency? That seems a remarkable event, coming from an assembly dominated by the Prime Minister's ideological allies.

I wonder whether your Lordships recognise the following words:
"We are on the brink of the new millennium, where radical, modernising programmes of reform are the only way to achieve decent modern societies for all our people."
Here we recognise the authentic voice of the Prime Minister. They are fine sentiments with which none of us could disagree, using words chosen by focus groups, serving as a substitute for action and a mask for increasing failure. Does it remind the Leader of the House just a little of the style of the communiqué?

4.33 p.m.

My Lords, I too thank the Lord Privy Seal for making a Statement to the House. I know that he will understand that I say with no disrespect that the Statement could have been written in advance of the Cardiff meeting. Most of the events over the past two days, if events there have been, have already been well reported overnight. I confess that those who participated in the conference will remember it most for the surprise and pleasure of being in the great city of Cardiff and for the fringe event of the visit by Nelson Mandela—each of which provides the top or tail of the Statement.

The meeting was marked more by aspirations than decisions. I share in that respect many of the views of the noble Viscount, Lord Cranborne. I looked carefully under the heading of economic reform and employment but could identify nothing that represented a real decision with measurable consequences. I was particularly struck by this sentence in the statement:
"We established a process to exchange best practice and monitor progress to ensure that these commitments are lived up to."
That phrase could have been repeated at almost every stage in the statement. The Lord Privy Seal shakes his head but I believe that he would be very hard pressed to point to any clear decision, the consequences of which will be plain. On the other hand, although that is typical of the Statement as a whole, it is an honest Statement, in so far as it refers to the two days in Cardiff as being a solid step forward. Those of us with experience of Westminster and Whitehall know that is Whitehall-speak for marking time. This was a marking time European Council at the end of a rather lacklustre presidency. While we welcome a number of aspects of the Statement and its more open and positive tone—very different from under the previous Government time and time again—the Government were mistaken to raise expectations that they could not wholly fulfil.

Certain elements or points in the Statement appear to have been agreed at Cardiff, although with uncertain consequences. We can applaud, for example, the references to democratic legitimacy and subsidiarity. We can take some comfort from those passages. The truth is—and I hope that the Lord Privy Seal will comment upon this—that there will be a diminishing role for Britain within the European Union as long as we are sidelined by our inability to decide when and in what circumstances to join the EMU. It is a strange matter that in the past six months of Britain's presidency a major historic decision was made to launch the euro, yet we were standing aside when we should have been participating and playing our part.

Does not the Lord Privy Seal agree that on the difficult but central question of the development of the European Union, were the Government to make a firm decision to set a clear timetable for joining EMU, we would find—as we did on other occasions in the past—that public opinion would swing to believing that that is the right way for Britain to go and that Britain should go in that direction as soon as possible?

4.37 p.m.

My Lords, I am grateful to the noble Viscount, Lord Cranborne, and to the noble Lord, Lord Rodgers of Quarry Bank. When I listen to the noble Viscount on these occasions, I feel sometimes that there is a slightly farcical air to our proceedings. As I repeated the Statement made by the Prime Minister half an hour after he had made it, the noble Viscount had the opportunity to witness the Statement being made either in the Chamber or on television, and then to repeat his leader's response in the other place. All the quotations from the Prime Minister of Finland that the noble Viscount threw at me were those that Mr Hague saw fit to use in the other place.

For every quotation about the British presidency the noble Viscount can throw at me, I can provide a thicker file of foreign opinion that the British presidency has gone rather well. The noble Viscount asked whether we had had a good six months. In all candour I believe that we did, for three major reasons. We have re-established decent working relations with our European partners. After the history of the past decade that is a major achievement, to put it mildly. We have seen the successful launch of European monetary union. To get that off the ground successfully in the past six months is, again, a major achievement. Thirdly, we have seen enlargemet off to a flying start. Again, I have to say that that is a major achievement. So, if the noble Viscount asks what are the major achievements of the past six months, those are.

The noble Viscount asked a number of detailed questions. The main one of substance seemed to be: what has the summit achieved except for words? That was repeated to a certain extent by the noble Lord, Lord Rodgers. In relation to jobs, for the first time in the history of the European Union—at one time I had some modest responsibility for trying to look after employment throughout the affairs of the then European Economic Community—national plans to deal with unemployment were brought forward by each member state.

In relation to the decisions at Cardiff, the agreement on reinforcing the development of a skilled and adaptable workforce and so forth was agreed unanimously. It was said,
"Orientations which guide our future work on employment shall include: reinforcing the development of a skilled and adaptable workforce, including through lifelong learning; particular attention should be paid to older workers; strengthening action on equal opportunities by ensuring that equality between men and women is mainstreamed in all employment policies … tackling discrimination against the disabled … promoting new ways of organising work, where necessary by reviewing the existing regulatory framework at all levels, to combine flexibility and security; reviewing tax and benefit systems to make it easier for employers to create new jobs and more attractive for employees to fill them; developing a culture of entrepreneurship and encouraging the growth of smaller businesses".
That is what all the members states signed up to. In addition, the Council agreed that the Commission should monitor progress in those directions. That is new. In my experience it has not happened before that specific commitments have been made in that way, endorsed unanimously by the European Council and to be monitored by the Commission.

The noble Viscount had a certain amount of fun with the Government saying that everything had been put off. But he misunderstands the nature of the European Council. The object of the Council, at the end of the presidency, is to review the progress being made on a number of ongoing issues. In our view, as I set out at the beginning of the Statement, the important ones are the economic reform policy, to which everybody signed up; the centrality of unemployment in national and economic policies; progress on enlargement; and progress towards EMU.

At a European Council meeting of this nature, though I was not there and do not know exactly what happened, they seem to try to review past progress and give those measures an encouraging push in the right direction. I do not accept for an instant that our presidency has been the sort of failure characterised by the noble Viscount, nor has it been as padded as the noble Lord, Lord Rodgers, seemed to characterise it. We have achieved the aims that we set for ourselves at the beginning of the presidency and the Government deserve credit for that.

4.43 p.m.

My Lords, I can assure my noble friend that I am not disappointed with the six months presidency—primarily because I was not expecting too much. My noble friend referred to improvements in the single market. Does he accept that the greatest improvement was for 11 member states to recognise that a single currency would provide the greatest improvement to a single market. My right honourable friend the Prime Minister is quoted in the press as having made one or two significant statements in Cardiff which implied some improvement in our position. Can my noble friend tell us whether there has been any significant change in what the Prime Minister said and in our position on the single currency?

My Lords, my noble friend tweaks me, not for the first time. In answering questions in another place this afternoon, the Prime Minister was asked a specific question. He repeated government policy in plain and unmistakeable terms and said that it had not changed.

My Lords, will the Leader of the House acknowledge that perhaps it was a mistake, at the beginning of the presidency, to puff up the prospects in the way that was done? Will he accept that it is not possible for anyone, simply by taking the chair of the Council of Ministers for six months, to lay the foundations for a new heaven and earth, as was advertised at the beginning of the presidency? Is it not inevitable, since those were empty flourishes—the Leader of the House knows this perfectly well—that some disappointment and criticism are now inevitable, as evidenced not just in what my noble friend said, but also in the objective description reported in the Herald Tribune today?

In particular, can I press the Minister on enlargement? Is not the timetable for enlargement receding rather seriously? It is not so long since the Poles were told that they would be in by the year 2000. So much has to be done by existing methods in this round of enlargement on agriculture, on the budget and on institutions, which has not been done. Can the Leader of the House give some indication, if all goes well, of when we might expect the five candidates in what is called the first wave to achieve entry?

My Lords, I do not believe that I can give a date. However, I agree with the noble Lord about the nature of the presidency of the European Union. Of course we cannot achieve a new heaven and earth in six months. That is not a contradiction; we may be able to achieve the foundation of what might in time become a new heaven and earth. One can move things along so that progress in that direction is intensified and accelerated. With respect, when one looks at the whole of the six months, certain major achievements took place in European development under the British presidency. I am not claiming that it was necessarily all due to the British presidency, but I totally disclaim the allegation that it happened despite rather than because of it.

In relation to enlargement, the UK presidency successfully implemented all elements of the remit from the Luxembourg Council. Cardiff welcomed those achievements and looks forward to further rapid progress. What happens next? Progress will inevitably continue. The EU will provide targeted aid for countries where they need it. We will regularly monitor their progress. We will continue working on the negotiations for the next stage. It is now for the applicant countries to submit their detailed negotiating positions. That has not yet happened. The EU must then decide how to react. In our view it is vital that we maintain the momentum of this process.

Cardiff did not perpetuate the divisions that emerged at Luxembourg which, after all, established an all-inclusive process within which individual countries could advance on merit. In relation to the targets, it confirmed them and looks ahead to the first of the regular reports on each candidate's progress towards succession.

I played a minor part in the Commission at the time that Spain and Portugal were negotiating their entry. It is an extraordinarily complicated process and on this occasion it is even more complicated because of the changes that will take place in the policies and in the structures of the Union as well as in the necessary processes and adaptation that have to take place in the applicant countries. No one should underestimate the difficulties of the process. We got off to a solid start. The negotiating process started and we look forward to maintaining that momentum.

My Lords, perhaps I can ask one or two questions of my noble friend. First, I am glad that there has been no change in Her Majesty's Government's policy on the single currency. I wonder whether the Prime Minister had a few words with M. Chirac on the Frost programme when he said that the euro would topple the United States dollar as the main currency in the world. Is not that a little xenophobic? Perhaps M. Chirac should be told that that does not go down well in this country.

It has also been reported that the Prime Minister said that the United Kingdom would be prepared to relinquish further areas of policy to qualified majority voting. Is my noble friend able to give some further information about that? If that were the case, would it not further reduce the powers of Westminster, and therefore the power of the people, to whom our Prime Minister wants power returned?

With regard to financing the European Union and enlargement, the understandable desire of Germany to reduce its large net contribution was presumably discussed. This must affect enlargement, especially if existing member states which are net recipients see their largesse from the EU being severely reduced. Was that discussed and were any conclusions reached which are perhaps not in the report?

Finally, there is an item in the report about reviewing tax and benefit systems. What does that mean? Does it herald yet more power even over taxation for the institutions of the European Union?

My Lords, I think I had better answer my noble friend Lord Stoddart before I answer his clone on the other side, if I may put it not unkindly—unless he is going to ask the same questions. I do not know what President Chirac said. I do not know whether my right honourable friend the Prime Minister knows what President Chirac said. And I certainly do not know what my right honourable friend the Prime Minister would have said about what President Chirac was supposed to have said had the Prime Minister known about it. So I cannot answer my noble friend's first question.

The euro may well become a reserve currency. There is little doubt about that. But it is not a question of challenging or competing with the dollar. As I understand it, there was no discussion of QMV at Cardiff. Certainly, there is nothing in the conclusions. There was a general discussion of the financing of the Community in which various countries set out their positions. The communiqué is extremely guardedly careful about the way in which it sums up that discussion—"no decisions were taken". As far as I know, nothing was discussed at Cardiff about reviewing tax and benefit policies.

My Lords, I am grateful to the noble Lord the Leader of the House for describing me as a clone of his noble friend Lord Stoddart of Swindon. I at least regard that as considerably flattering. I must apologise to the House because I had forgotten that the Leader of the House takes each question in turn. I thought that he took them all in one lump.

May I press the noble Lord on the question put to him by my noble friend Lord Cranborne to which I did not detect an answer in his reply to my noble friend? He asked whether, as part of the economic reform programme which is required for successful EMU, whatever that turns out to be, tax harmonisation will be very much on the agenda. Is that so, and what is the Government's view on it?

I find it extraordinary that the Leader of the House can say that enlargement has got off to a flying start, because it clearly has not. I think the noble Lord will agree that for enlargement to take place considerable reform of the common agricultural policy is necessary. He mentioned that there would be a deadline in March 1999 for that. Perhaps I may put one very specific question to him. Does Germany support such reform of the common agricultural policy, without which enlargement will be impossible?

Finally, the noble Lord said that the Prime Minister is rejoicing in his project of making a reality of subsidiarity. Surely he must agree that the reality of subsidiarity is in the wording, and that is what makes it a fraud. If the noble Lord will refer to our debates on 21st May (at cols. 1778–1803 of Hansard) on the Third Reading of the European Communities (Amendment) Bill he will see that subsidiarity was exposed precisely as such a fraud and that it cannot possibly do the job which the Prime Minister in his charm offensive with Brussels appears to think that it can. It was a fraud when it started. To realise that one has merely to concentrate on the first 10 words which allow subsidiarity only to apply in areas which are not in the Community's exclusive competence. The Amsterdam Treaty has made that worse. It underlines the acquis communautaire and it underlines Article 6.4 of the treaty. Is it not time that the Labour Government realised that subsidiarity always was and is still a fraud?

My Lords, if I may say so, that comes ill from a noble Lord who at one time was passionate about the concept of subsidiarity. As I recall the discussions that took place over the Maastricht Treaty, in which he played a prominent part—I had a modest role in getting the Bill through the House—subsidiarity was a concept that was coming vigorously from the other side of the House. If I am wrong about what the noble Lord's views were, I apologise to him.

My Lords, will the noble Lord be good enough to put that in writing? If he consults Hansard for the entire process of the Maastricht debates, he will see that I never believed in subsidiarity, that I was always against it and that I divided the House against it on more than one occasion.

My Lords, in that case, I apologise. He asked whether I would do so in writing. I will send the noble Lord tomorrow a copy of the Hansard in which my apology appears.

I was asked whether part of economic and monetary union is tax harmonisation. As far as I know, that was not discussed at Cardiff. What I am doing is making a Statement about what was discussed at the European Council in Cardiff. The noble Lord said that enlargement had not got off to a flying start and asked, "What about the CAP?" I put back to him, "What about Agenda 2000?", which is well on the Community agenda and, one hopes, will be resolved in the course of the next 12 months—by March 1999, if I remember rightly.

The noble Lord also referred to subsidiarity and asked whether it is a fraud. He thinks it is a fraud. My right honourable friend the Prime Minister does not think it is a fraud. He believes that it is perfectly possible to devise a relationship between the European institutions and the member states in which more decisions are taken by the member states and fewer—but, in the words of M. Santer, perhaps better decisions—are taken at the centre. That seems to be a sensible concept and one which I hope will gain the approval not only of a majority of this House but indeed of the country as a whole.

My Lords, I wish to make three points of a non-controversial nature on the Statement delivered by the Prime Minister in another place. I found it a little remarkable—this has been a matter of concern to all members of all parties—that there was no mention at all of the prevention of fraud in Community institutions—I would emphasise that—or any incisive statement that there is a real determination among the institutions and in the member states to deal with fraud. It is relegated to about three words in paragraph 56 of the President's conclusions, which are made available together with the speech of the Prime Minister.

My second point arises on the British contribution. I had rather hoped that the Prime Minister would take a slightly more robust attitude than he in fact did towards the British net contribution and the abatement arrangements that are made. I would have liked him to say that the position on the United Kingdom's abatement is not negotiable and that there will be no concession on that.

Finally, I was a little worried about Annexe 2 to the presidency conclusions relating to Kosovo. I noted with some regret that the remainder of the member states did not take the more incisive view backed by action taken by our own country together with the United States with regard to the operation of NATO over the question of Kosovo.

My Lords, as regards the last point, I believe that my noble friend is wrong. My information is that there was unanimity on the question of Kosovo. The European Union is not a military organisation. If action is to be taken, clearly it would have to be done by NATO.

As regards the first point made by my noble friend about fraud, the communiqué does not bear out his strictures. It says,
"The European Council stresses the importance of sound financial management and fraud prevention. In particular, it calls on the institutions to ensure that the opportunities provided by policy reform are used to introduce policies and procedures which are as fraud proof as possible and which encourage a high standard of financial management. It also underlines the importance of preparing the enlargement candidates to participate in the Community's finances".
I would have thought that the Government's position on fraud is pretty well known. As far as I know, it was reiterated at Cardiff. I cannot accept my noble friend's strictures concerning the UK budget rebate. Perhaps I may repeat two sentences from my right honourable friend's Statement. He said,
"There has been a good deal of press speculation about the position of the German and other Governments over their net contributions to the budget. No doubt Member States will continue to make their case for change in one direction or another. For our part, I made it clear that I will maintain the UK budget rebate, which cannot be changed without the agreement of the Government and this House".
I would have thought that that was fairly clear and unequivocal.

My Lords, can the noble Lord confirm that the discussion about bringing the institutions closer to the people means accentuation of the role of national parliaments rather than the transfer of further powers to the European Parliament?

My Lords, I do not believe that there was any discussion at Cardiff which would lead to the conclusion or implication that the European Council was in favour of transferring more powers to the European Parliament. The discussion that took place with the president of the European Parliament in Cardiff was more concerned with looking at the terms and conditions that the members of the European Parliament possess at present rather than contemplating that it should be given greater powers.

My Lords, will my noble friend the Leader of the House be surprised to hear that there is at least one noble Lord on the Back Benches who believes that the six-month presidency was rather a good one under the circumstances? Does he not agree that the March 1999 deadline for completing the deal on the Agenda 2000 package of reforms necessary for enlargement is a very ambitious one? Does he further agree that that is an absolutely necessary deadline because if it is not met there will be very serious slippage?

Does my noble friend also agree that as regards what the noble Lord, Lord Hurd, said concerning slippage, there are two very good reasons why the enlargement process will take longer than originally contemplated? The first is that nothing will happen about reform until after the German elections. Secondly, the candidate countries themselves are now beginning to realise, as they enter the negotiations, just how complex they are and that they would rather they took longer and got it right than that the negotiations were rushed and they got it wrong.

My Lords, I believe that my noble friend is quite right on his first point. When the European Union is taking decisions it is very helpful to have a deadline to which it has to work. Therefore, the imposition of the deadline for Agenda 2000 does two things; namely, it concentrates the minds of those who have to take the decisions and, secondly, it makes the decisions themselves more likely.

Concerning the second point made by my noble friend, he again is quite right. The enlargement process is extremely complicated and more so than some of the others. I believe I said a little earlier this afternoon that we have to look not only at the ways in which the enlargement countries adapt to the Union, but also at the ways in which the Union will have to adapt to them. What is extremely significant in some ways about enlargement is that decisions on it have been taken at all because the complexity of the issue is immense. However, the political and economic advantages of an enlarged Community are also immense and therefore worth the complexity and the difficulties of the process.

Scotland Bill

5.5 p.m.

Second Reading debate resumed.

My Lords, I hope to address noble Lords on the subject of Scotland after the ex-Cardiff pronunciamento from the noble Lord the Lord Privy Seal. I am at some double disadvantage here. I had confidently expected to be number 20, 30 or 40 in the enormous list of speakers, but having to bat at number four means that I am deprived of the right to make a short speech along the lines of, "Everything that could be said about this Bill has been said by other noble Lords", followed by a quick return to the seat.

This is a reprehensible Bill because it will lead to the independence of Scotland. As a hereditary Scottish Peer, shortly to be executed, I feel that I still have a duty to take part in important debates and at least to try to be original, which attempt shall be left until five minutes has elapsed, or at least to the end of my speech.

A strong believer in the Union by training and by sentiment, I look with horror on the work of an Administration apparently determined to mutilate the Union and then stand by, presumably, lamenting and wringing its hands as it watches its dismemberment. As a direct descendant of a member of the old Scottish parliament—unkindly dismissed by the noble Lord, Lord Steel, in his speech—who spoke at the time against the Union, but voted for it but was not one of the Peers who were richer as a result, I believe that, by inheritance, I have a claim to fair-mindedness.

My objection to the Bill is not merely prejudice or bias. It is just that it is hard to decide whether the "doing" of the Bill is worse than the deed itself. By the "doing", I am in fact referring to the Bill rushed through last summer, when no details at all were given on the subject of devolution for Scotland. I have already referred to the deed.

There may be Members of your Lordships' House who, like me, from habit or better reasons, read the Murdoch Sunday broadsheet. They may have spotted an article on Scots, the essence of which was that all Scots do not love all other Scots all the time, contrary perhaps to impressions given by spin doctors from Millbank when they are talking about Ministers in another place who, apparently, disagree with each other.

The title of the article was, "Aye, Jimmy, it's a grand sport is pulling the legs off a coo". It purported to be a review of a book by an Englishman entitled Bloody Scotland. Its merit was that it reminded one that from time to time Scots can be quite horrible to each other—Highlander versus Lowlander, and both against those in the Borders.

In the article, which I cannot believe no noble Lord read, there was a reference to a 14th century Earl of Buchan. I must digress on this. It recorded him as having set fire to a forest; driving out the animals and the inhabitants; killing the animals and eating them; killing the inhabitants and allowing them to be eaten by wolves. My family feel strongly that that is a libel. According to our records, the man in question most definitely had a social conscience. He might even have supported the Equal Opportunities Commission. He was a man in advance of his time. We believe that he was merely trying to conduct a census. In encouraging the inhabitants to come out of the forest, they over-reacted and afterwards everyone said, "It seemed like a good idea at the time".

Reverting to the serious point of the article, it served as a reminder of the violent things that Scots can do to each other in good causes. I have already referred to the Highlanders versus the Lowlanders. Let us hope that after independence, unable to blame the Union for its troubles, Scotland does not revert to endless squabbling.

Your Lordships may well ask why I talk about independence for Scotland in the context of a devolution Bill. It is because, although I deplore it, I think that one will produce the other—unless, that is, the Scots come to their financial senses. Sage and savant Billy Connolly probably got it right when asked "How can you spot a Scottish football fan?" he answered, "It is the one with the pocket calculator". Let thinking Scots do their national and international sums, therefore: no Korean subsidies for industry and no money from the Union any more.

Perhaps noble Lords will be familiar with the two rather dry figures that I dug out of a report, which emphasise what Scotland gets out of the Union. Per person, government expenditure in 1996–97 in Scotland was £4,826 whereas in England it was only £3,885. Where is the difference to come from? Not, incidentally, from oil. Therefore, perhaps I may offer a tiny word of advice to the Minister: how about using as a slogan for those who do not think that independence is right, "Vote for independence and be poorer"?

The point of this small speech is to ask what we are to do. If the Union between England and Scotland dissolves, rending apart monarchy and state with all its ramifications, and if we are removed from our fealty to the Crown, what should we do? I shall set about establishing my proper claim to the throne of Scotland, which I believe is the only legitimate Stuart claim, based on the wishes of James VI in 1625. I hope that I shall not have to establish that claim, but I believe that I will.

My Lords, before the noble Earl sits down, was his ancestor by any chance "The Wolf of Badenoch"?

5.12 p.m.

My Lords, with almost 70 speakers on the list for today and tomorrow, it behoves most of us who will take part in this Second Reading debate to be reasonably brief—and I intend to follow my own injunction in that regard.

However, before I make a few comments about the Bill, perhaps I may claim your Lordships' indulgence for a moment to engage in a measure of personal reminiscence. It was 20 years ago, when the noble and learned Lord, Lord McCluskey—whose name is on the Speakers' List but who I note has not yet arrived—and I were, if I may put it like this, the Lords Sewel and Hardie of our generation. We are now, of course, 20 years older, but not a lot wiser. I recall that there was then vigorous opposition to the provisions, led by the noble Earl, Lord Ferrers, with very strong support from the noble Lord, Lord Campbell of Croy; the noble Earl, Lord Lauderdale, and the noble Lord, Lord Gray, whom I particularly remember because his skill at threading amendments into the schedules was well noted by the Scottish Office. Indeed, the noble and learned Lord, Lord McCluskey, had from time to time in those days to deal with rapier-like legal thrusts from the noble Viscount, Lord Colville of Culross. So, some of us are still around 20 years on as we consider a different Bill.

The Bill of 20 years ago was introduced by the then Labour Government, who were in a minority position and who did not have a manifesto commitment to that end but who knew that their support, particularly in Scotland, demanded some action. The position is different with regard to this Bill. It was a clear manifesto commitment of the present Government. A referendum has been held in Scotland and we all know the outcome. If there was perhaps a hint of illegitimacy about that first Bill, I think that I can claim that this Bill is, politically at least, entirely legitimate.

In the Bill of 20 years ago, a serious attempt was made to define each of the functions which stood devolved. It was not an entirely successful procedure, leading to much disputation and considerable legal disagreement—at least in this House. The present Bill, defining as it does in Schedule 5 the reserved powers—all else being within the competence of the devolved parliament—is a construction which should be more readily grasped by most of us.

Perhaps I may point out that this Bill has only eight schedules; the last Bill had 17. One consequence of that—I hope that it will not happen this time; indeed, I am sure that it will not—is that a number of breakfasts were held in this House, with people moving about—if not with vigour, then at least with some purpose—half-way through the night. I suspect that there is less chance of that happening on this occasion.

Clause 21 of this Bill, which is linked to Schedule 3, relating to the regulation and content of standing orders, might, with profit, be probed somewhat in Committee. I happen to know that my noble friend Lord Monkswell intends to discuss the matter in Committee. Those of us who live in Scotland would do well to recall that recently the Lord Provost of Glasgow survived an attempt to remove him from his provostship. Glasgow council attempted to change the standing orders to that end. However, the Lord Provost was able to deploy the argument that nothing in standing orders permitted any change to be made to the standing orders and therefore the meeting called was invalid. So, the question of standing orders, as introduced into a new parliament, is important and we must tread with considerable care.

It is important that we notice that Clause 26 will enable the Lord Advocate and the Solicitor-General to take part in the proceedings of the new parliament, but without the right to vote if they are not members. I believe that Clause 28 should require Committee scrutiny, given the protection afforded under European Community law and rights under the European Convention on Human rights.

I have, however, two reservations. The first concerns the power to vary income tax by 3p in the pound up or down. In my view, it is minimalist in effect. It is mainly cosmetic—or is seen to be so—and such a limited financial freedom allows virtual total control of the supply provision to remain with the other place. That is the present position. The Secretary of State is able to move allocations between departments, although there are limits. Such movement does not occur with great openness at the moment. Presumably, the Scottish parliament would hold Ministers to greater public account than is presently the case. But expectations that an Edinburgh parliament can deliver improved social and infrastructure facilities, properly heightened by the attitudes of the members, which reflect the public representations made to them, will be constrained by the PSBR to be set nationally. I understand why these financial shackles are to be applied but I believe that they can be more loosely fitted.

My second reservation is that, although the pre-legislative scrutiny will undoubtedly occur and can be developed, new concepts in a new parliament can be arranged. The lack of provision in the Bill of a revising chamber of any kind is a weakness. I do not need to belabour that point to Members of this House. All noble Lords can recall the many legislative second thoughts that governments of all persuasions have offered to this House for further consideration.

That said, I very much welcome the Bill. It is a new dynamic to Scottish public life and it has been created to that end. A wider cross-section of the public than is usual appears to be willing to contest the election under an entirely new electoral system. It is my fervent hope that the outcome will prove to be more democratic than past results and hence more transparently accountable.

5.22 p.m.

My Lords, I take part in this debate with a real sense of foreboding because I cannot remember a Bill being laid before Parliament that brought with it so much potential for division and damage to the fabric of our nation. Modern cinema is full of action films in which to underline the horrors of some particularly destructive or explosive episode a slow motion technique is often used. Here I sense the opposite: an uncontrolled acceleration towards disaster. We are all blandly assured of the Government's benign and enlightened intentions and invited to join the consensus. They say that it is going to happen and so we should make the best of it.

I am not part of that consensus. Of course we must do what we can to make it work, but let that not be mistaken for acquiescence. I believe this to be a thoroughly bad Bill. It does not even serve the evident self-interest of its promoters, born as it was of appeasement out of panic when nationalism first threatened Labour's Scottish heartland over 20 years ago. Since then Labour politicians have fed and nurtured the very demand to which they now claim to be responding. After all that time their proposals are still half-baked.

Many of us argued for years that a devolved parliament for Scotland within a sovereign state with no federal structure could not remain stable in the long term; that it would unbalance the United Kingdom; that it would lead to friction and conflict: and that with no chance of going back once the process had been started Scotland could only move by fits and starts towards separation. Before this Bill has even completed its passage through Parliament we see that process gathering pace. We used to speak of the slippery slope. There is no slippery slope. If recent opinion polls are to be believed we are now in free fall towards separation. I do not believe that the process will move as fast as the polls suggest, but there is no doubt that it has started. The path ahead will be one of rows, concessions, botched deals and further rows until Scotland is separate in all but name and eventually separate altogether.

If the Government wonder why they have so seriously miscalculated, part of the reason is that they have been singing so loudly the song of nationalism. One cannot outbid nationalism. In trying to do so one simply endorses it. It is no good uttering homilies about the Union at the Dispatch Box here or in another place, as the noble Lord the Minister has again done today while his colleagues in Scotland are out proclaiming the nationalist message and we are invited to enact a measure that will create the separatist vehicle.

Devolution of power is not in itself an alien creed. To my party it is a concept with which its philosophy is entirely comfortable. It is a means of defending individual liberty against centralisation and socialism, and it inspired many of our policies when in government. But we have always attached a higher priority to the maintenance of our nation's constitutional integrity. Against that background, and in the light of all that we said on this issue over many years in defence of that fundamental principle, it was incomprehensible that my party, the Conservative and Unionist Party, failed to oppose the Second Reading of this Bill in another place.

I recognise that under the conventions of this House and in the light of the Salisbury doctrine noble Lords cannot oppose a measure that has reached them with such strong endorsement. However, I hope that noble Lords are as deeply suspicious as I am of the cynical and pernicious use of that insidious instrument, the pre-legislative referendum. I accept that we must confine ourselves to warning of the dangers that this legislation poses and seeking to persuade the Government to accept amendments to mitigate them. They are many and they are serious. The Bill contains more flashpoints than the Gaza Strip. It is full of gaps, inconsistencies and contradictions and it ducks and fudges the hard choices. Further, it cheats the people of Scotland who have been promised self-government that this Bill does not deliver. The West Lothian question has not been answered but has simply been ignored, yet it remains central to the viability of the relationship between a devolved parliament within a unitary and sovereign state and the Parliament of that sovereign state.

How can the MP for Dunfermline properly vote at Westminster on housing or health issues that affect Devizes or Doncaster when he cannot vote on them for Dunfermline? How can he as Chancellor of the Exchequer decide on taxation levels in England when a separate parliament decides taxation levels that affect his constituents in Scotland? That is not just unfair but unacceptably unfair, and it will soon be seen as such.

Many of us have warned for years about how Scotland's interests as well as those of the whole of the United Kingdom would be damaged by the measures in this Bill. We were ridiculed. We pointed out that the Cabinet post of Secretary of State for Scotland would wither and die, if it were not actually abolished. We also warned that Scotland's share of MPs at Westminster, sustained since the Act of Union, could no longer be justified and that Scotland's higher share of Treasury funding which recognised Scotland's particular needs and problems would be challenged and reduced. We were told that we were scaremongering. Yet before the ink is dry all of these things are happening. There is even a provision in Clause 81 of the Bill for a reduction in numbers of MPs. The only remaining issue to be decided is precisely how large the reduction will be. The Treasury has so spiked the taxation provisions in Clauses 69 to 75 as to insert a one-way valve: Scotland will pay more if its parliament puts up taxes but it will not be allowed to be better off if its parliament reduces them.

As money will be at the root of many of the conflicts ahead I should like to say a little more about it. The issue here is not the Barnett formula, about which so much has been said and written. The issue is the Scottish block: the overall level of central government spending in Scotland through the Scottish Office. Spending per head in Scotland has historically been higher than in England, as it has also been in Wales and Northern Ireland, to recognise local circumstances and needs. More recently, those greater needs have moderated in relative terms, not least because of the substantial gains that have been made by the Scottish economy over the past two decades. But only the undertaking of a new, thorough needs assessment could measure that accurately and strike a fair new level in relation to England. And who can blame the English now for seeking one?

The Barnett formula, agreed in the late 1970s by the then Chief Secretary and Bruce Millan as Secretary of State for Scotland, already recognised the need for an adjustment. It was a straightforward formula designed to ensure that future increases to the already higher spending levels in Scotland would be at a lower percentage rate per head of the population than in England so that Scottish spending, far from being protected as some have understood it, would be gradually brought down in the direction of the English level.

It was a formula for gradual convergence. But it failed in its objective. It failed because the formula did not apply to all spending. It did not apply to in-year changes; and above all it failed because successive Secretaries of State for Scotland were able to negotiate special deals outside it with the Treasury and win battles in Whitehall that protected Scotland's interests. That, of course, will no longer be possible.

Indeed, in this and in most other respects, the new first minister will have considerably less power to look after Scotland's interests than the Secretary of State for Scotland does at present. And now it will be not the formula for annual increases, but the actual Scottish block itself—the very bone and marrow of the United Kingdom Treasury funds spent in Scotland—that will come under attack; and Scotland will be powerless to influence that reappraisal at the heart of government, powerless to protect those spending levels; and, with its pitiful and peripheral tax-raising powers, the Scottish parliament will be powerless to replace them.

Indeed, what the Bill proposes for taxation is the worst of all worlds, for it concedes the principle without allowing the substance. Sadly, finance is only one of the areas of near certain conflict. There are many others, such as the arrangements for dealing with Europe where Scottish ministers may "assist" the British Government Minister in negotiations but it will be with the British Minister that other countries and the Commission will negotiate. It will be he who will cast the United Kingdom vote; and it will be his party's policies that govern his attitude, not that of the ruling party in Scotland. How will Scotland's farmers, with their distinctively different set of problems, feel as they lose the influence that they have had in European negotiations with Scotland's ministers reduced to the role of observers?

How long will the shared powers between Edinburgh and Westminster in such sensitive areas as industrial assistance survive without a serious rift to the disadvantage of our inward investment policies? Every time the Government are challenged over the handling of disputes between Edinburgh and Westminster, they fall back on the concept of something known as a concordat. We heard about it today from the Minister. This is the new panacea. The dictionary definition of a concordat is an agreement between Church and state. I do not know whether the fact that the Scottish parliament will initially meet on The Mound has gone to its head, or whether it is just hoping to get by on a wing and a prayer. To me a concordat is a second cousin of a compact—something of which we heard much in the 1970s as the cure-all then for Britain's industrial relations problems. The late Sir Nicholas Fairbairn defined a compact then as,
"a small flat container, full of powder and puff'.
That to me sums up the value of this Government's concordats. How can deals patched, I understand, not by Ministers but by officials in smoke-filled rooms, and without the force of law, possibly form the basis of a stable and durable relationship between the two parliaments?

What of the time bomb in Clause 27 of the Bill when after detailing in grand style how the Scottish parliament may make laws to be known as Scottish Acts of Parliament, it adds at subsection (7) that none of this affects the power of the Parliament of the United Kingdom to make laws for Scotland?

It has truly been said that power devolved is power retained, but that is not how the Government portray their proposals, and it is not how the people of Scotland understand them. If, after raising expectations of all that the Scottish parliament can do, it were to be overruled and overridden by this clause the whole venture would be doomed overnight. But it is Labour who have been telling us for years of the need for a Scottish parliament, as they claim, to put right the democratic deficit, and to make up for the lack of accountability. Thus are all the special privileges Scotland enjoys in this place dismissed in those two empty glib phrases. I refer to the higher share of MPs; the Scottish Grand Committee; the Scottish Select Committee; the Scottish Standing Committees; the territorial department of state; the Cabinet Minister and his four junior Ministers; the higher spending levels; the special Scottish legislation; not to mention the Scottish MPs serving as Ministers in United Kingdom departments, and the substantial number of active Scottish Peers in this House. That is not a democratic deficit. Indeed, there are many English who might consider that that is closer to being a democratic surplus.

Nor has there been any lack of accountability. Indeed, the capacity of our constitution to adapt and develop in an organic way within a unitary system to strengthen that accountability was demonstrated not many years ago by the new powers that I was able to secure for the Scottish Grand Committee to hold Question Time sessions, to pass Scottish legislation, to sit in Scotland, to move throughout the whole country of Scotland, and to do almost anything in fact that this new Scottish parliament can do, except raise taxes.

All the parliamentary benefits that have accrued to Scotland over the years will now be lost. There will be fewer MPs. They will soon become second class, part-time, shadowy figures as English Members understandably start to find ways to exclude them from their business. Scotland's funding will come under attack, but its ministers and members will no longer be able to take on the Treasury. Scotland's voice may be loud in Edinburgh but at Westminster and Whitehall it will be reduced to a whimper.

The power of a Secretary of State for Scotland is very considerable, not just in Scotland where he controls a territorial department with just about the most comprehensive range of powers anywhere in government, but, more importantly, at the heart of the United Kingdom's Government where he has a seat in Cabinet and the ear of the Prime Minister. I make this point not in a party sense, still less in a personal one. But Secretaries of State can defend Scottish interests at the centre of government, and with the weight of a major government department behind them they can win battles for Scotland, and over the years they have done so.

Power is easier to measure when it is lost—a matter which some in my party may now have cause to reflect upon at greater leisure. The tragedy is that it is only once the Scottish Office is corralled up in Edinburgh, its civil servants cut off from the mainstream of government, and its Secretary of State reduced to a cross between an errand boy and a ceremonial cypher, that the full extent of the loss of Scotland's power will become more apparent.

But perhaps the worst feature of this whole business—and here I agree with the noble Lord, Lord Kirkhill—is that Scotland's parliament will have no second chamber. Bicamerality is, and has been for centuries, a central pillar of our parliamentary democracy. Yet the new Scottish parliament will have no revising chamber, no chance for second thoughts, no pause for reflection. Every piece of legislation for which I had responsibility over my nine years as a Scottish Office Minister benefited from its passage through this House. If the Government wish to speak of democratic deficits, that is where they should look. It is a glaring yet wilful omission that Scotland will come to regret.

Those are only some of the reasons why I feel about this Bill a despondency that is close to despair. Scotland is being diminished. England is being ignored. The United Kingdom is being undermined. The Scottish parliament, after the initial fuss and fireworks, will do Scotland no favours. It will not advance the cause of democracy. But it will weaken all of us. The only ones to benefit will be those whose agenda is the destruction of the United Kingdom. We must hope against hope that the Government will listen and make changes even at this late stage, because as it stands this is a Bill that will break the back of Britain.

5.40 p.m.

My Lords, there are many difficult issues to be resolved in connection with the Bill. I was startled by the apocalyptic tone of the noble Lord, Lord Lang, in relation to the Bill. I found it hard to remember that he was one of the Secretaries of State in a Conservative government which, I suppose, could be regarded as probably the most disastrous in relation to the interests of Scotland during my time in politics. The Bill creates a system of devolution within a Scottish parliament as against the kind of separatism which the noble Lord, Lord Lang, put forward. If any party created a sense of separatism in Scotland it was the Conservative government and their operations. During those years, for example, a Secretary of State for Scotland allowed Scotland to be used as a guinea pig for a poll tax which, as my noble friend Lord Steel mentioned, was imposed on Scotland by the votes of the majority of the English Members of Parliament. The anomalies of running the political system in the United Kingdom are not confined to the difficulties created by the Bill but are inherent in the United Kingdom system.

In one sense I agree with the noble Lord, Lord Lang. This is a major constitutional Bill. It will give Scots exciting opportunities for a democratic control over their domestic affairs which is impossible in the crowded timetable of Westminster. I believe that the noble Lord, Lord Lang, largely glossed over that.

Beyond that, the Bill will have momentous consequences for the United Kingdom as a whole. Speaking as the current chairman—at least for a few more days—of the Scottish Peers Association, I find that the Bill contains a certain irony. I echo the words of the noble Lord, Lord Lang, in saying that our Members from all quarters of the House—life Peers and hereditary Peers alike—will no doubt demonstrate the revising qualities of this second Chamber at its best in seeking to improve a Bill which creates a Scottish parliament without the advantage of a second chamber. If there are not the revising operations of a second chamber after the publication of a Bill, it will make all the more important the proposals in the Bill for pre-legislative scrutiny and, equally, for the new proportional electoral system.

The Government, with their massive majority, deserve great credit for their courage in putting forward electoral arrangements which will prevent any massive Labour majority in the Scottish parliament. It is of course the best protection against the problems of one party domination which have disfigured local government not only in Scotland and not only in the Labour Party. It will be possible for the new Scottish parliament to pioneer a pattern of less adversarial party politics which I hope the rest of the United Kingdom will find useful to imitate.

The creation or, after 290 years, the recreation of a Scottish parliament throws up many problems and apparent anomalies for us to tackle in the later stages of the Bill; for instance, the West Lothian question, the Scottish role in Brussels, non-statutory concordats, which have been mentioned, and so forth. There are no perfect answers to any of those problems, but I take comfort from the fact that the British pragmatic experience has been that it is unwise to push logic too far in politics. Logic carried to extremes often reduces itself to absurdity. A little untidiness in public affairs is no bad thing. It would be curious for any of your Lordships who are content with the present rather eccentric structures of this House to go too far down the West Lothian road of logical democratic legitimacy.

I regard the Government's proposals in the Bill not only as meeting Scottish popular demand for greater self government but, equally important, as part of the sensible modernisation of the British constitution to meet the changing circumstances in Europe and in the world at large. It is part of the blueprint of a wide range of constitutional changes which we espouse on these Liberal Democrat Benches, recently spelt out by Robert Maclennan, the president of the Liberal Democrats. We are members of a European Community in a world where technology has created a global economy. In the face of such forces, we need the strong countervailing force of democratic devolution, not merely administrative devolution, to drive decision-making downwards wherever practicable to the national, regional or local community level.

I have a deep sense of being Scottish in terms of my national identity. Yet I am proudly British in terms of legal citizenship and strongly European by political conviction. I do not find any contradiction between those three positions. Independent national sovereignty in the 19th century sense of the term either for Britain or for Scotland is an anachronism for the 21st century. The Scottish nationalism of the SNP is dangerously out of date, as is the British nationalism of the Tory Eurosceptics. A look around the world shows that we suffer from too much nationalism, not too little. The United Kingdom is a success story of a rather untidy political, economic and monetary union of three, or three-and-a-half, nations, riddled with its own anomalies. Since political and economic union has not made the Scots noticeably less Scottish or the Welsh less Welsh, it should reassure us about developing a closer European Union without undermining our diverse national characteristics and a proper sense of national pride.

To have resisted the desire of the Scottish people for their own devolved parliament, as the Conservatives sought to do, would have fed the forces of separatism in Scotland, as indeed did their attitude when they were in government. The change in approach which we heard today from the Opposition Front Bench, as distinct from the speech of a former Secretary of State for Scotland, is welcome. It makes possible, not agreement on all the details of the Bill and the efforts to deal with some of the problems, but an underlying consensus about making a success of devolution.

The way the United Kingdom has evolved has produced a decent, tolerant, civil society and it has given the Scots, the Welsh, the English and those in Ulster a weight and an influence in the European Union and in world affairs generally which none of them could possibly enjoy separately. The best way to preserve that is to make a success of the devolution plans in the Bill.

For all the froth of public opinion polls which we see in the Herald and the Scotsman, I do not believe that the Scottish people will want to slide into the disruption and deep damage of separation. Once the new parliament is in place, what would be best for both Scotland and the United Kingdom is a period of stability while the new and difficult system settles down rather than a fresh round of feverish argument about a further referendum and separation. That would hardly serve the interests of the Scottish people.

It will be a major challenge to the political leadership of all the major parties in both Scotland and Westminster to make the new machinery work well, with its new voting system and untried concordats. However, it will give the Scottish people and members of the Scottish parliament the chance to devote parliamentary time to housing, education, law reform and job creation and to do so in depth, which has never been possible within the Westminster timetable. That is where the real interests of the Scottish people lie, rather than in a fresh round of constitutional turbulence.

5.50 p.m.

My Lords, as secretary of the Scottish Peers Association, I am very happy to find myself speaking between my present distinguished chairman for the next six days and the noble Lord, Lord Hughes, a previous distinguished chairman of the association.

In common with about 50 other Peers speaking in this debate, I have an interest to declare. I am a Scot and my home is in Scotland. In common with the noble Earl, Lord Buchan, whose speech I enormously enjoyed, I too am about to have my hereditary head cut off.

I have made an attempt to read the Hansard reports of the various stages of the Bill's passage through another place, which is extraordinarily difficult because, unlike in this House, every sensible speech is constantly interrupted by people trying to score cheap, party-political points. At the end of the day, most of the really important issues, or many of them, have not been resolved and will affect the relationship between Holyrood and Westminster. The potential for conflict in many areas is enormous.

I shall not repeat a list of those areas because that has been done already by the noble Lords, Lord Mackay of Ardbrecknish and Lord Lang of Monkton. But there are one or two remarks which I should like to make. There appears to be no agreement or no definite ruling as to whether the Scottish parliament would or would not have the power to organise a referendum on Scottish independence or whether that could be something which would remain with the Westminster Parliament.

That is very important because I envisage that if a referendum were to be organised by the Scottish parliament, it would be because there was a majority of Scottish Nationalists there. Therefore, it would appear to me that if they were going to organise the referendum, they would have the power to load the question in their favour. That matter really needs to be looked into.

But most important—and I make no apology for reiterating it—there is the vagueness with which the question of finance has been treated, because there is nothing in the Bill to ensure that the proportion of the United Kingdom revenue allocated to Scotland will not be reduced or that Scotland's needs will be taken sufficiently into account. Nothing will contribute to the disaffection of the Scots with the Union quicker than finding that they have to make do with a reduced standard of service from both local and national government or that they must pay a lot more in council tax to make up for the shortfall in the Holyrood parliament's grant to local government caused by a reduced block grant from the Treasury.

I know that the Government say that they will not reduce Scotland's funding and I believe them. But some of their English Back-Benchers and their constituents have other views. Also, one must remember that no government can bind a future government. Governments do change. The Scottish National Party is just sitting, waiting happily for that to happen.

There is also the question of the accountability of the Scottish parliament to Westminster as regards how the block grant is spent and there is the question which has already been raised of who will be eligible to pay any extra 3p tax and all the problems which that will cause.

While I am sure that we are all agreed that money is not the only important thing in life, I am sure that we are also all agreed that it is extremely important and that lack of it is a very serious matter.

Those matters are important and they should be written on the face of the Bill and not left to committees, concordats or just to luck. I fear sadly that devolution is not really workable except in a federal context and the opinion polls suggest that the Scots, who are not fools, are well aware of that.

They are also deeply disappointed because they thought that the Government whom they helped to elect, would wave a wand and give them everything they wanted at once. They wanted old Labour as they knew it and they do not really like new Labour at all. There are many disappointed people out there, particularly in relation to such matters as public sector pay and the national minimum wage. Perhaps I may add that most of them do not want a modern parliament building. They wanted the fine, old, dignified High School.

The result is that I am afraid that the Scots will not vote Labour again and they will certainly not vote Conservative. They will vote SNP. The Scottish National Party's star is rising very rapidly and one cannot just discount the opinion polls. It is rising so rapidly that it may very well win the first election for the Scottish parliament, although it may not have an overall majority. The Government say merrily that most people in Scotland do not really want independence. What makes them think so? Is it the fact that the people of Scotland voted for them over a year ago? If a week is a long time in politics, a year is a very long time indeed, quite long enough for an electorate to change its mind. I believe that that "it will be all right on the night" attitude is extremely unwise. While there is not a lot they can do about it, they could at least accept amendments to this Bill offered in good faith which would give the Scottish parliament a better chance of success.

So far in another place, the Government have been extremely deaf and inflexible. Their arrogance in thinking their Bill is perfect and not capable of improvement except by themselves on comparatively trivial matters is likely to prove a very big nail in the coffin of the United Kingdom. We are not trying to wreck the Bill. We accepted the results of the referendum and our only concern is to make this measure work. I hope that in his rather patronising opening speech, the Minister was not implying that anybody in this House has a vested interest in making sure that the Scottish parliament does not work. I am not aware of any such person among your Lordships and I do not believe that there is any. After all, as I have already indicated, the majority of the speakers in this debate live in Scotland and have a strong interest in making sure that it works. But as the Bill stands, I fear that its chances of working are slender unless the Government will open their mind and ears to a number of important amendments.

5.56 p.m.

My Lords, when political parties want to make constitutional changes such as are proposed in the Scotland Bill, the first requisite is that they should establish that that is what the people of Scotland want. I suggest that before this Bill was put forward, that was done. The general election returned Members from three political parties in Scotland each of which wanted change of some sort—either devolution or independence. Not a single opponent of change was returned in Scotland.

The Government then went on, having achieved the mandate which they sought in their manifesto, to produce a White Paper. After the White Paper, there was a referendum. There were predictions in this House that perhaps less than 30 per cent. of the people of Scotland would be prepared to vote in favour of the parliament and in particular the tax position. That was proved wrong. There were overwhelming majorities as regards both parts of the referendum.

Therefore, the Bill was produced in the form in which it came before the House of Commons, with complete legitimacy. I was interested to consider the changes at the time that the Scottish Parliament was done away with. Many noble Lords will have watched the play "The Three Estates". The three estates of the Scottish Parliament were the nobles, the barons and the burgesses. The nobles formed one-quarter of the parliament but each of them had his adherents among the barons and the burgesses so that the nobles effectively ran the Scottish parliament.

It is interesting to find that out of 60 nobles who were able to take part in the vote to ratify the treaty, only three-quarters actually took part. Twenty-nine of them voted for ratification and 15 voted against. We talk about percentages being necessary, so I should point out that 45 per cent. of that Scottish Parliament voted for ratification.

I was particularly interested in the speech made by the noble Earl, Lord Buchan, especially in his claim to be the rightful King of Scotland. As I said, 29 nobles voted for ratification while 15 voted against. One of the nobles who voted against was the noble Earl's predecessor, the Earl of Buchan. Perhaps he did so because he was afraid that, with the abolition of the Scottish Parliament, his claim to the kingship would be diminished.

I move on now to the points raised by my noble friend and by the noble Lord, Lord Lang, regarding the powers and the composition of the parliament. I have been a Member of your Lordships' House for 37 years. I doubt whether the number of Bills which originated in the House of Commons and which were passed without any amendment accepted from this House would get into double figures for that period. Therefore, I do not think that I am happy about the Scottish parliament being a single chamber. I say that because, if there is no second chamber, it will, with the best will in the world, become a legislative fort which will require subsequent legislation to put right. It will be within the powers of the Scottish parliament to remedy that.

I got in touch with the Norwegian Embassy today to find out exactly how the Storting works there. People are elected to a single chamber. One of the first things that they do is to decide that 25 per cent. of the members should form an upper house and that 75 per cent. should form a lower house. All legislation which goes through the Norwegian Parliament is only passed in the first place if it is approved by both houses. If there are differences between the houses—that is to say, if one house approves legislation but the other does not—they meet together and the majority then decides what to do. I commend that to my noble friends on the Front Bench as a possible way in which they could, within their powers, decide to do something of that nature. I do not necessarily recommend that my noble friends should do so right away because, obviously, the first thing to do is to find out whether single-chamber government works. I do not think that it will be proved to work completely satisfactorily. I suggest that in the second parliament they might perhaps decide to follow the Norwegian example.

I was very disappointed with the speech made by the noble Lord, Lord Lang. He obviously speaks as a totally unreconstructed Scottish Tory. Judging by all the evidence from Scotland, I am glad to know that the noble Lord does not represent the views of Tories in Scotland. Indeed, if you want to find out who is expressing the views of Scottish Tories, you should listen to Sir Malcolm Rifkind. I say that because Sir Malcolm Rifkind and any other Tories who are now talking there are doing so on the basis that they will do the best that they can to make the Scottish parliament work. That is a reasonable point of view. They will be represented in the Scottish parliament because of the way in which people will be elected.

Many people are talking like the noble Lord, Lord Lang, but they are really making themselves propagandists for the Scottish National Party. If they are going out of their way to show that a Scottish devolved parliament cannot work, they are really saying, "You must look for an alternative to the Scottish parliament". But what are the alternatives? They are nationalism or the status quo. The state of the Tory Party in Scotland does not give any guarantee that the people of Scotland will ever want to return to the present situation.

I am glad that the Liberals, the Labour Party and the Scottish Tories will be working for a successful devolved parliament. I agree with one comment that was made from the other side of the House: I believe that an independent Scotland would not be in the interests of Scotland. Much has been said about the opinion polls, especially as regards the Scottish Nationalists doing so well at present. I do not believe that that will be the situation in a year's time. It has been inflated in the first place by the nonsense about the knighthood for a Scottish actor whose name escapes me for a moment. I wonder whether anyone has ever asked him if he would have accepted a knighthood proposed by Michael Forsyth. Indeed, he has never said that he wanted one; it is other people who have said that he has been refused.

I see that I am pretty near my time limit in this debate, but I shall have much to say in Committee. I have in mind in particular Schedule 5 which runs to 20 pages and lists all the things that the Scottish parliament will not be allowed to do. I am afraid that I am not likely to accept that every one of those things should be excepted from the parliament. However, there is one good thing in Schedule 8. Indeed, I was surprised to see among the deletions the words,
"with the consent of the Treasury".
I never expected to see that in an Act of Parliament.

6.7 p.m.

My Lords, perhaps I may, first, make it clear that I speak as a Scottish Unionist. I define the word "unionism" as the belief that the preservation of the Union is a far greater and more valuable principle than the lesser disagreements which divide our political parties. I voted "No" in the referendum simply and solely because I felt that the consequences of devolution would, in the end, endanger the Union. But, equally, many Scots voted, "Yes" because they sincerely believed—as the Government argued—that, unless we had devolution, the Union would be weakened. Therefore, under my wide definition of unionism, I must class such people as fellow Unionists, even if I totally disagree with their reasons for favouring devolution.

When we look at the Bill, we must not focus only on its detail; beyond that, we must also ask whether the parliament will succeed in holding the Union together. However, before coming to the Bill, perhaps I may dwell for a moment on the referendum process which was its father. I do so simply because much that was said in the referendum campaign, and the manner in which the campaign was carried out, established some of the expectations in Scotland about the new parliament and also partly set its likely tone.

The whole affair was pushed through with undue haste to catch the ongoing tide of the election result. That may have been pragmatic politics, so I suppose it was quite acceptable to those who, unlike myself, are politicians. But it did not really leave enough room for any considered debate as to what was the best solution for our country.

The suppression during the campaign of any dissenting opinion in the Labour Party also showed an unfortunate disdain for democratic debate on what was surely a national rather than a party issue. But most obnoxious, however, was the formal campaign alliance between Labour and the SNP, in spite of the fact that each wanted devolution for totally opposite reasons. In this context some noble Lords may recall the jolly photographs in the Scottish press at the time of a pleasure boat proceeding up the River Forth containing Gordon Brown and Sean Connery. To say this scene brought to mind the biblical reference to the ox lying down with the ass is no harsher a description than the total cynicism that political pact deserves.

But it was not merely a cynical exercise, it was also a poorly judged one, which I believe was important in setting the adversarial tone of the referendum campaign which, for much of the time, seemed little more than the political equivalent of an ill-tempered England/Scotland football match. Believe me, that rather nasty tone—particularly from the SNP—continues to disfigure Scottish politics and will be a feature of the new parliament.

Where, then, is the new parliament likely to lead? I start with the reasonable assumption that the first Edinburgh government is likely to be a Labour-led coalition with the Liberal Democrats, and that this administration is likely to have an activist outlook towards expenditure. I say this because, on the Labour side, Scotland remains at heart distinctly more old Labour than new. Moreover, the Scottish parliament will be intimately involved in local government issues, and the history of Labour local government control in Scotland has consistently been one of trying to solve problems by enthusiastically throwing public money at them, often in a thoroughly reckless way, as Donald Dewar seems to have discovered only in the past few weeks.

I imagine the attitude of the Liberal Democrats in such a coalition might reflect the fact that it was the only party at the previous election to advocate increased taxation. Just as I foresee a Scottish parliament—or a Scottish administration rather—which will want to spend, so there is certainly no shortage of problems on which to spend. One can, of course, fairly remark that the financial appetite of a worthy social conscience is usually limitless.

We can be quite sure therefore that extra income tax will be levied. Business rates will also go up, although hopefully not to produce the absurd disparity between equivalent businesses in England and Scotland which used to exist—

My Lords, certainly under a Labour government. No doubt the somewhat opaquely described powers to develop other methods of tax to finance local government expenditure will also emerge. I do not want to exaggerate the actual economic effect. Higher income tax will reflect itself in some higher pressure on wages, and increased rates will not help, particularly for smaller businesses. As for the other taxation possibilities, they are hardly likely to be encouraging.

The overall effect may be somewhat marginal, but even marginal cost increases, at a time when competition is so intense, are difficult. However, it is perhaps the impression given by marginal increases in taxation which is more economically damaging than increases themselves. I think it is the potential damage to business confidence and the business climate in Scotland which concerns me most. It could distinctly change for the worse.

I am half Canadian and I am much involved in business there. I dread a situation emerging analogous to that which now prevails in Quebec. I remind noble Lords that there are the same ingredients there. Independence or separatism is a live issue there, actively promoted by a strong party, and may well become the subject of a further referendum. The effect on Quebec has been most unfavourable. Montreal is no longer the business centre of the same importance as Toronto that it once was. Many leading Canadian companies have moved their headquarters out of Montreal. Investment in the province has been poor. All this is not because of actual independence, but simply because the possibility is so endlessly discussed and debated there. Why should the results of a similar political situation in Scotland be any different? The external perception of Scotland, particularly by potential inward investors, would undoubtedly suffer, as it has in Quebec.

In practice I believe all noble Lords know well that whenever there are problems in Scotland, the SNP will simply say that it would all be quite different if only Scotland had independence, and a full control of its destiny. That will be fed by the simple, regular and popular expedient of blaming England or Westminster. If the Barnett arrangements are changed so that Scotland ceases to be disproportionately favoured, it will all be far worse. Such, then, are some of the ways in which dissent and friction will in practice be fostered.

There is a different and a fundamental question which the Bill raises. There must be minimum requirements for any state to continue to be defined as a unitary one. Is it possible that, in spite of the reserved powers, a Scottish parliament could legislate for change in such a way, and on such a range of subjects, that eventually the accepted definition of a unitary state no longer applied to the United Kingdom? For example, many people would accept that one of the required definitions of a unitary state is that common rights to property exist across the breadth of the state, and to the equal benefit of everyone in it. If that is so, beyond what point might legislation by a Scottish parliament on rights to property effectively breach this unitary principle? Perhaps it is better and more simply expressed by just asking whether in our United Kingdom it would ever be reasonable that a Scotsman enjoyed lesser property rights than an Englishman or a Welshman, or vice versa.

Clearly there are other examples of this kind which might occur to your Lordships. However, the basic question remains of how far a Scottish parliament should be properly allowed to go on legislating change, so that gradually, over time, we lose the features of a unitary state, and we drift into becoming, de facto, a federal one? There are other shortcomings of this Bill worth mentioning. I happen to think that the United States' system where people of ability can be brought into the Cabinet, although they have not been elected, has much to commend it. When a Scottish administration will have to draw its Ministers from a fairly small number of people, it seems to me that a good chance to introduce better talent has been missed.

I also have some difficulty with the question of the element in the parliament who will be elected by proportional representation. I am not so much against the principle as a whole—with which I have much sympathy—but against the undemocratic opportunity which it gives parties to stuff their lists with the more amenable of their supporters. The suggestion is that that is already happening.

I conclude with two or three questions that the Government need to ask themselves. First, as an English backlash develops, and will develop further, how do they propose in practice to deal with Scotland's disproportionate share of funding? Secondly—and this is perhaps not such a serious question—in a few years' time will it be acceptable to the English to have a Scot as Prime Minister? Thirdly, does the current level of support for the Scottish Nationalists indicate that we have at last started down the slippery slope? Finally, if the Government had had the foresight to envisage today's political situation in Scotland, would they ever have started down this road in the first place?

In trying to answer such questions, I commend to the Government this story. When St. Peter showed the Scottish sinner the stairway down to Hell, the sinner said, "But I didnae ken, I didnae ken". St. Peter said: "Ah weel, ye ken noo".

6.20 p.m.

My Lords, I rise to give my support to this Bill. It is undoubtedly historic and is a brave measure to change the constitution of the UK. I say that immediately since, as many noble Lords will know, I was not always in favour of devolution. In fact, in the other place during the 1970s I opposed the initial proposals when they were laid before Parliament and campaigned for a "No" vote in the referendum at that time.

My objections were twofold. The powers in the first Bill were far too narrow and limited. Secondly, the absence of revenue-raising powers meant that the body that would have been produced would have had fewer powers than a major local authority in Scotland. I was concerned not so much by the apparent rise of the SNP, but by its vicious anti-English rhetoric, its election tactics and its philosophy. I certainly did not want to make any concessions to the SNP.

I recall one election when members of the SNP were fondly under the delusion that they would beat me in my North Aberdeen seat. I was approached with mock sympathy. I was told that they were very sorry to see me go because we were really brothers under the skin; we were really all socialists—the only difference was that they were national socialists. The kindest thing I can say is that those comments were made out of gross ignorance. However, they sent a chill down my spine, and still do.

I do not resile in any way from my words and actions in the 1970s. However, I do not approach this Bill with the excessive zeal of a new convert. In the 20 years that have passed, I have become increasingly concerned at the relentless accretion of power to central government which was the hallmark of each of the Conservative administrations during their all too long period in office. Throughout a whole Parliament, the Scottish Office could not be scrutinised by the Select Committee on Scottish Affairs because the then Tory Back-Benchers from Scotland refused to serve on it. When they did finally agree to serve on the committee, they showed very little independence. They slavishly followed the Conservative Party line and voted down every proposal that was critical of government, even though the evidence was overwhelmingly in favour. I shall not go into detail. Anyone who wishes to look up the record of the Select Committee will find that the Division lists are there and the record is clear.

During that period of centralisation of power, local decision-making was squeezed, and that drove local government councillors to distraction. It is easy to criticise local government and to make local councillors the whipping boys. Heaven knows, they have made mistakes. I do not know whether those mistakes are large in comparison with those of central government. However, I believe that, properly organised and properly funded, local government can probably do more for the people in the localities than we can, either in the other place or in this House. We destroy local government at our peril.

Therefore my approach to devolution has evolved over the years in a pragmatic and practical way. The Bill before the House solves the problem of lack of power. The reserved powers are defined, and the rest is left to the Scottish parliament. The Bill is a powerful tool. It is an engine for change. I fully support the tax revenue powers contained in the Bill. It was always essential, in my view, to have rights and responsibilities enshrined in statute. Whether or not the proposal to vary by 3 per cent. is adequate, or whether it is the right mechanism, is beside the point at this stage. No doubt the matter can be debated seriously in Committee. In any event, once the parliament is up and running, that debate will continue.

I say in passing, although the matter is not for us to decide, that I do not think it would be wise for the political parties in Scotland to state as a manifesto commitment at the first election that they will not use this power during the lifetime of the first parliament. The people of Scotland voted overwhelmingly in the referendum for both the parliament and the tax-raising measures. They want a parliament which is innovative and which will produce visible signs of improvement in education, health, social services, the environment and so forth. I concede at once that money by itself does not necessarily guarantee progress. However, it seems to me inconceivable that progress can be made without spending money. For a new parliament to put itself in a straitjacket of that kind does not make much sense.

One of the issues that have dominated the debate on devolution was raised by the noble Earl, Lord Buchan, and the noble Lord, Lord Lang of Monkton. The question at the centre of the debate has always been: will the establishment of a Scottish parliament inevitably lead to the break-up of the United Kingdom? At one stage I frankly thought that it would. While I believe that it is not inevitable, much depends on how the new parliament functions and how it behaves.

My own view is that for a nation state to survive, it must have social cohesion. The 18 or 19 years of Conservative government did much to damage the social cohesion of the United Kingdom. If there is no social cohesion, then frankly a nation state cannot survive; nor does it deserve to survive. The problem is—and this is a message that we must send out loud and clear—that when modern nation states disintegrate because of a lack of social cohesion, social cohesion in the individual constituent parts often disintegrates even faster. So there are perils. Separatism frequently brings its own problems.

The rhetoric of the SNP has been somewhat toned down, at least in public, and its members deny that they are separatist. It is inescapably a separatist party. Its attitude towards a Scottish parliament clearly demonstrates that. It will give no promise to work constructively within the parliament for the good of the Scottish people. Its stated aim is that, if it gets control, there will be a referendum on independence. I am not entirely a fan of referenda, but they seem popular at present. Many claim that it is a respectable position. I recall, as my noble friend Lord Ewing will remember only too well, the late Norman Buchan, myself and some others arguing that a referendum should put three questions, including that of independence. In a sense there is nothing disreputable about holding a referendum on independence. What is disreputable is that the SNP will accept only one result.

I saw one of its spokesmen on television about 10 days ago. He was asked: "If there was a referendum on independence, would you accept a 'No' result?" "Certainly not", he said. "We will continue to have referenda until we get a 'Yes' vote". So if every year for the next 99 years we have a referendum to which the answer is always "No", the party will not accept it. But if there is one referendum vote saying "Yes", everyone else must accept the result. That is arrogance in the extreme and it is to the detriment of the Scottish people. Anything and everything is grist to the SNP mill.

Those of us who are politicians need to start blowing the trumpet of the good which is being done by government. I will not say that I agree with everything that has been done, but perhaps politicians are like this: we tend always to criticise and never praise. It is time we had some praise.

For example—the grist to the SNP mill—there is the reasonable proposition that the present Government should look at oil revenues and oil taxation. What is wrong with having a look at it? But it is presented by the SNP as an anti-Scottish measure, made worse, it says, by the fact that the Chancellor is a Westminster MP and a Scot.

The SNP will brook no opposition. I ask the people of Scotland this. I do not suppose they will bother to read the debate but I hope some people may mention it to them in passing. I shall not name the company because I do not believe in free advertising. But an insurance company spoke its mind and said that it was prepared to speak out in terms of the economic effects of independence. What did the SNP do? It said that what was necessary for Scottish people was to boycott that institution and withdraw their funds. It was conveniently glossing over, even if it had ever thought of it, that people who draw their money out of insurance policies before they mature lose a lot of money. So that was detrimental to the Scottish people, but the SNP did not bother about that. Of course, it back-tracked: it was the office boy who was employed to make the tea who wrote this little thing by accident. It is strange with parties and governments—and this applies to all governments—that whenever there is something patently bizarre, it is always the office boy who did it.

However, there is a serious point here—the back-tracking did not come immediately, nor was the suggestion denounced immediately. There are sinister forces around. Some people are extremely gloomy about the prospects of the result of the first elections, especially since the voting system under the Bill guarantees or intends to guarantee that no one party can govern on its own. I cannot say that I am or ever have been a great supporter of proportional representation, but there is some merit in a system which will not lead to the elective dictatorship which characterised the Thatcher years.

Any voting system is only effective if the parties taking part show responsibility once they are elected. I am not pessimistic at all about the first elections. I believe that the present public opinion polls are false. All that matters is the real election itself.

There were many in Scotland 18 months ago, especially in the media and even some within the ranks of the Labour Party in Scotland, who did not believe that the manifesto commitment on a strong and vibrant Scottish parliament would be delivered. They have been proved wrong. The Bill does precisely that. I give it a fair wind and hope that your Lordships' House will also give it a fair wind.

The eyes of the nation will then turn from the Westminster Parliament to those elected to serve in the new parliament. They will have an immense responsibility which I trust they will discharge effectively.

6.33 p.m.

My Lords, this Second Reading of the Scotland Bill is a truly historic moment for anyone who is a Liberal, a Democrat and a Scot, as I am. As a Liberal, I believe that it represents the realisation of a policy and a principle which, as we all know, we have held dear ever since Gladstone first enunciated his big idea of "Home Rule all round" in 1879 to the good citizens of Dalkeith during his Midlothian campaign.

I am neither well qualified enough, nor is there time in this enormously long debate to indulge in too much historical scene-setting. But I am proud to recall the words of my grandfather, Sir Archibald Sinclair, in a debate in the Commons in 1932, shortly after he had ceased to be Secretary of State for Scotland. He said:
"There is a demand growing insistently from the Scottish people that they should be given the right, which they believe is theirs inalienably, to control their own domestic affairs".
Further, prophetically, he said:
"if this demand is frustrated the extremists will seize and exploit their opportunity".
Not only does that illustrate the settled long-standing wish of the Scottish people to control their own domestic affairs, but he foresaw the dangers which accompany procrastination and delay which could become an issue for us today.

The Bill is the realisation of this essentially Liberal policy and the Government are to be congratulated on having followed our lead and presented a Bill which reflects so closely the recommendations of the Constitutional Convention's proposals and the subsequent White Paper which the Scottish people endorsed so unequivocally and resoundingly in the referendum last year.

It is as a Scot who lives in Scotland that I welcome it too. The need for the Scots to have more control over their own lives and affairs is very real and rule from Westminster has, perhaps unwittingly, over the years, eroded Scottish self-confidence. So many talented people have gone away to spread their wings and realise their potential, while others at home feel frustrated or inadequate. By the end of the Tory era, we were being governed by a party which had no mandate in Scotland and who apparently could not heed or hear Scottish wishes or needs.

As the only party with a narrow unionist policy the Tories were, as a result, wiped out politically last year in Scotland. They have, of course, done a 180 degree turn, having been forced to face the new reality of both the Scottish decision and their own political situation. Having done such a U-turn, it behoves them to be as constructive and positive as possible, so that what is delivered to Scotland through the Bill is the best possible system.

As a Democrat, I also welcome the Bill. Indeed, like the noble Lord, Lord Mackay of Ardbrecknish, who was in his wiser youth a Liberal as well, in particular I welcome the proportional system of representation that is at the heart of the selection and election procedures to the Scottish parliament. This is another of the long-held beliefs of my party. I am delighted that MSPs will be elected as both first-past-the-post candidates from the current constituencies and on a proportional basis from regional lists. There are issues that we will want to raise at a later stage in the passage of the Bill on the detail of the arrangements, particularly on the question of open lists, to avoid the risk of political placemen on the lists, but the principle is there and greatly to be welcomed.

Indeed, it is as a Democrat that I also welcome the fact that it is through this system, and this system alone, that the Conservative voice will be heard again in Scotland. I did not feel happy that after the last election some 20 per cent. of the electorate in Scotland had no voice in Westminster. It is only right that they too should be represented.

This Bill is a good one. It is a good constitutional document which is, by and large, comprehensive, well structured and clear in its terms. That view is endorsed by distinguished constitutionalists and the Law Society of Scotland, among others, with no political axe to grind. That is not to say that it is perfect as a document and it should be improved. Senior professionals too in Scotland, such as those in education and the criminal justice system with which I have been involved over the years, look forward with positive anticipation to what a devolved parliament can bring in those fields. They already have their own distinctive Scottish character, but they welcome the opportunity to bring a better coherence and a new strategic approach to the enactment of policies, with more time for proper, informed discussion and decision making.

In the entire last Session of the previous Parliament, only 13 hours were devoted to debating Scottish education on the Floor of the other place. In future, such vital matters can be fully and openly addressed in a Scottish context, with the needs of our own children and young people in mind—avoiding sectoral politics. I am currently involved in a Scottish Office committee that is examining post-school provision for young people with special needs. That committee intends to have recommendations ready for the new parliament's consideration at an early stage, and with the chance of proper consideration this is exciting for all concerned. There is the chance for a fresh look at the criminal justice system and proper parliamentary time for modern criminal justice legislation—perhaps a 21st century Prisons Act to underpin a 21st century system could be considered. We already have the children's panel system to address the problems of young people in trouble, which is second to none. In future, its view will be addressed by a government who are familiar with and understand the system better than it has ever been understood by Westminster legislators. The optimism of the top people in all those fields is hugely important, and it is something upon which we can and must build.

Of course there are technical and practical concerns. It would be extraordinary if that were not the case, where major constitutional change is involved. I know that the Bill will receive the closest possible scrutiny. We will have our part to play. One clearly articulated fear is of over-centralisation by the Scottish parliament and the squeezing of local authorities in education, for example. Those issues must be addressed. Given the openness and accountability built into the new structures, I trust that they will be addressed.

People with fundamental concerns about the Bill—and I have no doubt how deep and genuine many of them are—take the view that almost any change from the status quo is wrong and that the Union unchanged is, ipso facto, best. Their attitude is, "Never leave a hold of nurse for fear of finding something worse." But for most of us, holding on to nurse is the one thing worse than leaving hold of her. She no longer offers what is needed and the status quo is no longer acceptable—as the ballot box has demonstrated. Fears of the slippery slope to separation from the UK that many noble Lords mentioned are exaggerated. Current support for the Scottish National Party is a concern and cannot be ignored, but it has everything to do with disillusionment in Scotland with the new Labour Government. It has little to do with separation or the break-up of the UK, as recent polls have also shown. Whose judgment are we to trust? The realistic optimists or the messengers of doom?

The Scottish people at Holyrood are at least as capable of managing their domestic affairs as the Parliament at Westminster. As a Scottish Liberal Democrat, I believe that the Scots with their own parliament as defined in the Bill can leave nurse behind and will emerge strongly and confidently from under the skirts of Westminster. Scotland is indivisibly part of the family of the United Kingdom and must ever remain so. With its identity properly asserted through the Bill, the whole family will be strengthened and the integrity of the United Kingdom assured.

6.44 p.m.

My Lords, I will begin my speech back in time, but possibly not as far back as my noble friend Lord Buchan. A forebear of mine and forebears of a number of other noble Lords taking part in this debate were so opposed to the Act of Union that they voted against it and generally showed dissent whenever they could. My forebear—I am indebted to the Library for this information—was,

"very wild, inconstant and passionate. Does every things by starts. Hath abundance of flashy wit. Hath good interest in the country…gives himself liberty of talking when he is not pleased with the Government".
Those dissents and protests were genuinely felt but they probably had a lot to do with perceived loss of influence. My forebear was still hereditary Earl Marshal of Scotland, our Jacobite indiscretions still being a few years ahead. If my forebear was protesting because he thought the Union would not work, he was wrong. Apart from the Jacobite rebellions, the Union has been a considerable success. But we must move on.

Scotland is to have a parliament in Edinburgh with some power devolved to it and some reserved at Westminster, with the judicial committee the final arbiter that the Scottish parliament is acting within its powers. At present, Scots enjoy over-representation at Westminster. Under the Bill, provided that a constituent knows whether a matter is reserved or devolved, he can have both an MP and an MSP working for him in place of just one Member of Parliament. If some or all of the regional members can be called upon, the over-representation will be overwhelming. One solution could be to reduce the numbers of MSPs. However, assuming that more powers are devolved than are reserved and that we are trying to establish a successful Scottish parliament, the answer is probably to reduce quite significantly the number of Scottish seats at Westminster—leaving of course enough to preserve the Union.

Following exchanges in debates on the Government of Wales Bill, I am a little nervous of my next point. I understand that the Westminster Parliament should not direct the Scottish parliament as to how it should work, but I hope that it is in order to inquire whether there has been consultation regarding the working of the new parliament. Given its location in Edinburgh, quite a few of its members will be involved in a great deal of travelling, particularly from the north. I assume that activities on Mondays and Fridays will allow for that. I envisage a very busy first parliament for MSPs, but once the parliament is up and running MSPs may find that they can meet in parliament less often, thereby giving them more time to work in their constituencies.

When the results of the referendum for a Scottish parliament were announced I was in America, involved in Scottish work as the Chieftain of the New Hampshire Highland Games. An estimated 40,000 visitors, mostly American, came to admire my knees. Americans, who feel strong kinship with Scotland, told me that they thought the referendum was a vote for separation. I disagreed and said that the vote was a strong signal from the Scots for their own parliament in Scotland but with Scotland remaining an integral part of the United Kingdom. I hope sincerely that my interpretation of events is correct.

6.48 p.m.

My Lords, I rise as the first English person to speak in this debate. I make no apology for that because there is an important English dimension to this issue and it is a matter that affects the whole United Kingdom.

The Bill is one of four constitutional Bills in this Session of Parliament but it is the most far reaching and important and it takes us, as the noble Lord, Lord Sewel, said, into uncharted waters. We have not been down the devolution route in this form before.

Constitutional Bills are different from other Bills. They are about making long-lasting settlements—one hopes settlements that are stable and enduring; settlements that cannot be easily changed or altered, unlike, for example, the education Bill, in which I have been recently involved. That again is an important Bill that can be changed, but constitutional Bills fall into a different category.

I believe, therefore, that it is extremely important that we take great trouble to get it right. We have had some warning recently from overseas experience. If we look to New Zealand, it had extensive debate and a referendum, but is now having second thoughts on proportional representation which has not worked out as it was thought it would.

Many noble Lords referred to the question of Quebec in Canada. I recognise that independence for Scotland is not the point of the Bill but, as almost every speaker referred to independence, the warning from Quebec is a real one. It has dominated Canadian politics; it occupies a great deal of national debate and national time and, as my noble friend Lord Weir said, it has had devastating economic consequences and a satisfactory solution has not yet been found. I suspect strongly that when the Government introduced this Bill in another place, they never expected that a few months on the Scottish National Party would be leading in all the polls in Scotland. These matters can have unexpected outcomes and it is important that we recognise that and face up to it as the Bill proceeds through your Lordships' House.

I turn next to the English dimension. The Bill applies to the whole of the United Kingdom and I hope that in Scotland there is no doubt that that is the case. No one will argue about the outcome of the referendum—certainly I shall not—even if none of the important issues raised in the Bill was actually put to the Scottish people when they voted. Now that we have the Bill, we must all want to make devolution work for the benefit not only of the Scots, but also for the benefit of the United Kingdom. But the Bill must be seen to be fair to all parts of the United Kingdom if it is to endure.

The English dimension is serious. For the first time in my political life I have heard English people say that we would be better off if Scotland became independent. I would not be entirely surprised if the issue were raised during the London mayoral elections next year. It would be an easy argument to advance. Why should so much more money go to Scotland—we had the figures set out earlier—instead of being used on the poorer parts of London? I have heard it said, nearer to where I live, why should we spend the money on the Scots when we could put it into our local hospital? What worries me in relation to some of the comments being made today is that the more the Scottish nationalist feeling is hyped up, the more we will get a contrary feeling in England ready to be hyped up when anyone wants to do that.

I do not subscribe to those views. But I share the view so well put by my noble friend Lord Lang of Monkton that we could, as a country, spend a lot of time tearing ourselves apart when, for hundreds of years, Celts, Anglo-Saxons and now newcomers, have lived together amicably. We have prospered together. We have had an influence on the world in which the Scots have played an enormous part, far greater than either our population or geographical size would suggest. In modern parlance I believe it is called "boxing above our weight". What I hope we will not do is simply turn that to boxing one another. The English dimension, though still relatively quiescent, if not dealt with, could damage not only our country but our standing in the world as a whole.

I want to turn to the role of the House of Lords because the Bill is before us and we are predominantly a revising Chamber. I accept, and believe that my noble friends do also, in the principle of the Bill and wish for a successful devolution. I hope that, as a revising Chamber, we may make improvements, as my noble friend Lord Mackay made clear in his remarks earlier this afternoon.

We must then consider the West Lothian question, which cannot be left aside. The noble Lord, Lord Steel, said "Quite frankly, we have no answer to that". But that is not good enough and a lot of people will feel that it is not good enough. If they are quiet now, they will not be quiet next year or the year after. No one has stated more clearly and more consistently the West Lothian question, the whole question of the Scottish block grant and the Barnett formula, than the honourable Member, Mr. Tam Dalyell. When the English wake up to what they are spending on the Scots, I can see how the arguments could come into play in a most unhappy way.

I want to make one further point in relation to the whole West Lothian question. It may be thought that having English regions can be a substitute for dealing properly with the West Lothian question, but that is a complete non-starter. Only in the North and South West is there any sense of regional allegiance. There is no demand for regions and, in any event, they would not have anything like the comparable powers of the Scottish parliament.

The Bill raises other enormous problems. The relationship of the Scottish parliament and the European Union was touched on briefly as well as the list that my noble friend Lord Mackay read out. They are big issues. They cannot be brushed aside. We must address ourselves to finding a solution if we are serious about wanting to make this work and wanting to keep the Union. We must recognise that, should we fail to keep the Union, it would be not only Scotland that would be diminished; England, Wales and Northern Ireland would also be diminished. If we look at our standing in the world, where would we be in the United Nations? Where would we be in the European Union and in the Commonwealth? Those are all big, international organisations in which we have, and always have had, an influence. The stakes for which we are playing therefore are extremely high.

My final point is that I hope that the noble Lord, Lord Sewel, and his colleagues will listen to the arguments put forward in this House. And perhaps I can offer a general piece of political advice. I have found that governments do better when they listen to the House of Lords than when they just listen to their own parties. That applies both to the present Government and to my own party when we were in power. There is a great deal of wisdom and experience in your Lordships' House. There is a great will to try to resolve those questions. Unless we resolve them, we will be faced with a doubtful and possibly dangerous situation ahead.

6.59 p.m.

My Lords, it is a very great pleasure to follow my noble friend Lady Young. Over many years, with her great experience of the political life of the whole of the United Kingdom, she has been a good friend of Scotland. I agree with every word she said, although I shall speak from a somewhat different perspective.

The noble Viscount, Lord Weir, asked whether the Government would have started down the route they are now going down if they had known what was going to happen. When I first entered the local government political scene, the Lord Provost of Dundee at that time gave me a good piece of advice. He told me, "In politics, the golden rule is never to get yourself on a hook you cannot get off'. It has always seemed to me that this Bill is the result of the Labour Party in Scotland forgetting that golden rule. When all those years ago, fearing the Scottish National Party, it set up with the Liberals its Scottish Constitutional Convention and told it to invent a devolution scheme and sell that scheme to the people of Scotland—there was not mention of the United Kingdom at the time—that was done. It was done with great efficiency. The noble Lord, Lord Ewing, who is not in his place at the moment, has, alas, taken his name off the list. I hoped that he was going to tell us his views about that. But it was done and the effect of a lengthy and well-publicised exercise was such that, as the years went by, there was no escape.

It was all right for a party in opposition but then, come May last year, it was not possible, I suspect, for Labour to implement its new and more up-to-date instincts. This Bill was virtually unavoidable. The Government were impaled on a hook and they could not get off. Now, as other noble Lords have said, the law of unintended consequences has taken over. The SNP is high in the polls, Donald Dewar's personal rating has collapsed and the Liberals share bottom place with my party in the polls.

The noble Lord, Lord Steel, said that the new parliament would improve the economic climate. I imagine that he has observed, as I have, that businesses based in Scotland are becoming somewhat unnerved. General Accident has merged with Commercial Union and is moving its headquarters south. Scottish Widows and Standard Life, both based in Edinburgh, have expressed grave anxiety. Policy holders of Scottish Widows, as the noble Lord, Lord Hughes of Woodside, told us, have been receiving rather unpleasant letters. Watson and Philip has added its warning. The chairman of the Bank of Scotland has said a good deal over the years about his fears for what higher taxes would mean in Scotland. Yesterday a survey was published of 150 small businesses. Three-quarters of them expect higher taxes under a Scottish parliament and 83 per cent. are concerned about the effect on their business.

In these circumstances, how should noble Lords view the Bill? We have heard a number of angles on this. I agree with my noble friend Lord Mackay of Ardbrecknish who said in his opening speech that it would be easy for some of us to shrug our shoulders and say "I told you so" and take little interest in the proceedings from now on. It would be easy for some—we have already heard a few voices talking in that way—to feel that amendments are likely to make little difference, that the Scots are heading for separation anyway and that the rest of the United Kingdom may be better off without us. If I may say so, I believe that is totally unjustified pessimism. I firmly agree that this House should put a lot of energy and its best skill into looking carefully at the Bill, particularly at the parts that are likely to lead to most controversy, and that we should do all we can to get the parliament to work as smoothly and fairly as possible so that it becomes stable and works to the satisfaction of all concerned. I agree with my noble friend Lady Young that that must surely be in the interests of every United Kingdom citizen, not just the Scots.

There are a number of controversial areas. Noble Lords have already said a good deal about them and much more will be said. I would simply refer to two aspects of the Bill which have not yet been mentioned. There is the obscurity of the drafting of Part IV of the Bill, which deals with the parliament's tax varying powers. The original simple idea of plus or minus 3 per cent. has now become very complicated indeed as the Bill attempts to cater for every possible change in tax structure that the Treasury might invent. There is also a complicated arrangement for the Scottish parliament setting a percentage tax variation and then having to change it. How will business, how will individuals and how will charities which depend on covenants understand this and plan ahead with any certainty? The Association of Chartered Accountants in Scotland is very concerned about the lack of clarity of these clauses and thinks that Clause 71, which defines who is a Scottish taxpayer, must be removed and totally rewritten or the Bill will not work at all. We must look carefully at that.

Another point which has not been completely covered is that the proposed procedure for the drafting and consideration of Bills is somewhat incomplete without some kind of second chamber. The potentially controversial mechanisms for ensuring that they are within the parliament's competence and do not contravene existing or impending UK or European legislation are somewhat difficult to understand. We must be very sure that they are foolproof. I believe that the noble and learned Lord, Lord Hope, may have interesting things to say on this point when he comes to speak. I hope that noble Lords will pay great attention to what he says.

There are many other key aspects that need our careful scrutiny. We must indeed all hope, as my noble friend Lord Mackay said, that the Bill does not prove to be another own goal for Scotland but that it operates reasonably smoothly and fairly, to the advantage of us all. I believe that your Lordships, if you put your shoulder to the wheel—and the Government willing—can ensure that.

7.7 p.m.

My Lords, the Bill we are considering today is probably the most important that we shall study in the life of this Parliament. It has the most far-reaching implications for the future of the United Kingdom and, as such, it must be examined not only as a means of devolving power from the centre but as providing a ready-made jumping-off point from which Scotland could become independent. I found myself almost in complete agreement with what my noble friend Lord Lang and my noble friend Lord Mackay of Ardbrecknish on the Front Bench had to say. The only excuse I can make for repeating many of the points which they made is that I feel that they are of such importance that they cannot be uttered too often.

Thus it could well be that the break-up of the United Kingdom could become a reality in something less than a decade. Let us make no mistake. Once this parliament is operating, its frustrations, when it is unable to achieve certain of its desires, will lead it to blame Westminster, and the constant bickering which will follow will set up a very dangerous relationship between it and Westminster from which only nationalists will take comfort. Indeed, it is arguable—and it is likely that the nationalists would use such an argument—that any future long-term relationship between Scotland and England might actually benefit from Scotland becoming independent sooner rather than later thus avoiding the niggling arguments and resentments which could sour relationships over the next decade, making the eventual settlement of terms, in the event of independence, much more acrimonious than might otherwise be the case.

Then there is the demand, which has been mentioned by a number of speaker this afternoon, for a referendum on Scottish independence. After all, the Government were very happy to stand shoulder to shoulder with the Scottish National Party in order to obtain a yes vote in the devolution referendum, so why are they so bashful about trying to find out if the people of Scotland wish to proceed further along this path? If the Government feel squeamish at the thought of this, then the new parliament may well make it a priority itself, particularly if the nationalists win a majority of seats as seems quite possible. For all those problems and uncertainties the Government have nobody to blame but themselves. Everything which is happening was predictable. Labour has let the genie out of the bottle and it must take the consequences.

I have never argued the case against nationalism on the basis of Scotland not being able to survive on its own, but purely on the basis of the Union being much more beneficial to Scotland. My fear is that attitudes in Scotland will harden against the Union. I was very interested in what my noble friend Lady Young had to say about some of the attitudes which are developing in England as far as concerns the Scots.

In my view the Scottish parliament will stimulate resentment rather than pacify feelings. I doubt very much if there still remains within Scotland a majority to retain the Union; a situation brought about largely by those who have been preaching for some years now the gospel of devolution and playing right into nationalist hands. But what is certain is that pretending that the setting up of the Scottish parliament will change everything is quite wrong and is really another way of putting off the evil day and at very great cost.

Perhaps the only way left to save the Union is by creating a parliament in England for the English and establishing a federal parliament for the whole of the United Kingdom, for which the Liberals have been asking for ever and ever. Perhaps they are simply accepting this measure as a stepping stone. However, that seems to me a most costly and over-elaborate way of resolving a problem brought about principally by a failure adequately to explain and highlight the enormous advantages of the Union to all its members. In any event, it is doubtful whether even that will satisfy—

My Lords, is not the noble Lord being a little defeatist? If the advantages of the Union are such, surely he can explain them to the people of Scotland.

My Lords, the noble Lord did not have a lot to contribute. I am sorry that I gave way. In any event, it is doubtful whether even that will satisfy the appetite for independence, which wells up not very far below the surface in Scotland today. The polls indicate a massive swing to nationalism which, had it been reflected in the heavily populated central belt in the way in which it flourished in rural areas in 1974, might have given the SNP power in Scotland at that time. Now, for the first time, nationalism is reflected in the central belt of Scotland. That situation, taken along with sleaze oozing from Labour-controlled councils at an alarming rate, is causing a degree of panic in Labour circles in Scotland which is quite understandable.

My noble friends on our Front Bench have indicated that we must accept the reality of the situation and move forward to ensure that the new parliament is a success, and I accept their judgment. Of course, when the Bill receives Royal Assent and becomes an Act of Parliament, it will be the duty of all law-abiding citizens to respect its integrity, but that should not inhibit us from criticising it at this stage or at the later stages, but particularly at Second Reading.

I profoundly dislike any legislation which endangers the Union and I dislike this Bill in particular because I disagree with the philosophy behind it. I am undoubtedly one of a minority in Scotland at the moment, but a sizeable minority which does not relish what this Bill will do eventually. It gives us no pleasure to see our predictions of a couple of years ago beginning to happen already as far as nationalism is concerned.

I doubt very much indeed if this legislation will provide the people of Scotland with anything more than they already have through the Scottish Office and it is open to question whether those functions will be provided in as acceptable a form as at present. We already have a wealth of devolution in Scotland administered by a Secretary of State and his Ministers. The Scottish Office is the envy of many UK departments because so many problems can be resolved within the Scottish Office itself without constant reference to other departments, which is the lot of UK ministries. And what of the Secretary of State? He or she will become a very minor voice in Cabinet and a nonentity in Scotland.

The costs of establishing and operating a Scottish parliament are as yet uncertain, but if the initial costing of the creation of a parliamentary building is anything to go by, they will be much higher than forecasts indicate at present and that is merely a foretaste of what lies ahead.

Regarding the details of the Bill, we shall have ample opportunity to debate them in the months ahead. Much remains still to be questioned despite the scrutiny already given in another place. However, there are three areas which give cause for particular concern. The first was referred to by the noble Lord, Lord Hughes. It is not very often that I find myself in agreement with the noble Lord, but tonight I do. That is—

My Lords, that was well said. The first is the fact that Scottish Bills are to be denied the benefit of scrutiny by a second chamber. This is a mysterious decision since in principle the Government must agree with the existence of a revising chamber or they would simply do away with the House of Lords in its entirety. Also, since new members of the Scottish parliament are likely to include a large proportion of inexperienced members, it is particularly inappropriate for there not to be any method of having a second look at Scottish legislation.

The second problem relates to the method of election. It seems to me that having a mixture of constituency members and listed members will create two classes of member. The listed non-combatant, as I care to call him, will always be the poor relation. He or she is unlikely to command the same authority as a constituency member. Furthermore, if he or she becomes a Minister without any parliamentary or constituency experience, life will be difficult in the extreme for that individual.

The third area which gives me cause for concern is the preference that the Government have shown in Committee in another place for concordats. There is really no substitute for writing in requirements on the face of the Bill. Concordats at best are vague and at worst they are merely provided to get the Bill through Parliament, appeasing Members for the time being.

Finally, I am concerned about the status and the future of the Lord Advocate and the Solicitor-General for Scotland. A third Law Officer is to be appointed. I think that the Government owe us a more detailed explanation in due course of how the relationship between the Lord Advocate and the new Law Officer will be regarded. Who is to be the senior? Is the Lord Advocate still to be the senior Law Officer, or is the Scottish Law Officer who will be operating at Westminster to be senior to him, or to be considered senior to him? I do not propose to dwell on those or other legal subjects because there are distinguished luminaries in the legal profession who will no doubt look into those matters in much greater detail and who have much more knowledge of the subject than I do.

I look forward very much to the further stages of this Bill, but I shall need a lot of convincing that it will one day be to the benefit of Scotland.

7.21 p.m.

My Lords, I have three things to say. First, I want to pay homage to a man who was a Member of your Lordships' House and who would have been very happy to be present on this day. For all his political life, in much less sympathetic times than now obtain, he fought for home rule. As a tribute to him, I shall quote from the end of his maiden speech, which he made, unusually, on the day of his Introduction, 6th December 1967. But then, John Bannerman, Lord Bannerman of Kildonan, was an unusual man. He said:

"there can be nothing surer in this life than the truth which we Liberals proclaim; and that is that the growth in stature of man depends on the extent to which he can control his own destiny. This is equally true of nations: and Scotland is a nation. That is why Liberals advocate federalism to replace the present form of centralised … government in Britain, so that all parts of Britain may be helped … That is not a selfish ambition. This is an ambition which we are determined is better for the United Kingdom".— [Official Report, 6/12/67; cols. 708–9.]
John followed a long Liberal tradition, to which reference has already been made, which was rooted, as we are reminded by the exhibition in Westminster Hall, in Gladstone's efforts for home rule in the last century, continued in the federal United Kingdom Bill of the Asquith Government, which, as my noble friend Lord Steel said, fell only because of the outbreak of World War I. As my noble friend Lady Linklater reminded us, between the wars Sir Archibald Sinclair held the torch. The Covenant Movement, after the Second World War, was the natural heir to that tradition. Its driving force, John MacCormick—"King John", as many people will remember—was of course a Liberal candidate in Roxburgh, Selkirk and Peebles, the seat formerly represented by my noble friend Lord Steel of Aikwood.

I am proud to have made my little footnote in that record when, on 30th November 1966, in the other place I introduced the first home rule Bill since the war under the ten-minute rule. I said:
"we are not seeking separation from the United Kingdom, but sensible and effective devolution within it".
I was barracked for that and the Speaker had to intervene. That is most unusual on a ten-minute rule Bill. Now I have heard from the noble Lord, Lord Sewel, almost exactly the same words—and from the same Government Benches, and so the wheel turns. I went on to say:

"Nor is there any contradiction or conflict between wishing to see this and wishing to see the United Kingdom join the European Economic Community. Indeed, I would aver that the larger the grouping the greater the need for devolution within it".—[Official Report, Commons, 30/11/66: col. 458.]
I say all this mainly because I happen to continue to think—although I suspect that it is not a general view—that consistency in politics, which seems these days to be a very rare commodity, as pragmatism, often linked to opportunism, conquers ideology, is a merit, a virtue and a valuable thing. On these matters, Liberal Democrats have stood up for what they believed in foul weather and fair. Those who have toiled long and hard in the vineyard have contributed to the quality of the fruit.

My other two points are relatively brief, but they are related to "the quality of the fruit". I refer secondly to the West Lothian question. My noble friend Lord Steel of Aikwood said frankly that there was no clear answer to this question and that although there are weaknesses here, they are less than the weaknesses of the existing system.

After all, the Government's proposals worked out, as my noble friend Lord Steel said, consensually in conjunction with the Scottish Constitutional Convention, are founded in the belief that in Scotland a co-operative approach can now work and that it is unquestionably better than the confrontational approach which is the essence of the Westminster system. I very much hope that that is so; I want it to be so although some of the speeches that we have heard do not entirely suggest it. However, I continue to believe that in the end, as the noble Lord, Lord Gray of Contin, suggested, the only sensible and logical answer to Tam Dalyell is federalism—a clear division of entrenched powers in a constitutional frame. Federalism remains a clear option, which may solve future problems, but I recognise that we are not talking of it now.

Thirdly, unlike the noble Lord, Lord Mackay of Ardbrecknish, who has vanished, with whom I worked long ago in the Scottish Liberal Party—
"Bliss was it in that dawn to be alive,
But to be young was very heaven"—
I strongly and warmly support the Government's acceptance of a proportional element in the voting system. It is, as the noble Lord, Lord Sewel, said, "fair". The noble Lord, Lord Thomson of Monifieth, put the argument against one-party domination on a minority vote. But the essence is the desire to produce in the legislative assembly a fair reflection both of the distribution of political opinion within the country and the interests of the different regions, such as the north-east, the Highlands and the Borders. That is something which is accepted pretty well all over the rest of Europe.

I get tired and angry with those who pomp and prate about democracy, but who are, and have been, happy to sustain a system which is blatantly unfair; with those who governed Scotland without a mandate and without very much regard for what the Scottish people felt—the noble Lord, Lord Thomson of Monifieth, mentioned the poll tax—yet listening to the speech of the noble Lord, Lord Gray of Contin, it is clear that the Conservatives still do not realise that they have been quite the best recruiting sergeants for the nationalism that they condemn. Indeed, they have produced the nationalism that they condemn.

I was saddened by the speech of the noble Lord, Lord Lang of Monkton. I hope that that did not reflect general Conservative views. I believe that it was the former Lord Provost of Dundee who remarked that perhaps Sir Malcolm Rifkind was a better guide to what was going on in the Conservative Party. The noble Lord, Lord Lang, sounded like a man with a closed mind which was continuing to close. He seemed never to have heard of Catalonia and Bavaria or regional developments in France and Italy. It is true that for this change to work we need open minds, tolerance, a commitment to success and patience with one another. That is what Scottish people want and also deserve from their politicians.

7.30 p.m.

My Lords, I have listened with great attention, as have all other noble Lords present, to the debate tonight. I wish to speak to a fairly narrow business point having worked all my life in Scottish companies in Scotland. For much of that time I had some responsibility for disbursing taxpayers' money to industry through various government bodies.

I have been struck by the unity on all sides of this House on one point: concern about the Union. That has come through from every single speech. If that unity is reflected outside this House in the political parties and in Scotland it should start to influence Scottish public opinion during the debates and in the run-up to the Scottish parliament and those who are persuaded by a populist, perhaps a "Braveheart", point of view. I suggest that collectively through all three political parties and the independents we must put across the facts. I believe that in business terms the Scottish national case is a dud prospectus. The balance sheet does not add up, nor could it. If Scotland went into that situation it would be the equivalent of a business going into receivership.

I shall finish with four brief light-hearted points. I ask noble Lords to attend to a little arithmetic. I apologise for elaborating these facts but they are true. As a percentage of GDP, public expenditure in the UK is about 42 per cent. Scottish expenditure as a percentage of Scottish GDP is 50 per cent. The overall Scottish GDP is about 8.5 per cent. of the UK figure. The population of Scotland is about 8.8 per cent. and public expenditure exceeds 10 per cent. Scottish expenditure exceeds the revenue collected from taxes in Scotland by about £7.4 billion. Even if one allocated all the oil revenues—it is inconceivable that any government would be willing to do so—that deficit would still be about £5 billion. The Scottish block vote is just over £14 billion.

This leads me to my second point. Of that £14 billion, about 40 per cent. (£5.2 billion) goes to finance local authority expenditure. The balance of local authority expenditure comes from self-financing. Most of that comes from the council tax. That produces about £1.2 or £1.3 billion and adds up to total local authority expenditure of £6.3 billion.

I am sorry to bore noble Lords with those figures. However, all of us who believe in the Union should try to get across in the manifestos and the process that leads up to the parliament the fact that the nationalist separatist policies do not add up. Scotland would be infinitely the poorer. If the budget were to break even taxes would have to go up by a fantastic amount. I suggest that all of us need to put across that point because it is not understood by the 52 per cent. of people who voted for this proposition.

That leads me to my concerns about the financial arrangements under the Bill. I believe that 3p in the pound resulting in £450 million is of mind-boggling irrelevance in relation to the potential gap in taxation. This is entirely covered in Part VI of the Explanatory and Financial Memorandum:
"Self-financed public expenditure—i.e. spending not financed by UK taxpayers as a whole—may increase or decrease depending on how the Scottish Parliament elects to use its tax-varying powers and how it decides to treat self-financed spending by Scottish local authorities".
I suggest that there is the rub. If, as we have heard from so many noble Lords, there is a belief that the Westminster parliament is extremely unlikely under tight public expenditure control to increase the block grant—it could be decreased and would be very unlikely to go up—and the Scottish parliament is to work as it must for Scotland and Scottish business, there will be a great appetite for programmes and policies that require cash. The cash will not be there. In another context we have heard about "leaving nurse". There is perhaps a feeling that the effect of the thumbscrews applied by both the present and previous administrations to local authority expenditure may be less under a Scottish parliament. There will be a great appetite for local authority expenditure.

If the Scottish parliament has discretion and in its wisdom decides to pass responsibility for non-domestic rates to local authorities, the amount raised by that means will be £1.4 billion. That is equal to the amount raised by council tax and is included in the £5.3 billion. That would be subject to great pressure. There would be no more money from central government. The council tax could not be raised because the parliament would have to report to the electorate. Once again the tax would fall back on business. That is a major concern to business. I hope that the Government will consider an amendment to place some form of cap on the tax to be raised on business.

On Monday I attended a conference in Edinburgh to hear what the political parties had to say about business. The Labour view was put by Henry McLeish, the Liberal Democrat view by a distinguished industrialist and the SNP view by one of the Ewing dynasty. Perhaps I may run through those views quickly. Labour said that there was no point in having a parliament if it disadvantaged business and the economy; business must be involved; business policies must have priority; there must be a stable economic framework; inward and domestic investment were of equal importance; there should be strong emphasis on small companies etc. The Liberal Democrat Party spoke about wealth creation and investment in people and capital; there must be a sensible structure for business rates; tax stability was essential in the first four years; and there should be lower taxes if possible, certainly not higher than the rest of the UK. Well done to both of them.

The SNP said that a favourable business climate was essential; Scotland would succeed only if business succeeded; the Government created work and business created jobs; and no power should be given to local authorities to raise non-domestic rates above the English level. I point out that the SNP is saying to the public and to business something I wanted to hear.

I have spoken long enough. However, I express my concern that if there is no further amendment to the Bill the power that will be reserved to the Scottish parliament and ultimately to the Treasury to cut local authority expenditure if it becomes too high is not enough. Some further amendment at Committee stage of the Bill will be needed if business confidence is to rise. It is important that business plays its part.

Perhaps, with the greatest respect, I may correct my noble friend Lady Carnegy. I was deputy chairman of General Accident. My noble friend Lord Lang of Monkton is a director. On Tuesday we shall both be at the same dinner saying farewell to General Accident. We were both heavily involved in all those discussions. I have to say that that decision had absolutely nothing to do with devolution or a Scottish parliament. It was entirely about the ability to create a UK champion in the insurance industry which can compete worldwide and to protect Scottish jobs and investment in Scotland.

The Scottish parliament will sit where I had my office in Scottish and Newcastle. I hope that when they have a spare moment, all the MSPs will enjoy looking out, as I used to do, at King Arthur's seat and seeing the fulmars nesting.

My Lords, I hesitate to interrupt the noble Lord. However, he has drawn attention to the site of the Scottish parliament. Can the noble Lord confirm rumours that are circulating that because it is being built on the site of the present brewery it will shortcut the planning process, and that no change of use permission will be required?

My Lords, I should love to be able to answer the Minister on that point. However, as I retired as a non-executive of Scottish and Newcastle over five years ago, I am looking far into the past and have no current knowledge.

The Minister will be disappointed if I do not raise this point because he thinks that I cannot stand on my feet without talking about salmon. I just wish to thank him for Clause 100 which allows Her Majesty by Order in Council to produce regulations for Tweed and border Esk. He will understand why I thank him for that.

7.42 p.m.

My Lords, first, I must apologise to the Minister for the fact that I was unable to be present to hear his opening remarks due to business elsewhere in the House. I shall look forward with great pleasure to reading them tomorrow in Hansard.

I should like to say a few words about the constitutional aspects of the Bill and to comment on the provisions which it makes with regard to the appointment, removal and functions of the judiciary. For reasons which I shall attempt to explain in a moment, I believe that the new constitutional settlement for Scotland will have major implications for the work which judges do and for the way in which the work done by the judges affects the conduct of government. I also believe that insufficient attention was paid to that aspect of the devolution process when it was being explained to the people of Scotland during the referendum campaign. In the result, it is far from clear, despite all the enthusiasm which they have shown for it, that the people of Scotland have yet really understood the nature of the change in their parliamentary arrangements which will be an inevitable consequence of devolving legislative power to Holyrood from Westminster.

We all know the result of the referendum and we share a wish to see the best and most stable form of devolution that can be achieved. But if that end is to be achieved, it is essential that we should all have a clear understanding of the nature of the fundamental change which is being proposed.

One can best approach the first point I wish to make by looking at the issue of sovereignty. Much has been said about that issue in another place. It seems to have been approached by some of the Government's critics—I refer in particular to the Scottish National Party—on the basis that there was a choice between retaining parliamentary sovereignty at Westminster and transferring parliamentary sovereignty to the people of Scotland in their own Scottish parliament. That certainly is how the argument has been presented in Scotland, and I suspect that there is now a widely held belief—encouraged no doubt by the fact that the new legislature is to be called a parliament and not an assembly—that the Scottish parliament will enjoy the same sovereignty, and all the privileges which go with sovereignty, as the Parliament here at Westminster. But such a belief, if indeed there is such a belief, would be profoundly mistaken. In that mistake would lie the risk of dissatisfaction, and thus of instability, as the true nature of what has happened was revealed when the work done by the Scottish parliament was brought under scrutiny in the courts.

The fact is that there is to be created for Scotland a new kind of sovereignty. It is not parliamentary sovereignty but constitutional sovereignty. Parliamentary sovereignty will continue to reside here at Westminster. That is made absolutely clear in Clause 27(7) of the Bill. But even if the clause had been silent on the matter, there would have been no choice about this. A devolved parliament cannot be a sovereign parliament in the sense that Parliament here is sovereign. The essential characteristic of a parliament which enjoys parliamentary sovereignty is that its power to legislate on whatever matter it chooses cannot be called into question before the courts. But the essential characteristic of a devolved parliament is that it can only legislate within the powers which have been devolved to it. Any legislation which is enacted outside those powers is vulnerable to attack on the ground that it is ultra vires. My point is this. It is the judges, not the devolved parliament nor even the executive, who will have the last say as to whether or not it is within the powers of the parliament.

On one view it might seem that a new arrangement which subjected Scottish legislation to judicial scrutiny was an imperfect arrangement. After all, the position today is that Scottish legislation enacted here in this Parliament enjoys all the benefits of the principle of parliamentary sovereignty. Except in so far as a question may arise under European Community law, and, when the Human Rights Bill is enacted, under convention law, such legislation is beyond challenge once it has been enacted. There is no uncertainty. Public money can be expended and arrangements can be entered into privately in complete confidence that what has been enacted by this Parliament is the law. That will not be the position when legislation has been enacted by the Scottish parliament.

One has only to look at the devolution issues listed in paragraph 1 of Schedule 6 to see the scope which will exist for challenges to be made. No time limit is set for the making of those challenges. As has been pointed out by several noble Lords, there is to be no revising chamber. So in theory at least—I stress the word theory—subject to the exercise of the powers given to the court in Section 93 to vary retrospective decisions, legislation by the Scottish parliament could be set aside as not being within that parliament's competence long after it had been put into effect. In the wrong hands that could be very damaging.

But there is an entirely different side to this matter which we should properly recognise. The situation in which the Scottish parliament will find itself is the same as that in which parliaments or national assemblies of almost all the countries, states and provinces both in Europe and in the Commonwealth—Catalonia and Bavaria have been mentioned—which have written constitutions enact their legislation within the constitution. The United Kingdom is unique within the European Union in that it alone operates under the principle of parliamentary sovereignty. In all the other countries it is the constitution which is sovereign and binding on the legislature. The same is true in most Commonwealth countries, which see the principle of parliamentary sovereignty as outdated and even dangerous—nowhere more so than in South Africa. So on one view it can be said that the new arrangement which will apply in Scotland is a truly modern, state of the art, arrangement. Indeed, in another place the Secretary of State for Scotland said that this was a decisive step in the fight to modernise our constitution. In that respect, I agree with him. He also said that the objective was a new covenant with the people. That also is true, in the same sense as in all those other countries it is the constitution which is the covenant with the people. But the fundamental point which needs to be understood is that both the Scottish parliament and the Scottish executive will be have to respect and live within that covenant, and that it will the responsibility of the courts in the last resort to ensure that they do.

That brings me to the judiciary. This is not the time to go into detail; I can make only three or four general points. The first is the most important. It is that absolute confidence in the independence of the judges will be crucial in the working out of the new arrangements. That will have to work in two ways. The public must have complete confidence in the independence of the judges from pressure of any kind at the instance of those over whose actions they will have to adjudicate. And the judges themselves must have complete confidence in their independence if they are to do their job properly. Where devolution issues are raised the courts and tribunals before which they are raised will be brought more than ever before in Scotland into the arena which until now has been reserved for politics and the legislature. So independence from pressure from both the executive and the legislature will be essential if the covenant with the people is to be upheld.

The second point is related to the first. It will be necessary to look very closely at the provisions in Clause 89 about the appointment and removal of judges. We must ensure that what is enacted there will provide the best possible arrangement. In the past, this was left to practice and convention. Nothing was written down. Now we are to have a code for dealing with these matters. That is right and necessary, but the code will need to be complete and it will need to guarantee independence. The arrangements should be entrenched so that they will not be capable of being altered, or even modified, by the Scottish parliament. And the system for removal will need to take account of the protections which are available under convention law to ensure fairness and due process to the individual. As the Bill stands, the prospect of a challenge in the courts by a judge to his removal on convention grounds cannot be dismissed as fanciful. The position of the sheriffs, for whom a procedure for removal already exists in the Sheriff Courts (Scotland) Act 1971 but who are not mentioned in this respect in the Bill, will also have to be clarified as they, too, may have to deal with devolution issues.

The third point relates to the procedure for judicial scrutiny, including the provisions for references and appeals to the Judicial Committee of the Privy Council. Some of this ground is already being covered in the debates on the Government of Wales Bill. But in the context of a Scottish parliament which will enact primary legislation, the importance of getting these arrangements right is absolutely paramount. For example, I hope that Ministers will give consideration to increasing the number of holders of high judicial office in Scotland who are made Privy Counsellors. We must recognise that at present the only Scottish judges who are made Privy Counsellors and who become members of the Judicial Committee by virtue of their judicial office are the Lord President of the Court of Session and the Lord Justice-Clerk.

In England and Wales, and in Northern Ireland, the position is different. All members of the Court of Appeal are made Privy Counsellors on their appointment to the Court of Appeal. In the result, there is a large pool of serving and retired judges in England and Wales and Northern Ireland who can sit on the Judicial Committee with the Lords of Appeal in Ordinary. Under the present arrangements, the different position in Scotland is not important because the Judicial Committee is not required to adjudicate on Scots law. But that will change with devolution, so account will need to be taken of that—and of the future of appeals from the Court of Session to this House, as these appeals provide the only reason why Scottish judges are appointed to sit here as Lords of Appeal in Ordinary—in looking at the composition of the Judicial Committee for the purposes of this Bill.

The ultimate safeguard in any constitution is the separation of powers as between the legislature, the executive and the judiciary. The part to be played by all three branches is brought under scrutiny in the Bill. Perhaps for understandable reasons, the third branch, the judiciary, received little attention in the debates in another place. I know that that will not happen in your Lordships' House and I look forward to the examination of this part of the detail during the remaining stages of the Bill.

7.55 p.m.

My Lords, despite my anxieties about the huge constitutional change which the Bill brings about, I must try to be constructive and confine my main remarks to three aspects of the Bill which I believe will cause trouble and need to be examined. I was pleased to hear the Minister say that he would be open-minded when considering points as the Bill goes through the House and will not resort to what I would call "resist tactics" all along the line.

As a result of the Bill being enacted, the structures of our UK constitution will never be the same again. Implicit in that remark is that in the Government's eyes change will be for the better. I have to say that it will be for better or worse, richer or poorer, for longer than any of us will live. As has been said so often, the referendum result was decisive and clear. However, what is not so clear is whether the support for the Union in Scotland is as clear cut as true unionists such as myself would wish. This is the challenge which all three unionist parties in this House must face in Scotland in the years ahead.

The Government, having passed this Bill, cannot walk away from the knock-on effects in the United Kingdom of lopsided arrangements which have brought about the West Lothian question. It will have to be addressed if not by this Government then by a successor in the future. Being constructive, I hope that the Minister will see sense in instituting a review of the appropriate functions and powers of Scottish MPs at Westminster after the Bill has been passed and publish it during the course of this Parliament. If that does not happen, I believe that they will rightly stand accused of putting the cohesion of the United Kingdom at risk.

The noble Lord, Lord Steel, said that there was no answer to the West Lothian question. However, like my noble friend Lady Young, I believe that that is not an excuse for not trying to find a better solution than we have at present. Having had experience as chairman of the Conservative National Union Executive Committee, which covers the whole of the United Kingdom, I agree only too wholeheartedly with my noble friend Lady Young that there are stirrings in the camp in England. I know that once that fire begins to flame things will get very serious indeed for the unity of the United Kingdom.

The first issue of concern in the Bill, which the nationalists would have no difficulty in puncturing, is the concordat arrangement for the Scottish parliament in dealings with Europe, particularly in farming and fishing, which for some years I had the honour to represent in the Scottish Office. As the Minister knows, fishing is a very complex issue. It is more important in Scotland as to its size than it is south of the Border. So our Scottish voice is very important in the Council of Ministers.

While the Ministry of Agriculture takes the lead, it is not always easy for territorial Ministers—I am sure the Minister will agree with this—albeit from the same party, to reach a united view in order to put their case. I suggest that that will be even more so if the Scottish parliament and UK Ministers represent different parties. If there is no statutory framework governing Scottish participation in the Council of Ministers on those subjects, what is to prevent the National Farmers' Union of Scotland or Scottish fishermen's federations and others bypassing the Scottish parliament and dealing direct with the lead Ministry? If that were to happen, I believe that we should be handing to the SNP remarkably good ammunition and we must do our best to ensure that that does not happen.

Secondly, the Bill is not sufficiently explicit on tax-raising powers. As has already been said by my noble friend Lady Carnegy of Lour, the Institute of Chartered Accountants of Scotland has written to many of us suggesting that it is concerned about how Part IV is meant to interact with the basic rate of income tax and other parts of the system. It says:
"It is a fundamental point because it illustrates a lack of clarity in primary legislation designed to implement constitutional change".
It goes on:
"If the tax raising powers are brought into disrepute this will have a knock on effect on the credibility of the new Parliament".
I hope that in Committee, we shall consider those matters and in particular the view of the Inland Revenue, as I understand it, that it would prefer the SVR to be treated as a levy rather than as at present an extension of the basic rate tax. Why on earth did the Government abandon the 183-day rule on residence for something far more obscure and difficult to comprehend?

Scottish industry is watching developments most closely in those areas as the success of this parliament is so vital to its survival. It will no doubt be encouraged by the assessment of the noble Lord, Lord Steel, that real economic success—or did I hear the word "boom" mentioned?—may come as a result of the new parliament. But I have some doubts and was somewhat alarmed by statements from another place from the Liberal Benches which said that the funding settlement gets us off to a good start. However, we shall have to revisit that issue.

There is widespread talk in Scotland of the Scottish parliament, either directly or indirectly through local authorities, raising such taxes as the tourist tax—I think Councillor Geddes mentioned that—a local sales tax and higher business rates. I, for one, worked extremely hard for several years to try to bring down those business rates in line with England. We succeeded because a lot of money from the Scottish block had to go into that. But I do not regret a penny of it because we in Scotland, in industry, can compete on a level playing field with those south of the Border. Woe betide any government, whether in Scotland or at Westminster, who try to undermine that arrangement because the net result will be that industry in Scotland will suffer and some of it could easily move elsewhere.

As I understand it, as presently drafted, the Bill does not prevent extra taxes being levied if 3p does not raise the necessary sums. Furthermore, it does not prevent additional revenue being raised through local taxes. I hope that those matters will be studied carefully in Committee.

I am in total agreement with the noble Lord, Lord Hughes, and, surprisingly the noble Lord, Lord Kirkhill, on the question of the unicameral Scottish parliament. It may be because they, like me, have had to pick up the pieces from the other end of the corridor as regards legislation on several occasions. I cannot conceive of legislation coming from a unicameral Scottish parliament which will be any different from that which came from the other end of the corridor, from whichever party is in office. I hope that this matter will be looked at. I know that there is no easy solution. I was extremely impressed that the noble Lord, Lord Hughes, had taken the trouble to find out what happened in Norway to see whether a solution could be found.

The most important thing that we must do is to try to make this Bill better than it is. I hope that we shall succeed. I hope that the Scottish parliament will live up to the people's great expectations of it. Like my noble friend Lord Mackay of Ardbrecknish, I hae my doots but like a good marriage it will take hard work to make it work by those who really truly believe in the Union.

8.5 p.m.

My Lords, in view of the long list of speakers, I shall confine myself to one principal issue. It was an issue raised by the Minister in his opening remarks. But despite the assurances that he sought to give us then, it remains a concern for my noble friend Lord Mackay of Ardbrecknish and other noble friends and noble Lords who have spoken since. I refer to the policy formulation and decision-making processes which will attach to agriculture, fisheries and environmental policy in Scotland after this Bill is enacted.

I should remind the Minister that concerns expressed by my noble friends and others during the debate are felt also by various organisations in Scotland. It is undoubtedly an area where more reassurance and clarity is required.

The effect of the Bill devolves legislative competence for agriculture and animal welfare, fisheries, the environment, natural heritage, pollution, water and so on to the Scottish parliament. But the critical decisions affecting those areas are, as many noble Lords know, determined largely at EU level. Hence the obvious sense for Scotland in the current arrangements whereby UK policies regarding such issues and the subsequent negotiation within the European Union are formulated jointly by Scottish Ministers, as UK Ministers, along with the appropriate Whitehall and other territorial Ministers.

Annex C of the very useful guide to the Bill points out that the Bill reserves all EU matters to Westminster, while at the same time, the new Scottish Ministers will lose the formal role which they currently exercise as UK Ministers in the surrounding policy-making process.

Thus as regards agriculture, fisheries and the environment, Scotland may well be gaining legislative competence and no doubt there will be opportunities where that new competence can be put to very good use. In opening, the noble Lord, Lord Sewel, welcomed the prospect of local solutions to local problems; and so do I. However, some of the very real problems which exist in those areas and their respective solutions are far from being local.

As regards the interest of Scottish farmers, fishermen and all those with an interest in Scottish environmental policy, the principal policies and measures which the new parliament will implement will not be initiated, negotiated or decided by Scottish Ministers or a Scottish parliament, but they will be initiated, negotiated and decided through a process that no longer has any formal role for Scottish Ministers.

The loss of formal competence in UK policy matters and EU negotiations will be a high price to pay. Neither the opening remarks of the Minister nor Schedule 5 provide much guaranteed comfort in that respect.

I regret that the future input of Scottish Ministers to the meetings and deliberations of EU Councils of Ministers will at best be rendered ambiguous. Along with many other Scottish Office Ministers in this House, many of whom have spoken already in the debate, while I was the agriculture and environment Minister, I attended more than a dozen agriculture Councils and four or more environment Councils. Although I was a Scottish Minister, my status as a UK Minister enabled me to speak regularly during the formal Council proceedings. Such occasions sometimes reflected agenda items that were of particular interest to Scotland, but that was by no means always the case. For all or most of two Agriculture and two Environment Councils, I was the only UK Minister attending. I thus led for the United Kingdom on the entire agendas and spoke for the UK on them as a Scottish Minister. Will that be possible in the future? From the Minister's opening remarks it appears that it will clearly not be, as he said that UK Ministers would always lead at EU Councils of Ministers. In future, Scottish Ministers will not be UK Ministers; in other words, they will not be Ministers of the Crown.

Further, with what ease and frequency will Scottish agriculture, fisheries and environment ministers be able to speak and contribute to EU Councils of Ministers in the future? When a Council of Ministers goes into closed session and only member state Ministers are allowed to remain in the room, how easy will it be for devolved Scottish Ministers at that moment to stay with their Minister of the Crown colleagues? Indeed, will Scottish Minsters be confined to the public areas of the Brussels and Luxembourg Council buildings, except where, under the provisions outlined in Schedule 5, they are providing assistance to a Minister of the Crown? Will Scottish Ministers be allowed to access the Council buildings and the Council chamber as and when they wish, even when their assistance has either not been sought by a UK Minister or has actually been refused by a UK Minister?

The Minister approves of the brevity of the reference in Schedule 5 to those areas in that he feels that it will deliver flexibility. However, brevity may also deliver uncertainty in such areas. Although it may sound far-fetched to some, if there are different parties in government both north and south of the Border it could well be that Ministers from both sides would be pursuing very different policies. Therefore, it is possible that the UK Minister in London could actively seek to prevent a Scottish Minister from attending a certain Council of Ministers. He may fear parallel press conferences from different Ministers in the UK preaching different messages on the same issues.

The latter are not nit-picking questions, because EU policy has such an immensely significant impact on Scottish agriculture, fisheries and environmental concerns. Rightly, therefore, it is the Scottish Ministers who currently decide when they want to go to Brussels, which Councils they wish to attend, whether or not they want to attend inside the Council chamber and whether, with the agreement of fellow UK Ministers, they actually want to speak. At present, Scottish Ministers are in no way confined in either their appearance or indeed in their movements during Councils of Ministers. That is an important prerogative that Scottish Ministers should retain. During later stages of the Bill, I hope that we will receive some reassurance and clarity from the Minister in that respect.

As has been said by various other former Ministers who have had experience of such Councils, there is often tension between Scottish Ministers and their Whitehall colleagues at these Councils, even when Scottish and London Ministers are of the same political party. We must make allowances in the future for the fact that those tensions might be very much worse where Ministers from either side of the Border come from different parties.

The current ability for a Scottish Minister to attend in his own right and of his own volition is, I believe, important for two further reasons. First, there is the fact that the haggling and late night horse-trading that an EU Council decision will often require can leave pre-arranged policies in tatters. The pre-agreed negotiating positions are unavoidably subject to adjustment and compromise. According to my first-hand experience, such last minute alterations can have significant implications for Scottish interests. In addition, there are also useful opportunities for Scottish Ministers to pursue valuable lobbying and diplomacy during a Council meeting outside the Council chamber itself—in other words, in and around the surrounding corridors, the surrounding offices and the surrounding watering holes. Such opportunities are vital to Scottish Ministers, especially when they are pursuing issues which are not actually on the formal Council agenda.

I do not want the advocacy of Scottish interests in Europe by Scottish Ministers in charge of agriculture, fisheries and the environment to be side-lined. Therefore, I derive no reassurance from the fact that, despite the innumerable hours that I spent in and around Council meetings, I never once met—nor, indeed, did I ever hear any reference to the presence of—a Minister from Catalonia, Bavaria or from any other devolved region. I do not want Scottish Ministers to be, as it were, reduced to a silent and non-speaking status.

I shall conclude with a brief reference to three other points. The first point is one which no doubt will be clarified as the Bill progresses. I seek clarification regarding the proposed devolution of legislative competence for food standards and the relationship that is envisaged between the Scottish parliament and the Food Standards Agency. My second point is particularly appropriate for the Minister. I believe that the Bill offers a very good opportunity for an explicit reference to the promotion of sustainable development in Scotland through the powers and procedures of the new Scottish parliament. I accept the argument that it is implicit, but I also recognise the fact that Scotland has often taken the lead in the past in such matters. Indeed, it was Scottish legislation that first included sustainable development on the face of a UK Act. I believe that there is good reason for Scotland to take the lead once again, and to do so to its own credit and advantage.

Finally, I turn to a point which has been well covered by various noble Lords; namely, the extent to which single chamber government can incorporate the same kind of scrutiny, revision and counter-balance in its operation as a second chamber would normally provide in most other governmental arrangements. I look forward to hearing the Government's response.

8.17 p.m.

My Lords, like my noble friend Lord Hughes of Woodside, I have expressed occasional sceptical views in the past about certain aspects of devolution. The fact is that I have previously questioned such matters, but I am now satisfied that what the Government propose adds up to good legislation. Of course, it is a Bill which results from a long-standing aspiration of the Labour Party and the people of Scotland, as has been said repeatedly. Indeed, it received massive support in the referendum.

The Bill also has the support of all Scotland's great institutions, including the Church of Scotland and the Scottish Trades Union Congress. I mention those in particular as they are the two mass membership organisations in Scotland today. Devolution is supported by all the political parties that are represented by election at Westminster and in the European Parliament.

I was pleased to see that Mr. Hague had called on his supporters in Scotland to make a success of the new parliament. I am sure that the Opposition Front Bench will forgive me if I say that we will judge that on the Government side of the House by the approach taken to the business of opposition during the passage of the Bill. However, for the moment we assume that there is something of a consensus surrounding the issue; indeed, that is how it should be.

I believe that how our people are governed is a matter upon which consensus should be sought among all Members of this House and the other place, as well as the political parties in the country. If we can agree on that, as I believe we have in the past, we underpin the political stability of our country which has been such a positive factor in our long history. I support the Bill because I believe the country is ready for another advance in democracy. Our structures of government are not set in stone. They have to change and develop. The judgment we have to make is how far-reaching change should be and that what is done is always with the consent of the people. I believe therefore that this Bill is the right measure.

The Bill is about extending democratic control over those measures already administratively devolved to Scotland. The powers and functions that are properly the responsibility of the United Kingdom are retained.

The Bill recognises the right of the Scottish nation to insist on the devolution of, and control over, those matters that have always been the preserve of Scotland through the terms of its treaty with England. The Scots have preserved their right to determine their own system of education which was developed out of events having their origin in the Reformation. The Scots want control over health and over social policy including law and order. The Bill serves those ends and strengthens historic commitments.

The Bill brings government closer to the people. In doing so it reinforces an essential quality in the make-up of the Scots that authority is derived from the will of the people and from nowhere and no one else. I told the General Assembly of the Church of Scotland last month that such principles were the very stuff of being a Scottish Presbyterian and the very stuff of being a Scot. I am a unionist. I recognise the great benefit of the Union over the past three centuries. The Labour Party is unionist and this Bill seeks only to devolve existing power. I believe the House understands very well the relationship between the parliaments. Time does not permit me to reiterate the arguments.

I am proud to be a Scot. I am a true patriot but that is very different from being a nationalist. I, too, want to say something about Scottish nationalism because the fear is often expressed by the opponents of devolution—we have heard much of that today—that this Bill will lead to separation.

Nationalism seems to me a small idea. The Scottish variety is no different. My right honourable friend George Robertson said it had a darker side. We know that to be true. Nationalism is exclusive. Its bottom line is surely that it says to minorities, "You are not one of us." That fact is expressed today in many of the former communist countries of eastern Europe with tragic consequences.

I do not believe such things could occur here, but there have been sad and unacceptable happenings in Scotland, not, I stress, at the hand of the SNP but as a consequence of the licence given to excesses by the rise of a nationalist ethos. Disparaging the English, even hating the English, has been fostered by films like "Braveheart". It was meant as entertainment—it was supposed to be cowboys in kilts—but it has been used to build a nationalist ethos.

In recent times there have been excesses that have horrified all decent people in Scotland. Those events, one tragic, are well documented in an article by Lawrence Donegan in the Scotsman of 6th June. If Members of your Lordships' House read the article they will understand the grounds for the deep worries and concerns many of us feel about nationalism's darker side. As I said, nationalism is a small idea not worthy of the Scots.

But, of course, there is worry about opinion polls. My right honourable friend the Secretary of State for Scotland made the point that when the Bill is implemented the arguments of the Scottish nationalists, and their appeal, will diminish. However, I am not inclined to take advice from the Conservative Benches about opinion polls because in real polls the Conservative Party in Scotland has lost all its seats. However, all the seats held by the Scottish National Party are seats formerly held by the Tories. Someone must explain to me how Conservatives and unionists can become nationalists. I have never understood that. However, that is what has happened. I do not think that those on the Benches opposite should give us advice about shifts in public opinion or what that may mean. The Bill will not lead to—

My Lords, I am grateful to the noble Lord for giving way. At the risk of giving him a piece of advice, I hope I may tell him that for four years up until last May a certain political party said that it did not believe the polls. That did not turn out to be the case, did it?

My Lords, I am not saying that I do not believe the polls. I certainly believe that the polls as of today's date represent a shift in opinion. What I am saying is that I do not believe that this Bill when enacted will see those polls translated into reality at the ballot box. That is the difference between us. I am sceptical about taking advice from my good friend, the noble Lord, Lord Mackay of Ardbrecknish.

The point I was making is that I do not believe this Bill will lead to the break-up of the Union. It will build on our traditions of democracy, freedom and tolerance. I believe that it will defeat nationalism because it will rob it of its sense of grievance, and nationalism in Scotland is built on a sense of grievance, and that alone. The Bill expresses the settled will of the Scottish people, as has been said before. I hope that the House will give the Bill its full support, improve it by all means but at the end of the day enact it.

8.26 p.m.

My Lords, I feel particularly privileged to be able to speak on the Second Reading of this Bill. In declaring an interest I admit, like many other speakers, to one in my ancestry, my residence and my livelihood. Perhaps speaking with a little more relevance, I should say that this year I am president of the Royal Highland and Agricultural Society of Scotland, whose remit takes in all rural affairs.

A couple of weeks ago I took an ancient sword to be displayed in an exhibition commemorating the 700th anniversary of the battle of Falkirk. The sword's history can be traced back to Sir John de Graham, the historical right-hand man of Mel Gibson—I beg your Lordships' pardon; the noble Lord, Lord Hogg, has misled me. I meant to refer to the right-hand man of Sir William Wallace. I say that to illustrate how easy it is for the public to become confused as to whether facts stem from Hollywood or from history. Sir John was killed in that battle. The names of many succeeding generations of my family appear in numerous aspects of Scottish history from the Declaration of Arbroath to the Act of Union and beyond. I am tempted to pick a bone with the noble Lord, Lord Steel of Aikwood, for his rather sweeping statement about the part that bribery played in the passing of the Act of Union. However, I do not think that would advance our cause tonight.

At the present moment ordinary Scots find themselves surrounded by salesmen for devolution in all their beguiling colours. I hear little outside this Chamber of what used to be regarded as one of our great assets, the universally recognised "canny Scot". We hear little of how Scottish pride and independence of character can contribute to the associations and institutions of the whole country to which we as a nation belong.

I was glad to hear the Minister mention that this legislation is taking us into uncharted waters. We are offered new institutions, voting procedures and ways of drafting legislation with almost the same assurance as if they were new washing powder or wallpaper. Those products are at least the result of scientific and market testing. We have been offered some explanation by the noble Lord, Lord Steel of Aikwood, and we have heard the wisdom of the noble and learned Lord, Lord Hope of Craighead, as to the existence of those concepts elsewhere. But the public might have a better understanding of what we are about to undergo if they were described as novel or (dare one say it?) experimental arrangements.

Together in these British Isles we have developed institutions and traditions, industries and economic influence which have at times been an inspiration to the world. I would liken the United Kingdom to a family of brothers. We still need to consider our joint responsibilities for our past, as we do our potential for the future. For one member of the family simply to say, "I am leaving", would not negate our common parentage nor be sufficient to deny all that has gone before, and I personally hope that there is still greater strength in our all continuing to move together.

It would appear that a great many of the issues to be raised in relation to the Bill have inevitably been thrashed out in this House as part of the debate on the Welsh Bill. I noted in particular those raised by my noble friend Lord Crickhowell about the accountability and career implications for civil servants.

Having spent over 30 years in active farm and countryside management, including eight years on the council of the Scottish National Farmers' Union, my concern over this proposed legislation has focused on how it will affect agricultural and rural affairs. In terms of fundamental finance for Scotland, this looks like being the area where the greatest changes will be felt.

Scotland is familiar with the block grant from Westminster as it now stands. But the Scottish Office Agriculture, Environment and Fisheries Department has a budget this year, outside the Scottish Office block grant, of £509 million. Under the arrangements outlined in the White Paper it would appear that £173 million will no longer be negotiated with the Treasury by a UK Minister devoted to Scottish rural and environmental affairs. Is that sum simply to be added on to the present Scottish block grant, or will the sums of money devoted to similar areas in England be totted up together and, by the use of the Barnett formula, whose future cannot be guaranteed, a sum be added to the Scottish block? The agricultural and rural interests, which rely on that funding, will then have to bid, along with all the other demands of the Scottish economy, for what are bound to be fairly scarce resources.

I have spoken to some of those in agricultural education and research who are extremely worried about how what could become a relatively haphazard flow of resources could undermine their long-term viability. That leaves aside the impossibility of knowing for some time yet what the initial sum will be. Just yesterday I was talking to someone in this building who pointed out that that money provides the core funding for a world class biological research industry that provides 10,000 jobs in the Scottish central belt alone.

Other Members of your Lordships' House, notably my noble friends Lord Lindsay and Lord Sanderson, dealt with the question of Europe. I hope noble Lords will forgive me if I return to it briefly. My noble friends spoke of the pitfalls that are likely to be encountered in putting across the case that is required to secure the remaining sum of approximately £360 million of support which it is anticipated will come to Scottish agriculture this year from Europe. That is a not inconsiderable sum. In some ways it bears comparison with the sum which it is thought will be raised through an extra Scottish tax.

Almost by definition, within the European Union at present it is extremely unlikely that agriculture and the environment would ever be seen as matters of sufficient subsidiarity to be devolved to the Council of the Regions. But unless that happens, the Scottish minister for these matters will always been seen in European circles, in whatever role he is asked to speak, as the monkey rather than the organ-grinder.

The fact that there has been very little comment on the devolution proposals from those who represent agriculture in Scotland is perhaps just a symptom of the crisis that the industry is in at the moment. The drop in farm incomes, coupled with increased environmental and animal health regulations, leaves them without much time to consider many other aspects. However, it is revealing that when I talked to one of those responsible for one of the representative organisations he seemed to think that the best channel left for seeking to promote Scottish interests would be an attempt to persuade the English NFU to adopt the policies that would be most favourable to the Scottish context. Never an easy task! Is that not an indication of just how remote Scottish interests will be from the seat of influence under the proposed arrangements?

It is evident that the Government expect there still to be a Secretary of State for Scotland. One or two noble Lords have hinted at the fact that, given the very few responsibilities left, it is uncertain whether they would be adequate to justify a continued place in the UK Cabinet. Will the Minister consider what role that position could still play, and spell it out in rather more detail than is presently being revealed? That is surely the area where more muscle could be available for agriculture, as for other industries already mentioned, which are both Scottish and national industries and whose future is governed from Europe. They might be better served if some aspects of their administration were reserved in the first instance to such an office.

8.36 p.m.

My Lords, since I shall speak about history and the future, I ought to mention that among my predecessors were those who negotiated the Union of the Crowns and of the Parliaments and who raised the first rebellion against the Union.

The arrival of this Bill signifies the recognition that the constitution of the United Kingdom is unfair and in danger of breaking up. The main problem is the domination of the United Kingdom Parliament by representatives from England. By that, I mean that representatives from Scotland can be outvoted on Scottish domestic matters, the outcome being that democracy exists only at local level in Scotland. The Bill sets out a means of returning some aspects of national government to Scotland and introduces democracy at national government level for the first time.

The treaty of 1706 was signed between two sovereign, and hence equal, states. Therefore, one must conclude that Scotland entered the Union on a voluntary basis, at least de jure. On the face of it, that is fine. But the reality was that the English state had achieved all that it had dreamed of—the annexation of Scotland in all but name. The Bill puts in place a national parliament and in so doing rights a wrong that has been festering for the past 293 years.

The treaty is in tatters. It has been violated many times and is in need of renegotiation. The Scots of the 18th century made the mistake of seeing the treaty as a written constitution. The catalogue of violations starts with the abolition of the Scots Privy Council and the Scottish Mint in 1708, the imposition of the malt tax a few years later, and the abolition of the post of Secretary for Scotland in 1746. I acknowledge that that post was wisely re-established in 1885. Scots who had fought for the Stuart cause were hunted down and subjected to genocide following the defeat at Culloden—genocide, because their wives and children were killed as well. All that must remain in the past.

The question for Scots today is this. Is Scotland best served by being in a reformed British multi-national state, or by withdrawal and becoming a small European state? I am happy to accept either verdict so long as my compatriots come to a mature decision about it. It would be wrong to equate the SNP vote, either in an opinion poll or at a general election, with a vote on independence.

This is not a call for a referendum—at least not yet. I am keen that the Bill be implemented and allowed to bed down. I want these reforms to be well tested and therefore I am keen that there be no referendum on United Kingdom membership for at least 10 years. That provides an incentive to prove either that the reforms are the improvement hoped for or that the experience and confidence gained from this limited exercise of national government leads to a desire to take the consequences of sovereign government. It was helpful to have the statistics provided by the noble Lord, Lord Nickson.

Before moving on to the Bill, I have to say that the government of a United Kingdom does not have to be as narrowly defined as it is in the British constitution. There is no reason that there has to be a parliamentary union. The United Kingdom could also be a social, linguistic, economic and defence union. There could be a tax-gathering parliament in Scotland under the crown. That was exactly the negotiating position of the Scottish Parliament in April 1706. It is equally valid now.

So to the Bill. It introduces a devolved parliament to Scotland with this Parliament retaining the right to pass Scottish domestic legislation. That is enshrined in the obscure sounding Clause 27(7). Elsewhere, the Bill gives the right to any Secretary of State to overrule the Scots parliament if it appears that reserve powers or European legislation are being affected by Scottish legislation.

Those powers of the Westminster Parliament I regard as inevitable. It is a scheme of devolution after all. The question everyone will watch for is this: how will this Parliament and its government approach the use of those powers? Will confrontation be sought with the undoubtedly junior Scottish parliament or will the process be one of diplomatic negotiation? A process of advice prior to the third reading of a Scottish Bill would seem to me the best route ahead.

I hope to bring forward amendments concerning the funding of the parliament's environmental responsibilities. These are of greater proportion than the human population would imply. A needs-based assessment rather than a population-based formula is needed. I shall also raise the subject of children's rights-proofing of all legislation and, further to that, raise the subject of remote areas-proofing.

While canvassing to be a candidate for the Scottish parliament in the far north constituency, I came to realise that the anxiety felt in north-west Scotland about the domination of the parliament by the central belt would best be met by a remote areas standing committee, with the task, among others, of commenting on legislation in a rural and remote context.

I also mention my reluctance to see the membership of the parliament reduced in numbers, especially if it affects proportionality. One of the hidden safeguards for the remote areas is that the 129 members, and especially the regional members, give the remoter areas a disproportionately better representation than the central belt. This I approve of. It is a satisfactory way of counter-balancing domination by the more urban and populated areas.

The Bill is designed to define how the Westminster Parliament will act in the governance of Scotland. Therefore, I accept that the way the Scottish parliament will proceed is largely left to the membership to determine. I am surprised that the list of reserved powers includes broadcasting and abortion. In their own different ways, I feel that these are domestic issues and that they should be devolved. Not to have the power to summon the broadcasters to give evidence to parliament just because Clause 24 does not extend beyond the Border seems a travesty, especially when one considers the effect that they can have on the behaviour of the population.

In conclusion, this Bill contains the hopes of the Scottish people. Its enactment will probably reform the United Kingdom sufficiently to satisfy popular demand for Scottish autonomy within British solidarity. Meantime, it will certainly allow the people of Scotland to be seen in a different light in European circles as a re-emergent nation.

8.45 p.m.

My Lords, I must declare an interest as being Scottish, having lived nearly all my life in Scotland, where I still live, been to a Scottish school, a Scottish university and my family, the Drummonds, although originally Hungarian refugees, have lived in Scotland for nearly a millennium. I must also admit that my ancestors intermarried with Welsh, Irish and even English so I can claim unequivocally to be a member of the United Kingdom of Great Britain.

As your Lordships may be aware from previous debates, I, like my ancestor who was a member of a Scottish parliament before 1707, have both believed fervently in a united parliament of the United Kingdom. I have always been very much against going back. I voted "No" in the referendum and I am not a convert.

One of the ladies standing outside Errol School with a large placard saying, "Vote 'Yes"", said to me, "I voted for Scotland". "So did I", I said. However, I also believe very strongly in democracy and as a large majority in Scotland voted for a separate parliament—though no one did from my local hairdresser, post office or dentist—I reckon it is my duty to help try to make it work.

Once I was making a special steamed pudding for a lunch party for my grandmother when unfortunately the water got in and turned it all into porridge. However, I drained it a bit, put it in a flat dish in the oven with butter and sugar on top and said it was a sort of crême brulée. It was not as good as it should have been originally, but it worked. I expect King Alfred got away with the burnt cakes by saying that they were a new form of intensive cooking. Indeed, I have often wondered whether the burn in Bannockburn was not referring to a stream, or warriors, as in Anglo-Saxon beorn, but to some culinary disaster with the oatcakes.

Many of your Lordships have referred to current areas in the Bill which will need sorting out in order to make it work. The main problems are, of course, financial, because a new parliament, with the appropriate buildings, infrastructure and salaries of the members as well as their supporters, will all cost money. Some of this money may be raised by taxation in Scotland. There is a suggestion that some may be raised by cutting NHS spending in Scotland.

The Institute of Chartered Accountants in Scotland has also very serious reservations about the drafting of the tax clauses. And, of course, with heavier taxes to pay, new businesses will be less keen to invest in Scotland. It makes sense not to invest in a place where everything is going to cost you more. Already there has been difficulty about Mitsubishi shutting down its TV plant in Haddington. This may be just the tip of the iceberg and nobody who lives in Scotland and loves her wants her to turn into a "Titanic".

There is further the question of land reform. There is a strong bias in the Government's paper against private ownership of land. Having just returned from Bulgaria, which is finding its way out of communism and public ownership, I am very well aware of how public ownership does not work well. I am also aware of the efforts which private owners put into owning and managing land or any other assets. With public ownership, the feeling of personal duty and obligation is very much lessened.

Another area which certainly requires teasing out is that of Scotland's relationship with the European Union. Despite what the noble Lord, Lord Sewel, said when he referred to an enabling commission, Scottish Ministers must continue to attend the EU Council of Ministers as of right so that they do not lose their voice in Europe. My noble friend Lord Lindsay put that point much more pertinently. Agriculture, fishing and development funding are all things that we in Scotland need to discuss at first hand in Europe. They are all vital to our well-being. There is not as yet statutory provision for Scotland to set up a representative office in Brussels or to continue our veto on policies affecting farming and fishing.

Finally, there is the West Lothian question. As my noble friend Lord Weir said, there may in future be dissatisfaction about having here in England a Scottish Prime Minister, Scottish Chancellor of the Exchequer, Scottish Foreign Secretary and Scottish Minister of Defence. Even if the number of Scottish Members is reduced in the English Parliament, the question is still relevant. Flying around our dovecote at home are four beautiful white fan-tailed pigeons given us by the honourable Member for West Lothian. I can only hope that his metaphorical pigeons do not come home so easily and so persistently to roost.

8.50 p.m.

My Lords, apart from the distinguished exception of my noble friend Lady Young, I do not believe that any of the previous speakers comes from England. On Second Reading of the Government of Wales Bill, my noble friend Lord Crickhowell mentioned English dogs that bark in the night. One or two of them may have been placed rather far down the list, to speak when most people have gone home.

In all the devolution debates in which I have taken part over 20 years, I have always spoken as a UK Unionist. I am 100 per cent. English but always pro-Scots. I speak as one who is increasingly concerned as to whether there will still be a United Kingdom a decade from now. I am not reassured by the noble Lord, Lord Sewel.

In this Bill and that for Wales, we are debating not just the constitution of Scotland and Wales but that of the UK, which includes England. The Scotland Bill must be one of the most fundamentally important since the war because it vastly changes the way that this country is to be governed and effectively ends our unitary state. It seems important that some speakers from England should express a view.

Scotland is of course perfectly entitled to vote for its own parliament or even for independence, but I believe the vast majority of the population of the UK would view the latter course as an unmitigated disaster and tragedy. It is unbelievable that one has even to contemplate a break-up of the UK, which has been a force for good over two or three centuries, during which time the Scots have greatly contributed in so many ways—one could say, to a disproportionate extent given their small population. That is why, up to now, Scottish over-representation at Westminster and extra expenditure under the Barnett formula have been generally accepted.

I hope and trust that Scotland will not break away, but this Bill is seen by many as another, and so far the worst, example of a politically motivated constitutional innovation in the absence of any clear and considered idea of just where, how far and in what form that process may end for the UK. The Quebec situation has been mentioned. Can one imagine the hair-raising cliffhangers in a few years if that were to happen in respect of Scotland? Whatever the merits or otherwise of devolution, it must be durable. There is no point in bringing forward proposals that are not fair to all concerned—and the proposals are not fair to England. The English not only expect fairness but are just as entitled as the Scots, Welsh and Irish to express their national identity.

The irresponsible weakness of the Bill is that it builds up potential conflict between Scotland and England. The role of the Secretary of State and his influence in Cabinet will be greatly reduced, which will mean that the position of Scotland in the UK and within the Council of Europe will be much diminished. Worst of all, the Bill utterly fails to address the English dimension and the UK as a whole. Any concern expressed evokes absolutely no response from the Government. The problem for the Government is that there is no answer, or at any rate no palatable answer. They continue to adopt an ostrich-like stance, which will catch them out in the end.

Government policy has already been rumbled. The idea was to give Scotland a parliament in such a way that it would stop the Scottish National Party in its tracks, but all indications are to the contrary. Devolution has been described as a stepping stone to independence but, judging from recent opinion polls, it is more like a rocket. At the same time, the Government's idea is to shore up their strength at Westminster by using Scottish votes on English legislation and perpetuating the over-representation of Scotland as long as possible. The derisory sop of the potential reduction of 10 or so MPs at some time well into the next millennium—not at the end of this Parliament but at the end of the one after that—is pathetic. In any case, that will only alleviate the problem and, as Mr. Tam Dalyell and others have pointed out, the West Lothian problem goes much deeper than just voting on exclusively English legislation.

An even more serious dilemma is that Scots MPs could in due course determine the political complexion of English Secretaries of State responsible for education, health, the environment and so on. The Scotland Bill, like the Government of Wales Bill, highlights the problem that the Government will not face—how to balance the constitution of all four parts of the Union when they will have a different form of government. Scotland and Wales will be over-represented in comparison with England, and both Scotland and Wales will receive a higher proportion of government spending than in England.

The nightmare scenario of the Union will in all probability arise in five years. I hazard a guess that the SNP will not quite succeed in next year's elections for the Scottish parliament but, after a stultifying four-year period of a Scots parliament run mainly by Scots Labour, it will be a different matter. By that time, there will be the danger of rampant nationalism in Scotland. The Government will have a war on two fronts. By then, it will be blatantly obvious to the poor old English, who are normally so quiescent and slow to be aroused, that their affairs are being unduly and adversely influenced by Scots MPs. Sooner or later, simmering resentment will explode, when a hospital is closed down in Watford or wherever. The problem will initially be disguised by the large Labour majority in England but the Government should not assume that state of affairs will necessarily be the case after the next general election.

The Scotland Bill and Government of Wales Bill are widely seen as part of the Government's policy of fragmenting the UK—moving closer to a Europe of regions and away from the concept of nations. Regional assemblies for England as the Government's answer to the English problem is nonsense. At least the Welsh assembly and the Scottish parliament will be constructed on historic national borders and identities. No regional assembly in England would be comparable, but it would need to be so if the West Lothian problem is to be solved.

Many other ideas must be found if the UK is to survive. Any reduction in Scottish MPs merely alleviates or dilutes the problem; it does not solve it. The possibility has been raised of an English grand committee and so-called "English days" which might work temporarily, but they are riddled with anomalies and great difficulties could arise when, as is often the case, there is a Conservative majority in England but a United Kingdom which is Labour.

I was glad that my noble friend Lord Gray of Contin mentioned the possibility of an English parliament. But he said that that would be extremely costly and complicated and should certainly not be taken lightly. I have a little doubt in my mind that we will need an English parliament and the formation of an appropriate federal structure. Anyone reading the speeches on devolution in another place and the many articles in the press, will be struck by the increasing and substantial support that this has attracted—by no means just from Conservatives. Moreover, there would appear to be a growing acquiescence from the more enlightened Members of other parties that at least only English Members should vote on English matters.

Moving towards a federal structure will mean parliaments in England, Scotland, Wales and, hopefully, Northern Ireland—though were I a Northern Ireland Unionist I would worry whether there would be a UK to which to belong a few years from now. There would be a much reduced role for the UK Parliament which would have reserve powers similar to those proposed under the Bill before us. As has been pointed out, the predominant part—namely, England—would comprise over 80 per cent. of the whole. It has been pointed out that there has been no successful precedent for an arrangement whereby the main participant of a federation was so large. But, equally, so far as I know, there has been no unsuccessful precedent either. Such an arrangement would be more radical, more logical, more understandable and workable than the Labour constitutional quagmire of mishmash which is neither credible nor sustainable.

It may well come to pass that such an arrangement will be the last chance—the long stop, as it were—to save the Union a few years from now. It will certainly be a question of whether the will and determination exist to make it work. As matters stand, I fear that all the seeds of destruction of the Union lie within the Bill.

9.2 p.m.

My Lords, most of the activities of Her Majesty's present advisers can be regarded by most of us with a certain amount of approbation. Their start has been much better than that I remember of, say, Harold Wilson, or the back end of Edward Heath's term. It is fair to say that most generous minded Tories would say that the victory of the last election, even if over large, was not undeserved, perhaps because the victors were neither socialists nor Labour. However, there is one dreadful exception to that general approbation; that is, the desire of Her Majesty's present advisers to tinker with the British constitution.

The Welsh have been cajoled into a half-baked assembly. There is talk of changing the voting system in such a way that never again will the British electorate be able to chuck out their masters. There is a promise to further engorge the powers of patronage of the First Lord of the Treasury by allowing him to handpick the second Chamber. Now there is this Bill. I am afraid that the speech of the noble Lord, Lord Sewel, was full of pious platitudes, laden with meaningless phrases such as "concordat", and it certainly showed a lack of the intellectual vigour with which I normally associate him.

What I have to say will probably have less influence on Her Majesty's Government than did Laocoön on the wooden horse of Troy; the process has already started and is already decided. However, it is worthwhile pointing out that the Union of Scotland and England produced over the past 300 years a political unit which was probably the most successful, the most enlightened and the most beneficial to humanity than has been known since the days of the Antonines.

Before 1707 Scotland was poor, fractious and murderous. Mary Queen of Scots was temporarily Queen of the Scots only because the writ of the Scottish Crown was not writ large. England turned down three requests for an Act of Union. The English attitude can be summed up by that of Edward Gibbon who said of Scotland:
"The masters of the fairest and most wealthy climates of the globe turned with contempt from the gloomy hills, assailed by winter tempests, from lakes concealed in a blue mist and from cold and lonely heaths over which the deer of the forest were chased by a troop of naked barbarians".
Only in 1707 after the death of Queen Anne's last child did the Union succeed because there was grave concern over the possible splitting of the two crowns, with all the terrible dangers that that would present.

What happened next was magic for both England and Scotland. The two countries added up two and two and made five. The Scots governed England. They produced the Edinburgh Enlightenment and the great engineering and industrial might of the 18th century, the Adam brothers, Adam Smith, Raeburn, and a Scottish Peer who could and did outbid the Vatican for the contents of the Orsini Library. Had there been no Union the plains now rich with harvest would have remained barren moors; waterfalls which now turn the wheels of immense factories would have resounded in wilderness; New Lanark would still have been a sheep walk and Greenock a fishing hamlet. Those are not the words of an Englishman, but the words of Lord Macaulay—the greatest of all Scottish historians.

If this Bill goes through and devolution happens—as I regret it will—the Scots will not be able to choose their government; it will be done in an unholy alliance cobbled together by party bosses as a result of proportional representation. There could even be such an unnatural animal as an alliance between the Scottish Tories and the Scottish Nationalists, just to ditch the other lot. That is what happens with proportional representation. Thank goodness for my noble friends Lord Ellenborough and Lady Young. Finally, the English question is beginning to be put. Somehow I thought that the 87 per cent. of the United Kingdom—judging by the Government's speeches, some of the speeches of the Liberal Democrats and even from my own Front Bench—did not exist.

There will be tension between England and Scotland if the Bill goes through. Five years ago one never saw a cross of St. George flying in the street. One now sees it quite frequently. Like the noble Earl, Lord Mar, even though he does not admit it, I am British by country. My country stretches from Cape Wrath to Kent, to Cornwall and to Lough Foyle. I am proud of it and I hope that it stays like that as long as it possibly can. By blood I am a bit Irish and a bit Welsh. I certainly have some Jamaican blood in me and a bit of Devonian blood. I live in England but I am British and proud of it and long may that stay so.

To change the constitution for the benefit, imagined or otherwise, of less than 10 per cent. of the population at the behest of only those 4 per cent. who voted is hardly democratic. England has had no say, and judging by the debate in your Lordships House today, when the vast majority of speakers have been Scots, perhaps she is not yet interested. But, unfortunately, she will wake up and the consequences could well be an English nationalism as petty and mean-minded as that of the SNP.

The West Lothian question does not arise in a unitary state. Nor does it matter that the British Parliament pays £777 more per head to the Scots than it does to the English; nor does it matter that the Scots are over-represented in the British Parliament; nor does it matter that they pay less in taxation; nor does it matter that they get greater subsidy. That is what central and unitary government does. What does matter—this is where my own party has gone wrong and I see no sign of the party presently in government putting it right—is that governments of all parties fiddle about with the height of kerb stones in villages and boss schools about. There is no real local democracy in local taxation and in local authorities. It is that which has caused this unhealthy bout of Scottish nationalism.

After devolution, can it be possible for Robin Cook's successor as British Foreign Secretary to represent a Scottish constituency any more than someone representing a Northern Ireland constituency has held any office of importance in the British Government since partition in 1922? Can one imagine a Scottish Member of Parliament acting as Home Secretary, as Chancellor of the Exchequer, or as Secretary of State for Defence? The English simply will not put up with it. That will be a cause of Scottish resentment and the English will be poorer by it. I do not mind the "Jockocracy" under which we are governed at the moment because it is "Jockocracy" of the Union.

This Bill is a seed bed of secession and of the destruction of the Union. If the present First Lord of the Treasury presides over the destruction of that great Union with his normal elfin insouciance, then his high crimes will be worse than those of Stafford and his misdemeanours worse than those of Montrose.

9.11 p.m.

My Lords, perhaps I may be permitted to begin on a slightly personal note. It is 20 years and three months ago to the day that I had the honour and privilege of replying to the debate on the Second Reading of the then Scotland Bill. I am delighted to see that most of your Lordships are too young to remember that occasion, but those who do, like the noble Lords, Lord Mackie of Benshie and Lord Campbell of Croy, whom I am delighted to see here, and the noble Earl, Lord Onslow, have hardly changed. The three months that followed that debate were for me perhaps the most stimulating and exciting of my entire life. It was a period during Committee and on Report when this House did itself an enormous amount of good in terms of its reputation for examining legislation. I hope that your Lordships will find the next few months as stimulating as we found those few months in Committee and on Report.

In January 1985 I became a judge of the Court of Session in Scotland and since then, as all will acknowledge—perhaps not all—I have been out of politics. For that reason I have to return to Edinburgh before the end of the debate and I tender my apologies to the noble and learned Lord the Lord Advocate for that. I cannot properly join in the full debate, but I want to say something which is a matter of some importance. It echoes to a degree what was said by my noble and learned friend Lord Hope of Craighead. It relates to the appointment and removal of judges.

I have no particular interest in this matter now because I shall retire round about the end of the millennium. I thought I might sit once in the new millennium and condemn someone to death, just to go out with a bang! So I have no direct interest in the matter and I do not suppose I shall be removed under the provisions of the Bill. The 1978 Bill, which resulted in the modest little document, the Scotland Act of that year, contained no provision about the appointment or removal of judges.

Every schoolchild knows that the independence of the judiciary is a vital ingredient of a mature democracy. As my noble and learned friend Lord Hope of Craighead said, the effect of this Bill and this scheme on the administration of justice has hardly figured in the public debates. That is hardly surprising; one cannot expect people to get excited about the removal of elderly judges. The advantage of this House is that it can remedy that. I hope that it will approach this matter as thoroughly as the many other matters of detail about which your Lordships have spoken.

As a result of this piece of legislation, taken along with the Human Rights Bill 1998, the obligation of judges to step into what has hitherto been the political field is greatly increased. My noble and learned friend Lord Hope of Craighead mentioned Schedule 6. He is right to say—and your Lordships should note—that the devolution issues are very widely defined. The judges will have to determine delicate and difficult questions which the legislature cannot possibly foresee about where the boundaries are to be drawn between the legislative competence of a devolved parliament and that of Westminster.

Similar questions arise in relation to the acts of the executive and that includes the first minister. He or she is bound to be exposed to the same temptation as American presidents have been exposed to for the past 200 years and particularly this century. Even a man whom we all admire, Franklin Delano Roosevelt, sought to pack the Supreme Court of the United States because that court was striking down as unconstitutional legislation which he wanted to hurry through. He did not in fact succeed, but all modern presidents have packed the court with their nominees who reflect their political and philosophical views. That temptation is bound to face Ministers. It may lead to politicisation of the judiciary.

We have a strange situation at the moment for this perhaps the most mature and liberal of all the democracies in relation to the appointment of judges. They are appointed by the political power, pure and simple. I meet many lawyers from around the world. Some of them have come to me and said, "We want to tell you about the terrible scandal in our country: judges are appointed by the political power". I have to admit shamefacedly that that is exactly the situation that we have in this country. It seems to work moderately well, but as we advance in a constitutional sense I should have looked in the Bill for some provision whereby that power was diminished. But far from that being the case, it has in fact increased.

At present the judges of the Court of Session are appointed by the Secretary of State for Scotland on the recommendation of the Lord Advocate. When I was Solicitor-General for Scotland and Lord Murray was the then Lord Advocate, we found that the then Secretary of State, William Ross—later Lord Ross of Marnock—was proposing to appoint judges with a kind of minor consultation with the Law Officers. I can say this now. We threatened to resign if that happened. The matter was worked out between the Secretary of State and ourselves. The end result was that the Lord Advocate recommended the name of the judge. He has always had a tremendous independence from the normal political executive. The Secretary of State had the right of veto and that was as far as it went. There was elaborate consultation with the Lord President and perhaps, in certain circumstances, with the Dean of the Faculty of Advocates.

Under this Bill the Lord Advocate disappears from the process altogether and the first minister simply appoints judges of the Court of Session. I hope that this matter will be looked at carefully by the Government and that we are able to return to it in Committee.

The other aspect of the matter is even worse in a democracy and that is the removal of judges. At the moment nobody knows how to remove a judge of the Court of Session. It has never been done. It is thought that one possibility, based on the English model, is to have a resolution passed in both Houses of Parliament, but nobody knows whether that has any validity. Another method would be for the Lord Advocate to present a petition to the Court of Session itself and ask it to exercise its supereminent power the nobile officium. That might work and it might not. In practice, of course, one would expect people to twist the arm behind the scenes and make the offender an offer that he could not refuse. That is how it would be done.

The relevant provision in this Bill is Clause 89(6), which simply provides that the first minister can remove a judge. There are two safeguards. First, the first minister must specify the ground of unfitness as inability, neglect of duty or misbehaviour. He does not have to prove it; merely to specify it. There then has to be a vote in favour of that Motion by two-thirds of the membership of the parliament. One can imagine circumstances in which the first minister would not have great difficulty in commanding two-thirds of the membership of the parliament. He might thus have considerable power.

At the moment, even for sheriffs and sheriff principals, as the noble and learned Lord, Lord Hope of Craighead, said, under Section 12 of the 1971 Act—in fact, the provision dates back to previous decades—a sheriff cannot be removed unless the Lord President and the Lord Justice-Clerk conduct an investigation into whether or not there has been inability, neglect of duty or misbehaviour. They make a judgment on the basis of unfitness and if, but only if, the judges decide that the sheriff is unfit may the Secretary of State put an order before both Houses of Parliament. Each House has the right to annul that order. There is thus the involvement of a bicameral legislature and a powerful investigation, independent of the Executive. Under this Bill those elements will disappear. It is a curious feature of this Bill that, as it stands, the protection afforded to sheriffs survives, but the judges of the Court of Session may be removed by the method that I have described.

I consider that it is of the greatest importance that before the first minister lays before the parliament a Motion for the removal of a judge, whatever the majority he may need to pass that Motion, there has to be an independent investigation. There may be good reasons why the Lord President and the Lord Justice-Clerk are not the right people to conduct that investigation because they deal with the judges every day. At the moment we have half a dozen excellent people who could conduct that investigation, such as the noble and learned Lord, Lord Mackay of Clashfern, a retired Scottish judge; Lord Ross, the former Lord Justice-Clerk and a member of the Privy Council, and the noble and learned Lords, Lord Jauncey of Tullichettle, and Lord Keith of Kinkel. Indeed, there are several other judges who could carry out such investigations, some of whom are so young that they are younger than myself. As I have said, there are at least half a dozen, any two or three of whom could be selected by the first minister, just as the Secretary of State today selects judges for such tasks, who could conduct the investigation. If, and only if, they report that there is an unfitness for office should the first minister then remove that judge, following a vote in the parliament.

Those are issues of great constitutional importance. While I have been a Member of your Lordships' House, this House has always prided itself on concerning itself with constitutional issues because it has a strong sense of the constitution. I hope that, even if I am unable to be present on the occasions when I should like to be present, others will at least pick up this point and make the Government think again. I am grateful for your Lordships' attention.

9.23 p.m.

My Lords, this Bill is the result of a referendum in which all those resident in Scotland and on the electoral register there were entitled to vote. People born in Scotland but registered elsewhere were not so entitled; nor were people registered in England, Wales and Northern Ireland. That decision by less than 45 per cent. of Scottish residents will have an enormous impact on the rest of us. That is an interesting figure because, as the noble Lord, Lord Hughes, pointed out, it is the same as the percentage of noble Lords from Scotland who signed up to the Union. We must ensure that the resulting legislation is not only good legislation but that it contains adequate safeguards to protect the Union which is the United Kingdom. This Bill threatens that Union and UK Members have a duty to seek answers to the questions posed by it.

Twenty years ago Tam Dalyell first raised the West Lothian question, as so many noble Lords have said. We are assured in the press that Tony Blair, the Prime Minister, has determined that the extra representation granted to Scotland will be withdrawn, but that still leaves the problem of Scottish MPs who can vote on English home affairs when English MPs have no reciprocity. No one should doubt that the West Lothian question will return to haunt us over and over again unless we remove it now. An article in that most Scottish of newspapers the Glasgow Herald stated that to cut the number of Scottish MPs might dilute the West Lothian question but would not solve it. The probity of our legislature is in doubt if the Government use their present majority to ensure their future control of English home affairs by insisting that, while only the Welsh assembly and the Scottish parliament will enact legislation for their respective countries, all Westminster MPs may vote on English matters. This is not fair to the vast majority of the people of the Union and must be addressed.

The raising of taxes is an unpopular activity at the best of times. When they are not raised universally, and with the approval of a mere 38 per cent. of the affected population, they rankle, and eventually resentment spills over into action. Our history books are full of it. Scottish income tax, which is certain to be about 3p in the pound, will be levied on all those present in Scotland at the beginning or the end of the day for four or more days in a week. That leads to some anomalies.

I take the hypothetical case of A who lives and works in Scotland and obviously pays Scottish tax and the case of B who lives in England, works day shifts in Scotland and will not pay the tax. Let us take the case of C who lives in England, works permanent nights in Scotland and does not pay the tax either. However, if D lives in Scotland and has a sales territory which means that he is in northern England for, say, five days and four nights but is present in Scotland on Monday morning and Friday evening, he is deemed to be in Scotland for four days and is liable to pay the tax. We then consider the case of his boss. Let us say that his wife and children spend all week in the south of Scotland and live in a house registered in her name. His office is in Liverpool where he has digs to which he drives late every Sunday evening and from which he returns every Friday afternoon. He does not pay the tax.

One wonders how long such a state of affairs will subsist before there is an exodus south of the Border. How long before house prices in Berwickshire go up? How long before overseas companies find it preferable to locate elsewhere? How long before it becomes obvious that 3p in the pound no longer returns £450 million per annum? Will we not soon see people moving across the Border to live, thus adding to the problems of the Government, who, quite rightly, wish to reduce the amount of commuting by the people of this country? Will the tax also be applied to UK servicemen who as part of our Armed Forces are required to live on bases in Scotland? Will they have to pay it and claim it back from the MoD at a later time?

That takes me to the liability of Westminster to underwrite the Scottish experiment. Will the Treasury have to fork out if the tax yield is less than the target? Will it have to fork out if the target is found to be too low? Further, will it have to fork out if the revenue is on target but the Scottish parliament is spendthrift, similar to some west coast local authorities? Should there be a boom in Scotland resulting in a return of some of the £450 million, will the Secretary of State slice the extra from the block that he pays to Scotland?

Noble Lords have already referred to the Scottish block grant. Every Scottish resident receives approximately £4,505 a year compared with the English equivalent of £3,604. In 1996–97 the block grant for Scotland amounted to approximately £14.3 billion. Government spending per head was 23 per cent. higher than in England. I calculate that if that difference were removed, the Exchequer would have a further £2.7 billion to spend on, say, transport the building of hospitals or giving students their grants back. That was most adequately pointed out by my noble friend Lady Young.

Finally, I turn to a matter about which I am most concerned. In an echo of that once loved radio game, I am an English animal with strong Scottish connections—or perhaps I should speak of a UK animal. I am proud to be a member of the United Kingdom. But while I believe that we should recognise and honour the desire of the Scots to have a greater control over political matters Scottish, I am adamant that we should act to sustain this union. It is likely that the Labour representation in Edinburgh will be less than that of the SNP on its own, and highly likely that it will be less than the SNP coupled with the Conservatives and/or the Liberal Democrats. The central plank of SNP ideology is independence for Scotland; and its favoured method of attaining it is a referendum. I have already quoted Tam Dalyell. He is an arch critic of devolution and was quoted in the Guardian last August as comparing the Scottish Parliament to,
"the entrance to a motorway, without exits, to a separate Scottish state".
In contrast Donald Dewar, arch proponent of devolution, wrote in the Scotsman in May this year that the parliament,
"will, if nationalists have their way, be dominated by infighting and their never-ending demands for further upheaval. It is a recipe for constitutional chaos".
A straw poll of some university trained business people from Dublin yielded the opinion that within 10 years Scotland will be in the same shape as Ireland in the 1930s. In the face of that consensus I fear that legislation could become a Petri dish for the culture of the bacterium of civil unrest. My unease is worsened by the concurrent experiment with proportional representation which in other countries and at other times has brought vigorous minorities to the fore. I was somewhat uncomfortable with the comment made by the noble Lord, Lord Thomas of Monifieth, who spoke of devolution democracy. I understand there to be closed lists, and I can only see it as a second rate democracy. Should I be comforted by the Minister talking about people having "access easily"? How can one have "access easily" with concordats and closed lists?

The Bill must contain safeguards to ensure that no Scottish parliament can destroy the union of our nations by voting internally for independence. If that were to happen, this Government would be responsible, and future generations would hold them accountable for the consequent suffering and dislocation. Scotland's place in the Union is deeply valued. There is no evidence that the remainder of us wish the UK to be fragmented. Forty-five per cent. of Scotland has decided to have a larger measure of control over its own affairs; and so be it. But in doing so its people should acknowledge the pre-eminence of the Union, confirm their continuing allegiance to the monarchy and acknowledge the mutual dependence of the nations of this United Kingdom.

9.33 p.m.

My Lords, in my opinion this Bill, along with the other measures being brought forward by Her Majesty's Government, such as the proposed emasculation of your Lordships' House, is a step in a process which will result in the dismantling of the United Kingdom. It took many hundreds of years of terrible and destructive wars to lead our forebears, Scottish and English, to the conclusion that it would be best for this island to be united under one flag and one parliament. In 1707, some including my predecessor, the second Lord Belhaven, disagreed with that. But that was then. It is open to question what their views would be now. What can be said is that one of the most successful and benevolent constitutions which the world has even known is now in grave danger.

We should not have let Europe influence us in these particular decisions, but we have. In that regard, we do not need to take any lessons from France, which has had nine constitutions since 1789. We do not need any from Germany, which has had four constitutions since 1918, or from Spain, which is only just settling after a bloody and horrible civil war. I shall not mention the others. I say only that if the intention is to divide up this island on the basis of the German länder, we are asking for trouble.

The noble Lord, Lord Sewel, said that those who disagree with the Government's present policy are working against the Union. I find that an astonishing statement. It seems to me that it is a classic example of turning the facts upside down. It is the Government who are breaking the Union, not those of us who disapprove of this legislation.

However, given the present state of popular opinion in Scotland, something had to be done by whichever party was elected in the election last year. There is clear dissatisfaction with the status quo in Scotland. It is mistaken in my view, but undoubtedly it exists. I am inclined to agree with my noble friend Lord Tebbit that the referendum should have been on independence. To paraphrase Dr. Johnson, when a man is to be hanged in the morning he concentrates his mind wonderfully.

A clear option would have been fairer to the Scottish people—and I say that because I believe that this Bill will lead to independence. I realise that my noble friends, such as Lord Mackay of Ardbrecknish, who live in Scotland are now rightly dedicated to making the unworkable work and I wish them well. But as an independent Member of your Lordships' House, I have to express my view that it is unlikely to work.

I have always thought that there were only two consistent options for Scotland; independence or the status quo with as much devolution as the system can bear, which is more or less what we have had until now. In my view, this Bill should make provision for a further referendum on independence. If the vote is against independence it will, it is to be hoped, calm the wilder elements in the Scottish parliament. And if it is for independence we know where we are going and half the Cabinet will have to resign.

I regret all this. In 300 years our two nations have become very closely intertwined. How many English people have your Lordships met who confessed to having a Scottish grandmother? Very many, I guess, if their experience is the same as mine. Many people will find themselves living on the wrong side of the Border, as happened in Czechoslovakia. I am of their number, having lived in England since 1981. I do not think of myself as a foreigner here and English people living in Scotland ought not to think of themselves as foreigners there. Independence for small nations reduces the independence of the individuals who live in them. It may be fun for the politicians and nationalistic idealists, but it is a good deal less fun for the rest of us; a fact which most Scottish people have yet to grasp. It should be brought home to them.

Perhaps I may point to one possible consequence of the Bill which may not be all that far in the future. At present the Labour Party enjoys an unprecedented majority in the other place. But let us suppose that the Government are returned to power in the next election purely because of the Scottish vote. That means that England will have a Conservative Government but for the Scots. What happens then? Are English matters to be overridden by the Labour majority while the Scots have their own opt-out in the event of a Conservative Government? I realise that the English are the most tolerant people on earth and slow to wrath, but there are limits and I fear that we may see what those limits are sooner than Her Majesty's Government and others expect.

What I fear most is that that movement towards separation will create enmity between the Scottish and the English, an enmity which died nearly 200 years ago. For the first time in my life, I sometimes feel it is better, when living here, not to say that I am Scottish.

I notice also something which my more parochial and inward-looking fellow Scots might have missed: that is, the growth of English nationalism referred to by my noble friend Lord Onslow. The St. George's Cross is seen more and more in place of the Union Jack. In case no one has noticed, that is a direct response to the growth of Scottish nationalism and with the past few days in mind, I should say that English nationalism is not the explicit preserve of football hooligans. Many of my English friends and neighbours who have no interest in football are becoming increasingly nationalistic; and I do notice that.

The new assembly is supposed to bring government closer to the Scottish people. One must hope so. It will certainly increase the size of government bureaucracy under which the Scottish people will be expected to live. Every Scot will have two MPs—a privilege denied to the English and a doubtful privilege at that. On top of that, there will be Brussels. So I am wrong. There will be three MPs. I hesitate to give advice as to who to write to and which surgery to attend. But I congratulate the Scots. Surely in the whole of history no one has had such a galaxy—or should I say trinity?—of representatives. Whether that brings government closer to the people or on top of the people, only time will tell but it will undoubtedly be expensive.

Then there are the local councillors. All those men and women bring a huge baggage of bureaucrats and hangers-on, all paid, with them. I realise that my noble friends who live in Scotland must decide to make the best of a bad job and to try to make this work. From the southern side of the Border, while I wish them well, I cannot for the life of me see how it can work. In the end, it will please no one, north or south, and then we shall see.

9.41 p.m.

My Lords, I am one of the few Members from the English regions who has dared to test the waters in this debate. I should say immediately that although I am a former leader of Manchester City Council and a former Leeds MP, I am not speaking in that capacity. I am presenting my own views as I see them.

I am rather concerned. In some respects, I was hurt by the fact that I am supposed to support a measure of this importance without having a say in it until it reached your Lordships' House. Any move which can dismember the Union in which I have grown up is a matter for 50-odd million people, not 5.5. million people.

I am rather annoyed that I am supposed to march through the Lobbies in this House and vote for a measure on which I was denied the right to vote when the referendum was brought before the people. That is rather a strange way of treating the majority of people whom this issue will affect: by not providing them with the franchise to express their opinion.

Your Lordships may ask why I have a gripe about that. I shall tell you. Nobody has yet said what this exercise will cost. Perhaps I may return to an exercise which the last government undertook, if your Lordships would like some relevant costs to look at. Those costs are much less than the ones we are talking about here. Mr. James Prior, the then Secretary of State for Northern Ireland, instituted a Northern Ireland assembly. Let us look at what was paid to each member of that assembly. Most twin-tracked and were Westminster Members and also members of the assembly. It was decided to pay them two-thirds of a Westminster Member's salary, two-thirds of his expenses and two-thirds of everything else. We ended up with the most peculiar situation whereby the highest paid man in Parliament was the late Mr. James Kilfedder, because in addition to twin-tracking and therefore receiving one and two thirds salary and expenses as a Member of the other place and as a member of the assembly, he received also two-thirds of the Speaker's salary because he was the Speaker of that assembly.

I do not know what the total cost of that exercise was but it will have been much less than this exercise will cost. I believe that the House is entitled to know what is envisaged. There is nothing in the Bill about what people will be paid and what will be available for them to draw. I could, of course, concur and ask, "Well, what's it got to do with me?"—but I shall tell noble Lords what it has to do with me.

In opening the debate, my noble friend the Minister said that there was no intention to interfere with the present financial arrangements. But what did he mean? Was he referring to the equation for last year, or what will be paid next year as the block grant? Does he mean that the costs for this exercise will come out of that block grant?

My Lords, perhaps I may assist my noble friend and shed some light on the matter. The answer is, yes.

But, my Lords, that can only mean a diminution in the services in Scotland; indeed it cannot mean anything else. I believe it is a conservative estimate that the whole process will probably cost about £100 million. Therefore, £100 million less will be spent on hospitals and schools in Scotland. I do know a little about local government finance, but we have been given no guarantee in that respect.

Much has been said about the Barnett formula. I do not know what that formula is, nor indeed does anyone else, except for my noble friend Lord Barnett, who is not present in the Chamber. He was the architect of it. I suspect, and only suspect, that there may have been a case at some time in the past for the differential contained within the Barnett formula. However, it is possible for differentials over a period of time to become completely irrelevant and to go out of control. I believe a young Member of the House on the Opposite Benches gave us an outline of what it means in terms of the hard facts of life. I do not know whether the noble Baroness, Lady Young, gave that information, but I quoted sometime ago in your Lordships' House the actual differential per capita of payment between Scotland and England as being £871. I also calculated that if we take the English as being about 50-odd million up to that level, it would cost over £300 million. That is the sort of money that we are talking about.

For the life of me I cannot see that the English regions will accept the situation when they get to hear about it. Some of the MPs in another place have been rather slow to react. That is perhaps because some of them are new to Parliament and do not know the system. If this thing goes through, and it means that those south of the Border will be called upon to contribute substantial sums of money to this exercise, I suspect that when the Government cut the cake it will mean less cake for the other regions. I am not going to sit here and swallow that because I think that the Scots have done very well. Indeed, they are getting rather greedy because they have done so well.

I live in a city which could do with a lot of money being spent on it. In fact, parts of it are like a desert. No one talks to me about finding extra money for that, but extra money will be found for this exercise. If my noble friend the Minister says to me that it will come out of the block grant, it will not be the block grant within the existing ratio; it will be the existing grant with a "plus-age". If we divide up the national cake taking the biggest slice for England, the next slice, which will be a small one, will be for Scotland. However, in ratio it will be much bigger. It will mean that the only areas from which that extra money can come will be the English regions.

I have a suggestion to make which noble Lords may think rather foolish. If the Government propose to continue with the Barnett formula, I should point out to them that my noble friend has said that it is already out of date. So he must know what is wrong with it, even if the Government do not. It might be feasible to appoint a Select Committee of both Houses at this stage, under the chairmanship of my noble friend Lord Barnett, to look into the question of the Barnett formula and bring it up to date so that its application will be fair to all people. That would take the politics completely out of the matter. I do not suggest, of course, that the over-abundance at present in another place—I stress the words "at present"—of Ministers from north of the Border (the ratio at the Treasury is 3:1 in this regard) would result in any bias being shown whatsoever! However, if they wish to win the next election and retain their seats, they will not want to be regarded as the people who started to give money back to the English. Let us face it, this measure is a gift-horse to the SNP.

Every morning i1n the Library I am asked by Scots whether I have seen the public opinion polls. I reply, "If that applied to England, I would be frightened". They say, "We are frightened too". I cannot conceive that the Government's intentions for this Bill can be fulfilled. The SNP believes that it will carry everyone before it.

An aspect of this matter that interests me is that of Europe. I believe I am right in saying that the Scottish assembly will have no direct access to Europe and will have to gain access to Europe through Westminster. Can your Lordships conceive of a situation where the SNP was to become a powerful voice or win the elections? God forbid that that should happen, but according to the opinion polls it could happen. If the SNP were to become such a powerful voice, do your Lordships believe that it would sit back while Ministers in another place say, "We will tell you what to do as regards Europe"? In my opinion that is a recipe for disaster.

I shall not vote against the measure, but I shall certainly not vote for it at this point in time. I believe it is too fraught with difficulty for everyone concerned. I do not believe it has been clearly explained what ordinary people in Scotland will lose. If I had my way I would re-organise the financial aspects to give a fair deal to all. Those people who are lighting bonfires and waving the nationalist flag in Scotland will quickly sober up when they realise that money will be taken out of their pockets. If we "butter up" these people, that is only another incentive for them to continue their present behaviour.

I do not know what the outcome of the elections in Scotland will be. I do not think anyone does. As I have said, I believe this process is fraught with difficulties. The matter in the Bill that interests me deeply is that of finance. At the Committee stage of the Bill I shall scrutinise that aspect line by line.

9.53 p.m.

My Lords, follow that, especially if you have a somewhat modest locus standi in this matter! I declare I was born in Dunoon.

I wish to approach the debate from a totally different direction. I take the opportunity to raise two tourism topics. That is a subject which has been close to my heart for many years, as many noble Lords will be aware. The first concerns the present and future relationships between the Scottish Tourist Board and the British Tourist Authority. The second concerns the threat of a tourism tax, which is implicit in tax raising powers.

I start with the BTA/STB relationship, pausing only to take my hand out of my pocket, for which I apologise. This was governed from 1969 by the Development of Tourism Act, which gave the BTA the duty of promoting Scottish tourism overseas. Many years later, political pressures—that is what we are here to discuss tonight, to a certain extent—led to the Tourism (Scotland) Act, which gave the Scottish Tourist Board some overseas promotional powers.

The Bill before us devolves tourism to the Scottish parliament. I have no quibble with that at all. The Tourism (Scotland) Act specified that STB's overseas activities should complement or supplement rather than clash head on with the BTA's work. The Secretary of State has a role to play. I hope that that will continue. What I would like to see in the future is the BTA and the Scottish Tourist Board playing their separate roles, with the STB continuing to be complementary, providing the best of Scottish tours.

The Bill as it stands gives Scotland the best of both worlds. Perhaps I may quote a press release issued yesterday by the Scottish Office. It noted that:
"BTA had promoted Scottish tourism well".
It is nice to know that after all the years of slings and arrows of outrageous fortune.
"The fact that the industry in Scotland is able to call on BTA's experience and world-wide resources is a real benefit which we will retain".
The words in the press release are attributed to the honourable Member for Cunninghame South, the Scottish Tourism Minister—someone with whom I have fought over the years, not necessarily face to face, but side by side, on transport, and someone for whom I have great admiration. He states that the Scottish Tourist Board should be politically accountable to the devolved parliament—I have no quibble with that—but that the Scottish tourism industry should also recognise the importance of the BTA in ensuring that Scottish interests are represented on a much wider scale than STB itself could aspire to. Those words are music to my ears. They articulate the future to which we must aspire. They are a tribute to the fact that from Ravelston Terrace (which, coincidentally, has a former BTA staff member as its chief executive), to Thames Tower and to the Scottish Office itself they are speaking with one voice.

I appreciate that the noble and learned Lord, Lord Hardie, whom I can see on the Front Bench, will have to respond to over 60 speeches tomorrow evening. However, I hope that he will find time to join me in congratulating all those concerned on evolving a practical and a strong way of ensuring that Scotland's vibrant tourism industry continues to go from strength to strength.

I have just mentioned a vibrant industry. But it is also an industry of fragilities. I refer particularly to seasonality. I hesitate to quote my own words, but once upon a time I said that no tourist goes to Scotland after the end of September, because there is nothing to do. The reason there is nothing to do is that no tourists go to Scotland after the end of September. It is not a perfectly strong industry. It is the second strongest in the British market. The biggest subject on which my former colleagues in the BTA receive questions is London—naturally, because it is a gateway. The second biggest is Scotland. So we have a vibrant, or potentially vibrant industry.

It is also a fragile one, if it is an industry at all. Perhaps I may quote the noble Lord, Lord McIntosh of Haringey. Responding to his first tourism debate on 18th June last year (col. 1332) he said that rather than call it an industry, we should regard it as a number of "interdependent sectors". He mentioned the hotel sector, the hospitality sector, the entertainment sector, the transport industry and many others. I could restate his sentiments from my own experience: a Scotrail sleeper to Inverness; breakfast in what I believe was called "the Porridge Court Hotel" by Compton Mackenzie (some noble Lords will remember the Station Hotel at Inverness); a hired car; John O'Groats; a delightful bed-and-breakfast near Dounreay; the boat to Cape Wrath, and all the other things that are so good in Scottish tourism. And that is just the first 40 hours from Euston. For four of us, it was the start of a delightful experience and one that was very much value for money.

However, were we to repeat the trip in a couple of years hence, and the tax-raising powers were in place, such a trip could be a soft target for a bed tax. I should find that a nightmare. I believe it would turn a vibrant industry into a potentially very fragile one. A tax could raise costs substantially. Four of us spending a week following the Scottish coastline and paying, say, a tax of £2 per person a night, would mean that we would have to find another £56. We might well be able to afford that, but I wonder whether the Glasgow citizen heading for a holiday camp in Ayr would not find it a very penal infliction indeed. I feel that it would be a discriminatory tax, not least for that reason. It would be a painful tax and a serious threat to the Scottish tourism industry which I value and support, not just because I was born in Dunoon.

The accommodation sector is not the only sector that would be hurt. Let me refer again to the remarks of the noble Lord, Lord McIntosh, about the many sectors within the tourism industry. Should we penalise one to the advantage of the many, perhaps to rescue the local tourism structure in Scotland? It has its problems. That is not a question for the Minister to answer, but one which those voters who work in the Scottish tourism industry, as well as their elected representatives, would do well to think about twice, if necessary, and then reject.

10 p.m.

My Lords, there will be no vote on the principles of this Bill and the noble Lord, Lord Sewel, has already told us that he suspects those who speak against its principles of ulterior motives. One thing is certain: the Government will pay no attention to those who complain about the principles of the Bill.

I feel rather like a member of a ship's crew wrecked on a desert island in the middle of a vast sea of political opportunism, who is reduced to putting messages in bottles and throwing them into the sea, in the hope that at some stage in the future someone will realise that there were people who thought the Bill was wrong in principle.

I share with many other noble Lords the misgivings that devolution will foster the growing trend towards tribalism and violence that is so much in evidence today and will ultimately lead to a demand for independence. However, I wish to address my remarks this evening to the subject first brought up by the noble Lord, Lord Kirkhill, and very admirably by my noble friend Lord Lang: the lack of financial independence caused by the block grant.

It is a delusion that the democratic aspirations of the people can be satisfied by giving them votes to elect bodies that have power only over how a given sum of money can be spent, but have no responsibility for how much that sum amounts to or for how most of the taxation is raised to pay for it.

It is the reduction in the responsibilities of local authorities, the substitution of block grants for local taxation and the capping of local authority expenditure that has led to the centralisation of power in Westminster. This and the transfer of power to Europe have helped cause disaffection with the Westminster Government and encouraged the widely held conviction that there is a democratic deficit which can be solved by creating new assemblies. But these new assemblies incorporate the same defects.

The very serious question of the connection between taxation and government expenditure, the management of the nation's money, the part it plays in the democratic process and its contribution to the concept of sovereignty has been brushed aside. It is fundamental to the debate on economic and monetary union, therefore the Government do not want to discuss it. They have deliberately avoided discussing it.

In the debate in Committee on Clause 22 of the Government of Wales Bill concerning the transfer of powers to the Welsh assembly, the question was raised by noble Lords as to whether powers should be retained to withdraw functions given to the assembly if it went astray. In resisting the amendment, the noble and learned Lord, Lord Simon of Glaisdale, and the noble Lord, Lord Williams of Mostyn, asserted that they were convinced that, constitutionally, Westminster remained sovereign. Although I did not hear him, I am told that the noble and learned Lord, Lord Hope, also made that point this evening. I agree with them, but for the prime reason that Westminster will still hold the purse strings.

In Scotland, since English taxpayers contribute to the Scottish block grant which confines the ability of the assembly to spend as it would, the condition of Scotland will be rather like a child on an allowance from its parents. Financial waywardness in the assembly will be countered by the threat of a cut in subsidy.

This has to be. When countries share a currency and, in effect, join their bank accounts, autonomy has to be limited in this way. Imagine the situation if, to satisfy the expectations which will be fuelled by having their own assembly, the Scots were allowed to be a high tax, big spending economy. Sharing the same currency and language, businesses and people would flock to England where costs and taxes were lower and Scotland would be left impoverished.

It is necessary to make that obvious point about England and Scotland because, according to the opposite point of view, the freedom to spend and tax within a 3 per cent. budget deficit is claimed to be the essence of economic sovereignty within the single currency. It is a freedom that we could not exercise. Therefore, we find the Chancellor of the Exchequer announcing in his Budget that he is the guardian of the people's money. He is, and he still will be the guardian of the people of Scotland's money after the formation of the Scottish parliament. By that means, Westminster will retain its ultimate sovereignty over Scottish expenditure. If we join the single currency, that function will be transferred to Frankfurt and Brussels, but still not to Scotland.

The proposals will not and cannot reconnect the vital democratic link so that votes for expenditure have their counterpart in taxation for the Scottish parliament. The inevitable shortage of money will still be blamed on Westminster. It panders to tribal and nationalistic instincts without tackling the real problems caused by an unaffordable welfare state and the breakdown of the ability to finance local responsibilities from local taxation. The hard choices must still be made in Whitehall and the buck stops there.

The Bill will not for long improve relations between Scotland and Westminster, which I imagine is its main purpose. It will in time rebound on its perpetrators for having deceived the Scottish people into volunteering for a bad experiment. It is also an important constitutional change and a rotten idea. The Bill is misguided in principle and no amount of amending will change that.

10.6 p.m.

My Lords, the noble Lord the Minister has brought before your Lordships' House perhaps the most far-reaching constitutional reform for 300 years. One of the reasons that I have the privilege to sit in this place is what happened more than 300 years ago, when the first Earl of Stair helped to bring to fruition the Act of Union of 1707. He died during the night following the last debate in the then Scottish Parliament, having had a hard battle persuading all parties to agree the terms of that Act. I hope that the same fate does not befall this Earl of Stair.

I am not only a Scot but a full-time resident of Scotland and I believe strongly that the United Kingdom can only be strong on both the world and European stage if the two countries remain united. This island is too small to divide into even smaller countries. I hope that even after the Bill has passed, the Government will fulfil their obligations to Scotland, both as a self-governing country and as part of a strong United Kingdom.

The referendum last September produced the conclusive result that the people of Scotland wished a devolved parliament, although the national turnout to vote of 74 per cent. was perhaps a little low for such an important decision. Galloway, an area that swung from a majority in favour of the Union in the last government to a majority of in favour of independence under this Government, managed a turnout of only 63 per cent. Perhaps the Government should have taken a forewarning of their present standing in Scotland.

I look forward to the passage of the Scotland Bill and hope that the Government will heed the many amendments needed to ensure the success of the new Scottish parliament. There is a danger that a parliament with legislative power over areas currently covered by regional councils may result in decisions in Edinburgh taking local government further from the electorate. I am thinking particularly of planning matters in this instance.

This Bill is in some places vague and glosses over some important divisions of responsibility between the devolved parliament and the Parliament in Westminster: first, on the matter of defence, which is a reserved item. However, due in many cases to the scarcity of the population and to the terrain, the majority of Scotland is classified as a low-flying area. For similar reasons, many units of the Army exercise in Scotland. The new Scottish parliament will have legislative powers, according to the White Paper, over many areas of the environment and some aspects of the air space. Will the Scottish parliament be able to legislate against or make very awkward the training use of Scotland for the reserved Armed Forces in the event of public pressure being applied to the members of the Scottish parliament?

The Scottish parliament will also have devolved responsibility for civil defence and emergency planning. Recently there was a serious breakdown in the water supply to areas of Glasgow and, even before that, serious flooding in Perth. In both cases the Army—both territorial and regular—was involved in relief work and assistance. Under the new devolved system, the question is not only who will authorise military aid but also who will pay for the use of the reserved equipment.

The noble Lord, Lord Mackay of Ardbrecknish, referred in his opening to the Forestry Commission. Financial arrangements have been based on the receipts of the commission being split fairly between Scotland and the remainder of the United Kingdom, the financing of the commission's activities being controlled by the Scottish executive. As long ago as 1947 the land use for forestry in Scotland and England was nearly 7 per cent. and nearly 6 per cent. respectively; it is now split almost 15.5 per cent. in Scotland and 7.5 per cent. in England. Consideration will be needed to ensure that the fair division of funding allows for the often extra environmental costs of establishing woodland in Scotland. That is particularly relevant if the devolved parliament can legislate for planning and environmental matters. We need an assurance that the fair provision of funds for Scottish forestry referred to in the White Paper will allow for the extra costs and can be flexible in the event that new plantings, and particularly replanted clearfells, do not carry extra costs which penalise Scottish forestry in the future.

Finally, speaking from these Benches, I am pleased that there is to be provision for non-aligned individuals to stand for seats in the regional lists. However, if sufficient of the electorate vote to enable an independent candidate to take one of the seven regional seats, then that seat should remain occupied by an independent for the duration of the parliament. Under Clause 9—page 5 of the Bill—if a seat belonging to a registered political party becomes vacant, it is automatically filled from that party's list by another candidate and remains vacant only if there are no more candidates from that party. The procedure is simple. The returning officer merely notifies the presiding officer of a change. However, if a seat becomes vacant that was occupied by an independent, it must remain unfilled until the next election. That omission could easily be overcome by allowing the next independent candidate with the highest share of votes to fill the vacancy on the same basis as a registered political party. In constituencies the size of the Scottish regions the deficit of one independent member is liable to leave a large proportion of the non-aligned electorate unrepresented.

10.13 p.m.

My Lords, it is a privilege to be the 35th speaker in this wide-ranging, informative debate on this historic Scotland Bill. If I had not suffered the good fortune to come just before my noble friend the Opposition Chief Whip, I would have been tempted to retire in silence on the basis of the dog having his evening stroll and, on reaching the 12th tree, finding there is nothing left. It is impossible not to repeat at least one of the many issues raised. I shall therefore, as a matter of brevity, leave my noble friend to stir us with his usual forceful and penetrating speech to complete the first leg.

Like other noble Lords, I worry about the framework under the Bill for the Scottish parliament. I appreciate that the Government have sought a framework with a light touch, relying on good working relationships between Edinburgh and Westminster. I believe that they are dangerously over-optimistic. Almost as night follows day, there are bound to be conflicts. There is bound to be resentment on both sides.

I give one example of a potential resentment. It concerns the Scottish fishing industry. I must declare a small interest, having served for 20 years with the Fishermen's Mission, which looks after fishermen and their families at fishing ports, particularly at times of tragedy. That happens all too frequently, as indeed we witnessed last Sunday. The Scottish fishing industry represents 66 per cent. of the entire UK fishing quota and it is a vital and important industry to Scotland. What is likely to happen when it comes to the common fisheries policy being renegotiated in Brussels? Will there be a Scottish voice leading the negotiations for the United Kingdom? Almost definitely not, as no one other than the Secretary of State will be serving at that time in the national Cabinet, and it looks as though he will be stripped of most of his powers by then.

Of course it will be said that the British negotiations will be a team effort. But that still denies, I suggest, the Scottish hopes raised by Scotland having its own parliament and its own voice, not deflected by some alternative issue such as Greek olive oil, brewing in Brussels, or some trade-off.

I should like to raise another issue—the potential confusion for the Scottish people as to whom they should consult in the future if they feel there is an injustice. Should it be their Member of Parliament at Westminster; should it be their constituency Scottish Member of Parliament in Edinburgh or their regional Member of Parliament in Edinburgh; or even the Secretary of State or the first minister? I hope that the Government will iron out such a confusion and publish clear guidance for the Scottish people as to their rights.

Finally, I worry about the future of the Scottish parliament and where it will lead. Resentments and conflicts between Westminster and Edinburgh caused by the inherent imbalance between the subordinate parliament and Westminster are bound to lead in future to the talk of independence. Like others, I would regard the break-up of the Union as wholly damaging. I hope that the Government will confirm that in no way are they contemplating in the future a referendum for independence and that it will not be achievable by a Scottish parliament alone under the Bill.

10.17 p.m.

My Lords, I may be speaking at the end of the day but it is not yet the end of an old song. I am sorry that the Government have chosen not to provide a "winder-upper" this evening but it gives me the greatest pleasure to be able to wind up on behalf of the Opposition and to be the last speaker of the day. It is now late but it surely justifies the decision that was taken to have two days on this Second Reading. Otherwise we would have been here all night. I am just sorry that it took the Government quite so long to reach their decision.

If anything, this debate has proved that the Scotland Bill is better than the new drug Viagra in keeping the House of Lords active and awake with this record number of speakers. But what happened to the Labour Party today? Why were there so few representatives of the people's party speaking on the Second Reading of this, their flagship Bill? It has become very fashionable in government circles to name and shame. I shall resist that temptation except to say this. It is a long time since I have spoken on a Bill to do with Scotland without seeing some old and good friends on the other side who are sadly absent. I hope there is no truth in the rumour that because some of those noble Lords disagreed with the Government's policies they were asked not to speak up today. That would be truly shameful.

My noble friend Lord Mackay of Ardbrecknish in his opening words talked a little about the timing of the Bill. He pointed out the rather leisurely pace at which it has gone through Parliament. I welcome that because it means that the Scottish Office and its Ministers will have an opportunity to re-write it during the Summer Recess when they have realised the wisdom of your Lordships who will wish to make amendments. I am delighted that the noble Lord, Lord Sewel, said that he would listen carefully, I hope that meant that he will accept some of the amendments put forward. There is certainly no reason to rush. This Bill will be delivered in good time for the new Session some time at the end November.

The noble Lord, Lord Sewel, said a number of interesting things, but one thing of particular interest. He said that the Bill was part of a far-reaching constitutional programme. I agree with that as far as it goes. He spoke about the Scottish Bill and the Welsh Bill, the new mayor for London and other things. But one thing he did not mention was reform of the House of Lords. I have a question for him. Was he on or off message on that? Did he inadvertently make a great constitutional declaration or was he simply showing his own prejudice that there are more important things to do than worry about this House?

More importantly, is it really part of an overall vision, a design for constitutional change that the Labour Party is taking through involving Scotland, Wales, London, the Human Rights Bill, the independence of the Bank of England and all the other matters that we have heard so much about over the past 12 months or so? I do not believe it is. What we are witnessing is a rag-bag of constitutional policies tacked together here and there with no coherence apart from one thing and that is that every Bill passed through this constitutional package removes power from the House of Commons. If that is the intention, why is it that this Government are incapable of saying so?

The intention for this Bill was entirely political. It was nothing to do with better government for Scotland, but simply to provide different government. In what I thought was an uncharacteristically cheerless and ungenerous speech, the noble Lord, Lord Thomson of Monifieth, blamed everything on the last 18 years of Tory misrule in Scotland. In particular, he complained of the experiment of the poll tax. What is this Bill if not a constitutional experiment on the people of Scotland?

My Lords, the Bill may be a constitutional experiment, but the people of Scotland agree to it. That is the difference between this legislation and the poll tax.

My Lords, I am so glad the noble Lord mentioned that, because the Scottish people were asked in a pre-legislative referendum. I would expect the Liberal Democrats to agree with the whole concept of such legislation, but we did not and we still do not now. The motivation for the Bill was entirely political. It was for the parties of the Scottish Constitutional Convention, in which the Liberal Democrats played an important part, to take as much power as possible and stop the nationalists. That was the political motive.

I do not know whether the Bill is going to work or not. I do not know whether a Scottish parliament will work. I wish it every success. But I am certain about one thing. The evidence so far is that this legislation is not the settled will of the Scottish people. In the course of the past six months all it has done is to push people further and further towards the arms of the nationalists. I wonder what those who promoted this idea so much think of it now.

Perhaps I may turn to a more parochial issue. I refer to the unicameral nature of the Scottish parliament. My noble friend Lord Lang of Monkton, in an excellent speech, talked about bicamerality and said—I think that I quote him correctly—that it is central to parliamentary democracy. He is right. In their discussions, Scottish Office Ministers must at some point have deliberated whether or not there should be some kind of second Chamber, or senate for the Scottish parliament—and decided not to have that. When the noble and learned Lord the Lord Advocate winds up tomorrow, I should like to know why the Government took that decision—and why they took that decision for Scotland but not for the Westminster Parliament. They have said time and time again that they want to have a second Chamber for the Westminster Parliament. Why is a second Chamber being kept for the English but not for the Scots? Does the noble and learned Lord believe that that will lead to better legislation—or to worse legislation—for the people of Scotland?

Anybody listening to this debate will have been impressed by the number of Peers who referred to the relationship between the Scottish parliament and Europe. Those listening to the debate will have been particularly impressed by the number of noble Lords who spoke from real experience. I believe that over half a dozen Members of this House who have spoken today have practical experience of being a Minister in the Scottish Office with responsibilities for dealing with Europe. I suspect that the noble Lord, Lord Sewel, and his colleagues have worked hard to find a solution to the problem of how to pretend to devolve power on such issues to the Scottish parliament while at the same time retaining that power for the nation state of the United Kingdom, Ministers of which will have power in the Council of Ministers. That will not do. The industries which depend so much on the decisions that are taken in Brussels, such as the agricultural and fishing industries, must not be fobbed off by the idea of concordats, especially when they have no legislative base and we have no idea how they will work in practice.

I urge the Minister during the Summer Recess to discuss this, widely and cross-party, to try to find a solution to this problem, otherwise the people who will lose out will be the farmers and fishermen of Scotland who depend for such a large part—not just of their income, but for the policies which dictate the way in which they do business—on the decisions that will be taken by people over whom the Scottish parliament will have no authority. The speech of my noble friend Lord Lindsay was particularly powerful and convincing on that point.

This Bill was intended to be the flagship of the Labour Party programme, but the flagship has proved not to be a flagship, but a fireship—and now the wind has turned, just as some of us warned that it would. It is driving the fireship, Labour-lit, towards the heart of its own fleet. There is, I think, a faint feeling of panic in the ranks of the Scottish Labour Party. I cannot say that I sympathise too much, but let us hope that the wind does not rise into a gale that could engulf the Union itself.

Both the Labour Party and the Liberal Democrats have fallen into the nationalist trap. That trap was set some 20 years ago in the 1970s. It has now become fashionable to "bash the Nats", but that will not work; it never has. What has to be done is to make a very clear case for the Union, for the United Kingdom. I hope that we shall hear a little more from the Labour Party about the benefits of this United Kingdom than we have heard over the past few years. Labour Members use and play the language of nationalism against us. One of the reasons for our decline and eventual doom last year was precisely that.

The Labour Government will be judged on this single issue—on whether this manages to keep the United Kingdom together. If they have unleashed the forces of separatism in the United Kingdom, the electorate will never forgive them for taking us all down this road. This is the last time that the House will have a major Second Reading debate on Scotland. Let us hope that if we ever return to this subject it is not to debate the "Scotland Independence Bill".

My Lords, I beg to move that this debate be now adjourned until tomorrow.

Moved accordingly, and, on Question, Motion agreed to.

House adjourned at half-past ten o'clock.